Economy: HSBC Flash Manufacturing PMI: Apr 2014
HSBC reported a continuing contraction in manufacturing during April 2014 More:
- Flash China Manufacturing PMITM at 48.3 in April (48.0 in March). Two-month high.
- Flash China Manufacturing Output Index at 48.0 in April (47.2 in March). Two-month high.
“The best thing we can say [about China's economy] is stabilization. It’s not really an improvement. Usually the PMI actually improves around April but the pickup here is been rather muted, only 0.3 points. if you look at the details, [it] doesn’t seem like the economy is really pulling out of a rut.”
Frederic Neumann, Managing Director and Co-Head of Asian Economics Research, HSBC More
“The HSBC PMI number is actually looking more at the exporters rather than firms that serve the domestic demand. So export sector is probably picking up but to keep in mind that China’s economy nowadays is much more driven by domestic rather than exports. The property sector is now the pillar for growth, not export anymore. And property indicators show real estate activity slowing down very fast and that’s the reason why we’re very worried about the second-quarter GDP.”
Zhiwei Zhang, China Economist, Nomura More
“China can avoid a hard landing but I think the trade off is that the slowdown will continue for a long time. I think China is trying to re-engineer its growth model which is a long time effort which takes multi-years.”
Eddie Tam, Chief Investment Officer, Central Asset Investments More
Flash manufacturing PMI: Apr 2014
“Manufacturers indicated a strong start to the second quarter of 2014, with the latest survey highlighting expanding levels of production, new work and employment. At 55.4 in April, the Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) was down fractionally from 55.5 in March but still well above the neutral 50.0 value. Sharper rates of output and new business growth boosted the Manufacturing PMI during April, while the main negative influence on the headline index was a rise in the suppliers’ delivery times component.”
Markit Economics, “Production rises at fastest pace for just over three years in April“, 23 Apr 2014 (09:45am) More
New residential sales: Mar 2014
Sales of new houses fell 14.5% to an annualised rate of 384,000 during Mar 2014, which was an opposite change to an expected increase to sales of 450,000 (range of estimates: 428,000 to 476,000)
“Sales of new single-family houses in March 2014 were at a seasonally adjusted annual rate of 384,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 14.5 percent (±12.9%) below the revised February rate of 449,000 and is 13.3 percent (±9.9%) below the March 2013 estimate of 443,000.
The median sales price of new houses sold in March 2014 was $290,000; the average sales price was $334,200. The seasonally adjusted estimate of new houses for sale at the end of March was 193,000. This represents a supply of 6.0 months at the current sales rate.”
U.S. Department of Housing and Urban Development, “New residential sales in March 2014“, 23 Apr 2014 (10:00am) More
“It’s the reduction in affordability, the lack of inventory, also weak growth in median household income — all these are contributing to the sluggish recovery in housing. It’s going to raise concerns about the strength of the housing recovery, but it’s too early to be too worried.”
Ryan Sweet, Senior Economist, Moody’s Analytics Inc. More
“The weak tone of this report is a bitter pill for those, including ourselves, who have been looking for signs of a spring thaw in the housing recovery”
Millan Mulraine, Deputy Chief Economist, TD Securities More
Stock market indices
“Earnings season has been better than expected, but revenue growth has been static, which is concerning because of its implications for margins. If margins are going to stay at record levels, we’ll need revenue acceleration. Otherwise we may not see upside surprises going forward.”
Michael Mullaney, Chief Investment Officer, Fiduciary Trust Co ($11bn) More
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Mar 2014 quarter reports
Apple AAPL -1.31%
Flash numbers More
- Revenue was $45.6bn, up from $43.6bn Q1 2013, exceeding expectations of $43.53bn
- iPhone sales: 43.7m during the Mar 2014 quarter, exceeding expectations of 38.2m phones.
- Net income was $10.22bn, up from $9.55bn in Q1 2013
- EPS were $11.62, up from $10.09 in Q1 2013, exceeding expectations of $10.18.
Apple has also announced:
- a $30bn increase in its stock buyback program from $60bn to $90bn, increasing its return of capital to shareholders from the previous $100bn plan to $130bn by the end of 2015.
- an 8% rise in dividend.
- a 7 for 1 stock split in Jun 2014.
“The possibility is out there that in the next several months, they will have a string of new devices so that by the time Christmas time comes around, they will be ready to sell them all.”
Giri Cherukuri, Head Trader, OakBrook Investments LLC ($3.2bn) More
Facebook FB -2.65%
Flash numbers (1 minute after close) More
- Revenue was $2.50bn, up 72% from Q1 2013, exceeding expectations of $2.36bn
- Revenue from advertising was $2.27bn, up 82% from Q1 2013
- Net income was $0.642bn, up 293% from $0.219bn in Q1 2013
- EPS were 25 cents, up 278% from 9 cents in Q1 2013, exceeding expectations of 24 cents.
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Portfolio stock prices
- Apple reported its earnings after market close. It rose more than 7% to $569.37 after market close.
- Facebook reported its earnings after market close. There was a surprise negative spike within a minute of market close, dropping temporarily to $56.96 before rising to positive territory.
- VMware lost more than 9% after missing EPS expectations in yesterday’s quarterly report.
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The Australian Bureau of Statistics reported today (11:30am) that the Consumer Price Index (CPI) rose 0.6% (0.5% seasonally adjusted) during the Mar 2014 quarter. For the year from 1 Apr 2013 to 31 Mar 2014 the CPI rose 2.9%. More
“This could support the property market to the point where it may get a little bit uncomfortable for the Reserve Bank, particularly in Sydney.”
Alex Joiner, Property Analyst, Bank of America Merrill Lynch More
Australia’s lower than expected CPI growth has led to an opinion that pressure to increase the Reserve Bank’s Official Cash Rate has been reduced, as the 2.9% annual rise is within the RBA’s 2% – 3% target range for CPI growth. This led to a drop in the USD/AUD exchange rate.
The inflationary pressure is there: Melbourne’s median house price rose 2.8% during the Mar 2014 quarter to a record $604,110. More