Fri 17 Nov 2017


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  • Today at the stock market

    bull/bearWall Street ended the week on a sour note on Friday, with major indexes slipping modestly as investors weighed the fate of the Republicans’ tax overhaul plan. The benchmark S&P 500 has rallied more than 15% this year, supported by corporate earnings growth and solid economic data.

    • The S&P 500 index lost 6.79 points, or 0.26%, to 2,578.85
    • The Dow Jones Industrial Average fell 100.12 points, or 0.43%, to 23,358.24
    • The Nasdaq Composite index dropped 10.50 points, or 0.15%, to 6,782.79.
    • Advancing issues outnumbered declining ones on the NYSE by a 1.83-to-1 ratio; on Nasdaq, a 1.50-to-1 ratio favored advancers.
    • About 6.3 billion shares changed hands in U.S. exchanges, below the 6.8 billion daily average over the last 20 sessions.

    Tax Reform

    Investors have been hopeful that a tax bill under debate in Congress will boost corporate earnings and further fuel the stock market’s record-setting run. Congressional Republicans took important steps on Thursday toward the biggest U.S. tax-code overhaul since the 1980s, with the House of Representatives approving a broad package of tax cuts. The debate shifts to the Senate, where a bill has already encountered resistance within the Republican ranks.

    A Reuters poll showed that nearly two-thirds of more than 60 economists said they were not confident the Trump administration would get the legislation passed this year.

    “I think there is a fear that they are not going to be able to get enough support to really get something on the president’s desk to sign. The week started with a lot of optimism for tax reform and I think we are ending the week a little hung over,” said Jake Dollarhide, CEO of Longbow Asset Management in Tulsa, Oklahoma.

    Earnings

    With nearly all of the S&P 500 companies reporting results, Q3/2017 earnings are expected to have climbed 8.2%, according to Thomson Reuters I/B/E/S.

    “The earnings in the third quarter are pretty good,” John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston. “There remains a little bit of uneasiness around political risk, domestically and internationally.”

    Abercrombie & Fitch rose 23.9% and Gap rose 7.0% after the apparel retailers reported results that beat estimates.

    Shares of sports retailers soared on better-than-expected earnings. Foot Locker rose 28.2%, Shoe Carnival rose 29.7% and Hibbett Sports rose 15.2%.

    And …

    Twenty-First Century Fox shares rose 6.2% after two people familiar with the situation said both Comcast and Verizon were interested in buying parts of its studio and TV operations.Reuters

    Market indices

    Market indices
    ^ Market indices today (mouseover for 12 month view) Chart: Google Finance

    Index Ticker Today Change 31 Dec 16 YTD
    S&P 500 SPX (INX) 2,578.85 -0.27% 2,238.83 +15.18%
    DJIA INDU 23,358.24 -0.43% 19,762.60 +18.19%
    NASDAQ IXIC 6,782.79 -0.16% 5,383.12 +26.00%

    Portfolio Indices

    USD and AUD denominated indices over the past 52 weeks (Chart: Bunting)
    ^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting

    Index values

    Index Currency Today Change 31 Dec 16 YTD
    USD-denominated Index USD 3.057 -0.62% 2.105 +45.25%
    Valuation Rate USD/AUD 0.76164 -0.30% 0.72663 +4.81%
    AUD-denominated Index AUD 4.015 -0.33% 2.895 +38.68%

    Portfolio stock prices

    Stock Ticker Today Change 31 Dec 16 YTD
    Alphabet A GOOGL $1,035.89 -1.20% $792.45 +30.71%
    Alphabet C GOOG $1,019.09 -1.30% $771.82 +32.03%
    Apple AAPL $170.15 -0.56% $115.82 +46.90%
    Amazon AMZN $1,129.88 -0.66% $749.87 +50.67%
    Ebay EBAY $35.58 -0.12% $29.69 +19.83%
    Facebook FB $179.00 -0.33% $115.05 +55.58%
    PayPal PYPL $76.38 -1.70% $39.47 +93.51%
    Twitter TWTR $20.76 +1.96% $16.30 +27.36%
    Visa V $109.82 -1.09% $78.02 +40.75%
    VMware VMW $123.26 +0.44% $78.73 +56.56%

    FX: USD/AUD

    USD

    DXY movements
    ^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

    The Bloomberg Dollar Spot Index (DXY) fell 0.4%, touching the lowest in more than 3 weeks.
    The EUR gained 0.2% to USD 1.1791.
    Britain’s GBP rose 0.1% to USD 1.3210.
    Japan’s JPY climbed 0.9% to 112.09 per USD, the biggest gain since 8 Sep 2017.
    Bloomberg

    AUD

    AUD movements
    ^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com

    Oil and Gas Futures

    Futures prices

    Prices are as at 15:49 ET

    • NYMEX West Texas Intermediate (WTI): $56.59/barrel 2.63% Chart
    • ICE (London) Brent North Sea Crude: $62.74/barrel 2.25% Chart
    • NYMEX Natural gas futures: $3.12/MMBTU +2.29% Chart

    flag_europe EU: Norway’s Sovereign Wealth Fund to Exit Energy

    Norway, which relies on oil and gas for about a fifth of economic output, would be less vulnerable to declining crude prices without its fund investing in the industry, the central bank said Thursday. The divestment would mark the second major step in scrubbing the world’s biggest wealth fund of climate risk, after it sold most of its coal stocks.

    “Our perspective here is to spread the risks for the state’s wealth,” Egil Matsen, the deputy central bank governor overseeing the fund, said in an interview in Oslo. “We can do that better by not adding oil-price risk.”

    The plan would entail the fund, which controls about 1.5% of global stocks, dumping as much as USD 40 billion of shares in international giants such as Exxon Mobil Corp. and Royal Dutch Shell Plc. The Finance Ministry said it will study the proposal and decide what to do in “fall of 2018” at the earliest.

    While the fund says the plan isn’t based on any particular view about the future of oil prices or the industry as a whole, it will likely add to pressure on producers already struggling with the growth of renewable energy supplies. The Stoxx Europe 600 Oil and Gas index reversed gains after the announcement, sliding 0.3 percent as of 3:47 p.m. in London.Bloomberg

    flag_europe EU: Production in Construction. Sep 2017

    Press Release Extract [ser_eu_construction]

    In September 2017 compared with August 2017, seasonally adjusted production in the construction sector increased by 0.1% in the euro area (EA19), while it decreased by 0.4% in the EU28, according to first estimates from Eurostat, the statistical office of the European Union.

    In August 2017, production in construction remained stable in the euro area and fell by 0.2% in the EU28. In September 2017 compared with September 2016, production in construction increased by 3.1% in the euro area and by 2.6% in the EU28.

    Monthly comparison by construction sector and by Member State

    The increase of 0.1% in production in construction in the euro area in September 2017, compared with August 2017, is due to building construction rising by 0.2%, while civil engineering remained stable. In the EU28, the decrease of 0.4% is due to building construction falling by 0.7%, while civil engineering grew by 0.1%.

    eu_construction_20171117

    Among Member States for which data are available, the highest increases in production in construction were recorded in Slovenia (+4.0%) and the Netherlands (+1.1%), and the largest decreases in Romania (-4.6%), Hungary (-3.8%) and Slovakia (-2.4%).

    Annual comparison by construction sector and by Member State

    The increase of 3.1% in production in construction in the euro area in September 2017, compared with September 2016, is due to building construction rising by 3.7% and civil engineering by 0.9%. In the EU28, the increase of 2.6% is due to building construction rising by 3.2% and civil engineering by 1.4%. Among Member States for which data are available, the highest increases in production in construction were recorded in Hungary (+23.8%), Poland (+18.1%), Slovenia (+7.0%) and Sweden (+6.8%). Decreases were observed in Romania (-13.5%), the United Kingdom (-1.4%) and Belgium (-0.4%).

    Eurostat, “September 2017 compared with August 2017: Production in construction up by 0.1% in euro area, Down by 0.4% in EU28 “, 17 Nov 2017 More

    flag_europe EU: Balance of Payments. Sep 2017

    In September 2017 the current account of the euro area recorded a surplus of €37.8 billion.
    In the financial account, combined direct and portfolio investment recorded net acquisitions of assets of €52 billion and net disposals of liabilities of €6 billion.

    Current account

    The current account of the euro area recorded a surplus of €37.8 billion in September 2017. This reflected surpluses for goods (€35.2 billion), primary income (€9.7 billion) and services (€7.3 billion), which were partly offset by a deficit for secondary income (€14.3 billion).

    The 12-month cumulated current account for the period ending in September 2017 recorded a surplus of €346.4 billion (3.2% of euro area GDP), compared with one of €359.3 billion (3.4% of euro area GDP) for the 12 months to September 2016. This development was due to a decrease in the surplus for goods (from €377.0 billion to €342.0 billion) and an increase in the deficit for secondary income (from €135.9 billion to €151.1 billion). These were partly offset by increases in the surpluses for primary income (from €69.2 billion to €93.4 billion) and services (from €49.0 billion to €62.0 billion).

    Financial account

    In September 2017 combined direct and portfolio investment recorded net acquisitions of assets (€52 billion) and net disposals of liabilities (€6 billion).

    Euro area residents recorded a net increase of €12 billion of direct investment assets as a result of net investments in equity (€20 billion), which were partly offset by net disinvestments in debt instruments (€9 billion). Direct investment liabilities increased by €2 billion as a result of net acquisitions of euro area equity (€4 billion) by non-euro area residents. This was partly offset by net disposals of euro area debt instruments by non-euro area residents (€2 billion).

    With regard to portfolio investment assets, euro area residents made net purchases of foreign securities amounting to €41 billion. This resulted from net acquisitions of both short-term and long-term debt securities (€21 billion and €15 billion, respectively) and equity (€5 billion). Portfolio investment liabilities decreased by €8 billion as a result of non-euro area residents’ net disposals of euro area long-term debt securities (€42 billion), which were partly offset by net acquisitions of euro area equity (€20 billion) and short-term debt securities (€14 billion).

    The euro area net financial derivatives account (assets minus liabilities) recorded negative net flows of €8 billion.

    Other investment recorded decreases in both assets and liabilities of €30 billion and €54 billion, respectively. The decrease in assets was explained by MFIs (excluding the Eurosystem) (€44 billion) and, to a lesser extent, by general government (€2 billion), which were partly offset by increases in assets of other sectors (€12 billion) and the Eurosystem (€2 billion). The decrease in liabilities was attributable to MFIs (excluding the Eurosystem) (€71 billion) and other sectors (€19 billion). These were partly offset by incurrences of liabilities by the Eurosystem (€32 billion) and the general government sectors (€4 billion).

    In the 12 months to September 2017 combined direct and portfolio investment recorded increases of €732 billion in assets and €317 billion in liabilities, compared with increases of €1,087 billion and €416 billion respectively in the 12 months to September 2016. This resulted primarily from a decrease in the direct investment activities of both euro area residents abroad and non-residents in the euro area, with the net acquisition of equity assets decreasing from €603 billion to €128 billion and a shift in equity liabilities, from net investments of non-euro area residents of €409 billion to net disinvestments of €46 billion. The changes in direct investment were partly offset by developments in portfolio investment, in particular those related to transactions in equity. On the asset side, there was a shift from net sales of foreign equity by euro area residents of €5 billion to net purchases of €162 billion. On the liabilities side, the non-euro area residents increased the net purchases of euro area equities from €171 billion to €320 billion.

    According to the monetary presentation of the balance of payments, the net external assets of euro area monetary financial institutions (MFIs) decreased by €67 billion in the 12 months to September 2017, compared with a decrease of €223 billion in the 12 months to September 2016. This still reflects primarily a 12-month cumulated current and capital account surplus (€319.6 billion), whose counterpart entries are observed in net financial transactions by non-MFIs.

    In September 2017 the Eurosystem’s stock of reserve assets increased to €674.8 billion from €673.7 billion in the previous month. This increase (€1.1 billion) was explained mainly by net acquisitions of assets (€6.4 billion), which were partly offset by negative price changes (€5.6 billion), particularly of monetary gold.

    European Central Bank, “Euro area monthly balance of payments (September 2017)” 17 Nov 2017 More

    flag_usa US: State Employment and Unemployment. Oct 2017

    Press Release Extract [ser_us_ue_states]

    Unemployment rates were lower in October in 12 states, higher in 1 state, and stable in 37 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Twenty-three states had jobless rate decreases from a year earlier, 2 states and the District had increases, and 25 states had little or no change. The national unemployment rate edged down to 4.1 percent in October and was 0.7 percentage point lower than a year earlier.

    Nonfarm payroll employment increased in 9 states in October 2017, decreased in 3 states, and was essentially unchanged in 38 states and the District of Columbia. Over the year, 27 states added nonfarm payroll jobs and 23 states and the District were essentially unchanged.

    Unemployment

    Hawaii had the lowest unemployment rate in October, 2.2 percent, followed by North Dakota, 2.5 percent. The rates in Alabama (3.6 percent), Hawaii (2.2 percent), and Texas (3.9 percent) set new series lows. (All state series begin in 1976.) Alaska had the highest jobless rate, 7.2 percent. In total, 14 states and the District of Columbia had unemployment rates higher than the U.S. figure of 4.1 percent, 13 states had lower rates, and 23 states had rates that were not appreciably different from that of the nation.

    Nonfarm Payroll Employment

    Nine states had over-the-month increases in nonfarm payroll employment in October 2017. The largest increase in employment over the month occurred in Florida (+125,300), followed by Texas (+71,500) and California (+31,700). In percentage terms, the largest increase occurred in Florida (+1.5 percent), followed by Oregon and Texas (+0.6 percent each). Three states had over-the-month decreases in nonfarm payroll employment in October: Connecticut (-6,600, or -0.4 percent), Nebraska (-6,600, or -0.6 percent), and South Dakota (-2,400, or -0.5 percent).

    Bureau of Labor Statistics, “State Employment and Unemployment. Oct 2017“, 17 Nov 2017 More

    flag_usa US: Monthly New Residential Construction. Oct 2017

    Press Release Extract [ser_us_newresconst]

    us_newresconst_20171117

    Building Permits

    Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,297,000. This is 5.9 percent (±1.4 percent) above the revised September rate of 1,225,000 and is 0.9 percent (±1.6 percent) above the October 2016 rate of 1,285,000. Single-family authorizations in October were at a rate of 839,000; this is 1.9 percent (±1.7 percent) above the revised September figure of 823,000. Authorizations of units in buildings with five units or more were at a rate of 416,000 in October.

    Housing Starts

    Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,290,000. This is 13.7 percent (±10.5 percent) above the revised September estimate of 1,135,000, but is 2.9 percent (±10.1 percent) below the October 2016 rate of 1,328,000. Single-family housing starts in October were at a rate of 877,000; this is 5.3 percent (±12.1 percent) above the revised September figure of 833,000. The October rate for units in buildings with five units or more was 393,000.

    Housing Completions

    Privately-owned housing completions in October were at a seasonally adjusted annual rate of 1,232,000. This is 12.6 percent (±12.2 percent) above the revised September estimate of 1,094,000 and is 15.5 percent (±11.7 percent) above the October 2016 rate of 1,067,000. Single-family housing completions in October were at a rate of 793,000; this is 2.6 percent (±11.1 percent) above the revised September rate of 773,000. The October rate for units in buildings with five units or more was 433,000.

    U.S. Census Bureau and U.S. Department of Housing and Urban Development, “Monthly New Residential Construction. Oct 2017“, 17 Nov 2017 More

    flag_usa US: Quarterly Selected Services Estimates. Q3/2017 (Adv)

    Press Release Extract [ser_us_services]

    Selected Services Total

    Advance U.S. selected services total revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $3,720.3 billion, an increase of 1.2 percent (± 0.4 percent) from the second quarter of 2017 and up 5.3 percent (± 3.2 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 3.2 percent
    (± 0.6 percent) to 3.0 percent (± 0.4 percent).

    Utilities

    Advance U.S. utilities revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $156.1 billion, an increase of 13.9 percent (± 3.8 percent) from the second quarter of 2017 and up 1.2 percent (± 9.9 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of -7.8 percent (± 1.3 percent) to -7.5 percent (± 1.7 percent).

    Transportation and warehousing

    Advance U.S. transportation and warehousing revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $232.7 billion, an increase of 0.2 percent (± 1.1 percent) from the second quarter of 2017 and up 3.0 percent (± 7.0 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 7.9 percent (± 0.6 percent) to 8.2 percent (± 0.9 percent).

    Information

    Advance U.S. information sector revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $385.3 billion, an increase of 1.2 percent (± 0.4 percent) from the second quarter of 2017 and up 6.1 percent (± 3.8 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 2.5 percent (± 0.6 percent) to 2.1 percent (± 0.6 percent).

    Finance and insurance

    Advance U.S. finance and insurance revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $1,150.9 billion, an increase of 1.4 percent (± 0.4 percent) from the second quarter of 2017 and up 6.4 percent (± 9.5 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 2.2 percent (± 1.7 percent) to 2.3 percent (± 0.4 percent).

    Real estate and rental and leasing

    Advance U.S. real estate and rental and leasing revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $177.8 billion, an increase of 1.2 percent (± 1.3 percent) from the second quarter of 2017 and up 6.4 percent (± 10.2 percent)* from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 8.8 percent (± 1.5 percent) to 8.5 percent (± 1.7 percent).

    Professional, scientific, and technical services

    Advance U.S. professional, scientific, and technical services revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $439.1 billion, a decrease of 1.5 percent (± 1.3 percent) from the second quarter of 2017 and up 1.4 percent (± 6.1 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 3.7 percent (± 1.3 percent) to 2.8 percent (± 1.1 percent).

    Administrative and support and waste management and remediation services

    Advance U.S. administrative and support and waste management and remediation services revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $241.5 billion, an increase of 1.8 percent (± 1.3 percent) from the second quarter of 2017 and up 8.7 percent (± 6.8 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 4.2 percent (± 0.9 percent) to 4.9 percent (± 1.5 percent).

    Educational services

    Advance U.S. educational services revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $17.7 billion, a decrease of 1.7 percent (± 3.2 percent) from the second quarter of 2017 and up 9.3 percent (± 8.9 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 11.0 percent (± 3.0 percent) to 7.4 percent (± 2.5 percent).

    Health care and social assistance

    Advance U.S. health care and social assistance revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $631.2 billion, a decrease of 0.4 percent (± 0.6 percent) from the second quarter of 2017 and up 4.4 percent (± 3.2 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 1.0 percent (± 0.9 percent) to 1.0 percent (± 0.4 percent).

    Arts, entertainment, and recreation

    Advance U.S. arts, entertainment, and recreation revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $73.9 billion, an increase of 8.7 percent (± 2.1 percent) from the second quarter of 2017 and up 10.5 percent (± 7.8 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 13.6 percent (± 3.4 percent) to 12.9 percent (± 2.7 percent).

    Accommodation

    Advance U.S. accommodation revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $66.0 billion, a decrease of 0.4 percent (± 0.9 percent) from the second quarter of 2017 and up 2.2 percent (± 8.1 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 10.3 percent (± 1.5 percent) to 11.9 percent (± 1.3 percent).

    Other services (except public administration)

    Advance U.S. other services (except public administration) revenue for the third quarter of 2017, not adjusted for seasonal variation or price changes, was $148.1 billion, an increase of 0.4 percent (± 5.3 percent) from the second quarter of 2017 and up 10.9 percent (± 8.0 percent) from the third quarter of 2016. The first quarter of 2017 to second quarter of 2017 percentage change was revised from the preliminary estimate of 9.4 percent (± 3.0 percent) to 5.9 percent (± 3.4 percent).

    U.S. Census Bureau, “Quarterly Selected Services Estimates. Q3/2017 (Advance Report)“, 17 Nov 2017 (10:00) More

    flag_japan Japan update

    Currency: USD/JPY

    JPY movements
    ^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

    Stockmarket: Nikkei 225

    N225 movements
    ^ Nikkei N225 movements over the past week Chart: Google Finance

    flag_china China update

    Currency: USD/CNY

    CNY movements
    ^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

    Stockmarket: CSI300

    CSI300 movements
    ^ Shanghai CSI300 movements over the past week Chart: Google Finance