Wed 28 Jan 2015

News

Regular Items

Greece reneges on commitments to EU, ECB and IMF Opinion

Back in Oct 2012 Greece was failing to meet conditions it had agreed with IMF-EU-ECB troika inspectors in order to qualify for release of a tranche of bailout funding. 16 Oct 2012 These included fiscal cuts, public sector pay structure, pensions and severance pay, and sales (privatisation) of some infrastructure assets. Yannis Emiris, CEO of the Hellenic Republic Assets Development Fund (HRADF), had announced that new asset sales and privatisations weare expected to include Hellenic Petroleum, the country’s two biggest ports in Piraeus (OLP) and Thessaloniki (OLTH), its second-biggest water company Thessaloniki Water (EYATH), and Larco, one of the world’s biggest nickel producers. However the HRADF has consistently failed to meet its performance targets. More

Yesterday new Greek Prime Minister Alexis Tsipras announced a halt to the privatization of the port of Piraeus on Tuesday, for which China’s Cosco Group [COSCO.UL] and four others had been short-listed, and a halt the sale of stakes in the Public Power Corporation of Greece (DEHr.AT), Greece’s biggest utility, and refiner Hellenic Petroleum (HEPr.AT) and put other planned asset sales of motorways, airports and the power grid on ice.

Germany’s Economy Minister Sigmar Gabriel said Athens should have discussed the halt to privatizations with its partners before making an announcement: “Citizens of other euro states have a right to see that the deals linked to their acts of solidarity are upheld.“.More

On Friday Greek Finance Minister Yanis Varoufakis is scheduled to meet Jeroen Dijsselbloem, President of the Eurogroup (eurozone finance ministers).

Last Monday Dijsselbloem said “I expect from (Greece) that they will work with us to strengthen the Greek economy, which is crucial of course. We fully understand that a lot of work has to be done and we stand ready to support them. Of course membership of the euro zone also means that you comply to all that we have agreed with each other, but on that basis we stand ready to work with them … We have already done a lot to lift the debt burden for Greece over the last couple of years in terms of interest and maturity, the length of the loans. We have always said that we continue to work with them if the Greeks commit to what we have agreed with them, and if necessary. Now these words if necessary refer to the debt sustainability. It is too early to say, we have always said that we will come back to debt sustainability issues after the completion of the fifth review and that is still pending, so it is too early.More

The next meeting of the Eurogroup is scheduled for 16 Feb 2015 in Brussels More

USA: Federal Open Market Committee Monetary Policy Statement

Extract

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation have declined substantially in recent months; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to decline further in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. The Committee continues to monitor inflation developments closely.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Federal Reserve, “FOMC Monetary Policy Statement“, 28 Jan 2015 More

Comment

On balance, I viewed it as slightly hawkish. The equity markets view it as a June hike still being a potential outcome. It’s basically interpreting that the Fed will plow ahead with rate hikes despite low inflation and international woes.
Anthony Valeri, Market Strategist, LPL Financial Corp (San Diego, CA) More

Facebook Q4/2014 and full year 2014 earnings Opinion

Facebook produced a 58% gain in revenue in Q4/2014 and 49% for the full year. However analysts focused on an increase in Facebook’s costs, and Facebook was sold down.

Extract

Full Year 2014 Business Highlights:

  • Revenue for the full year 2014 was $12.47 billion, an increase of 58% year-over-year.
  • Income from operations for the full year 2014 was $4.99 billion.
  • Net income for the full year 2014 was $2.94 billion.
  • Free cash flow for the full year 2014 was $3.63 billion.
  • Daily active users (DAUs) were 890 million on average for December 2014, an increase of 18% year-over-year.
  • Mobile DAUs were 745 million on average for December 2014, an increase of 34% year-over-year.
  • Monthly active users (MAUs) were 1.39 billion as of December 31, 2014, an increase of 13% year-over-year.
  • Mobile MAUs were 1.19 billion as of December 31, 2014, an increase of 26% year-over-year.

Fourth Quarter 2014 Financial Highlights:

Revenue – Revenue for the fourth quarter of 2014 totaled $3.85 billion, an increase of 49%, compared with $2.59 billion in the fourth quarter of 2013. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased by 53%.

  • Revenue from advertising was $3.59 billion, a 53% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, revenue from advertising would have increased by 58%.
  • Mobile advertising revenue represented approximately 69% of advertising revenue for the fourth quarter of 2014, up from approximately 53% of advertising revenue in the fourth quarter of 2013.
  • Payments and other fees revenue was $257 million, a 7% increase from the same quarter last year.

PR Newswire, “Facebook Reports Fourth Quarter and Full Year 2014 Results, 28 Jan 2015 (16:00) More

Oil and Gas Futures

  • NYMEX West Texas Intermediate (WTI) (Mar 2015): $44.38/barrel as at 16:30
  • ICE (London) Brent North Sea Crude (Mar 2015) $48.53/barrel as at 16:30
  • NYMEX Natural gas futures (Feb 2015): $2.87/MMBTU as at 14:30

USA Stock Market Indices Opinion

Index Ticker Today Change 31 Dec 14 YTD
S&P 500 SPX (INX) 2,002.16 -1.35% 2,058.90 -2.76%
DJIA INDU 17,191.37 -1.13% 17,823.05 -3.54%
NASDAQ IXIC 4,637.99 -0.93% 4,736.05 -2.07%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 28 Jan 2015 Watch Read
Comment

The Fed continued to emphasize that any rate hike decisions will be very data-dependent, which has been the norm for quite some time. People are looking closely at earnings, which has been the story of the volatility in the past week or two. Oil and the strong U.S. dollar are also creating a drag on large multinational companies.
Joe Bell, Senior Equity Analyst, Schaeffer’s Investment Research Inc (Cincinnati, OH) More

Portfolio

Index values Opinion

:-) Outperformed Currency Today Change 31 Dec 14 YTD
Portfolio Index USD 1.784 +3.85% 1.741 +2.45%
Valuation Rate USD/AUD 0.79552 -0.42% 0.82153 -3.17%
Portfolio Index AUD 2.242 +4.29% 2.119 +5.80%

52-week performance Opinion

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

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

Stock price movements

The shape of the portfolio today (Chart: Yahoo Finance)

The shape of the portfolio today (Chart: Yahoo Finance)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stock prices

Stock Ticker Today Change 31 Dec 14 YTD
Apple AAPL $115.31 +5.65% $110.38 +4.47%
Amazon AMZN $303.91 -0.93% $310.35 -2.08%
Ebay EBAY $53.84 -1.55% $56.12 -4.06%
Facebook FB $76.24 +0.61% $78.02 -2.28%
Google A GOOGL $512.43 -1.68% $530.66 -3.44%
Google C GOOG $510.00 -1.66% $526.40 -3.12%
Linkedin LNKD $220.46 -0.97% $229.71 -4.03%
VMware VMW $75.06 -6.69% $82.52 -9.04%

FX: USD/AUD

The AUD fell a little further today (Chart: xe.com)

The AUD fell a little further today (Chart: xe.com)

Tue 27 Jan 2015

News

Regular Items

UK: Gross Domestic Product Preliminary Estimate, Q4 2014 Opinion

Extract

Key Points (all figures in this release are seasonally adjusted)

  • Change in gross domestic product (GDP) is the main indicator of economic growth. GDP is estimated to have increased by 0.5% in Q4 2014 compared with growth of 0.7% in Q3 2014.
  • Output increased in two of the four main industrial groupings within the economy in Q4 2014. In order of their contribution, output increased by 0.8% in services and 1.3% in agriculture. In contrast, output decreased by 1.8% in construction and 0.1% in production.
  • GDP was 2.7% higher in Q4 2014 compared with the same quarter a year ago. GDP in 2014 as a whole was up 2.6% on 2013.
  • In Q4 2014 GDP was estimated to have been 3.4% higher than the pre-economic downturn peak of Q1 2008. From the peak in Q1 2008 to the trough in Q2 2009, the economy shrank by 6.0%.
  • The preliminary estimate of GDP is produced using the output approach to measuring GDP. At this stage, data content is less than half of the total required for the final output estimate. The estimate is subject to revision as more data become available, but these revisions are typically small between the preliminary and third estimates of GDP.

Office for National Statistics, “Gross Domestic Product Preliminary Estimate, Q4 2014“, 27 Jan 2015 More

Comment

Britain’s economy recorded its fastest annual growth since 2007 last year despite a bigger-than-expected slowdown in the final three months of 2014, giving a mixed message just 100 days before Britons go to the polls.

British gross domestic product grew by 2.6 percent in 2014 as a whole, the Office for National Statistics said on Tuesday, up from 1.7 percent in 2013 and putting it on track to have been the world’s fastest-growing major advanced economy last year.

While most countries have not yet reported 2014 growth data, Britain’s reading places it ahead of International Monetary Fund estimates for other big developed economies last year, a fillip for British Prime Minister David Cameron ahead of a national election on May 7.Reuters

We think that GDP growth could pick up to 3 percent this year. The best days of the U.K.’s recovery may still lie ahead.
Samuel Tombs, Economist, Capital Economics (London) More

Advance Report on Durable Goods Manufacturers’ Shipments, Inventories, and Orders Opinion

Extract

New Orders

New orders for manufactured durable goods in December decreased $8.1 billion or 3.4 percent to $230.5 billion. This decrease, down four of the last five months, followed a 2.1 percent November decrease.

Shipments

Shipments of manufactured durable goods in December, up following two consecutive monthly decreases, increased $2.6 billion or 1.1 percent to $246.8 billion. This followed a 0.7 percent November decrease.

Unfilled Orders

Unfilled orders for manufactured durable goods in December, down following ten consecutive monthly increases, decreased $8.9 billion or 0.8 percent to $1,167.6 billion. This followed a 0.2 percent November increase.

Inventories

Inventories of manufactured durable goods in December, up twenty of the last twenty-one months, increased $2.0 billion or 0.5 percent to $410.8 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 0.5 percent November increase.

Capital Goods

Nondefense new orders for capital goods in December decreased $7.9 billion or 9.7 percent to $73.3 billion. Shipments increased $0.1 billion or 0.2 percent to $78.9 billion. Unfilled orders decreased $5.7 billion or 0.8 percent to $732.4 billion. Inventories increased $1.0 billion or 0.5 percent to $187.5 billion.
Defense new orders for capital goods in December decreased $0.5 billion or 5.3 percent to $8.7 billion. Shipments increased $0.2 billion or 2.2 percent to $10.2 billion. Unfilled orders decreased $1.5 billion or 0.9 percent to $156.2 billion. Inventories decreased $0.1 billion or 0.3 percent to $24.1 billion.

Employment and Statistics Administration, “Advance Report on Durable Goods Manufacturers’ Shipments, Inventories, and Orders“, 27 Jan 2015 (08:30) More

S&P/Case-Shiller 20-City Composite House Price Index – Nov 2014

Extract

shiller_20150127

Year-over-Year: Both the 10-City and 20-City Composites saw year-over-year growth rates decline in November compared to October. The 10-City Composite gained 4.2% year-over-year, down from 4.4% in October. The 20-City Composite gained 4.3% year-over-year, compared to 4.5% in October. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 4.7% annual gain in November 2014 versus 4.6% in October 2014.

Month-over-Month: The National and Composite Indices were both marginally negative in November. The 10 and 20-City Composites reported declines of -0.3% and -0.2%, while the National Index posted a decline of -0.1% for the month.

S&P/Case-Shiller, “20-City Composite House Price Index – Nov 2014“, 27 Jan 2015 (09:00) More

U.S. Consumer Confidence Index – Jan 2015 Opinion

Extract

The Conference Board Consumer Confidence Index®, which had increased in December, rose sharply in January. The Index now stands at 102.9 (1985=100), up from 93.1 in December.
The Present Situation Index rose to 112.6 from 99.9, while the Expectations Index increased to 96.4 from 88.5 in December.

Conference Board, “U.S. Consumer Confidence Index – Jan 2015“, 27 Jan 2015 (10:00) More

Apple Q1/2015 earnings – Q1/2015 Opinion

Apple today reported the highest profit for any company in history. Say, that’s at least OK.

Extract

CUPERTINO, Calif.–(BUSINESS WIRE)– Apple® today announced financial results for its fiscal 2015 first quarter ended December 27, 2014. The Company posted record quarterly revenue of $74.6 billion and record quarterly net profit of $18 billion, or $3.06 per diluted share. These results compare to revenue of $57.6 billion and net profit of $13.1 billion, or $2.07 per diluted share, in the year-ago quarter. Gross margin was 39.9 percent compared to 37.9 percent in the year-ago quarter. International sales accounted for 65 percent of the quarter’s revenue.

The results were fueled by all-time record revenue from iPhone® and Mac® sales as well as record performance of the App Store℠. iPhone unit sales of 74.5 million also set a new record.

Apple, “Apple Q1/2015 earnings – Q1/2015“, 27 Jan 2015 (16:00) More

Comment

Given what we see ahead for Apple in 2015 and beyond, we are even more excited about the company’s early-stage ramp in this transformational cycle.
Brian White, Analyst, Cantor Fitzgerald More

VMware Q4/2014 earnings – Q4/2014 Opinion

Extract

PALO ALTO, CA — (Marketwired) — 01/27/15 — VMware, Inc.(NYSE:VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the fourth quarter and full year of 2014:

Quarterly Review

  • Total revenues for the fourth quarter were $1.70 billion, an increase of 15% from the fourth quarter of 2013, or up 16% year over year in constant currency.
  • License revenues for the fourth quarter were $777 million, an increase of 13% from the fourth quarter of 2013, or up 16% year over year in constant currency.
  • Operating income for the fourth quarter was $344 million, a decrease of 8% from the fourth quarter of 2013. Non-GAAP operating income for the fourth quarter was $567 million, an increase of 7% from the fourth quarter of 2013.
  • Net income for the fourth quarter was $326 million, or $0.75 per diluted share, a decrease of 2% per diluted share compared to $335 million, or $0.77 per diluted share, for the fourth quarter of 2013. Non-GAAP net income for the quarter was $467 million, or $1.08 per diluted share, an increase of 7% per diluted share compared to $436 million, or $1.01 per diluted share, for the fourth quarter of 2013. Both GAAP and Non-GAAP results on a year-over-year basis include the impact of the acquisition of AirWatch, completed in the first quarter of 2014.

Annual Review

  • Revenues for 2014 were $6.04 billion, an increase of 16% from 2013.
  • Operating income for 2014 was $1.03 billion, a decrease of 6% from 2013. Non-GAAP operating income for 2014 was $1.88 billion, an increase of 6% from 2013.
  • Net income for 2014 was $886 million, or $2.04 per diluted share, a decrease of 13% compared to $1.01 billion, or $2.34 per diluted share, for 2013. Non-GAAP net income for 2014 was $1.54 billion, or $3.56 per diluted share, an increase of 5% per diluted share compared to $1.46 billion, or $3.37 per diluted share, for 2013. Both GAAP and Non-GAAP results on a year-over-year basis include the impact of the acquisition of AirWatch, completed in the first quarter of 2014.
  • Operating cash flows for 2014 were $2.18 billion, a decrease of 14% from 2013, and free cash flows for the year were $1.83 billion, a decrease of 17% from 2013.
  • Cash, cash equivalents and short-term investments were $7.08 billion and unearned revenues were $4.83 billion as of December 31, 2014.

VMware also announced that its Board of Directors has authorized the purchase of up to $1 billion of its Class A common stock through the end of 2017. Stock will be purchased from time to time, in the open market or through private transactions, subject to market conditions. VMware now expects the stock repurchase program to more than offset dilution from its equity compensation programs in 2015. The new stock repurchase authorization is in addition to VMware’s ongoing $1 billion stock.

VMware, “VMware Q4/2014 earnings – Q4/2014“, 27 Jan 2015 (16:00) More

Oil and Gas Futures

  • NYMEX West Texas Intermediate (WTI) (Mar 2015): $45.45/barrel
  • ICE (London) Brent North Sea Crude (Mar 2015) $49.07/barrel
  • NYMEX Natural gas futures (Feb 2015): $2.89/MMBTU

USA Stock Market Indices Opinion

Index Ticker Today Change 31 Dec 14 YTD
S&P 500 SPX (INX) 2,029.55 -1.34% 2,058.90 -1.43%
DJIA INDU 17,387.21 -1.65% 17,823.05 -2.45%
NASDAQ IXIC 4,681.50 -1.89% 4,736.05 -1.15%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 27 Jan 2015 Watch Read
Comment

Currency headwinds, as well as evidence of a continual deceleration of global growth, is having a major impacts on quarterly results. Coupled with that, durable goods orders were somewhat disappointing, which scotches any optimism for today’s trading session.
Chad Morganlander, Stifel, Nicolaus & Co. ($160 billion) More

Portfolio

Index values Opinion

:-( Underperformed Currency Today Change 31 Dec 14 YTD
Portfolio Index USD 1.718 -3.18% 1.741 -1.35%
Valuation Rate USD/AUD 0.79888 +0.29% 0.82153 -2.76%
Portfolio Index AUD 2.150 -3.45% 2.119 +1.45%

52-week performance Opinion

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

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

Stock price movements

The shape of the portfolio today (Chart: Yahoo Finance)

The shape of the portfolio today (Chart: Yahoo Finance)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stock prices

Stock Ticker Today Change 31 Dec 14 YTD
Apple AAPL $109.14 -3.50% $110.38 -1.12%
Amazon AMZN $306.75 -0.94% $310.35 -1.16%
Ebay EBAY $54.69 -2.44% $56.12 -2.55%
Facebook FB $75.78 -2.21% $78.02 -2.87%
Google A GOOGL $521.19 -2.89% $530.66 -1.78%
Google C GOOG $518.63 -3.10% $526.40 -1.48%
Linkedin LNKD $222.62 -1.65% $229.71 -3.09%
VMware VMW $80.61 -2.24% $82.52 -2.31%

Mon 26 Jan 2015

News

Regular Items

Greek election – final results and a new government

New Government

Alexis Tsipras (SYRIZA) has secured a 162 majority in a 300 seat Parliament through a coalition with the Independent Greeks (ANEL) Party. He was sworn in as Prime Minister this afternoon (Athens time) by President Karolos Papoulias. More

Results

This table shows the election scores with 99.94% of the vote counted. This was enough to confirm allocation of seats in the Greek Parliament and the formation of a new government.

Party Leader 99.94% Seats
Coalition of the Radical Left (SYRIZA) (New Govt) Alexis Tsipras 36.34% 149
Independent Greeks (ANEL) (SYRIZA coalition) Panos Kammenos 4.75% 13
New Democracy (ND) (Former Government) Antonis Samaras 27.81% 76
Popular Association – Golden Dawn Nikolaos Michaloliakos 6.28% 17
To Potami (The River) Stavros Theodorakis 6.05% 17
Communist Party of Greece (KKE) Dimitris Koutsoumpas 5.47% 15
Panhellenic Socialist Movement (PASOK) Evangelos Venizelos 4.68% 13
Movement of Democratic Socialists (Kinima) George Papandreou 2.46% 0

IMF support

In a statement today International Monetary Fund Chair Christine Lagarde said “We stand ready to continue supporting Greece, and look forward to discussions with the new government.More

USA: Blizzard disrupts NorthEast States Opinion NBR

Wind-driven snow falling as fast as 4 inches per hour is poised to bring travel and commerce to a standstill from New York to Boston. Northeast governors and mayors have warned people to prepare for the storm and stay off the roads as a major winter storm takes shape off the U.S. East Coast Monday afternoon.Bloomberg

S&P downgrades Russian debt to junk status NBR

Standard & Poors today cut Russia’s sovereign credit rate to BB+ from BBB-, just below investment grade.Deutsche Welle On 17 Jan 2015 Moody’s Investors Service cut its rating for Russian government bonds to just above junk bond status.

Oil and Gas Futures

  • NYMEX West Texas Intermediate (WTI) (Mar 2015): $45.15/barrel
  • ICE (London) Brent North Sea Crude (Mar 2015) $48.16/barrel
  • NYMEX Natural gas futures (Feb 2015): $2.88/MMBTU

USA Stock Market Indices Opinion NBR

Index Ticker Today Change 31 Dec 14 YTD
S&P 500 SPX (INX) 2,057.09 +0.26% 2,058.90 -0.09%
DJIA INDU 17,678.70 +0.03% 17,823.05 -0.81%
NASDAQ IXIC 4,771.78 +0.29% 4,736.05 +0.75%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 26 Jan 2015 Watch Read
Comment

The Greek elections infused a little bit more risk into the market. More people are focusing on a pretty busy earnings calendar this week and the Fed commentary on Wednesday. Those are going to be the much bigger focus for traders than the situation in Greece.
Michael James, Managing Director of Equity Trading, Wedbush Securities Inc More

Portfolio

Index values Opinion

:-( Underperformed Currency Today Change 31 Dec 14 YTD
Portfolio Index USD 1.774 -0.17% 1.741 +1.89%
Valuation Rate USD/AUD 0.79660 -0.04% 0.82153 -3.03%
Portfolio Index AUD 2.2270 -0.13% 2.227 +5.08%

52-week performance Opinion

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

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

Stock price movements

The shape of the portfolio today (Chart: Yahoo Finance)

The shape of the portfolio today (Chart: Yahoo Finance)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stock prices

Stock Ticker Today Change 31 Dec 14 YTD
Apple AAPL $113.10 +0.11% $110.38 +2.46%
Amazon AMZN $309.66 -0.87% $310.35 -0.22%
Ebay EBAY $56.06 -1.23% $56.12 -0.11%
Facebook FB $77.50 -0.43% $78.02 -0.67%
Google A GOOGL $536.72 -0.97% $530.66 +1.14%
Google C GOOG $535.21 -0.88% $526.40 +1.62%
Linkedin LNKD $226.36 -2.52% $229.71 -1.46%
VMware VMW $82.46 -0.63% $82.52 -0.07%

Week: 19-25 Jan 2015

A warm day at Port Melbourne's beaches

A warm day at Port Melbourne’s beaches

Greek elections result in change of government

Greek election system

Under Greek electoral law, parties must secure 3 percent of the vote to enter the 300-seat parliament. The biggest party automatically gets a 50-seat bonus, and the level required to win outright depends on the share of the vote taken by parties that fail to cross the threshold. Reuters

The biggest party generally needs between 36% and 40% of the vote to win outright although the exact figure depends on the share of the vote taken by parties that fail to cross the 3 percent threshold to enter parliament. ekathimerini

Results

This table shows the election scores with 68.92% of the vote counted. This was enough for Alexis Tsipras to claim victory and Antonis Samaras to concede defeat. SYRIZA has formed a coalition with the Independent Greeks (ANEL) party.

Party Leader 68.92%
New Democracy (ND) (Former Government) Antonis Samaras 28.15%
Coalition of the Radical Left (SYRIZA) (New Govt) Alexis Tsipras 36.04%
To Potami (The River) Stavros Theodorakis 5.93%
Popular Association – Golden Dawn Nikolaos Michaloliakos 6.34%
Communist Party of Greece (KKE) Dimitris Koutsoumpas 5.43%
Panhellenic Socialist Movement (Pasok) Evangelos Venizelos 4.75%
Independent Greeks (ANEL) (SYRIZA coalition) Panos Kammenos 4.69%
Movement of Democratic Socialists (Kinima) George Papandreou 2.44%

Note: a minor party, Enosi Kentroon, has 1.83% of the vote as at the 68.92% mark.

SYRIZA leader claims victory

Alexis Tsipras has claimed victory from Sunday's election.

Alexis Tsipras has claimed victory from Sunday’s election.

With Greece’s bailout deal with the euro zone due to end on Feb. 28, Tsipras’ immediate challenge will be to settle doubts over the next instalment of more than 7 billion euros in international aid. EU finance ministers are due to discuss the issue in Brussels on Monday.

Financial markets have been worried a Syriza victory will trigger a new financial crisis in Greece, but the repercussions for the euro zone are expected to be far smaller than feared the last time Greeks went to the polls in 2012.

Tsipras said today that he would cooperate with fellow euro zone leaders for ‘a fair and mutually beneficial solution’ but said the Greek people came first. ‘Our priority from the very first day will be to deal with the big wounds left by the crisis. Our foremost priority is that our country and our people regain their lost dignity.’

Tsipras has promised to renegotiate agreements with the European Commission, European Central Bank and International Monetary Fund “troika” and write off much of Greece’s 320 billion-euro debt, which at more than 175 percent of gross domestic product, is the world’s second highest after Japan.Ekathimerini

What to expect from a SYRIZA government NBR

Lloyd says: “It seems like SYRIZA would want to grab Greece’s credit card and party like it’s 1999.”

Extract from Ekathimerini

Question: How does SYRIZA propose to tackle what they call a ‘humanitarian disaster’ caused by the demands of Greece’s bailout?

They want to immediately raise the minimum salary from EUR 580 to EUR 751 (USD 650 to USD 840) a month. People working and those already retired would have a ’13th month’ of pension restored if their monthly pension is less than EUR 700. Coupons for food and electricity would be given to at least 300,000 households and peoples’ primary places of residence would be protected from repossession. Other SYRIZA priorities include guaranteed access to free medical care and scrapping tax on heating fuel. The party believes the ‘emergency’ plan will cost EUR 12 billion (USD 13.5 billion) which they say they will raise from securing reduced repayments on the national debt, by re-directing EU funds, and by cutting tax fraud and smuggling. The problem is that releasing these funds cannot be done overnight. Analysts at Eurobank believe a SYRIZA government would have ‘a very narrow margin for manoeuvre’ and Greece could soon see its debt repayments climb.

Question: Would a SYRIZA victory poison relations between Greece and its lenders, the European Union and the International Monetary Fund?

SYRIZA’s demands to write off part of the colossal Greek debt (which stands at 318 billion euros, or 175 percent of GDP) combined with the possibility of public finances getting out of control could create tensions between Athens and its creditors. The party is also challenging measures demanded in return for the bailout, such as liberalisation of the labour market, Goldman Sachs investment bank said Friday: ‘The gap that separates the economic philosophy of the two sides is large in key areas (such as budget targets, pension system sustainability, labour market reforms and legislation, privatizations and public sector headcount).’ German Chancellor Angela Merkel has tried to calm the rhetoric by talking of a need to ‘find solutions.’

Question: Would SYRIZA’s policies put Greece’s place in the eurozone at risk?

SYRIZA say they have no intention of leaving the eurozone. On the other hand, European officials have gone to great lengths to put out the fire sparked by rumours from Berlin that Greece could leave. Merkel said Friday that Greece must ‘remain part of our (European) story.’ Nevertheless, Goldman Sachs said ‘lenders are willing to pay the cost of heightened default uncertainty in Greece rather than provide funds for policies that reverse the reforms that have taken place and deviate from economic orthodoxy.’ However, Greece could also exit the eurozone ‘by accident,’ according to Finance Minister Gikas Hardouvelis. If it defaults on debt repayments and the markets panic it could trigger a bank run. The European Central Bank could then refuse to step in to help a SYRIZA government.

Ekathimerini, “A SYRIZA government in Greece: what it wants and what might be possibleEkathimerini

European leaders have said Greece must respect the terms of its EUR 240 billion bailout deal, but Tsipras campaigned on a promise to renegotiate the country’s huge debt, raising the possibility of a major conflict with euro zone partners.

‘We must not reward the breaching of agreements, German politician Wolfgang Bosbach told the daily Osnabruecker Zeitung newspaper. That would send completely the wrong signal to other crisis-stricken countries that would then expect the same treatment.Ekathimerini

Currency response

The EUR has fallen to its lowest level since Sep 2003 (Chart: xe.com)

The EUR has fallen to its lowest level since Sep 2003 (Chart: xe.com)

Eurogroup response

Extract from Deutsche Welle

At a meeting of eurozone finance ministers in Brussels on Monday, attendees spoke out against the idea of writing off Greek debt, just as Greece’s new anti-bailout prime minister, Alexis Tsipras, was being sworn in.

Dutch Finance Minister Jeroen Dijsselbloem, who usually chairs these gatherings, told reporters that there was “little support” for forgiving Greek debt, although it may be possible to ease the terms of repayment. However, he emphasized that would only happen “if necessary.”

Greece has borrowed 240 billion euros ($270 billion) to stave off bankruptcy since 2010. A great deal of this sum comes from its European neighbors.

Hans-Hoerg Schelling, Austria’s finance minister, said the rest of Europe shouldn’t be made to restructure its financial policy “just because a country like Greece has a problem.” With the European part of Greece’s aid program due to end in February, tough negotiations could be ahead if neighboring countries take a hard line against Greece’s anti-austerity government.

Germany’s Wolfgang Schäuble struck a more enigmatic note, saying: “Greece is still in the process of building a new government…the way ahead is not only a question of debt.”

Schäuble added that growth was the most essential element – not only for Greece’s recovery, but also for European stability in general. Like his colleagues though, he reiterated that Greece could not abandon its commitments.

Deutsche Welle, “EU finance ministers: Greece must pay“, 26 Jan 2015 More

USA market indices Impact

Index 23 Jan 15 Week 16 Jan 15 Month 31 Dec 14 Year 31 Dec 14
S&P 500 2,051.82 +1.60% 2,019.42 -0.34% 2,058.90 -0.34% 2,058.90
DJIA 17,672.60 +0.92% 17,511.57 -0.84% 17,823.05 -0.84% 17,823.05
NASDAQ 4,757.88 +2.66% 4,634.38 +0.46% 4,736.05 +0.46% 4,736.05

The shape of the week

US market indices this week (Chart: Yahoo Finance)

US market indices this week (Chart: Yahoo Finance)

A week of Nightly Business Reports

Monday Tuesday Wednesday Thursday Friday

PORTFOLIO

Long term (52-week) performance Impact

:-) Our AUD-denominated index closed the week on a record high. Given that none of the stocks in our portfolio are at record highs, there’s potential for continued growth – in what may be a volatile period ahead.

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

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

This week’s performance Impact

Index 23 Jan 15 Week 16 Jan 15 Month 31 Dec 14 Year 31 Dec 14
USD Index 1.777 +6.42% 1.670 +2.06% 1.741 +2.06% 1.741
Valuation rate 0.79689 -3.82% 0.82856 -3.00% 0.82153 -3.00% 0.82153
AUD Index 2.230 +10.65% 2.015 +5.22% 2.119 +5.22% 2.119

Portfolio stocks

US market indices this week (Chart: Yahoo Finance)

The shape of portfolio stocks this week (Chart: Yahoo Finance)

Apple AAPL +6.59%

AAPL share price performance this week (Chart: Yahoo Finance)

AAPL share price performance this week (Chart: Yahoo Finance)

Amazon AMZN +7.45%

AMZN share price performance this week (Chart: Yahoo Finance)

AMZN share price performance this week (Chart: Yahoo Finance)

Ebay EBAY +5.78%

EBAY  share price performance this week (Chart: Yahoo Finance)

EBAY share price performance this week (Chart: Yahoo Finance)

Facebook FB +3.52%

FB  share price performance this week (Chart: Yahoo Finance)

FB share price performance this week (Chart: Yahoo Finance)

Google Class A GOOGL +6.17%

GOOGL  share price performance this week (Chart: Yahoo Finance)

GOOGL share price performance this week (Chart: Yahoo Finance)

Google Class C GOOG +6.27%

GOOG  share price performance this week (Chart: Yahoo Finance)

GOOG share price performance this week (Chart: Yahoo Finance)

  • Friday close: $539.95 +6.27% from $508.08.
  • P/E (historical): 22.48 Change from 21.15
  • Target (1 year): NASDAQ consensus $597.5, range $580 ↔ $615.
  • Analyst recommendations: 8Change strong buy, 3 buy, 1 hold.

Linkedin LNKD +8.42%

LNKD  share price performance this week (Chart: Yahoo Finance)

LNKD share price performance this week (Chart: Yahoo Finance)

VMware VMW +2.94%

VMW  share price performance this week (Chart: Yahoo Finance)

VMW share price performance this week (Chart: Yahoo Finance)

FX: USD/AUD

USD/AUD over the past week (Chart: xe.com)

USD/AUD over the past week (Chart: xe.com)

Fri 23 Jan 2015

Regular Items

Oil and Gas Futures

  • NYMEX West Texas Intermediate (WTI) (Mar 2015): -1.97% to $45.40/barrel at 16:41 ET.
  • ICE (London) Brent North Sea Crude (Mar 2015) +0.54% to $48.78/barrel at 16:41 ET.
  • NYMEX Natural gas futures (Feb 2015): +5.33% to $2.99/MMBTU at 16:41 ET.

USA Stock Market Indices Opinion

Index Ticker Today Change 31 Dec 14 YTD
S&P 500 SPX (INX) 2,051.82 -0.55% 2,058.90 -0.34%
DJIA INDU 17,672.80 -0.79% 17,823.05 -0.84%
NASDAQ IXIC 4,757.88 +0.16% 4,736.05 +0.46%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 23 Jan 2015 Watch Read
Comment

The strong commitment from Draghi to wipe out fears about the euro zone’s sustainability is good news. Liquidity to the banking system should improve credit conditions, and thus economic growth. That will benefit equities. The ECB has given a time frame and the size of its QE is very helpful. Investors know they’ll be helped by the ECB for the next 18 months at least.
Pierre Mouton, Notz, Stucki & Cie. ($8 billion) (Geneva)

The bigger picture is that we had a pretty sizable move in the market the day before. The market is still assessing the recent actions by the ECB, trying to figure out how much of that action was already priced into markets going into the meeting and what it might mean for markets going forward.
Kevin Caron, Market Strategist, Stifel Nicolaus & Co. ($170 billion) More

Obviously earnings will become more of a focus as well, but the key is we need follow through. ECB is still going to be at the forefront over the next few trading days. People are still trying to digest this bazooka blast.
Matt Maley, Equity Strategist, Miller Tabak & Co LLC More

Portfolio

Index values Opinion

:-) Thanks to a rally in equities and a falling AUD, our AUD-denominated index exceeded its previous record close of 2.193 on 26 Dec 2014 to set a record high close today of 2.230.
Lloyd says: I have to say, for the past few weeks I wondered if we’d get back up there!

:-) Outperformed Currency Today Change 31 Dec 14 YTD
Portfolio Index USD 1.777 +0.62% 1.741 +2.06%
Valuation Rate USD/AUD 0.79689 -1.23% 0.82153 -3.00%
Portfolio Index AUD 2.230 +1.87% 2.119 +5.22%

52-week performance Opinion

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

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

Stock price movements

The shape of the portfolio today (Chart: Yahoo Finance)

The shape of the portfolio today (Chart: Yahoo Finance)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stock prices

Stock Ticker Today Change 31 Dec 14 YTD
Apple AAPL $112.98 +0.52% $110.38 +2.36%
Amazon AMZN $312.39 +0.67% $310.35 +0.66%
Ebay EBAY $56.76 -0.67% $56.12 +1.14%
Facebook FB $77.83 +0.23% $78.02 -0.24%
Google A GOOGL $541.95 +0.87% $530.66 +2.13%
Google C GOOG $539.95 +1.04% $526.40 +2.57%
Linkedin LNKD $232.22 +3.24% $229.71 +1.09%
VMware VMW $82.98 +1.01% $82.52 +0.56%

FX: USD/AUD – back to GFC-era values

The AUD bounced of a low of USD0.78912 today (Chart: xe.com)

The AUD bounced of a low of USD0.78912 today (Chart: xe.com)

Thu 22 Jan 2015

News

Regular Items

Europe: €1.1 trillion QE program announced Opinion NBR

ECB President Mario Draghi arrives at today's press conference

ECB President Mario Draghi arrives at today’s press conference

Extract

Based on our regular economic and monetary analyses, we conducted a thorough reassessment of the outlook for price developments and of the monetary stimulus achieved. As a result, the Governing Council took the following decisions:

First, it decided to launch an expanded asset purchase programme, encompassing the existing purchase programmes for asset-backed securities and covered bonds. Under this expanded programme, the combined monthly purchases of public and private sector securities will amount to €60 billion. They are intended to be carried out until end-September 2016 and will in any case be conducted until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term. In March 2015 the Eurosystem will start to purchase euro-denominated investment-grade securities issued by euro area governments and agencies and European institutions in the secondary market. The purchases of securities issued by euro area governments and agencies will be based on the Eurosystem NCBs’ shares in the ECB’s capital key. Some additional eligibility criteria will be applied in the case of countries under an EU/IMF adjustment programme.

Second, the Governing Council decided to change the pricing of the six remaining targeted longer-term refinancing operations (TLTROs). Accordingly , the interest rate applicable to future TLTRO operations will be equal to the rate on the Eurosystem’s main refinancing operations prevailing at the time when each TLTRO is conducted, thereby removing the 10 basis point spread over the MRO rate that applied to the first two TLTROs.

Third, in line with our forward guidance, we decided to keep the key ECB interest rates unchanged.

As regards the additional asset purchases, the Governing Council retains control over all the design features of the programme and the ECB will coordinate the purchases, thereby safeguarding the singleness of the Eurosystem’s monetary policy. The Eurosystem will make use of decentralised implementation to mobilise its resources. With regard to the sharing of hypothetical losses, the Governing Council decided that purchases of securities of European institutions (which will be 12% of the additional asset purchases, and which will be purchased by NCBs) will be subject to loss sharing. The rest of the NCBs’ additional asset purchases will not be subject to loss sharing. The ECB will hold 8% of the additional asset purchases. This implies that 20% of the additional asset purchases will be subject to a regime of risk sharing.

European Central Bank, “Monetary Policy Statement – Introductory statement to the press conference” 22 Jan 2015 More

FX: USD/EUR impact
The EUR fell against the USD after today's QE announcement (Chart: xe.com)

The EUR fell against the USD after today’s QE announcement … (Chart: xe.com)

... however the EUR has been declining steadily for the past year (Chart: xe.com)

… however the EUR has been declining steadily for the past year (Chart: xe.com)

Comment

Markets were expecting big and this sounds like a pretty big program, so that’s good news. We were all expecting it and finally we got what we were looking for.
Karyn Cavanaugh, Senior Market Strategist, Voya Investment Management LLC ($215 billion) More

This is a step in the right direction. It had been widely anticipated that they were going to do something, so they’re not surprising the market, but they still gave investors something positive.
John Fox, Director of Research, Fenimore Asset Management (Cobleskill, NY) More

Will QE work? “If the question is will it work in its ultimate objective of promoting economic growth and stopping the inflationary risk: No, it’s not enough – it’s not sufficient. Will it work in its intermediate objective of boosting financial markets in the short term: Yes, it will, but ultimately if you want to get Europe out of its funk, you’re going to need a much more holistic policy response that involves the politicians and not just the central bank.
Mohamed el-Erian, Chief Economic Adviser, Allianz (Irvine, CA) NBR

Europe: Greece is excluded from the ECB QE program

In the press conference, Mr Draghi was asked two questions about Greece and non-performing bonds More:

Question: My first question would be, it’s not actually very explicit here in the press release whether that means that you’re not going to buy into Greece’s debt right now.

Second question would be whether you’re also considering buying bonds which are actually already trading in negative territory when it comes to yields.

Draghi: Second question, the answer is yes.

And to the first question, let me say one thing here. We don’t have any special rule for Greece. We have basically rules that apply to everybody. There are obviously some conditions before we can buy Greek bonds. As you know, there is a waiver that has to remain in place, has to be a program. And then there is this 33% issuer limit, which means that, if all the other conditions are in place, we could buy bonds in, I believe, July, because by then there will be some large redemptions of SMP bonds and therefore we would be within the limit.

And by the way, let me add, if there is a problem, if there is a waiver, all these are not exceptional rules. They were rules that were already in place before. So we’re not creating.

With the election happening this weekend, Greek Prime Minister Antonis Samaras said the ECB’s decision not to extend its QE program to Greece unless it concludes the pending EC-ECB-IMF Troika review is confirmation that the country could find itself stranded if it elects a SYRIZA government. “Today’s ECB decision says it clearly: Without closing the review for the existing program that is due to expire in a month, we will be shut out. Our policies guarantee that Greece will play a full part in this new era for the whole of Europe but the central policy of the opposition party is certain to keep us out of these developments.

Ekathimerini notes that “In practice, Greek debt does not currently qualify (for QE acquisition) as another rule stipulates that a maximum 33 percent of the bonds issued by any country may be bought. The ECB and other eurozone central banks already own more than this, although they may start purchases after two bonds totaling 6.7 billion euros mature this summer.More

Europe: Denmark reduces its certificate of deposit rate again

Last Monday (19 Jan 2015) Danmarks Nationalbank reduced its lending rate and certificate of deposit rate. Today it reduced the certificate of deposit rate again, from -0.20% to -0.35%.

Extract

Effective from 23 January 2015, Danmarks Nationalbank’s interest rate on certificates of deposit is reduced by 0.15 percentage point. The lending rate, discount rate and the current account rate are unchanged.

The interest rate reduction follows Danmarks Nationalbank’s purchase of foreign exchange in the market.

Danmarks Nationalbank’s interest rates are:

  • Lending rate: 0.05 per cent
  • Certificate of deposit rate: -0.35 per cent
  • Current account rate: 0.00 per cent
  • Discount rate: 0.00 per cent.

Danmarks Nationalbank, “Interest Rate Reduction“, 22 Jan 2015 More

DKK/EUR over the last month (Chart: xe.com)

DKK/EUR over the last month (Chart: xe.com)

Europe: Government debt fell to 91.1% of GDP in the eurozone Opinion

Extract

At the end of the third quarter of 2014, the government debt to GDP ratio in the euro area (EA18) stood at 92.1%, compared with 92.7% at the end of the second quarter of 2014. In the EU28 , the ratio decreased from 87.0% to 86.6%. This decrease in the EU28 government debt to GDP ratio comes after fifteen consecutive quarters of increase. Compared with the third quarter of 2013, the government debt to GDP ratio rose in both the euro area (from 91.1% to 92.1%) and the EU28 (from 85.3% to 86.6%).

At the end of the third quarter of 2014, debt securities accounted for 79.3% of euro area and for 81.0% of EU28 general government debt, loans for 17.9% and 15.3% respectively and currency and deposits for 2.8% and 3.7%. Due to the involvement of EU governments in financial assistance to certain Member States, quarterly data on intergovernmental lending (IGL) is also published. The share of IGL in GDP at the end of the third quarter of 2014 amounted to 2.4% in the euro area and to 1.8% in the EU28.

Government debt at the end of the third quarter 2014 by Member State

eu_gdp_20150122

The highest ratios of government debt to GDP at the end of the third quarter of 2014 were recorded in Greece (176.0%), Italy (131.8%) and Portugal (131.4%), and the lowest in Estonia (10.5%), Luxembourg (22.9%) and Bulgaria (23.6%). Compared with the second quarter of 2014, eighteen Member States registered a decrease in their debt to GDP ratio at the end of the third quarter of 2014, nine an increase and Estonia no change. The highest decreases in the ratio were recorded in Cyprus (-5.1 percentage points – pp), Malta (-2.7 pp) and Hungary (-2.6 pp), and the highest increases in Bulgaria (+3.1 pp), Portugal (+1.9 pp) and Denmark (+1.6 pp).

Eurostat, “Third quarter of 2014 compared with second quarter of 2014: Government debt fell to 92.1% of GDP in euro area, Down to 86.6% in EU28“, 22 Jan 2015 More

Europe: Flash Consumer Confidence Indicator – Jan 2015 Opinion

Extract

eu_confidence_20150122
In January 2015, the DG ECFIN flash estimate of the consumer confidence indicator increased markedly in both the EU (by 1.7 points to -5.8) and the euro area (by 2.4 points to -8.5) compared to December 2014.
European Commission, “Flash consumer confidence indicator for EU and euro area“, 22 Jan 2015 More

USA: Gross Domestic Product by Industry – Q3 2014 Opinion

Extract

gdp_states_20150122

Real gross domestic product (GDP) increased at an annual rate of 5.0 percent in the third quarter of 2014, reflecting positive contributions from 20 of 22 industry groups. The private goods- and services-producing industries, as well as the government sector, contributed to the increase. Finance and insurance; mining; and real estate and rental and leasing were the leading contributors to the increase.

  • Finance and insurance real value added—a measure of an industry’s contribution to GDP—increased 21.2 percent in the third quarter, after increasing 6.0 percent in the second quarter.
  • Mining increased 25.6 percent, after increasing 11.5 percent. This was the largest increase since the fourth quarter of 2008.
  • Real estate and rental and leasing increased 4.4 percent, after increasing 0.9 percent.

Bureau of Economic Analysis, “Widespread Growth Across Industries Continues in Third Quarter 2014“, 22 Jan 2015 (08:30) More

USA: Unemployment Insurance Weekly Claims Report – Week to 17 Jan 2015 Opinion

Extract

In the week ending January 17, the advance figure for seasonally adjusted initial claims was 307,000, a decrease of 10,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 316,000 to 317,000. The 4-week moving average was 306,500, an increase of 6,500 from the previous week’s revised average. The previous week’s average was revised up by 2,000 from 298,000 to 300,000.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending January 10, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 10 was 2,443,000, an increase of 15,000 from the previous week’s revised level. The previous week’s level was revised up 4,000 from 2,424,000 to 2,428,000. The 4-week moving average was 2,427,000, an increase of 9,000 from the previous week’s revised average. The previous week’s average was revised up by 3,500 from 2,414,500 to 2,418,000.

Employment and Training Administration, “Unemployment Insurance Weekly Claims Report – Week to 17 Jan 2014“, 22 Jan 2014 (08:30) More

Oil and Gas Futures

Crude oil and natural gas futures fell today:

  • NYMEX West Texas Intermediate (WTI) (Mar 2015): -2.72% to $46.48/barrel at 16:13 ET.
  • ICE (London) Brent North Sea Crude (Mar 2015) -0.18% to $48.94/barrel at 16:13 ET.
  • NYMEX Natural gas futures (Feb 2015): -3.67% to $2.87/MMBTU at 16:13 ET.

USA Stock Market Indices Opinion

Index Ticker Today Change 31 Dec 14 YTD
S&P 500 SPX (INX) 2,063.15 +1.53% 2,058.90 +0.21%
DJIA INDU 17,813.98 +1.48% 17,823.05 -0.05%
NASDAQ IXIC 4,750.40 +1.78% 4,736.05 +0.30%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 22 Jan 2015 Watch Read
Comment

It’s that halo effect of the follow-through on ECB finally coming to the table and embracing a pretty material stimulus program. It brings some hope that Europe will get pointed in the right direction.
Todd Lowenstein, Highmark Capital Management (LA,CA) ($16 billion) More

Portfolio

Index values Opinion

:-) Outperformed Currency Today Change 31 Dec 14 YTD
Portfolio Index USD 1.766 +2.76% 1.741 +1.44%
Valuation Rate USD/AUD 0.80680 -0.91% 0.82153 -1.79%
Portfolio Index AUD 2.189 +3.70% 2.119 +3.29%

52-week performance Opinion

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

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

Stock price movements

The shape of the portfolio today (Chart: Yahoo Finance)

The shape of the portfolio today (Chart: Yahoo Finance)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stock prices

Stock Ticker Today Change 31 Dec 14 YTD
Apple AAPL $112.40 +2.60% $110.38 +1.80%
Amazon AMZN $310.32 +4.40% $310.35 -0.01%
Ebay EBAY $57.15 +7.05% $56.12 +1.84%
Facebook FB $77.65 +1.19% $78.02 -0.47%
Google A GOOGL $537.30 +3.25% $530.66 +1.25%
Google C GOOG $534.39 +3.16% $526.40 +1.52%
Linkedin LNKD $224.94 +2.62% $229.71 -2.08%
VMware VMW $82.15 +2.74% $82.52 -0.45%

FX: USD/AUD – back to GFC values

The AUD fell to USD0.80 today for the first time since Jul 2009 in the GFC era

The AUD fell to USD0.80 today for the first time since Jul 2009 in the GFC era (Chart: xe.com)

The AUD has returned to USD0.80 for the first time since Jul 2009, near the end of the GFC. It was helped out of that crisis by a mining boom associated with China’s growth. With this boost, the AUD rose to more than USD1.10 over the next 2 years (to Jul 2011). As the AUD rose through USD0.95 it was generally considered to be over-valued. However slower growth in Chinese manufacturing and over-production of resources (energy, ores, etc) have undermined the drivers of the high AUD. We consider the future range of the AUD to be between USD0.75 and USD0.85.

This was the environment in which the AUD was last at USD0.80 (Chart: xe.com)

This was the environment in which the AUD was last at USD0.80 (Chart: xe.com)

Comment (copied from 20 Jan 2015)

A small reduction in China’s GDP growth rate and a reduction in the contribution of the manufacturing sector in China’s economy is likely to lead to a reduction in demand for commodities, eg: energy and metals. “Where you want to be careful is countries like Australia or Chile or other resource producers that have been making a lot of money out of this that won’t. Australia, in particular, with lower oil prices and energy prices, coal in particular, and lower materials prices is going to hurt their economy, but also their currency this year.
John Rutledge, Chief Investment Strategist, Safanad (Irvine, CA), 20 Jan 2015 NBR Interview

The price of iron ore falls to its lowest level since Jul 2009

The price of iron ore with 62% content delivered to Qingdao, China, fell 1.5% to USD66.79/dry metric ton, the lowest level since June 2, 2009, according to Metal Bulletin. Prices are headed for a third consecutive weekly loss on speculation that mills in China will reduce steel output in the runup to a holiday next month, curbing demand from the biggest user and worsening a glut. More

Iron ore prices over the past 5 years (Source: AFR, Bloomberg)

Iron ore prices over the past 5 years (Source: AFR, Bloomberg)

Arrium Limited has turned its back on the iron ore expansion it built over recent years, announcing that it will close one of its two iron ore mining precincts in SA, accepting an AUD1.3bn write down, and cut its capital expenditure by 30 per cent. AFR

Wed 21 Jan 2015

News

Regular Items

World Economic Forum’s Annual Meeting, Davos 21-24 Jan 2015 NBR

wef_2015

The formal program of the World Economic Forum’s Annual Meeting, 2015 commences today in Davos-Klosters, Graubünden, Switzerland. The World Economic Forum (WEF) is an independent international organization committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas. It was founded by Klaus Schwab in 1971. It is generally considered to as a prestigious, exclusive venue for discussion and networking, attended by some 2,500 top business leaders, international political leaders, selected intellectuals, and journalists.

Eurozone: Assuming the ECB announces QE, the question is whether acquisitions are at ECB or national level? NBR

Extract 1: WSJ

FRANKFURT—The European Central Bank’s executive board proposed buying roughly €50 billion ($58 billion) a month in bonds for at least a year, according to people familiar with the matter, but markets largely shrugged as investors pondered whether the ECB will do enough to stoke Europe’s fragile economy.

The board’s proposal for the bond-purchase program, known as quantitative easing or QE, forms the basis of deliberations by the entire 25-member governing council on Thursday on whether to embark on a path already forged by the U.S. and the U.K. but mostly avoided in Europe. The final number and details of the program could change after the full board has its say….

…Although buying bonds appears to have broad support in the ECB’s governing council, the bank’s two officials from Germany have signaled they are likely to oppose the measure. Quantitative easing is deeply unpopular in Germany, where it stirs fears of inflation and the use of central bank money-printing presses to finance wasteful government spending.

‘I am currently not convinced by large-scale purchases of government bonds,’ ECB executive board member Sabine Lautenschläger said in a German magazine interview published Jan. 10.

Brian Blackstone, “ECB Executive Board’s QE Proposal Calls for Roughly €50 Billion in Bond Buys Per Month“, 21 Jan 2015, (19:30 ET) WSJ

Extract 2: Reuters

The indications are that Mr Draghi will have to bow to stipulations set by Jens Weidmann, head of the German Bundesbank, if he is to get QE approved. Most notably, purchases of sovereign debt will not be made under the usual risk-sharing arrangements at the ECB, whereby the 19 national central banks of the euro zone share any losses in rough proportion to the size of their economies. The Bundesbank would normally expect to shoulder a quarter of any losses incurred by the ECB. But in this instance, each central bank is likely to be largely responsible for buying the bonds of its own country and will have to bear any losses on them on its own.Economist

Extract 3: The Economist

Draghi must balance the intense market pressure to act and a need to buoy inflation on the one hand, with a desire to minimize German dissent on the other. One option to achieve a compromise is for the euro zone’s national central banks to bear the brunt of the risk of bond purchases, rather than this exposure being shared among them. Ireland’s finance minister said on Monday such a ploy would make a QE plan “ineffective”, yet this scenario may nonetheless be part of the final plan, sources have told Reuters.Reuters

Extract 4: Deutsche Welle

Amid the speculation, experts have outlined three scenarios for Thursday’s ECB meeting. First, the bank could announce that it will begin a new stimulus program and be forthcoming about the cost, saying it will bear the risk of such a move on its own.
Second, the ECB could call on national central banks to share some of the burden. The third scenario entails the monetary policymakers in Frankfurt saying they will begin buying government bonds but postpone revealing the scope of their purchases until later in the year.
Deutsche Welle

Comment

Lloyd says: “If that issue hasn’t been agreed at the Eurogroup and ECB, then unanswered questions about the form and timing of QE may lead to unexpected delay in that stimulus initiative. And that may create more uncertainty for FX brokers and traders.

Update: ECB announcement

The answer on this question turned out to be a compromise: 20% of the risk in asset purchases will be borne by the ECB, while 80% will be borne by eurozone nations’ central banks. ECB President Mario Draghi said “There was a consensus (at the Governing Council) on risk-sharing set at 20 per cent and 80 per cent on a no-risk-sharing basis.

Australia: Westpac – Melbourne Institute Consumer Sentiment Survey – Jan 2014 Opinion

Extract

The Westpac Melbourne Institute Index of Consumer Sentiment increased by 2.4% in January from 91.1 in December to 93.2 in January.

Westpac Bank, “Modest lift in Consumer Sentiment“, 21 Jan 2015 More

USA: Usual Weekly Earnings of Wage and Salary Workers – Q4 2014

Extract

Median weekly earnings of the nation’s 107.4 million full-time wage and salary workers were $799 in the fourth quarter of 2014 (not seasonally adjusted), the U.S. Bureau of Labor Statistics reported today. This was 1.7 percent higher than a year earlier, compared with a gain of 1.2 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.

Bureau of Labor Statistics, “Usual Weekly Earnings of Wage and Salary Workers for Fourth Quarter 2014“, 21 Jan 2015 (10:00am) More

Ebay Q4/2014 and full year 2014 earnings Opinion NBR

Key points More:

  • 2014 Enabled Commerce Volume of $255 Billion, up 24%
  • Gross Merchandise Volume of $83 Billion
  • Total Payment Volume of $228 Billion
  • 2014 Revenue Growth of 12%, Non-GAAP EPS Growth of 9%
  • Generated $4.4 Billion of Free Cash Flow in 2014, up 18%

Fourth Quarter and Full Year 2014 Financial Highlights (presented in millions, except per share data and percentages)

Q4/2014 Q4/2013 Change % 2014 2013 Change %
Net revenue $4,921 $4,530 $391 9% $17,902 $16,047 $1,855 12%
Enabled Commerce Volume (ECV) $72,005 $59,607 $12,398 21% $255,195 $205,201 $49,994 24%
GAAP
Net income (loss) $936 $850 $86 10% $(41) $2,856 $(2,897) (101)%
Earnings per diluted share $0.75 $0.65 $0.10 15% $(0.03) $2.18 $(2.21) (101)%
Non-GAAP
Net income $1,114 $1,067 $47 4% $3,729 $3,556 $173 5%
Earnings per diluted share $0.90 $0.81 $0.09 10% $2.95 $2.71 $0.24 9%

Business Outlook: 2015

First quarter 2015 — The company expects net revenues in the range of $4,350 – $4,450 million with GAAP earnings per diluted share in the range of $0.37 – $0.43 and non-GAAP earnings per diluted share in the range of $0.68 – $0.71. GAAP earnings include an estimate of separation and restructuring costs of $210 – $240 million.

Full year 2015 — The company expects net revenues in the range of $18,600 – $19,100 million with GAAP earnings per diluted share in the range of $2.17 – $2.32 and non-GAAP earnings per diluted share in the range of $3.05 – $3.15. GAAP earnings include an estimate of separation and restructuring costs of $350 – $400 million.

In after hours trade eBay peaked at $55.42, having closed at $54.83.

Comment

My real concern is how the marketplace continues to lose ground in the e-commerce world. They are showing tremendous deceleration.
Kerry Rice, Analyst, Needham & Co. (San Francisco) More

Morningstar fund manager of the year NBR

Morningstar’s Domestic-Stock Fund Manager of the Year is PRIMECAP.

Morningstar’s International-Stock Fund Manager of the Year is Dodge and Cox International Stock (DODFX).
Dodge & Cox International Stock managed to end the year in the black with a 0.1 percent return versus the 3.9 percent loss of the MSCI ACWI ex-US Index and the category’s 5.0 percent declineMore

Oil and Gas Futures

Crude oil and natural gas futures rose today:

  • NYMEX West Texas Intermediate (WTI) (Mar 2015): +2.82% to $47.78/barrel.
  • ICE (London) Brent North Sea Crude (Mar 2015) +2.17% to $49.03/barrel.
  • NYMEX Natural gas futures (Feb 2015): +5.26% to $2.98/MMBTU at 16:25.

The Bank of Canada (central bank for the world’s 5th largest oil producer) has quoted the expected impact of weaker energy prices on CPI during 2015 as a driver of its decision to reduce its target for the overnight interest rate by 25 basis points of one percentage point to 0.75%. More

The Bank of Japan has also cut its forecast year-on-year rate of increase in the CPI for Fiscal 2015, citing the expected impact of lower oil prices. More

USA Stock Market Indices Opinion

Index Ticker Today Change 31 Dec 14 YTD
S&P 500 SPX (INX) 2,032.12 +0.47% 2,058.90 -1.30%
DJIA INDU 17,554.28 +0.22% 17,823.05 -1.51%
NASDAQ IXIC 4,667.42 +0.27% 4,736.05 -1.45%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 21 Jan 2015 Watch Read
Comment

Volatility has been so pronounced day-to-day, hour-to-hour. The fact that the market is marginally positive is encouraging given all the elements that are out there.
Richard Sichel, Chief Investment Officer, Philadelphia Trust Co. ($2 billion) More

Portfolio

Index values Opinion

:-) Outperformed Currency Today Change 31 Dec 14 YTD
Portfolio Index USD 1.719 +0.98% 1.741 -1.29%
Valuation Rate USD/AUD 0.81418 -1.01% 0.82153 -0.89%
Portfolio Index AUD 2.111 +2.01% 2.119 -0.40%

52-week performance Opinion

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

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

Stock price movements

The shape of the portfolio today (Chart: Yahoo Finance)

The shape of the portfolio today (Chart: Yahoo Finance)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stock prices

Stock Ticker Today Change 31 Dec 14 YTD
Apple AAPL $109.55 +0.76% $110.38 -0.75%
Amazon AMZN $297.25 +2.70% $310.35 -4.22%
Ebay EBAY $53.38 -0.56% $56.12 -4.88%
Facebook FB $76.74 +0.66% $78.02 -1.64%
Google A GOOGL $520.39 +2.05% $530.66 -1.94%
Google C GOOG $518.04 +2.20% $526.40 -1.59%
Linkedin LNKD $219.20 +2.88% $229.71 -4.58%
VMware VMW $79.96 -0.84% $82.52 -3.10%

FX: USD/AUD

The  AUD fell against a stronger  USD today (Chart: xe.com)

The AUD fell against a stronger USD today (Chart: xe.com)

Comment

The Reserve Bank Board next meets on February 3. Markets are giving little chance to the prospects of a rate cut at that meeting. On December 4 last year Westpac forecast that the Bank would cut rates by 25bps in both February and March. At that time markets were pricing in the prospect of one rate cut by end 2015. They are now expecting close to two cuts by end 2015, in line with Westpac’s view but at a much slower pace.

“We expect that by the time of the release of the inflation report next week the case for a rate cut will have been made. The prospect of moving in February should be attractive to the Bank. A February decision can be fully explained in the Statement on Monetary Policy released three days after the decision, including the opportunity to update inflation forecasts. Delaying the move to March, which seems to be favoured by markets, makes the Statement much more awkward, particularly if, as we expect, the Bank’s inflation forecasts will be lowered significantly.

Bill Evans, Chief Economist, Westpac More

Tue 20 Jan 2015

News

Regular Items

S&P banned from rating bonds for 1 year NBR

Bloomberg reports a $60 million settlement with the U.S. Securities and Exchange Commission which includes suspension of Standard & Poor’s from rating bonds for one year. “The suspension will ban S&P from rating debt in the biggest portion of that market, those that bundle multiple loans tied to anything from shopping malls to skyscrapers, into securities that are sold to bond investors.Bloomberg

China: GDP – Q4/2014 Opinion NBR

China’s National Bureau of Statistics reported that GDP grew 7.3% in Q4/2014 from Q4/2013, and 7.4% for the full year of 2014. This was the slowest pace since 1990.

Comment

Markets should breathe a sigh of relief as the economy enters 2015 in a better shape than had been expected. The data lowers the need for further stimulus, but there remains some room for easing as risks are skewed to the downside.
Dariusz Kowalczyk, Analyst, Credit Agricole CIB (Hong Kong) More

A small reduction in China’s GDP growth rate and a reduction in the contribution of the manufacturing sector in China’s economy is likely to lead to a reduction in demand for commodities, eg: energy and metals. “Where you want to be careful is countries like Australia or Chile or other resource producers that have been making a lot of money out of this that won’t. Australia, in particular, with lower oil prices and energy prices, coal in particular, and lower materials prices is going to hurt their economy, but also their currency this year.
John Rutledge, Chief Investment Strategist, Safanad (Irvine, CA), 20 Jan 2015 NBR Interview

Eurozone: Household Savings Ratio in Q3/2014 = 13.1%

Extract

The household saving rate (gross saving divided by gross disposable income) in the euro area was 13.1% in the third quarter of 2014, compared with 13.0% in the second quarter of 2014.

Eurozone ousehold saving rate (seasonally adjusted)

Eurozone household saving rate (seasonally adjusted)

The household investment rate in the euro area was 8.3% in the third quarter of 2014, stable compared with the previous quarter. The household investment rate is defined as The gross investment rate of households (household investment rate) is defined as gross fixed capital formation divided by gross disposable income, with the latter being adjusted for the change in the net equity of households in pension funds reserves. Household investment mainly consists of the purchase and renovation of dwellings.

Eurostat, “First release for the third quarter of 2014: Household saving rate nearly stable at 13.1% in the euro area, Household investment rate stable at 8.3% in the euro area“, 20 Jan 2015 More

Eurozone: Business Investment Rate in Q3/2014 = 21.7%

Extract

In the third quarter of 2014, the business investment rate (gross fixed capital formation divided by gross value added) was 21.7%, compared with 21.6% in the second quarter of 2014. This ratio relates the investment of non-financial businesses in fixed assets (buildings, machinery etc.) to the value added created during the production process.

The business profit share (gross operating surplus divided by gross value added) was 38.8% in the third quarter of 2014, compared with 38.9% in the previous quarter.
This profitability-type indicator shows the share of the value added created during the production process remunerating capital. It is the complement of the share of wage costs (plus taxes less subsidies on production) in value added.

Eurostat, “First release for the third quarter of 2014: Household saving rate nearly stable at 13.1% in the euro area, Household investment rate stable at 8.3% in the euro area“, 20 Jan 2015 More

Greece in the leadup to the election Opinion

Last December (8 Dec 2014) the Eurogroup issued the following statement, indicating its requirement that Greece must meet the targets set by the EC-ECB-IMF Troika before it releases EUR 1.8 billion More:

We welcome the progress made by the Greek authorities in order to address the outstanding issues to conclude the fifth review, as assessed by the European Commission (EC), the ECB and the IMF. However we take note that despite this recent progress the current review can no longer be completed before the end of year. Therefore, the current review will need to continue into early 2015 until the staff-level agreement is reached and all the prior actions are deemed to be fulfilled. This would pave the way for the disbursement of the EUR 1.8 billion outstanding under the current EFSF programme.

Therefore, the Eurogroup would be favourably disposed to a request by Greece for a technical extension of 2 months of the current EFSF programme. The Eurogroup asked the institutions to prepare a factual report on the state of play of the current review and gave a mandate to the EWG to report to Member States in order to launch the national procedures with a view to reach a final decision on the extension of the current EFSF Master Financial Facility Agreement by the EFSF Board of Directors by the end of 2014.

However Greece is not getting to where it needs to be in order to meet the Troika’s targets. It remains an economic basket case with the European Union’s highest unemployment rate: 25.7% in Sep 2014 and 49.8% youth unemployment. To put this number, and Greece’s progress into a context, in Aug 2012 Greece’s unemployment hit a record high (at that time) of 25.4% More. In conclusion, Greece has made no progress, despite years of bailout funding.

In November Greece’s current account deficit increased to EUR0.997 billion from EUR0.753 billion in Nov 2013. More Greece’s debt is out of control, standing at around EUR320 billion, about 175% of GDP. It has selectively defaulted on loans (forcing large writeoffs (haircuts) on loans) and the SYRIZA Party suggests Greece needs to default again More It manages to get by though its threats to leave the eurozone, forcing the IMF, EU and ECB to provide large rescue packages.

Political instability has returned, with a snap election scheduled for 25 Jan 2015. The three main parties are:

  • New Democracy (ND) (liberal-conservative) led by Prime Minister Antonis Samaras
  • Coalition of the Radical Left – Unitary Social Front (SYRIZA) (leftist, anti-austerity) led by Alexis Tsipras appears to be marginally ahead in the polls.
  • Panhellenic Socialist Movement (PASOK) (center-left) led by Evangelos Venizelos

At present polls suggest that SYRIZA is ahead of ND. More A SYRIZA win at the election is considered to increase the risk of a Greek exit from the eurozone (Grexit). The European Bank for Reconstruction and Development (EBRD) considers a Grexit unlikely More, but the fit of Greek economic circumstances and rescue funding needs with the ECB recovery programs and their funding needs to be announced this week may place Greece’s needs in the “unwanted” basket. At issue will be Greece’s failure to meet the conditions necessary for the release of that EUR1.8 billion of bailout funding and an expected aggressive SYRIZA-led government. Most countries (certainly Germany) will have a contingency plan handy in the event of a Grexit – they’ve been there so many times.

FX: Saxo increases margin requirements for FX and CFD

Statement from Saxo Bank today:

Following the removal of the floor in EURCHF by the Swiss National Bank on 15 January 2015, Saxo Capital Markets has decided to increase margin requirements across a number of instruments. The changes affect:

  • New FX margin requirements
  • New CFD Index & CFD Single Stock margin requirements
  • Changes to the FX Option margin calculation
  • FX Option trading in Swiss Franc

After a long period with low volatilities across asset classes, we foresee a paradigm shift in the financial markets.

We want to signal and prepare our clients to have sufficient margin to support for potential bigger and more extreme short term shocks. CHF was one example. This week’s potential quantitative easing announcement from ECB and the election in Greece, 25 January 2015, are other such events.

In future, we expect to be more dynamic on margin levels depending on the financial environment and calendar, such as the increase in margin requirements implemented for CHF in September 2014 to 8%.

Oil and Gas Futures

Crude oil and natural gas futures fell today:

  • NYMEX West Texas Intermediate (WTI) (Mar 2015): -5.41% to $46.47/barrel.
  • ICE (London) Brent North Sea Crude (Mar 2015) -1.74% to $47.99/barrel.
  • NYMEX Natural gas futures (Feb 2015): -0.24% to $2.89/MMBTU at 15:6 ET.

The competition between oil producers is biting into the US oil industry, leading to layoffs, with Baker Hughes and Halliburton laying off 8,000 workers. NBR

USA Stock Market Indices Opinion

Index Ticker Today Change 31 Dec 14 YTD
S&P 500 SPX (INX) 2,022.55 +0.15% 2,058.90 -1.77%
DJIA INDU 17,515.23 +0.02% 17,823.05 -1.73%
NASDAQ IXIC 4,654.85 +0.44% 4,736.05 -1.71%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 20 Jan 2015 Watch Read
Comment

Volatility has been so pronounced day-to-day, hour-to-hour. The fact that the market is marginally positive is encouraging given all the elements that are out there.
Richard Sichel, Chief Investment Officer, Philadelphia Trust Co. ($2 billion) More

Portfolio

Index values Opinion

:-) Outperformed Currency Today Change 31 Dec 14 YTD
Portfolio Index USD 1.702 +1.93% 1.741 -2.24%
Valuation Rate USD/AUD 0.82252 -0.73% 0.82153 +0.12%
Portfolio Index AUD 2.069 +2.68 2.119 -2.36%

52-week performance Opinion

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

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

Stock price movements

The shape of the portfolio today (Chart: Yahoo Finance)

The shape of the portfolio today (Chart: Yahoo Finance)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stocks and market indices: price changes today (%) (Chart: Bunting)

Portfolio stock prices

Stock Ticker Today Change 31 Dec 14 YTD
Apple AAPL $108.72 +2.58% $110.38 -1.50%
Amazon AMZN $289.44 -0.45% $310.35 -6.74%
Ebay EBAY $53.68 +0.04% $56.12 -4.35%
Facebook FB $76.24 +1.41% $78.02 -2.28%
Google A GOOGL $509.94 -0.10% $530.66 -3.90%
Google C GOOG $506.90 -0.23% $526.40 -3.70%
Linkedin LNKD $213.06 -0.52% $229.71 -7.25%
VMware VMW $80.64 +0.04% $82.52 -2.28%

Mon 19 Jan 2015

121ft (37m) private yacht Vegas at Beacon Cove, Port Melbourne yesterday

121ft (37m) private yacht “Vegas” at Beacon Cove, Port Melbourne yesterday More

IN PORTFOLIOTICKER TODAY

News

IMF World Economic Outlook NBR

Extract
  • Global growth will receive a boost from lower oil prices, which reflect to an important extent higher supply. But this boost is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies.
  • Global growth in 2015–16 is projected at 3.5 and 3.7 percent, downward revisions of 0.3 percent relative to the October 2014 World Economic Outlook (WEO). The revisions reflect a reassessment of prospects in China, Russia, the euro area, and Japan as well as weaker activity in some major oil exporters because of the sharp drop in oil prices. The United States is the only major economy for which growth projections have been raised.
  • The distribution of risks to global growth is more balanced than in October. The main upside risk is a greater boost from lower oil prices, although there is uncertainty about the persistence of the oil supply shock. Downside risks relate to shifts in sentiment and volatility in global financial markets, especially in emerging market economies, where lower oil prices have introduced external and balance sheet vulnerabilities in oil exporters. Stagnation and low inflation are still concerns in the euro area and in Japan.

Four key developments have shaped the global outlook since the release of the October 2014 WEO.

First, oil prices in U.S. dollars have declined by about 55 percent since September. The decline is partly due to unexpected demand weakness in some major economies, in particular, emerging market economies—also reflected in declines in industrial metal prices. But the much larger decline in oil prices suggests an important contribution of oil supply factors, including the decision of the Organization of the Petroleum Exporting Countries (OPEC) to maintain current production levels despite the steady rise in production from non-OPEC producers, especially the United States. Oil futures prices point to a partial recovery in oil prices in coming years, consistent with the expected negative impact of lower oil prices on investment and future capacity growth in the oil sector.

Second, while global growth increased broadly as expected to 3¾ percent in the third quarter of 2014, up from 3¼ percent in the second quarter, this masked marked growth divergences among major economies. Specifically, the recovery in the United States was stronger than expected, while economic performance in all other major economies—most notably Japan—fell short of expectations. The weaker-than-expected growth in these economies is largely seen as reflecting ongoing, protracted adjustment to diminished expectations regarding medium-term growth prospects, as noted in recent issues of the WEO.

Third, with more marked growth divergence across major economies, the U.S. dollar has appreciated some 6 percent in real effective terms relative to the values used in the October 2014 WEO. In contrast, the euro and the yen have depreciated by about 2 percent and 8 percent, respectively, and many emerging market currencies have weakened, particularly those of commodity exporters.

Fourth, interest rates and risk spreads have risen in many emerging market economies, notably commodity exporters, and risk spreads on high-yield bonds and other products exposed to energy prices have also widened. Long-term government bond yields have declined further in major advanced economies, reflecting safe haven effects and weaker activity in some, while global equity indices in national currency have remained broadly unchanged since October.

Developments since the release of the October WEO have conflicting implications for the growth forecasts. On the upside, the decline in oil prices driven by supply factors—which, as noted, are expected to reverse only gradually and partially—will boost global growth over the next two years or so by lifting purchasing power and private demand in oil importers. The impact is forecast to be stronger in advanced economy oil importers, where the pass-through to end-user prices is expected to be higher than in emerging market and developing oil importers. In the latter, more of the windfall gains from lower prices are assumed to accrue to governments (for example, in the form of lower energy subsidies), where they may be used to shore up public finances. However, the boost from lower oil prices is expected to be more than offset by an adjustment to lower medium-term growth in most major economies other than the United States. At 3.5 and 3.7 percent, respectively, global growth projections for 2015–16 have been marked down by 0.3 percent relative to the October 2014 WEO.

Among major advanced economies, growth in the United States rebounded ahead of expectations after the contraction in the first quarter of 2014, and unemployment declined further, while inflation pressure stayed more muted, also reflecting the dollar appreciation and the decline in oil prices. Growth is projected to exceed 3 percent in 2015–16, with domestic demand supported by lower oil prices, more moderate fiscal adjustment, and continued support from an accommodative monetary policy stance, despite the projected gradual rise in interest rates. But the recent dollar appreciation is projected to reduce net exports.

In the euro area, growth in the third quarter of 2014 was modestly weaker than expected, largely on account of weak investment, and inflation and inflation expectations continued to decline. Activity is projected to be supported by lower oil prices, further monetary policy easing (already broadly anticipated in financial markets and reflected in interest rates), a more neutral fiscal policy stance, and the recent euro depreciation. But these factors will be offset by weaker investment prospects, partly reflecting the impact of weaker growth in emerging market economies on the export sector, and the recovery is projected to be somewhat slower than forecast in October, with annual growth projected at 1.2 percent in 2015 and 1.4 percent in 2016.

In Japan, the economy fell into technical recession in the third quarter of 2014. Private domestic demand did not accelerate as expected after the increase in the consumption tax rate in the previous quarter, despite a cushion from increased infrastructure spending. Policy responses—additional quantitative and qualitative monetary easing and the delay in the second consumption tax rate increase—are assumed to support a gradual rebound in activity and, together with the oil price boost and yen depreciation, are expected to strengthen growth to above trend in 2015–16.

In emerging market and developing economies, growth is projected to remain broadly stable at 4.3 percent in 2015 and to increase to 4.7 percent in 2016—a weaker pace than forecast in the October 2014 WEO. Three main factors explain the downshift:

  • Lower growth in China and its implications for emerging Asia: Investment growth in China declined in the third quarter of 2014, and leading indicators point to a further slowdown. The authorities are now expected to put greater weight on reducing vulnerabilities from recent rapid credit and investment growth and hence the forecast assumes less of a policy response to the underlying moderation. Slower growth in China will also have important regional effects, which partly explains the downward revisions to growth in much of emerging Asia. In India, the growth forecast is broadly unchanged, however, as weaker external demand is offset by the boost to the terms of trade from lower oil prices and a pickup in industrial and investment activity after policy reforms.
  • A much weaker outlook in Russia: The projection reflects the economic impact of sharply lower oil prices and increased geopolitical tensions, both through direct and confidence effects. Russia’s sharp slowdown and ruble depreciation have also severely weakened the outlook for other economies in the Commonwealth of Independent States (CIS) group.
  • Downward revisions to potential growth in commodity exporters: In many emerging and developing commodity exporters, the projected rebound in growth is weaker or delayed compared with the October 2014 projections, as the impact of lower oil and other commodity prices on the terms of trade and real incomes is now projected to take a heavier toll on medium-term growth. For instance, the growth forecast for Latin America and the Caribbean has been reduced to 1.3 percent in 2015 and 2.3 percent in 2016. Although some oil exporters, notably members of the Cooperation Council for the Arab States of the Gulf, are expected to use fiscal buffers to avoid steep government spending cuts in 2015, the room for monetary or fiscal policy responses to shore up activity in many other exporters is limited. Lower oil and commodity prices also explain the weaker growth forecast for sub-Saharan Africa, including a more subdued outlook for Nigeria and South Africa.

International Monetary Fund, “World Economic Outlook – 2015“. 19 Jan 2015 (22:00) More

Comment

Although the theme is that the U.S. is the best market out there, from a global perspective, you can’t see a slowdown in every country and expect the U.S. to stay above water.
Joe Bell, Senior Equity Analyst, Schaeffer’s Investment Research Inc. More

EUROPE: DENMARK

Danmarks Nationalbank cuts deposit rate to -0.2% from -0.05%

Money has been flooding from the Eurozone to AAA-rated non-Eurozone countries in Europe to avoid devaluation from an expected European Central Bank (ECB) monetary policy (expected asset purchase/quantitative easing) decision, scheduled for Wednesday 21 Jan 2015.

Last week’s Swiss National Bank’s move to deter that flood of Euros (EUR) being stored in Swiss Francs (CHF) diverted it to Denmark. To prevent pressure on the Kroner (DKK) Danmarks Nationalbank today cut its deposit rate to -0.2%, matching a record low, from -0.05% and lowered its lending rate to a record 0.05% from 0.2%. The timing of this decision was a surprise, mainly because it was made outside the normal schedule where such announcements are made on Thursdays. More

“Effective from 20 January 2015, Danmarks Nationalbank’s lending rate and interest rate on certificates of deposit are reduced by 0.15 percentage point. The discount rate and the current account rate are unchanged.

The interest rate reduction follows Danmarks Nationalbank’s purchase of foreign exchange in the market.

Danmarks Nationalbank’s interest rates are:

  • Lending rate: 0.05 per cent
  • Certificate of deposit rate: -0.20 per cent
  • Current account rate: 0.00 per cent
  • Discount rate: 0.00 per cent.”

Danmarks Nationalbank, “Interest Rate Reduction“, 19 Jan 2015 More

The DKK is pegged to the EUR via a bilateral agreement between Denmark and the Eurozone. Danmarks Nationalbank Governor Lars Rohde and Economy Minister Morten Oestergaard have offered assurances that Denmark will not abandon this peg, currently targeted at DKK/EUR 7.46038 +/- 2.25 percent.

DKK/EUR  over the last week (Chart: xe.com)

DKK/EUR over the last week (Chart: xe.com)

DKK/EUR  over the last year (Chart: xe.com)

DKK/EUR over the last year (Chart: xe.com)

AAA-rated economies

So, with Switzerland less attractive, and Denmark appearing to be the next destination of choice for eurozone funds, who are the other AAA-rated economies?

There are 11 countries rated AAA by Standard & Poor’s More. In addition to Switzerland (had a CHF/EUR peg) and Denmark (still has an ERM II DKK/EUR peg), there are:

  • in the eurozone (not a destination, given that it is in the eurozone):
    • Germany
  • in Europe, outside the eurozone and without an EUR peg policy:
    • Liechtenstein: too small?
    • Norway: oil/gas economic risk?
    • Sweden
    • United Kingdom
  • Outside Europe:
    • Australia: oil/gas economic risk?
    • Canada: oil/gas economic risk?
    • Hong Kong
    • Singapore

AUSTRALIA

TD Securities – Melbourne Institute Monthly Inflation Gauge – Dec 2014

Extract

The TD Securities – Melbourne Institute Monthly Inflation Gauge remained flat in December, following the 0.1 per cent rise in November. In the twelve months to December, the Inflation Gauge rose by 1.5 per cent, after the 2.2 per cent rise for the twelve months to November.

The trimmed mean of the Inflation Gauge rose by 0.1 per cent in December, following similar rises in November and October, to be 1.7 per cent higher than a year ago.

TD Securities – Melbourne Institute, “TD Securities – Melbourne Institute Monthly Inflation Gauge – Dec 2014“, 19 Jan 2015 More

Comment

December is a seasonally strong month for our Gauge, especially for December 2013, explaining why the annual rates for both the headline and trimmed mean measures were so weak. The usual seasonal price rises were still apparent, but were offset by fuel and other price falls in the month.

We have finalised our December quarter CPI forecasts, and there will be a soft report all round. We see headline inflation rising by only 0.3 per cent in the quarter, to be 1.8 per cent higher than a year ago, while we forecast underlying inflation to rise by 0.45 per cent in the quarter, for an annual rate of 2.1 per cent. We now expect underlying inflation to track around 2-2¼ per cent until year end, a lower trajectory than we previously assumed.

The RBA Board meets on February 3, and the market turmoil of recent days and weeks is highly likely to leave the Board on the sidelines until the smoke clears. Market turmoil also tends to dampen consumer and business sentiment, and these bear close watching. In a change of view, this very low inflation environment allows the RBA cash rate to remain at 2.5 per cent for much longer, and we no longer expect a rate hike this year. However, we remain unconvinced that cash rate cuts are the solution, rather we call on the government to announce a well-targeted infrastructure package, taking advantage of the current favourable funding conditions, to boost growth and jobs.

Annette Beacher, Head of Asia-Pacific Research, TD Securities More

USA: MARTIN LUTHER KING DAY

Today is Martin Luther King Day, a public holiday and non (sharemarket) trading day in USA.

The day is scheduled as the birthday (15 Jan 1929) of Martin Luther King Jr, a campaigner for the rights of Negro (African American) people. He was assassinated in Memphis, Tennessee on 4 April 1968. He had visited Memphis to support a campaign (a strike) following the accidental workplace deaths of 2 garbage workers (crushed to death in the back of a garbage truck as they were sheltering from a storm). His wife, Coretta King, said at his funeral “he gave his life for the poor of the world, the garbage workers of Memphis and the peasants of Vietnam. The day that Negro people and others in bondage are truly free, on the day want is abolished, on the day wars are no more, on that day I know my husband will rest in a long-deserved peace.

Week: 12-18 Jan 2015

EUR-CHF POLICY FALLOUT IN FX MARKETS

Casino de Monte-Carlo
Gamblers: FX traders have been making money betting on the CHF-EUR currency pair

The fallout from the Swiss National Bank’s currency policy decision last Thursday continues, including the closure of two non-bank foreign exchange brokers, Alpari UK and online trader Excel Markets (Auckland, NZ) and a $300m rescue of NYSE-listed Forex Capital Markets (FXCM) by Leucadia National Corporation (NYSE: LUK) (Jefferies Group). FXCM shares fell 92% on Friday morning, but rebounded after the Leucadia deal was announced. CNBC
Update: 20 Jan 2014 FXCM shares fell a further 87% today to close at $1.60. NBR Update

A lousy week for FXCM and its investors (Chart: Yahoo Finance)

A lousy week for FXCM and its investors (Chart: Yahoo Finance)

IG Group Holdings Plc has estimated an impact of as much as GBP 30 million (USD 45.5 million) More and Swissquote Group Holdings SA set aside CHF 25 million (USD 28.4 million). Bloomberg

Miami-based Everest Capital’s Global Fund, which was betting the Swiss franc would decline, is closing after losing all of its money (about $830 million as at 31 Dec 2014). Bloomberg

In Australia, Pepperstone, the nation’s largest retail foreign exchange broker, is eyeing acquisitions of distressed competitors hoping for a Leucadia/FXCM opportunity. AFR

And then there are the losses accrued to the clients of FX brokers: “The majority of clients in a franc position were on the losing side and sustained losses amounting to far greater than their account equityDavid Johnson, Co-founder of Global Brokers (NZ) Limited and Excel Markets (Auckland, NZ). More

Interactive Brokers Group said several customers suffered losses in excess of their deposit with the firms: “Such debits amount to approximately $120m, less than 2.5 per cent of our net worth.FT

I would be astonished if we did not see more casualties. This was a 180-degree about turn by the SNB. People feel hurt and betrayed.Nick Parsons, Head of Markets Strategy, Europe, National Australia Bank Ltd More

The balance between losses accruing to Saxo Bank and its clients is being reviewed at present. “Due to today’s exceptional market movement in CHF crosses, we have been filling client orders and positions in an extremely illiquid market. Once we are better able to establish true market liquidity, all executed fills will be revisited, and will be revised and amended to more accurate levels. This may result in a worse execution rate than the originally filled level.Saxo Bank, 15 Jan 2015 More

Whilst most traders and brokers were blindsided, Adam Myers, Executive Directorn and European Head of FX Strategy at Credit Agricole, said that some market participants appeared to have been aware that the SNB’s decision was coming before the official announcement. “It definitely looks like to us. There was a movement in the market well ahead of the headlines (from the SNB).CNBC

Statements

Alpari (UK)

Submitted on Fri, 16/01/2015 – 12:00 – The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. This has resulted in the majority of clients sustaining losses which has exceeded their account equity. Where a client cannot cover this loss, it is passed on to us. This has forced Alpari (UK) Limited to confirm today, 16/01/15, that it has entered into insolvency. Retail client funds continue to be segregated in accordance with FCA rules.More BBC

Update Alpari UK has since notified clients that it has not entered a formal insolvency process and is “urgently” seeking a sale. 17 Jan 2015 More It has issued a new statement (using the same URL as the previous statement):

(Undated) The recent move on the Swiss franc caused by the Swiss National Bank’s unexpected policy reversal of capping the Swiss franc against the euro has resulted in exceptional volatility and extreme lack of liquidity. Retail client funds continue to be segregated in accordance with FCA rules. For the avoidance of any doubt and notwithstanding previous announcements by the company, Alpari (UK) Limited has not entered a formal insolvency process. The board of directors are urgently considering all options including a sale and are liaising closely with the FCA. We hope to make a further announcement shortly.More

Excel Markets (NZ)

Global Brokers NZ Ltd. STP’s 100% of order flow and has sustained a total loss of operating capital. GBL can no longer meet regulatory minimum capitalization requirements of N$1,000,000 and will not be able to resume business. Losses incurred on trades that could not be exited due to illiquidity were losses incurred directly with the liquidity provider and we do not have the ability to reimburse those. Please note the interbank market for francs was illiquid for hours after the event and no traders with an open franc position were able to close it for a significant period of time, at any broker.More

OANDA

In the wake of recent market events, we did not re-quote any of our clients or amend any CHF-cross client trades. We also took the unprecedented step of forgiving all negative balances.More

Westpac and OzForex

OzForex Group Ltd (OzForex, ASX: OFX), wishes to advise that it has been informed by Westpac Banking Corporation (‘Westpac’) that it has made a strategic decision to exit the money service industry.More

OzForex can confirm that it has not been adversely affected by this event. OzForex is an international payments business, it does not participate in proprietary trading and it does not offer leveraged transactions. As such it is not exposed to any significant open positions. CHF represents on a very small portion of OzForex client funds flow representing less than 1% of all transactions.More

USA

US market indices Impact

Index 16 Jan 15 Week 9 Jan 15 Month 31 Dec 14 Year 31 Dec 14
S&P 500 2,019.42 -1.24% 2,044.81 -1.92% 2,058.90 -1.92% 2,058.90
DJIA 17,511.57 -1.27% 17,737.37 -1.75% 17,823.05 -1.75% 17,823.05
NASDAQ 4,634.38 -1.48% 4,704.07 -2.15% 4,736.05 -2.15% 4,736.05

The shape of the week

US market indices this week (Chart: Yahoo Finance)

US market indices this week (Chart: Yahoo Finance)

A week of Nightly Business Reports

Monday Tuesday Wednesday Thursday Friday

PORTFOLIO

Long term (52-week) performance Impact

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

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

This week’s performance Impact

Index 16 Jan 15 Week 9 Jan 14 Month 31 Dec 14 Year 31 Dec 14
USD Index 1.670 -4.26% 1.744 -4.10% 1.741 -4.10% 1.741
Valuation rate 0.82856 +0.37% 0.82551 +0.86% 0.82153 +0.86% 0.82153
AUD Index 2.015 -4.61% 2.113 -4.91% 2.119 -4.91% 2.119

Portfolio stocks

The shape of portfolio stocks this week (Chart: Yahoo Finance)

The shape of portfolio stocks this week (Chart: Yahoo Finance)

Apple AAPL -5.37%

AAPL share price performance this week (Chart: Yahoo Finance)

AAPL share price performance this week (Chart: Yahoo Finance)

  • Friday close: $105.99 -5.37% from $112.01.
  • P/E (historical): 16.48 Change from 17.42
  • P/E (1 year fwd): 13.78 Change from 14.26
  • Target (1 year): NASDAQ consensus $124.5, range $102 ↔ $143.
  • EPS estimates for Q1/2015:
    • Wall St: 2.56 (+23.67% on Q1/2014 = 2.07)
    • Estimize: 2.58 (+24.64% on Q1/2014 = 2.07)
  • Analyst recommendations: 21Change strong buy, 4 buy, 7Change hold.
  • SEC filings (CIK 0000320193): Edgar Search (New, Beta)

Amazon AMZN -2.08%

AMZN  share price performance this week (Chart: Yahoo Finance)

AMZN share price performance this week (Chart: Yahoo Finance)

  • Friday close: $290.74 -2.08% from $296.93
  • P/E (historical): NE
  • P/E (1 year fwd): NE
  • EPS estimates for Q4/2014:
    • Wall St: 0.24 (-52.94% on Q4/2013 = 0.51)
    • Estimize: 0.45 (-11.76% on Q4/2013 = 0.51)
  • Target (1 year): NASDAQ consensus $360, range $296 ↔ $460.
  • Analyst recommendations: 16 strong buy, 2 buy, 12 hold.
  • SEC filings (CIK 0001018724): Edgar Search (New, Beta)

Ebay EBAY -3.54%

EBAY  share price performance this week (Chart: Yahoo Finance)

EBAY share price performance this week (Chart: Yahoo Finance)

  • Friday close: $53.66 -3.54% from $55.63.
  • P/E (historical): NE
  • P/E (1 year fwd): 21.04 Change from 22.38
  • EPS estimates for Q4/2014:
    • Wall St: 0.89 (+9.88% on Q4/2013 = 0.81)
    • Estimize: 0.90 (+11.11% on Q4/2013 = 0.81)
  • Target (1 year): NASDAQ consensus $59.5, range $45 ↔ $65.
  • Analyst recommendations: 11 strong buy, 2 buy, 13 hold, 1 under perform, 1 sell.
  • SEC filings (CIK 0001065088): Edgar Search (New, Beta)

Facebook FB -3.29%

FB  share price performance this week (Chart: Yahoo Finance)

FB share price performance this week (Chart: Yahoo Finance)

  • Friday close: $75.18 -3.29% from $77.74
  • P/E (historical): 71.60 Change from $74.04
  • P/E (1 year fwd): 56.53 Change from 59.68
  • EPS estimates for Q4/2014:
    • Wall St: 0.49 (+58.06% on Q4/2013 = 0.31)
    • Estimize: 0.50 (+61.29% on Q4/2013 = 0.31)
  • Target (1 year): NASDAQ consensus $90Change, range $72 ↔ $105.
  • Analyst recommendations: 26 strong buy, 4 buy, 2 hold.
  • SEC filings (CIK 0001326801): Edgar Search (New, Beta)

Google Class A GOOGL +1.94%

GOOGL  share price performance this week (Chart: Yahoo Finance)

GOOGL share price performance this week (Chart: Yahoo Finance)

  • Friday close: $510.45 +1.94% from $500.72.
  • P/E (historical): 26.77 Change from 26.26
  • P/E (1 year fwd): 24.02 Change from 25.28
  • EPS estimates for Q4/2014:
    • Wall St: 7.17 (+15.83% on Q4/2013 = 6.19)
    • Estimize: 7.30 (+17.93% on Q4/2013 = 6.19)
  • Target (1 year): NASDAQ consensus $645, range $530 ↔ $750.
  • Analyst recommendations: 23Change strong buy, 2 buy, 6Change hold.
  • SEC filings (CIK 0001288776): Edgar Search (New, Beta)

Google Class C GOOG +2.40%

GOOG  share price performance this week (Chart: Yahoo Finance)

GOOG share price performance this week (Chart: Yahoo Finance)

  • Friday close: $508.08 +2.40% from $496.17.
  • P/E (historical): 21.15 Change from 20.66
  • Target (1 year): NASDAQ consensus $597.5, range $580 ↔ $615.
  • Analyst recommendations: 7 strong buy, 3 buy, 1 hold.

Linkedin LNKD -5.70%

LNKD  share price performance this week (Chart: Yahoo Finance)

LNKD share price performance this week (Chart: Yahoo Finance)

  • Friday close: $214.18 -5.70% from $227.13.
  • P/E (historical): NE
  • P/E (1 year fwd): 789.67 Change from 840.93
  • EPS estimates for Q4/2014:
    • Guidance: 0.49 (+32.43% on Q4/2013 = 0.37)
    • Wall St: 0.53 (+43.24% on Q4/2013 = 0.37)
    • Estimize: 0.54 (+45.95% on Q4/2013 = 0.37)
  • Target (1 year): NASDAQ consensus $250, range $180 ↔ $315.
  • Analyst recommendations: 18 strong buy, 1 buy, 9 hold.
  • SEC filings (CIK 0001271024): Edgar Search (New, Beta)

VMware VMW +2.17%

VMW  share price performance this week (Chart: Yahoo Finance)

VMW share price performance this week (Chart: Yahoo Finance)

  • Friday close: $80.61 +2.17% from $78.90.
  • P/E (historical): 38.94 Change from 38.12
  • P/E (1 year fwd): 31.29 Change from 31.53
  • EPS estimates for Q4/2014:
    • Wall St: 1.07 (+5.94% on Q4/2013 = 1.01)
    • Estimize: 1.08 (+6.93% on Q4/2013 = 1.01)
  • Target (1 year): NASDAQ consensus $105, range $69 ↔ $128.
  • Analyst recommendations: 13 strong buy, 4 buy, 9 hold, 1 sell.
  • SEC filings (CIK 0001124610): Edgar Search (New, Beta)

FX: USD/AUD

USD/AUD over the past week (Chart: xe.com)

USD/AUD over the past week (Chart: xe.com)