Friday 19 Sep 2014

View of the world from the top deck of an A380

View of the world from the top deck of an A380

Lloyd is away for a month – PortfolioTicker will be cut down to bare essentials until mid Oct 2014.

EUROZONE

Economy

Eurozone monthly balance of payments – Jul 2014 Opinion

Extract

In July 2014 the seasonally adjusted current account of the euro area recorded a surplus of €18.7 billion. In the financial account, combined direct and portfolio investment recorded net outflows of €17 billion (non-seasonally adjusted).

Current account

The seasonally adjusted current account of the euro area recorded a surplus of €18.7 billion in July 2014. This reflected surpluses for services (€12.8 billion), goods (€10.7 billion) and income (€3.6 billion), which were partly offset by a deficit for current transfers (€8.5 billion).

The seasonally adjusted 12-month cumulated current account for the period ending in July 2014 recorded a surplus of €237.6 billion (2.5% of euro area GDP), compared with one of €201.3 billion (2.1% of euro area GDP) for the 12 months to July 2013. The increase in the 12-month cumulated current account surplus was due mainly to increases in the surpluses for goods (€179.4 billion, up from €145.9 billion) and services (€120.0 billion, up from €102.6 billion), which were partly offset by a decrease in the surplus for income (€54.7 billion, down from €69.7 billion); the deficit for current transfers remained broadly stable.

Financial account

In the financial account, combined direct and portfolio investment recorded net outflows of €17 billion in July 2014 as a result of net outflows for both portfolio investment (€15 billion) and direct investment (€3 billion).

The net outflows for direct investment were a result of net outflows for equity capital and reinvested earnings (€4 billion), which were partly offset by net inflows for other capital (mostly inter-company loans) (€1 billion).

The net outflows for portfolio investment were almost entirely accounted for by net outflows for debt instruments (€15 billion), which were mainly driven by net purchases of foreign debt securities by euro area residents.

The financial derivatives account recorded net inflows of €4 billion.

Other investment recorded net outflows of €25 billion, which mainly reflected net outflows for MFIs excluding the Eurosystem (€17 billion) and for the Eurosystem (€14 billion), which were partly offset by net inflows for other sectors (€4 billion) and general government (€3 billion).

The Eurosystem’s stock of reserve assets increased by €2 billion in July 2014 (from €583 billion to €585 billion), mainly on account of valuation effects (transactions contributed to a decrease of €1 billion in overall reserve assets).

In the 12 months to July 2014 combined direct and portfolio investment recorded cumulated net inflows of €73 billion, compared with net outflows of €7 billion in the 12 months to July 2013. This shift resulted from lower net outflows for direct investment (€63 billion, down from €111 billion) and higher net inflows for portfolio investment (€137 billion, up from €103 billion).

European Central Bank, “Eurozone monthly balance of payments – Jul 2014“, 19 Sep 2014 More

UK

Scottish independence vote

The Scots have voted against independence. More

USA

Stock market indices Opinion

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX (INX) 2,010.406 -0.05% 1,848.36 +8.77%
DJIA INDU 17,279.74 +0.08% 16,576.66 +4.24%
NASDAQ IXIC 4,579.79 -0.30% 4,176.59 +9.65%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 19 Sep 2014 Watch Read
Comment

Markets are in a risk-on mode because the Fed’s still having a positive impact. They kept the phrase that they’ll keep rates low for a ‘considerable time.’ That reassured the markets. When tapering is finished, when we have no more inflow of money, we will reach the top in U.S. markets, but you still have a few weeks of good U.S. markets.
Louis de Fels, Fund Manager, Raymond James Financial Inc.($53bn) More

PORTFOLIO

Index values Opinion

:-( Underperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.660 -0.34% 1.399 +18.62%
Valuation Rate USD/AUD 0.89798 -0.60% 0.89789 +0.01%
Portfolio Index AUD 1.848 +0.27% 1.558 +18.61%

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

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 13 YTD
Apple AAPL $100.96 -0.82% $80.1457 +25.97%
Amazon AMZN $331.32 +1.94% $398.79 -16.92%
Ebay EBAY $52.43 -0.51% $54.865 -4.44%
Facebook FB $77.81 +1.05% $54.649 +42.38%
Google A GOOGL $604.91 +1.28% $560.365 +7.95%
Google C GOOG $595.08 +1.16% $560.365 +6.37%
Linkedin LNKD $211.17 +0.32% $216.83 -2.61%
VMware VMW $94.14 -2.28% $89.71 +4.94%

Thursday 18 Sep 2014

UK

Scottish independence vote

The question being asked of the Scottish electorate is: “Should Scotland be an independent country? (Yes . (No)”
Votes are being received through Scotland’s 32 local government authorities (Councils) who have a total of 5,767 counters for this vote.

Polls closed one hour after close of trade in New York. A YouGov survey of voters shows support for “No” at 54% and “Yes” at 46%. The formal result will be known when all the results from 32 local counts around Scotland are in. BBC live coverage

The first council to declare is Clackmannanshire – 46.2 (Yes); 53.8 (No)

USA

Economy

Unemployment Insurance Weekly Claims Report: Week to 12 Sep 2014 Opinion

Extract

In the week ending September 13, the advance figure for seasonally adjusted initial claims was 280,000, a decrease of 36,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 315,000 to 316,000. The 4-week moving average was 299,500, a decrease of 4,750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 304,000 to 304,250.

The advance seasonally adjusted insured unemployment rate was 1.8 percent for the week ending September 6, a decrease of 0.1 percentage point from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 6 was 2,429,000, a decrease of 63,000 from the previous week’s revised level. This is the lowest level for insured unemployment since May 19, 2007 when it was 2,417,000. The previous week’s level was revised up 5,000 from 2,487,000 to 2,492,000. The 4-week moving average was 2,481,750, a decrease of 18,250 from the previous week’s revised average. This is the lowest level for this average since June 23, 2007 when it was 2,477,250. The previous week’s average was revised up by 1,250 from 2,498,750 to 2,500,000.

U.S. Employment and Training Administration, “Unemployment Insurance Weekly Claims Report – Week to 12 Sep 2014“, 18 Sep 2014 (08:30am) More

Comment

The fact that we’re falling below 300,000 – that’s a good sign. Companies are not laying off. A big chunk of the decline in continuing claims is basically people finding jobs.
Aneta Markowska, Chief U.S. Economist, Societe Generale More

New residential construction (permits, starts, completions – Aug 2014 Opinion

Extract

BUILDING PERMITS

Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 998,000. This is 5.6 percent (±1.4%) below the revised July rate of 1,057,000, but is 5.3 percent (±1.7%) above the August 2013 estimate of 948,000.

Single-family authorizations in August were at a rate of 626,000; this is 0.8 percent (±1.5%)* below the revised July figure of 631,000. Authorizations of units in buildings with five units or more were at a rate of 343,000 in August.

HOUSING STARTS

Privately-owned housing starts in August were at a seasonally adjusted annual rate of 956,000. This is 14.4 percent (±7.9%) below the revised July estimate of 1,117,000, but is 8.0 percent (±11.2%)* above the August 2013 rate of 885,000.

Single-family housing starts in August were at a rate of 643,000; this is 2.4 percent (±9.7%)* below the revised July figure of 659,000. The August rate for units in buildings with five units or more was 304,000.

HOUSING COMPLETIONS

Privately-owned housing completions in August were at a seasonally adjusted annual rate of 892,000. This is 3.2 percent (±13.0%) above the revised July estimate of 864,000 and is 16.9 percent (±14.7%) above the August 2013 rate of 763,000.

Single-family housing completions in August were at a rate of 591,000; this is 8.2 percent (±9.7%)* below the revised July rate of 644,000. The August rate for units in buildings with five units or more was 292,000.

US Census Bureau, “New residential construction in August 2014“, 18 Sep 2014 (08:30am) More

Comment

The underlying momentum in the housing sector remains quite favorable and we expect building activity to rebound next month.
Millan Mulraine, Deputy Chief Economist, TD Securities More

Stock market indices Opinion

New records for market indices:

  • The S&P500 achieved a record of 2011.36, exceeding its previous record of 2,007.71 on 5 Sep 2014
  • The S&P500 achieved a record of 17,265.99, exceeding yesterday’s record of 17,156.85.
Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX (INX) 2,011.36 +0.49% 1,848.36 +8.82%
DJIA INDU 17,265.99 +0.64% 16,576.66 +4.16%
NASDAQ IXIC 4,593.42 +0.68% 4,176.59 +9.98%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 18 Sep 2014 Watch Read
Comment

The market’s still in Fed mode. A majority of people are thinking July 2015 may be the rate increase and the market’s responding positively to the idea that rates aren’t coming any sooner.
Joe Bell, Senior Equity Analyst, Schaeffer’s Investment Research Inc. Read

Anytime the Fed speaks it can move markets and it’s more true today than ever because we’re at an inflection point where non-traditional monetary policy that’s almost been on auto pilot is coming to a close and we’re shifting our focus to traditional policy.
Ron Sanchez, Executive Vice President and Chief Investment Officer, Fiduciary Trust Co. International Read

PORTFOLIO

Index values Opinion

:-( Underperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.665 +0.36% 1.399 +19.02%
Valuation Rate USD/AUD 0.90344 +0.16% 0.89789 +0.62%
Portfolio Index AUD 1.843 +0.20% 1.558 +18.29%

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

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 13 YTD
Apple AAPL $101.79 +0.21% $80.1457 +27.01%
Amazon AMZN $325.00 +0.31% $398.79 -18.50%
Ebay EBAY $52.70 +1.44% $54.865 -3.95%
Facebook FB $77.00 +0.75% $54.649 +40.90%
Google A GOOGL $597.27 +0.67% $560.365 +6.59%
Google C GOOG $589.27 +0.77% $560.365 +5.16%
Linkedin LNKD $210.50 +0.22% $216.83 -2.92%
VMware VMW $96.34 +1.95% $89.71 +7.39%

FX: USD/AUD

The AUD gained a little against the USD today (Chart: xe.com)

The AUD gained a little against the USD today (Chart: xe.com)

Wednesday 17 Sep 2014

USA

Economy

Federal Open Market Committee Meeting Opinion

Statement Extract

Information received since the Federal Open Market Committee met in July suggests that economic activity is expanding at a moderate pace. On balance, labor market conditions improved somewhat further; however, the unemployment rate is little changed and a range of labor market indicators suggests that there remains significant underutilization of labor resources. Household spending appears to be rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee’s longer-run objective. 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 and inflation moving toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced and judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.

The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in October, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $5 billion per month rather than $10 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $10 billion per month rather than $15 billion per month. 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. The Committee’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate.

The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incoming information broadly supports the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will end its current program of asset purchases at its next meeting. However, asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, 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 developments. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

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 Open Market Committee, “Statement from Meeting of 17 Sep 2014“, 17 Sep 2014 More

Comment

They want to let the market know they are not ready to raise rates anytime soon. Inflation is buying them time to do nothing. Inflation is running below expectations so they don’t need to be engaged in signaling tightening.
John Silvia, Chief Economist, Wells Fargo Securities LLC More

This doesn’t change the path for expected Fed rate increases. The message was right down the middle. The market is taking that in stride and sighing in relief that they’re not going to move in a hawkish manner. You’ll continue to get additional dollar strength from the forward-looking guidance going into 2017.
Chad Morganlander, Money Manager, Stifel, Nicolaus & Co. ($160bn)

US International Transactions: Second Quarter 2014 Opinion

The U.S. current-account deficit fell to $98.5bn in Q2/2014 from $102.1 billion in Q1/2014. More

Extract

The U.S. current-account deficit, a net measure of transactions between the United States and the rest of the world in goods, services, primary income (investment income and compensation), and secondary income (current transfers), decreased to $98.5 billion
(preliminary) in the second quarter of 2014 from $102.1 billion (revised) in the first quarter. The deficit decreased to 2.3 percent of current-dollar gross domestic product (GDP) from 2.4 percent in the first quarter. The decrease in the current-account deficit was largely due to a decrease in the deficit on secondary income. In addition, the surpluses on services and primary income increased. These changes were partly offset by an increase in the deficit on goods.

Goods and services

The deficit on goods and services increased to $130.3 billion in the second quarter from $124.5 billion in the first quarter.

  • The deficit on goods increased to $189.2 billion in the second quarter from $182.3 billion in the first quarter: Goods exports increased to $408.8 billion from $399.5 billion. Goods imports increased to $598.0 billion from $581.9 billion.
  • The surplus on services increased to $58.9 billion in the second quarter from $57.8 billion in the first quarter. Services exports increased to $177.4 billion from $174.7 billion. Services imports increased to $118.5 billion from $116.8 billion.

Net U.S. borrowing measured by financial-account transactions was $17.6 billion in the second quarter, down from $91.2 billion in the first quarter.

Bureau of Economic Analysis, “US International Transactions: Second Quarter 2014“, 17 Sep 2014 (08:30am) More

Consumer Price Index – Aug 2014 Opinion

The CPI fell 0.2% in Aug 2014, its first fall since Apr 2013. After the 0.1% rise in Jul 2014, economists had expected a flat CPI in Aug 2014. More

Extract

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.2 percent in August on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment.

The seasonally adjusted decline in the all items index was the first since April 2013. The indexes for food and shelter rose, but the increases were more than offset by declines in energy indexes, especially gasoline. The energy index fell 2.6 percent, with the gasoline index declining 4.1 percent and the indexes for natural gas and fuel oil also decreasing.

The index for all items less food and energy was unchanged in August; this was the first month since October 2010 that the index did not increase. While the shelter index increased and the indexes for new vehicles and for alcoholic beverages also rose, these advances were offset by declines in several indexes, including airline fares, recreation, household furnishings and operations, apparel, and used cars and trucks.

The all items index increased 1.7 percent over the last 12 months, a decline from the 2.0 percent figure for the 12 months ending July, and the smallest 12-month change since March. The index for all items less food and energy also rose 1.7 percent over the last 12 months. The food index has risen 2.7 percent over the span, while the energy index has increased 0.4 percent.

Bureau of Labor Statistics, “Consumer price index – Aug 2014“, 17 Sep 2014 (08:30am) More

Real earnings – Aug 2014 Opinion

Extract

Real average hourly earnings for all employees increased by 0.4 percent from July to August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This increase stems from a 0.2 percent increase in the average hourly earnings and a 0.2 percent decrease in the Consumer Price Index for All Urban Consumers (CPI-U). The change in real average hourly earnings is the largest 1-month percentage increase since November 2012.

Real average weekly earnings increased by 0.4 percent over the month due to the increase in real average hourly earnings and an unchanged average workweek.

Bureau of Labor Statistics, “Real earnings – Aug 2014“, 17 Sep 2014 (08:30am) More

Stock market indices Opinion

The DJIA achieved a record high today.

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX (INX) 2,001.57 +0.13% 1,848.36 +8.29%
DJIA INDU 17,156.85 +0.15% 16,576.66 +3.50%
NASDAQ IXIC 4,562.19 +0.21% 4,176.59 +9.23%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 17 Sep 2014 Watch Read

PORTFOLIO

Index values Opinion

:-) Outperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.659 +0.52% 1.399 +18.60%
Valuation Rate USD/AUD 0.90201 -1.35% 0.89789 +0.46%
Portfolio Index AUD 1.840 +1.83% 1.558 +18.05%

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

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 13 YTD
Apple AAPL $101.58 +0.71% $80.1457 +26.74%
Amazon AMZN $323.99 -1.15% $398.79 -18.76%
Ebay EBAY $51.95 +0.66% $54.865 -5.31%
Facebook FB $76.43 +0.46% $54.649 +39.86%
Google A GOOGL $593.29 +0.77% $560.365 +5.88%
Google C GOOG $584.77 +0.83% $560.365 +4.36%
Linkedin LNKD $210.04 -1.10% $216.83 -3.13%
VMware VMW $94.50 -0.67% $89.71 +5.34%

FX: USD/AUD

The AUD lost more ground against the USD after the FOMC statement (Chart: xe.com)

The AUD lost more ground against the USD after the FOMC statement (Chart: xe.com)

The AUD has been depreciating against the USD because of factors at both ends: improving US economy, and risks in the Australian economy, especially resource export prices and volumes.

:-) The 4.55% fall over the past 10 days has, of course, been very good for the AUD value of our USD-denominated portfolio.

Over the past 10 days the AUD has dropped 4.55% against the USD (Chart: xe.com)

Over the past 10 days the AUD has dropped 4.55% against the USD (Chart: xe.com)

Tuesday 16 Sep 2014

CHINA

Economy

China provided 500 billion yuan ($81.4 billion) of liquidity to the country’s five biggest banks as Premier Li Keqiang steps up stimulus to support economic growth, Sina.com reported yesterday.

The People’s Bank of China yesterday started providing the banks with 100 billion yuan each through standing lending-facilities with durations of three months, the news website said, citing banking analyst Qiu Guanhua at Guotai Junan Securities Co. The PBOC will complete the process today.More

Comment

Lloyd says: “I can’t see any source for this report (other than Bloomberg), even on sina.com”

The market sees the letters ’Q’ and ’E’ combined with China and it’s Happy New Year to the money printers and that’s what the jump is. They want the game to continue. They may not know how or why it’s happening but get some new QE money in there and that’s how the market reacts.
Joe Saluzzi, Co-Head of Equity Trading, Themis Trading LLC More

USA

Economy

Producer price index – Aug 2014 Opinion

Today’s report that the Producer Price Index was unchanged in Aug 2014 disappointed economists’ expectation of a 0.1% rise, giving heart to those hoping that the FOMC will be more dovish in its announcement on Thursday.

Extract

The Producer Price Index for final demand was unchanged in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.1 percent in July and 0.4 percent in June. On an unadjusted basis, the index for final demand increased 1.8 percent for the 12 months ended in August.

In August, a 0.3-percent rise in prices for final demand services offset a 0.3-percent decrease in the index for final demand goods.

Within intermediate demand, prices for processed goods fell 0.3 percent, the index for unprocessed goods declined 3.3 percent, and prices for services moved up 0.2 percent.

Bureau of Labor Statistics, “Producer price indexes – Aug 2014“, 16 Sep 2014 (08:30am) More

If Yellen is looking for evidence of slack in the economy, and thinking that inflation is too low, then PPI final demand prices fill the bill this morning.
Chris Rupkey, Chief Financial Economist, MUFG Union Bank More

Stock market indices Opinion

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX (INX) 1998.98 +0.75% 1,848.36 +8.15%
DJIA INDU 17,131.97 +0.59% 16,576.66 +3.35%
NASDAQ IXIC 4,552.76 +0.75% 4,176.59 +9.01%

The shape of the day

market_20190916

Nightly Business Report: 16 Sep 2014 Watch Read
Comment

No doubt the Scottish referendum especially is a source of uncertainty. The risk of a more hawkish Fed could also dampen investors’ appetite for stocks.
Espen Furnes, Storebrand Asset Management (Oslo) ($85 billion) More

Fed interest-rate policy is the central issue for everybody. In the wake of improving economic figures, a few questions such as the timing of the next Fed action arise. The Fed is likely to have a slightly more hawkish communication.
Guillaume Duchesne, Equity Strategist, BGL BNP Paribas SA (Luxembourg) More

We are getting a stronger tone to the market with the idea being floated that the Fed language could stay relatively the same, which would represent a ‘stay the course’ mentality and would be perceived as dovish. If they do take that out the market would price in a Fed that is closer to raising rates.
Jason Rogan, Managing Director of U.S. Government Trading, Guggenheim Securities More

PORTFOLIO

Index values Opinion

:-( Underperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.652 -0.09% 1.399 +18.06%
Valuation Rate USD/AUD 0.91439 +0.75% 0.89789 +1.84%
Portfolio Index AUD 1.807 -0.81% 1.558 +15.93%

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

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 13 YTD
Apple AAPL $100.86 -0.76% $80.1457 +25.85%
Amazon AMZN $327.76 +1.19% $398.79 -17.81%
Ebay EBAY $51.61 +1.28% $54.865 -5.93%
Facebook FB $76.08 +2.01% $54.649 +39.22%
Google A GOOGL $588.78 +1.23% $560.365 +5.07%
Google C GOOG $579.95 +1.20% $560.365 +3.50%
Linkedin LNKD $212.38 +2.25% $216.83 -2.05%
VMware VMW $95.14 +1.06% $89.71 +6.05%

Monday 15 Sep 2014

USA

Economy

Industrial output – Aug 2014 Opinion

The Federal Reserve Bank reported that industrial output fell unexpectedly in Aug 2014, down 0.1% after a 0.2% rise in Jul 2014 (revised down from 0.4%).

Extract

The index of industrial production edged down 0.1 percent in August, and the index for manufacturing output decreased 0.4 percent; the declines were the first for each since January. The gains in July for both indexes were revised down. The declines in total industrial production and in manufacturing output in August reflected a decrease of 7.6 percent in the production of motor vehicles and parts, which had jumped more than 9 percent in July. Excluding motor vehicles and parts, factory output rose 0.1 percent in both July and August. The production at mines moved up 0.5 percent in August, and the output of utilities rose 1.0 percent. At 104.1 percent of its 2007 average, total industrial production in August was 4.1 percent above its year-earlier level. Capacity utilization for total industry decreased 0.3 percentage point in August to 78.8 percent, a rate 1.0 percentage point above its level of a year earlier and 1.3 percentage points below its long-run (1972–2013) average.
Federal Reserve Bank, “G.17 Industrial Production and Capacity Utilization – Aug 2014“, 15 Sep 2014 (09:15am) More

Comment

The story is mostly one of a big jump in auto production in July which was reversed in August, so we should look at the two months together
Michael Feroli, Chief U.S. Economist, JPMorgan Chase & Co More

Stock market indices

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX (INX) 1984.13 -0.07% 1,848.36 +7.35%
DJIA INDU 17,031.14 +0.26% 16,576.66 +2.74%
NASDAQ IXIC 4,518.90 -1.07% 4,176.59 +8.20%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 15 Sep 2014 Watch Read
Comment

All this manufacturing and production data has been decent while the employment data is where things have been soft, the question is what the Fed thinks of it and whether this will soften them up a little bit. We’ll have to wait and see if on Wednesday they change the language on rates to being dependent on data.”
Michael Block, Chief Equity Strategist, Rhino Trading Partners LLC More

PORTFOLIO

Index values Opinion

:-( Underperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.653 -0.68% 1.399 +18.14%
Valuation Rate USD/AUD 0.90754 -0.18% 0.89789 +1.07%
Portfolio Index AUD 1.821 -0.50% 1.558 +16.88%

52-week performance Opinion

The strengthening USD is widening the gap between the AUD-denominated index and the USD-denominated index. A strengthening USD (and/or weakening AUD) works in favour of the AUD-denominated index.

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

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

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

Apple AAPL -0.06% Opinion

Apple reported today that pre-orders for its iPhone 6 and iPhone 6 Plus topped 4 million in the first 24 hours More. Previous records for the first 24 hours after a new product release have been:

  • more than 2 million pre-orders for the iPhone 5 in 2012 More
  • more than 1 million pre-orders for the iPhone 4S in 2011 More
  • more than 600,000 pre-orders for the iPhone 4 in 2010 More

Portfolio stock prices

Stock Ticker Today Change 31 Dec 13 YTD
Apple AAPL $101.60 -0.06% $80.1457 +26.77%
Amazon AMZN $323.89 -2.20% $398.79 -18.78%
Ebay EBAY $50.96 -2.36% $54.865 -7.12%
Facebook FB $74.58 -3.74% $54.649 +36.47%
Google A GOOGL $581.64 -0.56% $560.365 +3.80%
Google C GOOG $573.10 -0.44% $560.365 +2.27%
Linkedin LNKD $207.71 -7.61% $216.83 -4.21%
VMware VMW $94.14 -1.68% $89.71 +4.94%

FX: USD/AUD

The USD maintained its strength in expectation of an early 2015 interest rate rise (Chart: xe.com)

The USD maintained its strength in expectation of an early 2015 interest rate rise (Chart: xe.com)

Week: 8-14 Sep 2014

UK

Scottish Independence Vote

Scottish separatists demanding  freedom from British rule

“I eye aye”: Scottish separatists demanding freedom from British rule

More than 4.2 million people have registered to vote in the independence referendum, making it the largest electorate ever in Scotland.More

No announcement on USA military action against Scottish separatists

Speaking at the G7 summit in Brussels on 5 Jun 2014, US President Barack Obama expressed support for the United Kingdom to remain united: “We obviously have a deep interest in making sure that one of the closest allies that we will ever have remains strong, robust, united, and an effective partner.More

However he has not yet announced any economic sanctions or military action against Scottish separatists, no air strikes have yet been planned, no naval task forces have yet been deployed to Loch Ness, possibly because the Loch Ness monster is reported to have expressed opposition to separation More, and no ground troops have yet been readied for deployment.

High and low roads to Loch Lomond's bonny banks monitored by NASA

High and low roads to Loch Lomond’s bonny bonny banks monitored by NASA @Cmdr_Hadfield

There is little likelihood that civilian airliners will be at risk from captured anti-aircraft haggis or English breakfasts, and MacDonalds Angus burgers are not being served on international flights near Scotland.

Australian increased security precautions

Australia has increased the security level in the National Terrorism Public Alert System, with concern about civilian Australian activists returning from their involvement on the wrong side in overseas conflicts More The will mean more security at airports, ports, military bases, public buildings and large public events. Major airports have installed microburst warning systems as an alert against unexpected Gaels. There is as yet no statement as to whether Foreign Affairs officials will be targeting sporran-wearing face-painted Australian actors returning from Scotland. It is not yet an offence to use a fake Scottish accent in Australia, and wearing of the kilt is gaining acceptance in some areas. Tattoos are commonly worn and watched on the ABC.

 Australians are unlikely to be involved in further military action in Scotland.

Australians are unlikely to be involved in further military action in Scotland (Pic: Braveheart)

CHINA

Economy

Industrial Output – Aug 2014 Impact

National Bureau of Statistics of China (NBS) reported (via CRI) on Saturday that industrial output grew 6.9% in Aug 2014 from Aug 2013. This was below the expected level of 8.8% and below the 9.0% growth in Jul 2014.

Extract

China’s value-added industrial output expanded 6.9 percent year on year in August, down from 9-percent growth in July, the latest data showed on Saturday.

On a monthly basis, the industrial output in August expanded by a fractional 0.2 percent from July, the National Bureau of Statistics (NBS) said in a statement. In the first eight months, total value-added industrial output grew 8.5 percent from the same period last year.

August marked the second monthly retreat of the growth rate after industrial output grew 9.2 percent in June, its fastest pace since January.

“An obvious drop was seen in the industrial output growth for August,” said Jiang Yuan, a senior analyst with the NBS, citing reasons ranging from weak external demand to tempered growth of auto and cell phone production.

China’s August export growth came in at 9.4 percent, significantly lower than the 14.5-percent rise in July, pointing to dampened external demand and the complex situation of the world economy, according to Jiang.

Data on consumer goods such as cars and cell phones, which often posted double-digit growth in the past years, were also disappointing in August. Auto production grew only 3.1 percent, down sharply from 10.5 percent in July, while cell phone production retreated 2.3 percent.

Another drag was cooling investment. Saturday’s data showed urban fixed asset investment in January-August grew at a slower pace of 16.5 percent and property investment growth moderated to 13.2 percent. The investment slowdown weighed on related sectors including cement, glass and home appliance production, according to Jiang.

China Radio International (CRI), “China’s Industrial Production Slows in August“, 13 Sep 2014 More

Context

Manufacturing

In August 2014, China’s manufacturing purchasing managers index (PMI) was 51.1 percent, 0.6 percentage points lower over last month, fell back after having increased for 5 consecutive months, but still was the second highest point since this year, indicating that China’s manufacturing sector continued to maintain growth generally.
NBS and China Federation of Logistics and Purchases (CFLP), “China’s PMI Was 51.1 Percent in August“, 1 Sep 2014 More

Producer prices

In August 2014, Producer Price Index (PPI) for manufactured goods decreased 1.2 percent year-on-year, and decreased 0.2 percent month-on-month. The purchasing price index for manufactured goods went down by 1.4 percent year-on-year, and decreased 0.1 percent month-on-month. 1 On average from January to August, the PPI decreased 1.6 percent year-on-year, the purchasing price index for manufactured goods went down by 1.8 percent year-on-year.
NBS, “Producer Prices for the Industrial Sector for August 2014“, 11 Sep 2014 More

Consumer prices

In August, the consumer price index (CPI) went up by 2.0 percent year-on-year. The prices grew by 2.0 percent in cities and 1.9 percent in rural areas. The food prices went up by 3.0 percent, while the non-food prices increased 1.5 percent. The prices of consumer goods went up by 1.8 percent and the prices of services grew by 2.4 percent. On average from January to August, the overall consumer prices were up by 2.2 percent over the same period of the previous year.

In August, the month-on-month change of consumer prices was up by 0.2 percent, of which, prices increased 0.1 percent in cities and 0.3 percent in rural areas. The food prices went up by 0.7 percent, while the non-food prices went down by 0.1 percent. The prices of consumer goods increased 0.3 percent, and the prices of services remained at the same level (the amount of change was 0, similarly hereinafter).
NBS, “Consumer Prices for August 2014“, 11 Sep 2014 More

Balance of trade

Imports by (China) fell 2.4 percent in August compared with a year ago, the General Administration of Customs said on Monday, missing a Reuters estimate for a 1.7 percent rise. It was the second straight month that China’s import growth was surprisingly weak, raising concerns that tepid domestic demand exacerbated by a cooling housing market is increasingly weighing on the economy.

In contrast, China’s exports were surprisingly buoyant in August amid stronger global demand. They jumped 9.4 percent from a year earlier to beat a forecast rise of 8 percent, although the growth rate slowed from 14.5 percent in July. That pushed the trade surplus to an unexpected all-time high of $49.8 billion, which could put further appreciation pressure on the yuan currency CNY=CFXS.

Reuters, “Consumer Prices for August 2014“, 11 Sep 2014 More

Comment

Short of outright policy easing, China will likely miss the 7.5 percent growth target this year, and a sharp economic slowdown will endanger the undergoing structural reforms. As such, we reckon that Chinese authorities should further relax monetary policy as soon as possible to prevent growth momentum from decelerating further.
Liu Li-Gang and Zhou Hao, ANZ Bank More

The August data may point to a hard landing. The extent of the growth slowdown in the third quarter won’t be small. The chances of cutting interest rates and bank reserve requirements have increased. I think they are more likely to cut interest rates.
Xu Gao, Chief Economist, Everbright Securities (Beijing) More

Many doubt economic statistics produced by the Chinese government, suggesting political bias and fake transactions and data.

Official numbers smooth out fluctuations …When the economy is slowing down, they under-report the deceleration and when it is picking up, they under-report the acceleration. But overall it is OK.
Huang Yiping, Professor of Economics, Peking University More

USA

US market indices Impact

The market was sold down this week by investors fearing an early increase in interest rates. Some of this may have been caused by a letter from the Federal Reserve Bank of San Francisco which suggested that rates may increase sooner than expected: “An ongoing concern has been that the public might misconstrue the Fed’s forward guidance about future monetary policy and underappreciate the extent to which short-term interest rates may vary with future news about the economy … More So this got the market back into “good news is bad news”. And, “unfortunately”, there was good news this week about the US economy. NBR Report

Index 12 Sep 2014 Week 5 Sep 2014 Month 29 Aug 2014 Year 31 Dec 13
S&P 500 1,985.54 -1.10% 2,007.71 -0.89% 2,003.37 +7.42% 1,848.36
DJIA 16,987.51 -0.87% 17,137.36 -0.65% 17,098.38 +2.48% 16,576.66
NASDAQ 4,567.60 -0.33% 4,582.90 -0.28% 4,580.27 +9.36% 4,176.59

The shape of the week

S&P500, DJIA and NASDAQ index performance this week  (Chart: Yahoo Finance)

S&P500, DJIA and NASDAQ index performance this week (Chart: Yahoo Finance)

PORTFOLIO

Bunting portfolio indices 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

:-) Our AUD-denominated portfolio rose 5.10% this week, with the biggest contributor being a 3.6% fall in the value of the AUD against the USD. Not so bad for a “down week” for the market as a whole.

:-) Outperformed 12 Sep 2014 Week 5 Sep 2014 Month 29 Aug 2014 Year 31 Dec 13
USD Index 1.664 +1.35% 1.642 -0.67% 1.676 +18.95% 1.399
Trading USD/AUD 0.90917 -3.57% 0.94285 -3.17% 0.93892 +1.26% 0.89789
AUD Index 1.830 +5.10% 1.742 +2.58% 1.784 +17.47% 1.558

Portfolio stocks

Apple AAPL +2.72%

Apple deserved to do better this week with its announcements of the Apple Watch, Pay and iPhone6. But it was caught up in the general selldown, and the “magic” was lost. In fact Apple reports that pre-orders for the iPhone 6 have hit a record, and volume was so high that there is likely to be a delay in order fulfilment, and the ordering website crashed More (the same thing happened with Apple’s iPhone 4 in 2010 More)

Response to iPhone 6 and iPhone 6 Plus has been incredible, with a record number of pre-orders overnight. Pre-orders are currently available online or through the Apple Store App.
Trudy Muller, PR Director, Apple More

USA Today reports “Would-be iPhone 6 and iPhone 6 Plus owners expressed super-human patience and willpower in trying to pre-order their new phones. They stayed up late. They kept refreshing pages. They ultimately persevered. It was an emotional roller coaster ride for some this morning, as Apple began to take pre-orders Friday at 12:01 Pacific time on Apple.com and on the websites of wireless carriers and retailers. The phones go on sale Sept. 19.More

We think it’s going to be the most successful launch ever for an iPhone.” Marcello Claure, CEO, Sprint NBR Report

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

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

Amazon AMZN -4.39%

Amazon was trashed this week following its announcement to reduce the AT&T contract price of its new Fire smartphone from $199 to $0.99.

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

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

Ebay EBAY -3.17%

eBay was trashed this week as investors considered the impact of Apple’s Pay on PayPal’s business.

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

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

Facebook FB +0.28%

Facebook achieved a $200bn valuation this week, up from $100.676bn on 26 Aug 2013. A 100% rise in market cap in just over a year! Facebook’s market cap at the end of the week is $201.452bn, built by a self-made Mark Zuckerberg.

At age 30 years, Zuck is the 13th richest person in the world, and the 3rd richest tech founder, estimated by Bloomberg to be worth $34.5bn, ahead of Google founders Larry Page ($32.5bn) and Sergei Brin ($32.3bn). Bill Gates, founder of Microsoft, remains the world’s richest person, at $85.9bn, and Larry Ellison, founder of Oracle, is at #7, worth $45.5bn. More

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

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

Google Class A GOOGL -2.15%

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

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

  • Friday close: $584.90 -2.15% from $597.78.
  • P/E (historical): 30.22 Change from 30.89
  • P/E (1 year fwd): 26.83 Change from 26.92
  • Target (1 year): NASDAQ consensus $656 range $600 ↔ $750.
  • SEC filings (CIK 0001288776): Edgar Search (New, Beta)

Google Class C GOOG -1.77%

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

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

  • Friday close: $575.70 -1.77% from $586.08.
  • P/E (historical): 20.07 Change from 20.44
  • P/E (1 year fwd): N/A
  • Analyst recommendations: 6 strong buy, 3 buy, 0 hold.

Linkedin LNKD -2.09%

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

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

VMware VMW +0.37%

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

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

USD/AUD

USD/AUD this week (Chart: xe.com)

USD/AUD this week (Chart: xe.com)

Some air has finally been let out of the AUD’s bubble, which dropped 3.6% against the USD this week.

Friday 12 Sep 2014

USA

Economy

Consumer confidence – Prelim – Sep 2014 Opinion

The Thomson Reuters/University of Michigan’s preliminary indicator of consumer sentiment reached a 14 month high in Sep 2014.

Extract

The Thomson Reuters/University of Michigan’s preliminary September reading on the overall index on consumer sentiment came in at 84.6, the highest since July 2013, up from 82.5 in the final August reading. The number beat the median forecast of 83.3 among economists polled by Reuters.

The survey’s gauge of consumer expectations jumped to 75.6 from the 71.3 reading last month and above a forecast of 73.0.

The survey’s barometer of current economic conditions dipped to 98.5 from 99.8 and below a forecast of 100.

Thomson Reuters-University of Michigan, “Consumer confidence – Prelim – Sep 2014“, 12 Sep 2014 (08:30am) More

US import and export price indexes – Aug 2014

Extract

Prices for U.S. imports decreased 0.9 percent in August following a 0.3-percent decline in July, the U.S. Bureau of Labor Statistics reported today. Both the August and July drops in overall import prices were driven by lower fuel prices. U.S. export prices declined 0.5 percent in August, after ticking up 0.1 percent the previous month.

Bureau of Labor Statistics, “US import and export price indexes – Aug 2014“, 12 Sep 2014 (08:30am) More

Advance monthly retail sales – Aug 2014 Opinion

Extract

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $444.4 billion, an increase of 0.6 percent (±0.5%) from the previous month, and 5.0 percent (±0.9%) above August 2013. Total sales for the June through August 2014 period were up 4.5 percent (±0.7%) from the same period a year ago. The June to July 2014 percent change was revised from virtually unchanged (±0.5%)* to 0.3 percent (±0.2%).

Retail trade sales were up 0.6 percent (±0.5%) from July 2014, and 4.8 percent (±0.7%) above last year. Auto and other motor vehicle dealers were up 9.5 percent (±3.0%) from August 2013 and health and personal care stores were up 8.1 percent (±1.9%) from last year.

US Census Bureau, “Advance monthly retail sales – Aug 2014“, 12 Sep 2014 (08:40am) More

Comment NBR Report

The consumer is in decent shape right now. We are looking at solid economic growth in the third quarter.
Gus Faucher, Economist, PNC Financial Services Group Inc More

You’re seeing evidence that the consumer may actually be becoming more engaged in the expansion.Consumers are feeling better about the outlook for the economy certainly, and that’s one of several factors that is supporting the better spending numbers.
Michelle Girard, Chief U.S. Economist, RBS Securities Inc More

Retail sales were still somewhat weaker in the third quarter and recent labor market indicators have been somewhat less encouraging in August and September. This may be enough to keep the doves at the Fed in wait-and-see mode.
Scott Anderson, Chief Economist, Bank of the West More

Manufacturing and trade: Inventories and sales – Jul 2014

Extract

Sales. The U.S. Census Bureau announced today that the combined value of distributive trade sales and manufacturers’ shipments for July, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,360.3 billion, up 0.8 percent (±0.2%) from June 2014 and were up 5.3 percent (±0.6%) from July 2013.

Inventories. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,750.1 billion, up 0.4 percent (±0.1%) from June 2014 and up 5.9 percent (±0.4%) from July 2013.

Inventories/Sales Ratio. The total business inventories/sales ratio based on seasonally adjusted data at the end of July was 1.29. The July 2013 ratio was 1.28.

US Census Bureau, “Manufacturing and trade: Inventories and sales (MTIS) – Jul 2014“, 12 Sep 2014 (10:00am) More

Stock market indices Opinion

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1985.54 -0.60% 1,848.36 +7.42%
DJIA INDU 16,987.51 -0.36% 16,576.66 +2.48%
NASDAQ IXIC 4,567.60 -0.53% 4,176.59 +9.36%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 12 Sep 2014 Watch Read
Comment

Today’s retail sales and consumer confidence data fall into the argument of those who believe the Fed lift-off date may come sooner. The worry is if the Fed has to lift rates sooner rather than later, there’s the question of when, but also what the trajectory of interest-rate increases will be and if it will undermine this sanguine picture of equities as the only game in town.
Mark Luschini, Chief Investment Strategist, Janney Montgomery Scott LLC ($67bn) More

PORTFOLIO

Index values Opinion

:-) Outperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.664 +0.03% 1.399 +18.95%
Valuation Rate USD/AUD 0.90917 -0.56% 0.89789 +1.26%
Portfolio Index AUD 1.830 +0.59% 1.558 +17.47%

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

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 13 YTD
Apple AAPL $101.66 +0.23% $80.1457 +26.84%
Amazon AMZN $331.19 +0.20% $398.79 -16.95%
Ebay EBAY $52.19 +2.98% $54.865 -4.88%
Facebook FB $77.48 -0.56% $54.649 +41.78%
Google A GOOGL $584.90 -1.05% $560.365 +4.38%
Google C GOOG $575.70 -0.97% $560.365 +2.74%
Linkedin LNKD $224.83 -0.79% $216.83 +3.69%
VMware VMW $95.75 -0.98% $89.71 +6.73%

FX: USD/AUD

The AUD extended its decline against the USD (Chart: xe.com)

The AUD extended its decline against the USD (Chart: xe.com)

Thursday 11 Sep 2014

USA

Economy

Unemployment Insurance Weekly Claims Report: Week to 5 Sep 2014 Opinion

Extract

In the week ending September 6, the advance figure for seasonally adjusted initial claims was 315,000, an increase of 11,000 from the previous week’s revised level. The previous week’s level was revised up by 2,000 from 302,000 to 304,000. The 4-week moving average was 304,000, an increase of 750 from the previous week’s revised average. The previous week’s average was revised up by 500 from 302,750 to 303,250.

The advance seasonally adjusted insured unemployment rate was 1.9 percent for the week ending August 30, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 30 was 2,487,000, an increase of 9,000 from the previous week’s revised level. The previous week’s level was revised up 14,000 from 2,464,000 to 2,478,000. The 4-week moving average was 2,498,750, a decrease of 15,500 from the previous week’s revised average. This is the lowest level for this average since June 30, 2007 when it was 2,489,500. The previous week’s average was revised up by 3,500 from 2,510,750 to 2,514,250.

U.S. Employment and Training Administration, “Unemployment Insurance Weekly Claims Report – Week to 5 Sep 2014“, 11 Sep 2014 (08:30am) More

Comment

Claims have been running around 300,000 for a couple of months now, so I would not regard this as a deterioration in labor demand. It was during Labor Day holiday, so odds are that there are some seasonal adjustment problems. Underlying labor demand remains very firm, and certainly that is going to help consumer spending going forward.
Omair Sharif, U.S. economist, RBS Securities Inc. More

Quarterly services survey – Second quarter 2014

Extract

Information The U.S. Census Bureau announced today that the estimate of U.S. information sector revenue for the second calendar quarter of 2014, adjusted for seasonal variation but not for price changes, was $333.2 billion, an increase of 0.8 percent (± 0.9%) from the first quarter of 2014 and up 5.7 percent (± 0.9%) from the second quarter of 2013.

US Census Bureau, “Quarterly services survey – Second quarter 2014“, 11 Sep 2014 (10:00am) More

Stock market indices Opinion

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1997.45 +0.09% 1,848.36 +8.07%
DJIA INDU 17,049.00 -0.12% 16,576.66 +2.85%
NASDAQ IXIC 4,591.812 +0.12% 4,176.59 +9.94%

The shape of the day

Oil prices (down 3.8% this month), concern about the Fed’s timing of an interest rate rise and geopolitical issues (Ukraine, and ISIL in Iraq and Syria) drove today’s market.

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 11 Sep 2014 Watch Read
Comment

We’re just stuck in a tight range because the market has been so strong this year and every now and then the market needs a little time to cool off. Geopolitical events of course always make the market nervous.
Dan Miller, Director of Equities, GW&K Investment Management ($20bn) More

PORTFOLIO

Index values Opinion

:-) Outperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.664 +0.20% 1.399 +18.92%
Valuation Rate USD/AUD 0.91427 -0.74% 0.89789 +1.82%
Portfolio Index AUD 1.820 +0.95% 1.558 +16.79%

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

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

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

Portfolio stock prices

:-) Facebook achieved a new record close today: $77.92, exceeding its previous record of $77.89 on 8 Sep 2014. Facebook’s market cap is now $202.596bn.

Stock Ticker Today Change 31 Dec 13 YTD
Apple AAPL $101.43 +0.43% $80.1457 +26.56%
Amazon AMZN $330.52 -0.24% $398.79 -17.12%
Ebay EBAY $50.68 -0.82% $54.865 -7.63%
Facebook FB $77.92 +0.63% $54.649 +42.58%
Google A GOOGL $591.11 -0.39% $560.365 +5.49%
Google C GOOG $581.35 -0.30% $560.365 +3.74%
Linkedin LNKD $226.61 -1.90% $216.83 +4.51%
VMware VMW $96.70 -0.70% $89.71 +7.79%

FX: USD/AUD

The AUD has fallen 3% against the USD this week (Chart: xe.com)

The AUD has fallen 3% against the USD this week (Chart: xe.com)

NEW ZEALAND

Economy

Reserve Bank of New Zealand OCR decision

After a run of 4 increases, the RBNZ has decided to leave its official cash rate (OCR) unchanged at 3.50%.

Extract

The Reserve Bank today left the Official Cash Rate unchanged at 3.5 percent.

New Zealand’s economy is expected to grow at an annual pace of 3.7 percent over 2014. Global financial conditions remain very accommodative and are reflected in low interest rates, narrow risk spreads, and low volatility across a range of asset markets. Accommodative financial conditions are supporting a moderate rate of global growth, albeit uneven across regions.

Reserve Bank of New Zealand, “Monetary Policy Statement September 2014“, 11 Sep 2014 More

Wednesday 10 Sep 2014

X1.6 solar flare imaged by NASA's Solar Dynamics Observatory

X1.6 solar flare imaged by NASA’s Solar Dynamics Observatory More Watch

USA

Economy

Employer costs for employee compensation – Jun 2014

Extract

Private industry employers spent an average of $30.11 per hour worked for employee compensation in June 2014, the U.S. Bureau of Labor Statistics reported today. Wages and salaries averaged $21.02 per hour worked and accounted for 69.8 percent of these costs, while benefits averaged $9.09 and accounted for the remaining 30.2 percent. Total compensation costs for state and local government workers averaged $43.07 per hour worked in June 2014. Total compensation costs for civilian workers, which include private industry and state and local government workers, averaged $31.96 per hour worked in June 2014.

Bureau of Labor Statistics, “Employer costs for employee compensation – Jun 2014“, 10 Sep 2014 (10:00am) More

Stock market indices Opinion

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1995.69 +0.36% 1,848.36 +7.97%
DJIA INDU 17,068.71 +0.32% 16,576.66 +2.97%
NASDAQ IXIC 4,586.52 +0.75% 4,176.59 +9.81%

The shape of the day

The question du jour remains the timing of an interest rate rise by the Federal Reserve. More

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

Nightly Business Report: 10 Sep 2014 Watch Read
Comment

There’s been some discussion about whether the Fed might tighten the tone, or inject some uncertainty in the market. It will be an emotional change for the market when the Fed stops buying bonds in October. We have been used to this support for so many years that being in a world without it is a little scary. It also intensifies the focus on rate hikes.
Thomas Thygesen, Head of Cross-Asset Strategy, Skandinaviska Enskilda Banken AB (Copenhagen) More

The concern of the day is whether the Federal Reserve changes its timing of interest-rate moves to the upside. It’s pointless to try and figure out when interest rates will go higher. You just position yourself for when that day will come.
Dan Veru, Chief Investment Officer, Palisade Capital Management ($5bn) More

There’s a question of whether the recent weakness is the start of a new trend or just part of a business cycle that remains in an uptrend, but it is clearly the latter.
Anastasia Amoroso, Global Market Strategist, J.P. Morgan Funds More

Everybody has been watching Apple. It’s an Apple-dominated market, especially in a week where we don’t have a lot of macro data coming out.
Matt Maley, Equity Strategist, Miller Tabak & Co. LLC More

PORTFOLIO

Index values Opinion

:-) Outperformed Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.660 +2.33% 1.399 +18.68%
Valuation Rate USD/AUD 0.92109 -0.51% 0.89789 +2.58%
Portfolio Index AUD 1.803 +2.85% 1.558 +15.69%

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

Ebay EBAY -3.09%

Online auction giant eBay (EBAY) is down almost 3% this afternoon following the announcement of Apple Pay yesterday. The service stands to become big competition for eBay unit PayPal, which was rumored to be spun off in an IPO as early as next year. With a big installed base and a convenient new offering, Apple’s payment service poses a big threat to PayPal if Apple chooses to move beyond facilitating the transaction and into running the actual payment networks themselves.More

Ebay was trashed today, at one stage down more than 4%, as investors considered the impact of Apple Pay on PayPal’s business and the value of PayPal if it were to be IPO’d separately (as proposed by Carl Icahn and others).

So what would Peter Thiel, co-founder of PayPal, say about that? “I think the valuable tech companies are not the first movers or the second movers, they’re the last movers. Microsoft is a valuable company because it has the last operating system, Google’s valuable if it’s the last search engine … various companies are valuable if they’re the last in their category.Watch

It seems, today, that Apple is the last mover in payments.

Elon Musk, also a co-founder of PayPal, said (in 2012) “If PayPal doesn’t do something it will be screwed. (Q: There has not been a lot of innovation?) No, in fact if you look at the product plan I wrote in 2000 there’s hardly any difference, in fact it’s slightly worse than that. (Q: It’s gone backward?) Yes. PayPal should be where all the money is. (Q: And it’s not?). It’s definitely not.Watch

Facebook FB +0.99% achieves $200bn market cap

Shaun Parker first suggested Facebooks potential is in billions of dollars.

Shaun Parker first suggested Facebook’s potential is in billions of dollars Depiction

Facebook achieved a market cap of $201.6bn today. It achieved a market cap of $100.676bn on 26 Aug 2013. A 100% rise in market cap in just over a year!

Comment

This latest rally stems from their last earnings announcement, when they reported higher demand and sales numbers for their mobile ads. If they can continue to grow their mobile ads, they will have a sustainable demand for their stock.
Jeffrey Sica, President of Sica Wealth Management ($1.5bn) More

Portfolio stock price movements

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 13 YTD
Apple AAPL $101.00 +3.07% $80.1457 +26.02%
Amazon AMZN $331.33 +0.48% $398.79 -16.92%
Ebay EBAY $51.10 -3.09% $54.865 -6.86%
Facebook FB $77.43 +0.99% $54.649 +41.69%
Google A GOOGL $593.42 +0.24% $560.365 +5.90%
Google C GOOG $583.10 +0.36% $560.365 +4.06%
Linkedin LNKD $231.00 +0.99% $216.83 +6.54%
VMware VMW $97.38 +1.98% $89.71 +8.55%

FX: USD/AUD

The AUD has fallen as much as 2.79%  against the USD this week (Chart: xe.com)

The AUD has fallen as much as 2.79% against the USD this week (Chart: xe.com)

Tuesday 9 Sep 2014

USA

Economy

Job openings and labor turnover summary – Jul 2014 Opinion

Extract

There were 4.7 million job openings on the last business day of July, little changed from June, the U.S. Bureau of Labor Statistics reported today. The hires rate (3.5 percent) and the separations rate (3.3 percent) were unchanged in July. Within separations, the quits rate (1.8 percent) and the layoffs and discharges rate (1.2 percent) were unchanged.

Bureau of Labor Statistics, “Job openings and labor turnover summary – Jul 2014“, 9 Sep 2014 (10:00am) More

Consumer expenditures – calendar year 2013 Opinion

Extract

Average expenditures per consumer unit in 2013 were $51,100, little changed from 2012 levels, the U.S. Bureau of Labor Statistics reported today. In 2013 spending decreased 0.7 percent during the same period that the Consumer Price Index (CPI-U) increased 1.5 percent. In 2012 spending had increased 3.5 percent, outpacing the increase in prices. In 2013 average income per consumer unit edged down from 2012.

Most of the major components of household spending decreased in 2013. The largest declines occurred in the all other expenditures (-8.2 percent) and apparel and services (-7.6 percent) components. The all other expenditures category includes alcoholic beverages, education, miscellaneous, personal care products, reading, and tobacco products, all of which showed decreases. The only major components of household spending to increase were healthcare (2.1 percent), housing (1.5 percent), and transportation (0.1 percent). Overall food expenditures did not change in 2013, however food at home increased 1.4 percent while food away from home decreased 2.0 percent. Other highlights include a 4.7-percent decrease in entertainment spending and a 4.1-percent decrease in cash contributions.

Bureau of Labor Statistics, “Consumer expenditures – calendar year 2013“, 9 Sep 2014 (10:00am) More

Stock market indices Opinion

Index Ticker Today Change 31 Dec 13 YTD
S&P 500 SPX 1988.44 -0.65% 1,848.36 +7.58%
DJIA INDU 17,013.87 -0.57% 16,576.66 +2.64%
NASDAQ IXIC 4,552.29 -0.87% 4,176.59 +9.00%

The shape of the day

Market indices today (Chart: Yahoo Finance)

Market indices today (Chart: Yahoo Finance)

The market was worried that the Federal Reserve may increase rates much sooner than expected. This led to a broad market selldown and an appreciation of the USD. Apple’s product release share price rally disappeared in the market selldown.

Nightly Business Report: 9 Sep 2014 Watch Read
Comment

There are still a number of people who fear the Fed will raise rates too soon, but I don’t think there’s anything to be gained by being early in raising interest rates. If the Fed tightens too soon, it will drag the U.S. and the world into another recession.
John Manley, Chief Equity Strategist, Wells Fargo Funds Management ($233bn) More

PORTFOLIO

Index values Opinion

:-| About square Currency Today Change 31 Dec 13 YTD
Portfolio Index USD 1.623 -0.79% 1.399 +15.97%
Valuation Rate USD/AUD 0.92577 -0.80% 0.89789 +3.11%
Portfolio Index AUD 1.753 +0.03% 1.558 +12.48%

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)

The September dip at the left of the 52-week chart looks like being repeated this year. Hopefully the subsequent recovery and rally will also be repeated in the last quarter.

Stock price movements

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

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

Apple product release Opinion

Apple Watch, due for release in early 2015

Apple Watch, due for release in early 2015

New products and services

Apple today announced a range of new products and services including:

  • Apple Watch product range, which will be available for sale early next year: the Watch received a standing ovation from attendees at the Cupertino event.
  • Apple Pay: a mobile payments system, in partnership with American Express, MasterCard and Visa, commencing next month. Apple Pay makes the iPhone a digital wallet.
  • two iPhone 6 phones

Stock price reaction

AAPL's rally faded in the general market selldown (Chart: Yahoo Finance)

Apple’s product release rally faded in the general market selldown (Chart: Yahoo Finance)

Apple’s AAPL -0.38% share price rallied in the lead up to the product announcement, but that rally faded as the market was sold down on concerns about an earlier than expected interest rate increase (without foundation). Nevertheless, with a loss for the day of just 0.38%, Apple outperformed the main market indices: S&P500 SPX -0.65%, DJIA INDU -0.57% and NASDAQ IXIC -0.87%.

Portfolio stock prices

Stock Ticker Today Change 31 Dec 13 YTD
Apple AAPL $97.99 -0.38% $80.1457 +22.26%
Amazon AMZN $329.75 -3.68% $398.79 -17.31%
Ebay EBAY $52.73 -2.77% $54.865 -3.89%
Facebook FB $76.67 -1.57% $54.649 +40.30%
Google A GOOGL $591.97 -1.61% $560.365 +5.64%
Google C GOOG $581.01 -1.48% $560.365 +3.68%
Linkedin LNKD $228.74 -0.81% $216.83 +5.49%
VMware VMW $95.49 +0.95% $89.71 +6.44%

FX: USD/AUD

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

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