Scottish Independence Vote
“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 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 (Pic: Braveheart)
Industrial Output – Aug 2014
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.
“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
“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
“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
“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
“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
US market indices
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
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The shape of the week
S&P500, DJIA and NASDAQ index performance this week (Chart: Yahoo Finance)
Bunting portfolio indices
USD and AUD denominated indices over the last 52 weeks (Chart: Bunting)
This week’s performance
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.
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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)
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)
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)
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)
GOOGL share price performance this week (Chart: Yahoo Finance)
- Friday close: $584.90 -2.15% from $597.78.
- P/E (historical): 30.22 from 30.89
- P/E (1 year fwd): 26.83 from 26.92
- Target (1 year): NASDAQ consensus $656 range $600 ↔ $750.
- SEC filings (CIK 0001288776): Edgar Search (New, Beta)
GOOG share price performance this week (Chart: Yahoo Finance)
- Friday close: $575.70 -1.77% from $586.08.
- P/E (historical): 20.07 from 20.44
- P/E (1 year fwd): N/A
- Analyst recommendations: 6 strong buy, 3 buy, 0 hold.
LNKD share price performance this week (Chart: Yahoo Finance)
VMW share price performance this week (Chart: Yahoo Finance)
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.