Wed 28 Jun 2017

watch Nightly Business Report. watch Bloomberg Technology.
watch National Association of Realtors: Pending Home Sales Fall in May 2017
ECB Forum – Session 2: Business cycles, growth and macroeconomic policy: Policy panel
watch speech Mark Carney, Governor, Bank of England
watch speech Stephen Poloz, Governor, Bank of Canada
watch Haruhiko Kuroda, Governor, Bank of Japan

In Portfolioticker today

Today at the stock market

bull/bearThe S&P 500 Index rebounded from the biggest selloff in 6 weeks, with bank shares rising to March highs Treasury 10-year note yields climbed above 2.21%. Technology firms snapped back to halt a selloff that dented confidence in the year’s biggest gainers.

Small caps led the way with a rally that topped 1.5% and took the Russell 2000 Index within a point of an all-time high.

  • The S&P 500 Index added 0.9% to 2,440.51 as of 4 p.m. in New York, bouncing back from a loss of 0.8%. It’s on pace for a quarterly gain of 3.3%, the 7th straight advance. Financial shares surged 1.6%, touching the highest since Mar 2017.
  • The Nasdaq Composite Index jumped 1.4%.
  • Small caps in the Russell 2000 Index rallied 1.5%, the most since 1 Jun 2017.
  • The Stoxx Europe 600 Index closed little changed as it heads for a monthly slide of about 1%.
  • MSCI’s emerging markets index fell 0.3%, paring a quarterly gain of 5.8%.

The mood in U.S. equities reversed shortly before the open, when European Central Bank officials said markets had misinterpreted as hawkish comments Tuesday from Mario Draghi. That sent the EUR tumbling from the highest in a year versus the USD on bets stimulus would remain robust in the region. The EUR reversed again and the GBP soared when Bank of England’s Mark Carney, in a sign of confidence in the U.K. economy, said rates may need to rise soon. Canada’s Stephen Poloz then reiterated he’s considering tightening, sending the CAD tearing higher.

The optimistic reading of the latest central bank proclamations – economies around the globe can withstand tighter financial conditions as growth picks up – changed the tone in financial markets less than a day after a host of events from an IMF cut to its U.S. growth forecast, a fresh blow to the Republican agenda in Washington and a global cyberattack had ushered in note of caution. A trio of Federal Reserve speakers had also suggested that some assets had gotten rich by conventional measures. Markets also got a boost Wednesday as oil’s rebound continued.Bloomberg

Market indices

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2440.69 +0.88% 2238.83 +9.01%
DJIA INDU 21454.61 +0.67% 19762.60 +8.56%
NASDAQ IXIC 6234.41 +1.42% 5383.12 +15.81%

The portfolio today

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

Index values

Index Currency Today Change 31 Dec 16 YTD
USD-denominated Index USD 2.646 +1.42% 2.105 +25.72%
Valuation Rate USD/AUD 0.76908 +0.66% 0.72663 +5.84%
AUD-denominated Index AUD 3.442 +0.77% 2.895 +18.89%

Portfolio stock prices

:-) PayPal closed at $54.39, equalling its record high close of 8 Jun 2017.

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $961.01 +1.36% $792.45 +21.27%
Alphabet C GOOG $940.49 +1.42% $771.82 +21.85%
Apple AAPL $145.83 +1.46% $115.82 +25.91%
Amazon AMZN $990.33 +1.39% $749.87 +32.06%
Ebay EBAY $35.31 +1.15% $29.69 +18.92%
Facebook FB $153.24 +1.77% $115.05 +33.19%
PayPal PYPL $54.39 +3.15% $39.47 +37.80%
Twitter TWTR $17.95 -0.94% $16.30 +10.12%
Visa V $96.23 +1.40% $78.02 +23.34%
VMware VMW $89.58 +0.37% $78.73 +13.78%



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

The Bloomberg Dollar Spot Index (DXY) dropped 0.4% to the lowest since Oct 2016 (and before Trump’s 8 Nov 2016 election victory).
The EUR rose 0.4% to USD 1.1385, the highest level since Jun 2016, after rising 1.4% on Tuesday.
Britain’s GBP jumped 0.9% to USD 1.2933.
Canada’s CAD surged 1.3% to 1.30293.


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

Oil and Gas Futures

Futures prices

WTI futures advanced 1.1% to settle at $44.74 after climbing 4% in the previous 4 sessions. Prices gained as government data showed a drop in U.S. gasoline supplies that have remained stubbornly high at the start of the summer driving season.Bloomberg

Prices are as at 15:49 ET

  • NYMEX West Texas Intermediate (WTI): $44.73/barrel +1.11% Chart
  • ICE (London) Brent North Sea Crude: $47.32/barrel +1.44% Chart
  • NYMEX Natural gas futures: $3.07/MMBTU +0.99% Chart

flag_usa US: Monthly Advance Economic Indicators Report (International Trade, Retail, & Wholesale). May 2017

Press Release Extract [ser_149]


Advance International Trade in Goods

The international trade deficit was $65.9 billion in May, down $1.2 billion from $67.1 billion in April. Exports of goods for May were $127.1 billion, $0.5 billion more than April exports. Imports of goods for May were $193.0 billion, $0.8 billion less than April imports.

Advance Wholesale Inventories

Wholesale inventories for May, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $593.4 billion, up 0.3 percent (±0.4 percent) from April 2017, and were up 1.8 percent (±0.7 percent) from May 2016. The March 2017 to April 2017 percentage change was revised from down 0.5 percent (±0.2 percent) to down 0.4 percent (±0.2 percent).

Advance Retail Inventories

Retail inventories for May, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $617.4 billion, up 0.6 percent (±0.2 percent) from April 2017, and were up 3.2 percent (±0.4 percent) from May 2016. The March 2017 to April 2017 percentage change was unrevised at down 0.2 percent (±0.2 percent).

US Census Bureau, “Monthly Advance Economic Indicators Report (International Trade, Retail, & Wholesale). May 2017“, 28 Jun 2017 (08:30) More

flag_usa US: Pending Home Sales. May 2017

Press Release Extract [ser_79]

The ongoing supply shortages that are propping up home prices in many metro areas caused pending home sales in May to slump for the third consecutive month, according to the National Association of Realtors®. None of the major regions saw an increase in contract activity last month.

The Pending Home Sales Index,a forward-looking indicator based on contract signings, decreased 0.8 percent to 108.5 in May from a downwardly revised 109.4 in April. The index is now 1.7 percent below a year ago, which marks the second straight annual decline and the most recent since November and December of last year.

Lawrence Yun, NAR chief economist, says it’s clear the critically low inventory levels in much of the country somewhat sidetracked the housing market this spring. “Monthly closings have recently been oscillating back and forth, but this third consecutive decline in contract activity implies a possible topping off in sales,” he said. “Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast.”

The persistent housing shortages seen in several markets are most severe, according to Yun, in the lower price ranges. That’s very apparent when looking at the percent change in closings in May compared to a year ago. Sales of homes under $100,000 last month were down 7.2 percent from last year and up only 2.0 percent for those between $100,000 and $250,000. In higher price brackets, sales expanded incrementally all the way up to massive increases of 26.0 percent for homes priced between $750,000 and $1 million and even more for those $1 million and up (29.1 percent).

Weaker financial and economic confidence could also be playing a role in the slowdown in contract activity. NAR’s quarterly Housing Opportunities and Market Experience (HOME) survey, released earlier this week, found that fewer renters think it’s a good time to buy a home, and respondents overall are less confident about the economy and their financial situation than earlier this year.

“The lack of listings in the affordable price range are creating lopsided conditions in many areas where investors and repeat buyers with larger down payments are making up a bulk of the sales activity,” said Yun. “Meanwhile, many prospective first-time buyers can’t catch a break. Prices are going up and there’s intense competition for the homes they’re financially able to purchase.”

Existing-home sales are forecast to be around 5.63 million this year, an increase of 3.2 percent from 2016 (5.45 million). The national median existing-home price this year is expected to increase around 5 percent. In 2016, existing sales increased 3.8 percent and prices rose 5.1 percent.

“A much higher share of homeowners compared to a year ago think now is a good time to sell1, but until they do, sales will likely stay flat and low inventory will keep price growth moving swiftly,” said Yun.

The PHSI in the Northeast decreased 0.8 percent to 96.4 in May, but remains 3.1 percent above a year ago. In the Midwest the index was 104.5 in May (unchanged from April), and is 2.8 percent lower than May 2016.

Pending home sales in the South declined 1.2 percent to an index of 123.4 in May and are now 1.4 percent below last May. The index in the West subsided 1.3 percent in May to 98.6, and is now 4.5 percent below a year ago.

National Association of Realtors, “Pending Home Sales. May 2017“, 28 Jun 2017 (10:00) More

flag_usa US: Status of Debate on Tax Cuts

Press Report: Bloomberg

President Donald Trump’s call to slash the corporate income tax rate to 15% has faced resistance during private tax meetings, according to a senior White House official.

While Trump has been clear that he thinks cutting the rate, which is currently 35%, is essential for job creation, others have said that it’s impossible to cut it as much as he wants without adding to the federal deficit, said the official, who asked not to be named because the discussions are private. The official didn’t specify who had raised the objections, but said administration officials have met with over 200 members of Congress as part of the effort to craft the tax bill.

Offering a first glimpse into closed-door sessions on tax policy between Trump’s top economic advisers and congressional leaders, the White House official said the sides have yet to agree on whether tax legislation should be “deficit-neutral.” Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan have both called for such neutrality – meaning that any tax cuts would be offset either by higher revenue from other sources or by spending cuts – though some of Trump’s advisers have questioned the need for it.Bloomberg

Global Debt Hits Record High

Global debt levels have climbed $500 billion in the past year to a record $217 trillion, a new study shows, just as major central banks prepare to end years of super-cheap credit policies.

World markets were jarred this week by a chorus of central bankers warning about overpriced assets, excessive consumer borrowing and the need to begin the process of normalizing world interest rates from the extraordinarily low levels introduced to offset the fallout of the 2009 credit crash.

This week, U.S. Federal Reserve chief Janet Yellen has warned of expensive asset price valuations, Bank of England Governor Mark Carney has tightened controls on bank credit and European Central Bank head Mario Draghi has opened the door to cutting back stimulus, possibly as soon as September.

Years of cheap central bank cash has delivered a sugar rush to world equity markets, pushing them to successive record highs. But another side effect has been explosive credit growth as households, companies and governments rushed to take advantage of rock-bottom borrowing costs.

Global debt, as a result, now amounts to 327% of the world’s annual economic output, the Institute of International Finance (IIF) said in a report late on Tuesday.

One of the most authoritative trackers of global capital flows, the IIF report highlighted “rollover” risks, especially in emerging markets that have borrowed in hard currencies such as euros and dollars.Reuters Report

flag_japan Japan update

Currency: USD/JPY

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

Stockmarket: Nikkei 225

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

flag_china China update

Currency: USD/CNY

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

Stockmarket: CSI300

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