Mon 31 Jul 2017 (EOM)


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White House Departures:
watch 31 Jul 2017: White House Communications Director Anthony Scaramucci Reuters
watch 28 Jul 2017: White House Chief of Staff Reince Priebus.
watch 21 Jul 2017: White House Press Secretary Sean Spicer.
watch 30 May 2017: White House Communications Director Michael Dubke
watch 9 May 2017: FBI Director James Comey.

In Portfolioticker today

Today at the stock market

bull/bearU.S. stocks slumped Monday despite a strong performance for the month, spurred by healthy corporate results and growing optimism in the strength of the global economy. Treasuries slid and the USD added to its biggest monthly retreat since Jan 2017.

  • The S&P 500 closed down less than 0.1. at 2,470.3, but posted a gain of 1.9% in Jul 2017.
  • The Nasdaq 100 Index dropped 0.5%, paring its monthly advance to 4.1%.
  • The Stoxx Europe 600 Index slipped 0.1%, for its second straight monthly loss.
  • The MSCI All-Country World Index advanced 0.2%.
  • The U.K.’s FTSE 100 Index increased less than 0.1%.
  • The MSCI Emerging Market Index climbed 0.4%.

The S&P 500 Index swung between gains and losses on light volume, but the gauge still posted its fourth straight monthly gain. European shares retreated for Jul 2017. Copper rose to a 2-year high and iron ore surged. The USD pushed its decline this month to 2.6%, while the 10-year Treasury yield held near 2.30%. West Texas Intermediate crude traded above $50/barrel for the first time since May 2017.

U.S. stocks stumbled to the end of Jul 2017 after powering to fresh records amid evidence of resilient growth around the world. China’s official factory gauge showed continued expansion in Jun 2017, even as it slipped amid government efforts to curb financial risks. Japan’s industrial output expanded in Jun 2017, while numbers on Friday showed the U.S. economy accelerating in Q2/2017.

“Global expansion dynamics are well underway,” analysts at Candriam Investors Group wrote in a report. “The European recovery is well on track and is leading to above-trend growth in 2017-18. This has led us to increase our profit earnings expectations for euro-zone equities. The economic news flow is starting to become more supportive in the U.S., while emerging markets are benefiting from a good economic momentum.”

Meanwhile, the slew of corporate earnings continues. Apple Inc., Tesla Inc., Berkshire Hathaway Inc. and Toyota Motor Corp. are all set to unveil results this week. HSBC’s second-quarter profit beat analysts’ estimates as outgoing Chief Executive Officer Stuart Gulliver boosted revenue while also trimming costs, and the lender said it will spend up to $2 billion buying back stock.Bloomberg

Investors Sell Down PowerShares QQQ Trust Series 1 (Nasdaq 100 Index)

Outflows from PowerShares QQQ Trust Series 1, which tracks the Nasdaq 100 Index topped $3.7 billion for the five sessions ending 28 Jul 2017, the most since early Nov 2007.

On the surface, it was a quiet week for the product that tracks large-cap tech companies, ending down just 0.2%. On Thursday, however, QQQ suffered an intraday selloff of more than 2% led by Amazon.com Inc., with investors dumping the e-commerce giant ahead of its quarterly earnings report. Also that afternoon, JPMorgan Chase & Co. quant Marko Kolanovic warned that investors had a “limited window” to position for a pickup in volatility.

The divestiture of tech shares came despite of an impressive round of quarterly results for the group as a whole, pointing to investors’ wariness of holding a product that’s already up 20% year to date and has outperformed the S&P 500 Index by 10 percentage points in 2017.Bloomberg

Market indices

:-) The DJIA closed on a record high of 21,891.12 up 0.28% on Friday’s record of 21,830.31.

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,470.30 -0.08% 2,238.83 +10.33%
DJIA INDU 21,891.12 +0.27% 19,762.60 +10.77%
NASDAQ IXIC 6,348.12 -0.42% 5,383.12 +17.92%

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 2.697 -0.90% 2.105 +28.15%
Valuation Rate USD/AUD 0.80489 +0.14% 0.72663 +10.77%
AUD-denominated Index AUD 3.355 -1.05% 2.895 +15.87%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $945.50 -1.34% $792.45 +19.31%
Alphabet C GOOG $930.50 -1.17% $771.82 +20.55%
Apple AAPL $148.85 -0.43% $115.82 +28.51%
Amazon AMZN $987.78 -3.16% Opinion $749.87 +31.72%
Ebay EBAY $35.73 -0.58% $29.69 +20.34%
Facebook FB $169.25 -1.86% $115.05 +47.10%
PayPal PYPL $58.55 -1.10% $39.47 +48.34%
Twitter TWTR $16.09 -3.94% Opinion $16.30 -1.29%
Visa V $99.56 +0.41% $78.02 +27.60%
VMware VMW $92.71 +0.44% $78.73 +17.75%

FX: USD/AUD

DXY movements
^ AUD vs USD this month (mouseover for USD (DXY) Index) Charts: XE.com and Bloomberg

USD

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

The Bloomberg Dollar Spot Index (DXY) fell 0.3% and posted its 5th straight monthly drop.
The EUR rose 0.8% to USD 1.184.
Britain’s GBP added 0.5% to USD 1.3196.
Bloomberg

AUD

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

Oil and Gas Futures

Futures prices

Prices are as at 15:49 ET

  • NYMEX West Texas Intermediate (WTI): $50.36/barrel +1.31% Chart
  • ICE (London) Brent North Sea Crude: $52.65/barrel +0.25% Chart
  • NYMEX Natural gas futures: $2.82/MMBTU -4.08% Chart

flag_australia AU: New Home Sales

Press Release Extract [au_hia]

New home sales in Australia’s largest states hit their lowest level since October 2013 with sales sliding in both the detached house and multi-unit sides of the market according to the latest HIA New Home Sales Report.

au_hia_20170731

“During June, new home sales declined by 6.9 per cent compared with the previous month and were 11.9 per cent lower than the same period last year,” explained HIA Senior Economist Shane Garrett. “These results support HIA’s latest set of forecasts that new dwelling commencements are set to continue easing until late 2018. The reduction in sales of both detached houses and multi-units during the month of June continues the trend underway since sales peaked in early 2015. The fall in sales needs to be considered against the backdrop of residential building coming off a record peak of activity in 2016. We project that residential building will still be operating at a historically high level,” concluded Shane Garrett.

The reduction in new home sales during June 2017 was comprised of a 5.8 per cent reduction in new detached house sales and a 10.7 per cent fall in new multi-unit sales.

There were considerable differences in sales in June around the states with new detached house sales rising both in Victoria (+4.1 per cent) and Western Australia (+21.1 per cent). However, sales fell in New South Wales (-9.7 per cent), Queensland (-29.3 per cent) and South Australia (-23.7 per cent) during the month.

Housing Industry Association, “HIA New Home Sales Report – June 2017“, 31 Jul 2017 More

flag_australia AU: Australia Private Sector Credit

Press Release Extract [au_credit]

Private sector credit in Australia rose 0.6 percent month-on-month in June of 2017, following a 0.4 percent rise in a month earlier and reaching the strongest growth since December 2016. Business credit grew at a faster pace (0.9 percent from 0.3 percent in May) and housing credit went up further (0.5 percent from 0.6 percent). In contrast, personal credit declined by 0.1 percent, the same as in the prior month. Compared to the same month a year ago, private sector credit rose 5.4 percent, faster than a 5.0 percent growth in May. Private Sector Credit in Australia averaged 0.88 percent from 1976 until 2017, reaching an all time high of 2.90 percent in July of 1986 and a record low of -0.50 percent in July of 1992.TradingEconomics

flag_europe EU: Unemployment. Jun 2017

Press Release Extract [ser_40]

The euro area (EA19) seasonally-adjusted unemployment rate was 9.1% in June 2017, down from 9.2% in May 2017 and down from 10.1% in June 2016. This is the lowest rate recorded in the euro area since February 2009. The EU28 unemployment rate was 7.7% in June 2017, stable compared to May 2017 and down from 8.6% in June 2016. This remains the lowest rate recorded in the EU28 since December 2008. These figures are published by Eurostat, the statistical office of the European Union.

eu_ue_20170731

Eurostat estimates that 18.725 million men and women in the EU28, of whom 14.718 million in the euro area, were unemployed in June 2017. Compared with May 2017, the number of persons unemployed decreased by 183 000 in the EU28 and by 148 000 in the euro area. Compared with June 2016, unemployment fell by 2.368 million in the EU28 and by 1.667 million in the euro area.

Member States

Among the Member States, the lowest unemployment rates in June 2017 were recorded in the Czech Republic (2,9%), Germany (3.8%) and Malta (4.1%). The highest unemployment rates were observed in Greece (21.7% in April 2017) and Spain (17.1%).

eu_ue_states_20170731

Compared with a year ago, the unemployment rate fell in all Member States for which data is comparable over time, except Estonia which showed an increase (from 6.5% in May 2016 to 6.9% in May 2017). The largest decreases were registered in Spain (from 19.9% to 17.1%) and Croatia (from 13.3% to 10.6%).

In June 2017, the unemployment rate in the United States was 4.4%, up from 4.3% in May 2017 but down from 4.9% in June 2016.

Youth unemployment

In June 2017, 3.710 million young persons (under 25) were unemployed in the EU28, of whom 2.588 million were in the euro area. Compared with June 2016, youth unemployment decreased by 586 000 in the EU28 and by 399 000 in the euro area. In June 2017, the youth unemployment rate was 16.7% in the EU28 and 18.7% in the euro area, compared with 18.8% and 21.0% respectively in June 2016. In June 2017, the lowest rate was observed in Germany (6.7%), while the highest were recorded in Greece (45.5% in April 2017), Spain (39.2%) and Italy (35.4%).

Eurostat, “Unemployment. Jun 2017“, 31 Jul 2017 More

flag_europe EU: Inflation (HICP). Jul 2017 (Flash Estimate)

Press Release Extract [ser_21]

Euro area annual inflation is expected to be 1.3% in July 2017, stable compared with June 2017, according to a flash estimate from Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in July (2.2%, compared with 1.9% in June), followed by services (1.5%, compared with 1.6% in June), food, alcohol & tobacco (1.4%, stable compared with June) and non-energy industrial goods (0.5%, compared with 0.4% in June).

Eurostat, “Inflation (HICP). Jul 2017 (Flash Estimate)“, 31 Jul 2017 More

flag_usa US: Pending Home Sales. Jun 2017

Press Release Extract [ser_79]

After declining for three straight months, pending home sales reversed course in June as all major regions, except for the Midwest, saw an increase in contract activity, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.5 percent to 110.2 in June from an upwardly revised 108.6 in May. At 0.5 percent, the index last month increased annually for the first time since March.

Lawrence Yun, NAR chief economist, says the bounce back in pending sales in most of the country in June is a welcoming sign. “The first half of 2017 ended with a nearly identical number of contract signings as one year ago, even as the economy added 2.2 million net new jobs,” he said. “Market conditions in many areas continue to be fast paced, with few properties to choose from, which is forcing buyers to act almost immediately on an available home that fits their criteria.”

Added Yun, “Low supply is an ongoing issue holding back activity. Housing inventory declined last month and is a staggering 7.1 percent lower than a year ago.”

Yun does note that there could potentially be a sliver of increased hope in the months ahead for prospective first-time buyers, who continue to struggle reaching the market1. Sales to investors last month were the lowest of the year (13 percent), which helped push all cash transactions to 18 percent – the smallest share since June 2009 (13 percent).

“It appears the ongoing run-up in price growth in many areas and less homes for sale at bargain prices are forcing some investors to step away from the market,” said Yun. “Fewer investors paying in cash is good news as it could mean a little less competition for the homes first-time buyers can afford. However, the home search will still likely be a strenuous undertaking in coming months because supply shortages in most areas are most severe at the lower end of the market.”

Heading into the second half of the year, Yun expects existing-home sales to finish around 5.56 million, which is an increase of 2.6 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.

The PHSI in the Northeast inched forward 0.7 percent to 98.0 in June, and is now 2.9 percent above a year ago. In the Midwest the index decreased 0.5 percent to 104.0 in June, and is now 3.4 percent lower than June 2016.

Pending home sales in the South rose 2.1 percent to an index of 126.0 in June and are now 2.6 percent above last June. The index in the West grew 2.9 percent in June to 101.5, but is still 1.1 percent below a year ago.

National Association of Realtors, “Pending Home Sales Recover in June, Grow 1.5 Percent“, 31 Jul 2017 More

flag_japan Japan update

Currency: USD/JPY

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

Stockmarket: Nikkei 225

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

flag_china China update

Manufacturing PMI. Jul 2017

Preview: TradingEconomics

The official NBS Manufacturing PMI in China fell to 51.4 in July of 2017 from 51.7 in June and below market consensus of 51.6. Output (53.5 from 54.4 in a month earlier), new orders (52.8 from 53.1) and new export orders (50.9 from 52.0) rose at slower paces while employment fell for the fourth straight month (49.2 from 49.0). Also, raw materials in stock (48.5 from 48.6) continued to decline and orders in hand decreased more than in a month earlier (46.3 from 47.2). Meantime, buying quantity (52.7 from 52.5) increased at a slightly faster rate amid strengthening business confidence (59.1 from 58.7). Business Confidence in China averaged 52 from 2005 until 2017, reaching an all time high of 59.20 in April of 2008 and a record low of 38.80 in November of 2008.TradingEconomics

Press Release Extract [ser_77]

In July 2017, China’s manufacturing purchasing managers index (PMI) was 51.4 percent, a decrease of 0.3 percentage points from last month, and was in line with the average of the first half year, the overall trend of manufacturing industry was stable.

cn_pmi_20170731

In view of the sizes of enterprises, the PMI of large-sized enterprises was 52.9 percent, increased 0.2 percentage points from last month, rising for two consecutive months; that of medium-sized enterprises was 49.6 percent, decreased 0.9 percentage points from last month, and dropped below the threshold; that of small-sized enterprises was 48.9 percent, a decrease of 1.2 percentage points from last month, lower than the threshold.

Among the five sub-indices composing PMI, the production index, new orders index and supplier delivery time index were higher than the threshold. The main raw materials inventory index and employed person index were lower than the threshold.

Production index was 53.5 percent, a decrease of 0.9 percentage points month-on-month, and was still positioned in the expansion range, indicating that the growth rate of manufacturing production declined.

New orders index was 52.8 percent, a decrease of 0.3 percentage points month-on-month, and continued to be higher than the threshold, showing that the expansion of manufacturing market demand slowed down slightly.

Main raw materials inventory index was 48.5 percent, decreased 0.1 percentage point from last month, lower than the threshold, indicating that the manufacturing main raw material inventory continued to decrease.

Employed person index was 49.2 percent, increased 0.2 percentage points month-on-month, lower than the threshold, indicating that the pace of decline of manufacturing enterprises’ labor employment has narrowed.

Supplier delivery time index was 50.1 percent, an increase of 0.2 percentage points from last month, and rose above the threshold, indicating that the delivery time of manufacturing raw material suppliers has been further quickened.

National Bureau of Statistics of China, “Manufacturing PMI. Jul 2017“, 31 Jul 2017 More

Non-Manufacturing PMI. Jul 2017

Preview: TradingEconomics

The official Non-Manufacturing PMI in China fell to 54.5 in July of 2017 from 54.9 in June. New orders (51.1 from 51.4 in the prior month) increased at a slower pace, employment (49.5 from 49.6) declined for the seventh straight month while business sentiment remained strong (61.1 from 61.1). In addition, new export orders grew for the first time since February. Also, selling prices (50.9 from 49.3) increased for the first time in four months. Meanwhile, orders in hand (43.9 from 44.6) declined at a faster pace while suppliers’ delivery time was barely changed (51.7 from 51.8). The services sector accounted for over half of the country’s economy last year. Non Manufacturing PMI in China averaged 55.96 percent from 2007 until 2017, reaching an all time high of 62.20 percent in May of 2007 and a record low of 50.80 percent in December of 2008.TradingEconomics

Press Release Extract [ser_78]

In July 2017, China’s non-manufacturing purchasing manager index was 54.5 percent, a decrease of 0.4 percentage points from the previous month, and was in line with the average of the first half year, the non-manufacturing industry continued a good development momentum of steady growth.

cn_psi_20170731

In view of different industries, non-manufacturing purchasing manager index of service industry was 53.1 percent, a decrease of 0.7 percentage points from the previous month, but 0.5 percentage points higher than the same period last year, the service industry continued rapid growth. Of which, the indices of air transport, post, telecommunications, broadcasting, television and satellite transmission services, Internet, software and information technology services, continued to be positioned in the high level of the range which above 60.0 percent, and the total enterprise business increased rapidly. The indices of transport via road, real estate, resident services and repair, were positioned in the contraction range, and the total business decreased. Non-manufacturing purchasing manager index of construction industry achieved 62.5 percent, an increase of 1.1 percentage points from the previous month, and the production of enterprises maintained rapid growth.

New orders index was 51.1 percent, down by 0.3 percentage points from the previous month, and kept staying above the threshold, indicating that the growth of the non-manufacturing market demand slowed down slightly. In view of different industries, the new orders index of service industry was 50.2 percent, decreased 0.5 percentage points from the previous month, and staying in the expansion range for three consecutive months. The new orders index of construction industry was 56.0 percent, increased 0.6 percentage points from the previous month, and continued to be higher than the threshold.

Input price index was 53.1 percent, up by 1.9 percentage points from the previous month, and was above the threshold, indicating that the overall level of input price during the process of non-manufacturing enterprises’ operating activities continued to rise. In view of different industries, the intermediate input price indices of service industry was 51.9 percent, increased 2.3 percentage points from the previous month. The input price index of construction industry was 59.8 percent, a decrease of 0.1 percentage point from the previous month.

The sales price index was 50.9 percent, up by 1.6 percentage points from last month, and was back above the threshold, indicating that the overall level of non-manufacturing sales price went up. In view of different industries, the sales price index of service industry was 50.6 percent, an increase of 1.8 percentage points from the previous month. The sales price index of construction industry was 52.5 percent, an increase of 0.5 percentage points from the previous month.

Employment index was 49.5 percent, decreased 0.1 percentage point from the previous month, and continued to be lower than the threshold, indicating that the labor employment of non-manufacturing enterprises continued to decline. In view of different industries, the employment index of service industry was 48.6 percent, a decrease of 0.6 percentage points from the previous month. The employment index of construction industry was 54.2 percent, an increase of 2.3 percentage points from the previous month.

Business activities expectation index was 61.1 percent, unchanged from last month, and staying in the high level of the range for three consecutive months. In view of different industries, the business activities expectation index of service industry was 60.4 percent, an increase of 0.4 percentage points from the previous month. That of construction industry was 65.3 percent, a decrease of 2.3 percentage points from the previous month.

National Bureau of Statistics of China, “Non-Manufacturing PMI. Jul 2017“, 31 Jul 2017 More

Currency: USD/CNY

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

Stockmarket: CSI300

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