Thu 31 Aug 2017


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watch Mnuchin says detailed tax plan to be released in Sep 2017.

In Portfolioticker today

Today at the stock market

bull/bearU.S. stocks rose on Thursday after data showed domestic inflation increased at its slowest pace since late 2015, boosting expectations that the Federal Reserve will hold off from increasing interest rates again this year.

The USD surrendered early gains against a basket of major currencies, and gold prices rose as simmering tensions on the Korean peninsula supported sentiment.

U.S. consumer spending rose slightly less than expected in Jul 2017 and annual inflation increased at its slowest pace since late 2015. Investors’ focus now turns to the monthly U.S. payrolls report, to be released on Friday. The combination of moderate consumer spending and tepid inflation casts doubts on whether the Fed will raise rates at its Dec 2017 policy meeting.

The S&P 500 Index has been building momentum this week and closed above its 50-day moving average for a second straight day. This was a technical level that acted as resistance in the past week.

  • The S&P 500 gained 14.06 points, or 0.57%, to close at 2,471.65. [Bloomberg: Its five-day winning streak is the longest since May 2017.]
  • The Dow Jones Industrial Average rose 55.67 points, or 0.25%, to finish at 21,948.1. [Bloomberg: This was a fifth straight monthly advance.]
  • The Nasdaq Composite added 60.35 points, or 0.95%, to end at 6,428.66.

European stocks rallied after Reuters reported that the euro’s rapid gains are worrying a growing number of European Central Bank policymakers, raising the chance asset purchases will be phased out only slowly. The pan-European STOXX 600 closed up 0.77%. The EUR, which hit a more than 2½2-year high against the USD on Tuesday, slipped on the Reuters report, before recovering to trade up 0.19% at USD1.1904.

The USD, which weakened after the U.S. inflation data, edged lower as month-end investment flows and caution ahead of Friday’s U.S. jobs report weighed. The Bloomberg Dollar Spot Index (DXY) was 0.28% lower at 92.62. The weaker USD and continued security concerns related to North Korea helped gold prices rise. Spot gold was up 1.06% at $1,322.17/ounce.

U.S. Treasury prices gained after the U.S. data and as tensions with North Korea kept up demand for safe-haven bonds. Benchmark 10-year U.S. Treasury notes were up 7/32 in price to yield 2.1222%, down from 2.145% on Wednesday.

Gasoline futures surged 13.5% as almost a quarter of U.S. refining capacity remained offline due to Tropical Storm Harvey and traders scrambled to reroute millions of barrels of fuel.

U.S. crude settled up $1.27 or +2.76%, at $47.23/barrel and Brent crude settled $1.52 higher, or +2.99%, at $52.38/barrel.Reuters Bloomberg

Market indices

market
^ Major market indices (mouseover for month view) Chart: Google Finance

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,471.65 +0.57% 2,238.83 +10.39%
DJIA INDU 21,948.10 +0.25% 19,762.60 +11.05%
NASDAQ IXIC 6,428.66 +0.94% 5,383.12 +19.42%

read_this Portfolio Indices

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

:-) Our USD-denominated index closed at a record 2.890, up 0.61% on yesterday’s record of 2.873.
That’s a great way to end Australia’s Winter, and we’re looking forward to reporting 3.000 soon (requires a rise of just 3.8%). For our AUD-denominated index to report 4.000 against 3.000 for the USD index, the AUD would need to drop 9.8% to USD 0.717 – last seen 8 months ago in late Dec 2016.

Index values

Index Currency Today Change 31 Dec 16 YTD
USD-denominated Index USD 2.890 +0.60% 2.105 +37.30%
Valuation Rate USD/AUD 0.79984 +0.59% 0.72663 +10.07%
AUD-denominated Index AUD 3.616 +0.01% 2.895 +24.91%

Portfolio stock prices

:-) Apple closed at a record $164.00, up 0.40% on yesterday’s record of $163.35.

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $955.24 +1.23% $792.45 +20.54%
Alphabet C GOOG $939.33 +1.05% $771.82 +21.70%
Apple AAPL $16.004 +0.40% $115.82 +41.59%
Amazon AMZN $980.60 +1.34% $749.87 +30.76%
Ebay EBAY $36.13 +1.23% $29.69 +21.69%
Facebook FB $171.97 +1.21% $115.05 +49.47%
PayPal PYPL $61.68 -0.15% $39.47 +56.27%
Twitter TWTR $16.91 -0.12% $16.30 +3.74%
Visa V $103.52 -0.20% $78.02 +32.68%
VMware VMW $108.10 +1.07% $78.73 +37.30%

FX: USD/AUD

USD

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

The Bloomberg Dollar Spot Index (DXY) fell 0.2%.
The EUR added 0.2% to USD1.1903, near the strongest since 2015.
Britain’s GBP added 0.1% to USD1.2931.
Japan’s JPY rose 0.1% to 110.09 per USD.
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 15:47 EDT

  • NYMEX West Texas Intermediate (WTI): $47.08/barrel +2.44% Chart
  • ICE (London) Brent North Sea Crude: $52.38/barrel +2.99% Chart
  • NYMEX Natural gas futures: $3.02/MMBTU +2.76% Chart

Amazon and Microsoft Cooperating on Use of AWS

Amazon and Microsoft, two archrivals in cloud computing and stiff competitors for Seattle-area tech talent, are cooperating a lot more.

Earlier this week, we saw the marriage of Amazon’s Alexa virtual assistant and Microsoft’s Cortana. Then, on Thursday, the companies announced they were teaming up so programmers can more easily take code they manage in Microsoft’s tools, and roll it out on Amazon’s cloud.

On Thursday Microsoft published a blog post detailing the ways in which its Team Foundation Server on-premises software and its Visual Studio Team Services cloud service can hook into various Amazon Web Services tools.

After installing the new tools, developers can upload content to AWS’ widely used S3 storage service, automate the deployments with AWS’ CodeDeploy tool and run apps with the Lambda serverless-computing service, among other things, without leaving the confines of the Microsoft products

To build the integrations, Amazon engineers collaborated with members of Microsoft’s Visual Studio ALM Rangers group, Microsoft program manager Joseph Bourne wrote in the blog post. The ALM Rangers group is tasked with coming up with “out of band solutions for missing features or guidance,” Microsoft has said.

Effectively, Microsoft is providing a new source of revenue for AWS, the biggest cloud around and the main competitor to Microsoft’s own Azure cloud. That’s notable because historically Microsoft has advertised these kinds of integrations as a reason to use Azure.

But if Microsoft is serious about making things as simple as possible for end users, then the move makes sense.

The openness lines up with Microsoft’s recent willingness under CEO Satya Nadella to work with non-Microsoft platforms. For example, Microsoft has made it possible for people to use Linux in its Windows 10 operating system.

At the end of Jul 2017, Amazon held 34% of the cloud infrastructure services market, while Microsoft had 11%, according to Synergy Research.CNBC

synergy_20170831
Synergy Research

flag_australia AU: Private New Capital Expenditure and Expected Expenditure, Australia, Jun 2017

Press Release Extract [ser_abs1]

Actual Expenditure (Volume Terms)

  • The trend volume estimate for total new capital expenditure rose 0.6% in the June quarter 2017 while the seasonally adjusted estimate rose by 0.8%.
  • The trend volume estimate for buildings and structures rose by 0.3% in the June quarter 2017 while the seasonally adjusted estimate fell by 0.6%.
  • The trend volume estimate for equipment, plant and machinery rose by 1.1% in the June quarter 2017 while the seasonally adjusted estimate rose by 2.7%.

Expected Expenditure (Current Price Terms)

  • Estimate 7 for 2017-18 is $101,783m. This is 3.6% lower than Estimate 3 for 2016-17. Estimate 3 is 17.6% higher than Estimate 2 for 2017-18.

Australian Bureau of Statistics, “5625.0 Private New Capital Expenditure and Expected Expenditure, Australia, Jun 2017“, 31 Aug 2017 More

flag_australia AU: Participation, Job Search and Mobility, Australia, Feb 2017

Press Release Extract [ser_abs2]

Participation Potential

In February 2017, the Participation, Job Search and Mobility (PJSM) survey estimated that of the civilian population aged 15 years and over, 6.6 million persons were not in the labour force, 819,400 were unemployed and 12.0 million persons were employed.

Of the 6.6 million persons not in the labour force:

  • 59% were females;
  • 15% were aged 15–24 years, 38% were aged 25–64 years and 47% were aged 65 years and over;
  • 985,100 wanted to work but were not actively looking for work and were available to start work last week or within four weeks, of whom 63% were females; and
  • the main activity was retired (39%) followed by home duties (14%) and attending an educational institution (14%). Of those doing home duties 87% were females.

Of the 819,400 unemployed persons:

  • 52% were males;
  • 194,800 persons (24%) had been looking for work for 1 year or more; and
  • 21% were aged 25–34

Of the 12.0 million employed persons:

  • 91% were fully employed; and
  • 1.1 million were underemployed.

Of the 1.1 million underemployed workers:

  • 1,039,100 persons (92%) usually worked part-time, but would prefer more hours and were available to start work with more hours either in the reference week, or in the four weeks following the interview; and
  • 91,600 usually worked full-time (8%), but worked part-time hours in the reference week due to economic reasons (for example no work or not enough work available, been stood down).

Job Search

Of the 819,400 unemployed persons who looked for work in the reference period:

  • 58% looked for both full-time and part-time work;
  • 11% looked for full-time work only; and
  • 31% looked for part-time work only.

There were 2.2 million job starters (employed persons who had started their current job in the previous 12 months). Of these job starters, the highest proportion of steps taken to look for work or more hours were:

  • 15% looked at advertisements for jobs on the internet, in a newspaper or on noticeboards;
  • 14% wrote, phoned or applied in person to an employer for work; and
  • 12% answered an advertisement for a job on the internet, in a newspaper or on noticeboards.

Labour Mobility

Of the 2.2 million job starters, 1.3 million were not working in February 2016, while 925,700 were working, but had changed their employer/business in the last 12 months. Of these:

  • 71% changed their usual weekly hours worked;
  • 55% changed industry division; and
  • 35% had a change in their status of employment.

There were 9.9 million persons working in February 2017 who had been with their current employer/business for more than one year. Of these persons:

  • 81% were employees;
  • 25% were professionals; and
  • 13% worked in the Health care and social assistance industry division.

Australian Bureau of Statistics, “6226.0 Participation, Job Search and Mobility, Australia, Feb 2017“, 31 Aug 2017 More

flag_australia AU: AiGroup PMI. Aug 2017

Press Release Extract [ser_aig]

Key findings:

  • The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI® ) jumped 3.8 points higher in August to 59.8 points (seasonally adjusted).
  • This was the highest monthly result for the Australian PMI® since 2002. It marked an eleventh consecutive month of expansion for the Australian PMI® and the longest consecutive run of expansion since 2007 in the seasonally adjusted series.
  • Six of the seven activity sub-indexes in the Australian PMI® expanded in August (seasonally adjusted). Production and new orders were especially strong (61.4 and 64.3 points), but they were coupled with a robust expansion in inventories (58.9 points) rather than in sales (50.9 points). Exports contracted mildly (49.3 points). This suggests current activity is geared towards future orders and stockpiling rather than for immediate delivery. Employment and supplier deliveries expanded at a slower pace in August than in July.
  • This recovery is occurring despite the ongoing withdrawal of automotive production from Australia and is due to accelerating growth in other large sub-sectors. Seven of the eight sub-sectors in the Australian PMI® expanded in August (trend). Only ‘textiles clothing furniture and other manufacturing’ contracted (46.1 points) but even this sub-sector improved from previous months. Non-metallic mineral products (72.3 points) and wood & paper products (71.1 points) expanded very strongly in August due to local demand from the building industry and from food manufacturing and processing (for packaging products).
  • Positive sources of local demand for manufacturers of chemicals, metals, machinery and equipment in August included infrastructure construction; mining (re-investing as metals prices recover); agriculture (good crops and livestock); renewables; and water utilities.
  • Input costs and especially energy costs are of great concern to manufacturers. The recent lift in the dollar is dampening imported input prices but also dampening export sales.

Activity Sub-Indexes

  • The production sub-index increased by a further 2.4 points to 61.4 points in August (seasonally adjusted). This sub-index has shown strong expansion in 2017, with three months over 60 points so far this year. This month’s acceleration in production seems to have been in response to rising forward orders and stockpiling rather than immediate sales.
  • The new orders sub-index jumped 8.5 points higher to 64.3 points in August, suggesting further growth and recovery for parts of manufacturing through the rest of 2017. This was the highest monthly result for this sub-index since May 2002.
  • The sales sub-index fell by 4.9 points to 50.9 points in August, indicating stable sales levels this month, despite the apparent surge in future orders.
  • The exports sub-index fell by 4.6 points to 49.3 points in August, indicating a mild fall in exports for the first month since August 2016. This probably reflects the higher dollar.
  • The employment sub-index dropped 1.0 point in August to 56.4, indicating a slower rate of expansion. This is consistent with recent ABS employment estimates which showed a recovery in manufacturing jobs to May and more recently, in full-time jobs from May to July.
  • The deliveries sub-index fell by 1.1 points to 52.9 points in August, signalling slower inputs.
  • The stocks sub-index (inventories) jumped 9.9 points to 58.9 points in August, indicating a very rapid build-up in stocks this month, possibly in preparation for bigger forward orders.
  • Capacity utilisation fell by 0.7 percentage points to 77.0% of available capacity.

Wages and Prices Sub-Indexes

  • The input prices sub-index fell by by 6.4 points to 62.9 points in August, but remain relatively elevated. Input prices continue to increase for manufacturers, mainly driven by spiralling energy costs and rising raw materials prices for some key commodities.
  • The wages sub-index rose 3.3 points to 59.0 points in August. This is slightly higher than the average over the past twelve months (58.6 points) for this sub-index.
  • The manufacturing selling price sub-index increased by 2.9 points to 53.7 points in August. Some manufacturers commented that their ability to raise selling prices to match rising input costs is improving, as local stockpiles have dwindled and demand seems to be improving. Gains in selling prices remain relatively subdued and the pressure on manufacturer’s margins continues. Mounting energy costs are adding to this problem.

Australian Industry Group, “Report on Business – Manufacturing. Aug 2017“, 31 Aug 2017 More

flag_usa US: Personal Income and Outlays, Jul 2017

Press Release Extract [ser_personal]

Personal income increased $65.6 billion (0.4 percent) in July according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $39.6 billion (0.3 percent) and personal consumption expenditures (PCE) increased $44.7 billion (0.3 percent).

us_pce_20170831

Real DPI increased 0.2 percent in July and Real PCE increased 0.2 percent. The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

The increase in personal income in July primarily reflected increases in wages and salaries and personal income receipts on assets.

The $29.3 billion increase in real PCE in July reflected an increase of $18.7 billion in spending for goods and an $11.8 billion increase in spending for services. Within goods, furnishings and durable household equipment was the leading contributor to the increase. Within services, the largest contributor to the increase was spending for food services and accommodations.

Personal outlays increased $45.2 billion in July. Personal saving was $510.2 billion in July and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.5 percent.

Bureau of Economic Analysis, “Personal Income and Outlays, Jul 2017“, 31 Aug 2017 (08:30) More

flag_usa US: Unemployment Insurance Weekly Claims

Press Release Extract [ser_4]

insurance

In the week ending August 26, the advance figure for seasonally adjusted initial claims was 236,000, an increase of 1,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 234,000 to 235,000. The 4-week moving average was 236,750, a decrease of 1,250 from the previous week’s revised average. The previous week’s average was revised up by 250 from 237,750 to 238,000.

unemployment

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending August 19, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending August 19 was 1,942,000, a decrease of 12,000 from the previous week’s unrevised level of 1,954,000. The 4-week moving average was 1,951,500, a decrease of 6,250 from the previous week’s unrevised average of 1,957,750.

Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 31 Aug 2017 (08:30) More

flag_usa US: Mnuchin Expects Detailed Tax Plan To be Released in Sep 2017

Treasury Secretary Steven Mnuchin said Thursday the administration has a “very detailed” tax plan ready and “couldn’t be more excited” about its prospects.

Mnuchin made the remarks to CNBC as the White House is looking to get its economic plan back on track after months of having to focus on other issues.

He said the plan has been presented to members of Congress and will be released to the public by the end of Sep 2017.

“The House and the Senate are now socializing the plan with their members. We’re going to release a blueprint, it’s going to go to committee and we’re going to turn this into a bill that the president will sign,” Mnuchin said in a live interview.CNBC

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

Monthly Report on China’s Manufacturing Purchasing Managers Index

Press Release: NBS

In August 2017, China’s manufacturing purchasing managers index (PMI) was 51.7 percent, an increase of 0.3 percentage points from last month, and the manufacturing industry generally kept a good development momentum of steady growth.

cn_pmi_2017-831

In view of the sizes of enterprises, the PMI of large-sized enterprises was 52.8 percent, decreased 0.1 percentage point from last month; that of medium-sized enterprises was 51.0 percent, increased 1.4 percentage points from last month, and back in the expansion range; that of small-sized enterprises was 49.1 percent, an increase of 0.2 percentage points from last month.

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

Production index was 54.1 percent, an increase of 0.6 percentage points month-on-month, and continued to be higher than the threshold, indicating that the growth rate of manufacturing production increased.

New orders index was 53.1 percent, an increase of 0.3 percentage points month-on-month, and continued to be higher than the threshold, showing that the manufacturing market demand has been further improved.

Main raw materials inventory index was 48.3 percent, decreased 0.2 percentage points from last month, lower than the threshold, indicating that the manufacturing main raw material inventory continued to decrease.

Employed person index was 49.1 percent, decreased 0.1 percentage point month-on-month, lower than the threshold, indicating that the labor employment of manufacturing enterprises declined.

Supplier delivery time index was 49.3 percent, a decrease of 0.8 percentage points from last month, and dropped below the threshold, indicating that the delivery time of manufacturing raw material suppliers slowed down.

National Bureau of Statistics of China, “China’s PMI Was 51.7 Percent in August“, 31 Aug 2017 More

Monthly Report on China’s Non-Manufacturing Purchasing Managers Index

Preview: TradingEconomics
Press Release: NBS

In August 2017, China’s non-manufacturing purchasing manager index was 53.4 percent, a decrease of 1.1 percentage points from the previous month, and continued to be higher than the threshold, the non-manufacturing industry generally continued an expanding momentum.

cn_psi_20170831

In view of different industries, non-manufacturing purchasing manager index of service industry was 52.6 percent, a decrease of 0.5 percentage points from the previous month. The service industry kept growing, while the growth rate declined slightly. 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 wholesale, capital market services, 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 58.0 percent, a decrease of 4.5 percentage points from the previous month, while was still higher than the threshold, the production growth of enterprises slowed down.

New orders index was 50.9 percent, down by 0.2 percentage points from the previous month, and continued to stay above the threshold, indicating that the growth rate of the non-manufacturing market demand dropped slightly. In view of different industries, the new orders index of service industry was 50.3 percent, increased 0.1 percentage point from the previous month, and staying above the threshold for four consecutive months. The new orders index of construction industry was 54.5 percent, decreased 1.5 percentage points from the previous month, while was still higher than the threshold.

Input price index was 54.4 percent, up by 1.3 percentage points from the previous month, and continued to stay 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 53.2 percent, increased 1.3 percentage points from the previous month. The input price index of construction industry was 61.4 percent, an increase of 1.6 percentage points from the previous month.

The sales price index was 51.5 percent, up by 0.6 percentage points from last month, and staying above the threshold for two consecutive months, indicating that the overall level of non-manufacturing sales price continued to rise, and the amount of increase extended. In view of different industries, the sales price index of service industry was 51.0 percent, an increase of 0.4 percentage points from the previous month. The sales price index of construction industry was 54.4 percent, an increase of 1.9 percentage points from the previous month.

Employment index was 49.5 percent, unchanged from the previous month, and continued to be lower than the threshold, indicating that the labor employment of non-manufacturing enterprises declined. In view of different industries, the employment index of service industry was 48.6 percent, unchanged from the previous month. The employment index of construction industry was 54.3 percent, a slight increase of 0.1 percentage point from the previous month.

Business activities expectation index was 61.0 percent, a slight decrease of 0.1 percentage point from last month, and staying in the high level of the range which above 60.0 for four consecutive months. In view of different industries, the business activities expectation index of service industry was 60.1 percent, a decrease of 0.3 percentage points from the previous month. That of construction industry was 66.0 percent, an increase of 0.7 percentage points from the previous month.

National Bureau of Statistics of China, “China’s Non-manufacturing PMI was 53.4 Percent in August“, 31 Aug 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