Wed 2 Aug 2017


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In Portfolioticker today

Today at the stock market

bull/bearMost U.S. stocks fell, though Apple Inc. dragged major indexes higher, propelling the Dow Jones Industrial Average past 22,000 for the first time. Renewed weakness in the USD weighed on small caps. Oil rose as record gasoline demand allayed shale boom worries, though it settled off highs for the day.

Apple’s 4.73% gain, sparked by an optimistic sales forecast, took the Dow to a record, boosted the Nasdaq 100 Index and left the S&P 500 Index little changed even as most groups fell. European equities slid as a drop in industrial metals weighed on miners. The EUR, coming off its best month since March 2016, continued its surge versus the ailing USD.

  • The S&P 500 Index rose less than 0.1% to 2,477.57 at 4 p.m. in New York.
  • The Dow was higher by 0.24% to 22,016.24 as Apple jumped 4.73%.
  • The Russell 2000 Index lost 1.1%.
  • The Stoxx Europe 600 Index fell 0.4%.
  • The MSCI All-Country World Index was flat.

Weakness in the USD and the corresponding EUR rally have started to dominate market moves, with the EUR’s longest rally since 2013 sustained by interest-rate differentials as investors lose faith in Donald Trump’s spending plans. U.S. stocks have benefited, with multinationals delivering outsize earnings at the same time European exporters have taken a hit.

Friday’s report on the American labor market may provide the next inflection point, as investors look for clues on the strength of the world’s largest economy and the Federal Reserve’s next policy move.Bloomberg

Market indices

:-) The Dow Jones Industrial Average closed on a record high of 22,016.24, up 0.24% on yesterday’s record of 21,963.92.

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,477.57 +0.04% 2,238.83 +10.66%
DJIA INDU 22,016.24 +0.23% 19,762.60 +11.40%
NASDAQ IXIC 6,362.65 -0.01% 5,383.12 +18.19%

The portfolio today

:-) Our USD-denominated index closed on a record high of 2.799, beating its 7 Jun 2017 record of 2.779.
:-( Our AUD-denominated index remains 6.14% below its 2 Jun 2017 record of 3.710 because of a falling USD against which the AUD has been rising.

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 2.799 +3.04% 2.105 +32.96%
Valuation Rate USD/AUD 0.80149 -0.02% 0.72663 +10.30%
AUD-denominated Index AUD 3.495 +3.05% 2.895 +20.72%

Portfolio stock prices

:-) Apple closed on a record high of $157.14, beating its 12 May 2017 record of $156.10.
:-) Visa closed on a record high of $101.28, up 0.41% on yesterday’s record of $100.87.

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $947.64 +0.11% $792.45 +19.58%
Alphabet C GOOG $930.39 -0.05% $771.82 +20.54%
Apple AAPL $157.14 +4.73% Opinion $115.82 +35.67%
Amazon AMZN $995.89 -0.03% $749.87 +32.8%
Ebay EBAY $35.90 -0.03% $29.69 +20.91%
Facebook FB $169.25 -0.36% $115.05 +47.10%
PayPal PYPL $59.12 -0.37% $39.47 +49.78%
Twitter TWTR $16.07 -0.86% $16.30 -1.42%
Visa V $101.28 +0.41% $78.02 +29.81%
VMware VMW $92.11 -0.64% $78.73 +16.99%

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 0.1%.
The EUR rose 0.4% to USD 1.1852, the highest level since Jan 2015.
Britain’s GBP rose 0.2% to USD 1.3224, the strongest in more than 10 months.
Bloomberg

AUD

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

Oil and Gas Futures

Futures prices

West Texas Intermediate crude rose 0.9% to settle at $49.59/barrel. Record demand for gasoline helped ease concerns that increasing crude production from America’s shale fields will worsen a global glut.Bloomberg

Prices are as at 15:49 ET

  • NYMEX West Texas Intermediate (WTI): $49.50/barrel +0.69% Chart
  • ICE (London) Brent North Sea Crude: $52.26/barrel +0.93% Chart
  • NYMEX Natural gas futures: $2.81/MMBTU -0.28% Chart

Analysts Assess Apple’s Q3/2017 Report

First: Some quick numbers – Apple’s Market Cap is $819 Billion

NASDAQ Numbers:

  • Price: $157.14 (record high)
  • Market Cap: $819.302 billion
  • EPS: $8.80
  • P/E (historical): 17.86 (i.e: Price/EPS = $157.14/8.8)
  • P/E (forward): 16.92 (assumes EPS of $9.29, i.e: $157.14/16.92, that is +5.57% growth on $8.80)

Analysts’ Comments

Press Report: Bloomberg [aapl]

Apple Inc. shares are rising to new all-time highs as the market toasts the company’s quarterly earnings, reported after the close of trading on Tuesday.

Shares are surging toward $160 in pre-market trading after projected revenue in the current quarter topped estimates, signaling strong sales of new iPhones scheduled for release later this year. Shares closed Tuesday at $150.05 but have traded as high as $159.90, topping the all time high reached in May.

But while the stock market and most of Wall Street are celebrating, some analysts are voicing skepticism. Here’s a roundup.

Drexel Hamilton LLC, Brian White

“With the June quarter out of the way, we believe investors will quickly turn their focus to the iPhone 8 this fall, along with the company’s capital distribution initiative, depressed valuation and new innovations showcased at WWDC. We still believe Apple remains among the most under-appreciated stocks in the world.

Credit Suisse Group AG, Kulbinder Garcha

“Apple announced a solid set of results, showing growth in all product lines and all regions ex-China, with revenues of $45.4 billion and earnings per share of $1.67 versus consensus of $1.57. With the iPhone showing sustained growth, and Services again showing robust growth, we still look forward to an iPhone 8 super cycle.”

Barclays PLC, Mark Moskowitz

“The September outlook came in better than expected, which could fuel the bull’s exuberance that the next iPhone launch could rival the iPhone 6 mega-growth cycle. We are somewhat skeptical though, as June quarter results reveal other drivers beyond the iPhone for the incremental goodness. IPhone ASP trends are hardly improving despite what the company referred to as strong iPhone 7 Plus mix. Further, the broader market push to the midrange in smartphones and increasing competitive intensity in China could become bigger long-term headwinds.”

Macquarie Group Ltd, Benjamin Schachter

“We thought Apple’s third quarter call was one of its most bullish in recent memory. Despite a coming big refresh, iPhone posted better than expected growth, and virtually all products in almost all geographies posted solid growth. Our focus remains on Services, and while Apple didn’t provide App Store growth, it is clear that Services will remain the key number-two driver behind iPhone for the foreseeable future.”

Piper Jaffray Cos., Michael Olson

“The outlook implies that fears of an iPhone X launch delay, and/or limited availability of the device, may have been overblown. We recommend owning Apple due to growing anticipation around iPhone X and a favorable trajectory for services revenue. Maintain our overweight rating and raise price target to $190 from $158.”

Deutsche Bank AG, Sherri Scribner

“Apple delivered upside to results and guidance in a quarter that most investors weren’t particularly focused on. The big upside surprise came from iPad sales, while Services also saw improving trends. The focus for investors, however, is the next iPhone launch, with management’s guidance implying a relatively normal sequential increase, which may suggest speculation about iPhone delays are unfounded. We felt management delivered a good quarter, but we continue to believe the market is overly optimistic on future iPhone sales. Given a saturated smartphone market, elongating refresh cycles, increased competition in China, and a growing secondary market, we think Apple will have a hard time delivering on street expectations.”

Apple has 36 buys, 10 holds and no sell ratings with an average 12-month price target of $169.80, according to data compiled by Bloomberg.Bloomberg

flag_australia AU: Selected Living Cost Indexes (LCI), June 2017

Press Release Extract [ser_au_psi]

Pensioner and Beneficiary Households (0.0%)

The PBLCI recorded no movement in the June quarter 2017. Rises in health (+1.7%) and alcohol and tobacco (0.8%) are offset by falls in transport (-0.8%) and food and non-alcoholic beverages (-0.4%). The main contributor to the rise in health is medical and hospital services due to increases in private health insurance (PHI) premiums from 1 April 2017, and at the same time, the annual decrease in the PHI rebate. The rise in alcohol and tobacco is driven by tobacco (+1.0%) due to the flow on effects from the federal excise tax increase effective from 1 March 2017.

Transport (-0.8%) contributed the most significant partial offset this quarter, driven by automotive fuel due to falls in world oil prices. Food and non-alcoholic beverages (-0.4%) also contributed to the offset, driven by falls in fruit. Rises in selected fruits and vegetables resulting from crop damage from Cyclone Debbie were observed for tomatoes, beans, cucumbers, melons, berries and bananas. However, these rises were offset by falls in seasonally available fruits such as oranges, mandarins and apples. For vegetables there has been an increase in the supply of potatoes following a shortage due to wet weather in previous periods.

The PBLCI recorded no movement compared to the CPI (+0.2%) this quarter.

Over the last twelve months the PBLCI rose 2.0% while the CPI rose 1.9%.

Employee Households (+0.1%)

The living cost index for employee households rose 0.1% in the June quarter 2017. The main contributor to the rise is health (+2.3%), driven by medical and hospital services. The rise in medical and hospital services is due to increases in private health insurance premiums from 1 April 2017, and at the same time, the annual decrease in the PHI rebate. Alcohol and tobacco (+0.8%) also contributed to the rise, driven by tobacco due to the flow on effects from the federal excise tax increase effective from 1 March 2017.

Transport (-0.6%) contributed the most significant partial offset this quarter. The fall is driven by automotive fuel due to falls in world oil prices.

The LCI for employee households recorded a smaller rise compared to the CPI (+0.2%) this quarter. Employee households do not include new dwelling purchase by owner-occupiers, which rose this quarter, driven by increasing input costs in some cities.

Over the last twelve months the LCI for employee households rose 1.3% while the CPI rose 1.9%.

Age Pensioners (+0.1%)

The living cost index for age pensioner households rose 0.1% in the June quarter 2017. The main contributor to the rise is health (+2.0%), driven by medical and hospital services. The rise in medical and hospital services is due to increases in private health insurance premiums from 1 April 2017, and at the same time, the annual decrease in the PHI rebate.

Food and non-alcoholic beverages (-0.5%) contributed the most significant partial offset this quarter, driven by falls in fruit. Rises in selected fruits and vegetables resulting from crop damage from Cyclone Debbie were observed for tomatoes, beans, cucumbers, melons, berries and bananas. However, these rises were offset by falls in seasonally available fruits such as oranges, mandarins and apples. For vegetables there has been an increase in the supply of potatoes following a shortage due to wet weather in previous periods.

The LCI for age pensioner households recorded a smaller rise than the CPI (+0.2%) this quarter. Age pensioner households have a higher expenditure on food and non-alcoholic beverages, which fell this quarter, when compared to the CPI population.

Over the last twelve months the LCI for age pensioner households rose 2.0% while the CPI rose 1.9%.

Other Government Transfer Recipient Households (0.0%)

The living cost index for other government transfer recipient households recorded no movement in the June quarter 2017. The main contributor to the rise is alcohol and tobacco (+0.9%), driven by tobacco due to flow on effects from the federal excise tax increase effective from 1 March 2017.

Transport (-0.7%) contributed the most significant partial offset this quarter. The fall is driven by automotive fuel due to falls in world oil prices.

The LCI for other government transfer recipient households recorded no movement compared to the CPI (+0.2%) this quarter.

Over the last twelve months the LCI for other government transfer recipient households rose 2.0% while the CPI rose 1.9%.

Self-Funded Retiree Households (+0.2%)

The living cost index for self-funded retiree households rose 0.2% in the June quarter 2017. The main contributor to the rise is health (+2.9%), driven by medical and hospital services. The rise in medical and hospital services is due to increases in private health insurance premiums from 1 April 2017, and at the same time, the annual decrease in the PHI rebate.

Recreation and culture (-0.8%) contributed the most significant partial offset this quarter, driven by domestic holiday travel and accommodation which is typical of the off peak season for domestic holiday travel.

The LCI for self-funded retiree households recorded the same movement as the CPI (+0.2%) this quarter.

Over the last twelve months the LCI for self-funded retiree households rose 1.8% while the CPI rose 1.9%.

Australian Bureau of Statistics, “6467.0 Selected Living Cost Indexes, Australia, June 2017“, 2 Aug 2017 More

flag_australia AU: Building Approvals, June 2017

Press Release Extract [ser_au_8731]

The number of dwellings approved rose 0.1 per cent in June 2017, in trend terms, after falling for three months, according to data released by the Australian Bureau of Statistics (ABS) today.

“Dwelling approvals have been relatively stable in trend terms over the first six months of the year, after falling from record highs in mid-2016,” said Daniel Rossi, Director of Construction Statistics at the ABS. “The June 2017 data showed that the number of dwellings approved is now 15 per cent below the peak in May 2016″.

Dwelling approvals increased in June in the Australian Capital Territory (5.9 per cent), South Australia (3.2 per cent), Western Australia (1.7 per cent), Queensland (1.1 per cent) and Tasmania (0.7 per cent), but decreased in the Northern Territory (2.7 per cent) and Victoria (1.9 per cent) in trend terms. Dwelling approvals were flat in New South Wales.

In trend terms, approvals for private sector houses rose 0.8 per cent in June. Private sector house approvals rose in Queensland (1.8 per cent), New South Wales (1.1 per cent) and Victoria (0.5 per cent), but fell in Western Australia (0.6 per cent) and South Australia (0.1 per cent).

In seasonally adjusted terms, dwelling approvals increased by 10.9 per cent in June, driven by a rise in total dwellings excluding houses (20.1 per cent), while total house approvals rose 4.0 per cent.

The value of total building approved rose 1.3 per cent in June, in trend terms, and has risen for five months. The value of non-residential building rose 3.4 per cent while residential building fell 0.1 per cent.

Australian Bureau of Statistics, “8731.0 Building Approvals, Australia, June 2017“, 2 Aug 2017 More

flag_europe EU: Industrial Producer Prices, Domestic Market, Jun 2017

Press Release Extract [ser_eu_ipp]

In June 2017, compared with May 2017, industrial producer prices fell by 0.1% in the euro area (EA19) and by 0.2% in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In May 2017 prices decreased by 0.3% in the euro area and by 0.4% in the EU28.

In June 2017, compared with June 2016, industrial producer prices rose by 2.5% in the euro area and by 2.6% in the EU28.

eu_ppi_20170801

Monthly comparison by main industrial grouping and by Member State

The 0.1% decrease in industrial producer prices in total industry in the euro area in June 2017, compared with May 2017, is due to price falls of 0.3% in the energy sector and of 0.2% for intermediate goods, while prices remained stable for durable consumer goods and increased by 0.1% for capital goods and by 0.2% for non-durable consumer goods. Prices in total industry excluding energy remained stable.

In the EU28, the 0.2% decrease is due to price falls of 0.7% in the energy sector and of 0.1% for intermediate goods, while prices remained stable for durable consumer goods and increased by 0.1% for capital goods and by 0.2% for non-durable consumer goods. Prices in total industry excluding energy remained stable.

The largest decreases in industrial producer prices were observed in Greece (-1.3%), Denmark and the Netherlands (both -1.1%) and Ireland (-1.0%), while increases were observed in Latvia (+0.7%), Italy (+0.4%), Cyprus (+0.2%) and Malta (+0.1%).

Annual comparison by main industrial grouping and by Member State

The 2.5% increase in industrial producer prices in total industry in the euro area in June 2017, compared with June 2016, is due to rises of 2.9% both for intermediate goods and in the energy sector, of 2.5% for non-durable consumer goods, of 0.9% for capital goods and of 0.6% for durable consumer goods. Prices in total industry excluding energy rose by 2.2%.

In the EU28, the 2.6% price increase is due to rises of 3.4% in the energy sector, of 3.1% for intermediate goods, of 2.9% for non-durable consumer goods, of 1.2% for capital goods and of 1.0% for durable consumer goods. Prices in total industry excluding energy rose by 2.5%.

The largest increases in industrial producer prices were recorded in Belgium (+6.4%), Cyprus (+5.7%), the United Kingdom (+4.7%) and Poland (+3.7%), while a price decrease was observed in Luxembourg (-3.2%).

Eurostat, “Industrial Producer Prices, Domestic Market, Jun 2017“, 2 Aug 2017 More

flag_usa US: ADP National Employment Report. Jul 2017

Press Release Extract [ser_95]

Private sector employment increased by 178,000 jobs from June to July according to the July ADP National Employment Report®.

us_adp_20170802

“Job gains continued to be strong in the month of July. However, as the labor market tightens employers may find it more difficult to recruit qualified workers,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

“The American job machine continues to operate in high gear. Job gains are broad-based across industries and company sizes, with only manufacturers reducing their payrolls. At this pace of job growth, unemployment will continue to quickly decline, ” said Mark Zandi, chief economist of Moody’s Analytics.

ADP Research Institute, “ADP National Employment Report: Private Sector Employment Increased by 178,000 Jobs in July“, 2 Aug 2017

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

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