Tue 8 Aug 2017


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In Portfolioticker today

Today at the stock market

bull/bearU.S. stocks fell and a measure of equity volatility spiked higher after President Donald Trump delivered a warning to North Korea amid rising tensions between the nations. Treasuries slipped, while the JPY strengthened.

  • The S&P 500 Index fell 0.24% to 2,474.92.
  • The Dow Jones Industrial Average fell 0.15% to 22,085.34
  • he Nasdaq Composite Index fell 0.21% to 5,383.12.
  • The Stoxx Europe 600 Index erased losses to end higher by 0.2%.
  • The MSCI All-Country World Index fell 0.1%.

The S&P 500 Index fell to session lows and the CBOE Volatility Index jumped 11% shortly before 3:30 p.m. in New York when Trump said further threats from the country would be met with “fire and fury.” The comments jolted markets from a summer slumber, with U.S. assets largely little changed for most of the session. The 10-year Treasury yield rose. Crude retreated toward $49/barrel.

Trump’s comments followed a report in the Washington Post, citing a Defense Intelligence Agency analysis, that Pyongyang successfully developed a miniaturized nuclear warhead that could fit onto its missiles. He said North Korea will be “met with fire and fury and, frankly, power the likes of which the world has never seen before” if Kim Jong Un’s regime continues to threaten the U.S.

Markets had been listless with few catalysts to give investors reason for conviction. South Africa’s ZAR fell after President Jacob Zuma survived a no-confidence motion in parliament. The focal point of this week looks set to be Friday’s U.S. inflation data, which may be key to the USA’s interest-rate outlook.Bloomberg

Market indices

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,474.92 -0.25% 2,238.83 +10.54%
DJIA INDU 22,085.34 -0.15% 19,762.60 +11.75%
NASDAQ IXIC 6,370.46 -0.21% 5,383.12 +18.34%

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

:-) Our USD-denominated index closed on a record high of 2.834, up 0.54% on yesterday’s record of 2.818.
:-( Our AUD-denominated index remains below its 2 Jun 2017 record of 3.710 while the AUD remains above USD 0.76. The AUD has risen 9.6% against the USD so far this year.

Index Currency Today Change 31 Dec 16 YTD
USD-denominated Index USD 2.833 +0.53% 2.105 +34.60%
Valuation Rate USD/AUD 0.79642 +0.04% 0.72663 +9.60%
AUD-denominated Index AUD 3.560 +0.49% 2.895 +22.98%

Portfolio stock prices

:-) Apple closed on a record high of $160.08, up 0.80% on yesterday’s record of $158.59.

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $944.19 -0.16% $792.45 +19.14%
Alphabet C GOOG $926.79 -0.28% $771.82 +20.07%
Apple AAPL $160.08 +0.80% $115.82 +38.21%
Amazon AMZN $989.84 -0.24% $749.87 +32.00%
Ebay EBAY $36.36 +0.69% $29.69 +22.46%
Facebook FB $171.23 -0.44% $115.05 +48.83%
PayPal PYPL $59.48 -0.23% $39.47 +50.69%
Twitter TWTR $16.15 -1.49% $16.30 -0.93%
Visa V $101.28 -0.21% $78.02 +29.81%
VMware VMW $93.40 -0.05% $78.73 +18.63%

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) rose less than 0.1%.
The EUR fell 0.4% to USD 1.1749.
Britain’s GBP fell 0.4% to USD 1.299, the weakest in more than 2 weeks on a closing basis.
South Africa’s ZAR fell 1.2% to 13.395 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

West Texas Intermediate crude futures fell 0.5% to settle at $49.17/barrel amid speculation that stockpiles may rise once the summer period of higher demand ends.Bloomberg
Oil prices were volatile on increasing exports from key OPEC producers and news of lower crude shipments from Saudi Arabia.Reuters

Prices are as at 15:47 EDT

  • NYMEX West Texas Intermediate (WTI): $49.12/barrel -0.55% Chart
  • ICE (London) Brent North Sea Crude: $52.03/barrel -0.65% Chart
  • NYMEX Natural gas futures: $2.81/MMBTU +0.39% Chart

flag_usa US: Job Openings and Labor Turnover. Jun 2017

Press Comment: Reuters

Stocks across the globe were little changed after touching a record high while the dollar turned higher against a basket of peers after U.S. job openings jumped to a record high in Jun 2017. The job market data underscored the view that the Federal Reserve has ammunition to continue on its tighter monetary policy path.

The job openings data “was much stronger than expected. This reinforces the strong non-farm (payrolls) data from last Friday, and turned the USD higher significantly,” said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California.

The view that the Fed could continue raising rates translated into a move higher in financial shares on Wall Street. Banks usually see better returns as the yield curve steepens, which it did marginally after the job openings data.

“The strength of the job market is certainly one of the two things the Fed is looking at, and the jobs data would be the primary reason for the move higher in financials,” said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC. The data “is raising the likelihood for further rate increases.”Reuters

Press Release Extract [ser_49]

The number of job openings increased to 6.2 million on the last business day of June, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.4 million and 5.2 million, respectively. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.1 percent and 1.2 percent, respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

Job Openings

On the last business day of June, the job openings level increased to 6.2 million (+461,000). The job openings rate was 4.0 percent. The number of job openings increased for total private (+417,000) and for government (+44,000). Job openings increased in a number of industries with the largest increases occurring in professional and business services (+179,000), health care and social assistance (+125,000), and construction (+62,000). Job openings decreased in other services (-62,000). The number of job openings increased in the Midwest and West regions.

us_jolts_openings_20170808

Hires

The number of hires was little changed at 5.4 million in June. The hires rate was 3.7 percent. The number of hires was little changed for total private and for government. The number of hires decreased for educational services (-29,000), but was little changed for all other industries. Hires decreased in the Northeast region.

us_jolts_turnover_20170808

Separations

The number of total separations was little changed at 5.2 million in June. The total separations rate was 3.6 percent. Total separations was little changed for total private and for government. Total separations decreased in state and local government, excluding education (-19,000). The number of total separations was little changed in all four regions.

The number of quits was little changed at 3.1 million in June. The quits rate was 2.1 percent. The number of quits was little changed for total private and for government. Quits decreased in finance and insurance (-21,000). The number of quits was little changed in all four regions.

There were 1.7 million layoffs and discharges in June, little changed from May. The layoffs and discharges rate was 1.2 percent in June. The number of layoffs and discharges was little changed for total private and for government. The layoffs and discharges level was little changed in all industries and regions.

The number of other separations was little changed in June. Other separations was essentially unchanged for total private and for government. Other separations increased in wholesale trade (+18,000) and other services (+14,000). The number of other separations decreased in information (-9,000) and state and local government, excluding education (-9,000). In all four regions, the number of other separations was little changed.

Net Change in Employment

Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in June, hires totaled 63.4 million and separations totaled 61.1 million, yielding a net employment gain of 2.3 million. These totals include workers who may have been hired and separated more than once during the year.

Bureau of Labor Statistics, “Job Openings and Labor Turnover (JOLTS). Jun 2017“, 8 Aug 2017 (10:00) More

flag_japan Japan update

Current Account Surplus. Jun 2017

Japan recorded a 36th consecutive current account surplus in Jun 2017, supported by returns on overseas investments and a trade balance that returned to positive territory.

  • The current account surplus was JPY 934.6 billion (USD 8.44 billion), versus an estimate of JPY 860.5 billion.
  • The primary income surplus was JPY 507.2 billion.
  • The surplus in goods trade was JPY 518.5 billion, compared with an estimate of JpY 571.5 billion.” Bloomberg

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

International Trade. Jul 2017

Press Comment: Reuters

China’s exports and imports grew much less than expected in Jul 2-17, raising concerns over whether global demand is starting to cool even as major Western central banks consider scaling back years of massive stimulus support.

China and Europe have been driving an increasing share of global growth this year as political conflict stymies stimulus policies being pushed by President Donald Trump. But while China’s overall trade continued to grow at a healthy clip in Jul 2017, at 8.8% it was the slowest rate this year. Some analysts chalked up the softer readings to seasonal or one-off factors, but others said weaker import growth could be the first tangible sign of a long-expected slowdown in the world’s second-largest economy after a surprisingly strong first half.

“External demand is not really worrying in terms of the outlook. But we have to be cautious about the import outlook,” said Raymond Yeung, chief economist for Greater China at ANZ in Hong Kong. Yeung noted that bad weather may have been a factor.

China’s export growth slowed to 7.2% in Jul 2017 from Jul 2016, the weakest pace since Feb 2017 and cooling from an 11.3% rise in Jun 2017, official data showed on Tuesday. Analysts had expected a 10.9% gain. By contrast, neighboring South Korea saw its export growth accelerate in July while Taiwan’s held roughly steady.

China’s imports rose 11.0%, the slowest growth since Dec 2016 and down from a 17.2% rise in Jun 2017. That also missed expectations of 16.6% growth.

That left the country with a trade surplus of USD 46.74 billion for the month, the highest since Jan 2017, compared with forecasts for USD 46.08 billion and USD 42.77 billion for Jun 2017. The July trade figures are preliminary.

The disappointing China data came a day after ratings agency Fitch upgraded its outlook for the world economy for this year and next, citing recoveries in China and other emerging markets.

“Despite an uptick at the end of the second quarter, (China’s) trade growth now appears to be on a downward trend. In particular, the sharp decline in import growth since the start of the year suggests that domestic demand is softening,” Capital Economics said in a note.

Improving global demand, particularly for electronics, has boosted exports for China and other trade-reliant Asian economies in recent months after several lean years of declining shipments. But investors have been more focused on its strong appetite for imports, particularly industrial commodities such as iron ore and coal, which have sparked a global price rally and fueled higher earnings and share prices for many resource-related companies.

China’s iron ore imports in July fell from 2.4 percent from a year earlier as a recent buying spree eased, even though higher steel prices and a year-long construction boom have spurred mills in the world’s biggest steel producer to ramp up output.

Despite a sharp rebound in the value of the CNY versus the USD in recent months – the CNY has gained 3.5% so far this year – analysts downplayed its impact on trade flows. In CNY terms, growth in exports and imports also downshifted markedly, to 11.2% and 14.7%, respectively.

Tuesday’s data also showed China’s exports to USA rose 8.5% in July on-year, the slowest pace since Feb 2017, while imports from USA rose 24.2%. But that is unlikely to ease trade tensions between Washington and Beijing, which have escalated in recent months as Trump has pressed China to cut steel production to ease global oversupply and rein in North Korea’s missile program.

China reported a trade surplus with the USA of USD 25.2 billion for Jul 2017, down only slightly from Jun 2017, which was a near 2-year high. For the first 7 months of the year, China’s trade surplus with USA, its largest export market, rose 5.% to USD 142.75 billion, even as China’s overall trade surplus has fallen.

China may have more at stake than past years if relations with Washington sharply deteriorate. China’s surplus with USA accounted for 61.5% of China’s total trade surplus in the first 7 months of the year, compared to just 44% in the year-ago period.

USA and China failed last month to agree on major new steps to reduce the trade gap with USA. Trump had been expected to unveil new measures last week, as Washington prepares to launch an inquiry into Beijing’s intellectual property and trade practices. But an announcement on Friday was postponed. The White House said on Saturday that Trump appreciated China’s cooperation on new sanctions against North Korea that were passed over the weekend.Reuters

Previews: Trading Economics

Exports from China rose 7.2 percent year-on-year to USD 200.9 billion in July of 2017, below a 11.3 percent rise in the prior month and below market estimates of a 10.9 percent growth. It was the weakest increase in sales, due to softening global demand.The trade surplus with the US came in at USD 25.2 billion in July, nearly unchanged from USD 25.4 billion in June. Considering January to July 2017, trade surplus with the US stood at USD 142.75 billion, an increase of 5.9 percent compared to the same period the prior year. The US and China failed recently to agree on major new steps to reduce the US trade deficit with China, casting doubt over Trump’s economic and security relations with Beijing. Exports in China averaged 603.34 USD HML from 1983 until 2017, reaching an all time high of 2273.72 USD HML in December of 2014 and a record low of 13 USD HML in January of 1984.TradingEconomics

Imports to China increased by 11 percent year-on-year to USD 146.6 billion In July of 2017, after a 17.2 percent rise in a month earlier and below market estimates of a 16.6 percent rise. The result was underpinned by strengthening global demand as commodity prices including iron ore, copper and coal continue to recover. It was the the ninth straight month that imports have recorded positive growth. Imports in China averaged 509.72 USD HML from 1983 until 2017, reaching an all time high of 1830.94 USD HML in March of 2013 and a record low of 16.60 USD HML in July of 1983.TradingEconomics

China’s trade surplus fell to USD 46.74 billion in July of 2017 from USD 48.61 billion a year earlier but above market consensus of USD 46.08 billion, as exports rose less than imports. Year-on-year, exports rose 7.2 percent to USD 200.89 billion, following an 11.3 percent rise in the prior month and below estimates of a 10.9 percent growth. It was the weakest rise in outbound shipments since February, due to softening global demand. Purchases increased by 11.0 percent to USD 146.58 billion, compared to a 17.2 percent gain in a month earlier and less than expectations of a 16.6 percent rise. It was the slowest growth in inbound shipments since December 2016, likely due to cooling domestic demand. In June 2017, the trade surplus was marginally revised to USD 42.77 billion. Balance of Trade in China averaged 93.44 USD HML from 1983 until 2017, reaching an all time high of 628.33 USD HML in February of 2015 and a record low of -319.71 USD HML in February of 2012.TradingEconomics

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