Tuesday 22 Aug 2017

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In Portfolioticker today

Today at the stock market

bull/bearU.S. stocks ended up on Tuesday, with each of the three major indexes posting their best one-day percentage gains in over a week, as lawmakers’ comments on tax reform and the debt ceiling boosted investor optimism.

  • The S&P 500 .SPX gained 24.11 points, or 0.99%, to 2,452.48.
  • The Dow Jones Industrial Average .DJI rose 196.21 points, or 0.9%, to 21,899.96.
  • The Nasdaq Composite .IXIC added 84.35 points, or 1.36%, to 6,297.48.Reuters

Global equity markets rallied on Tuesday, lifted by mining companies in Europe and surging technology shares on Wall Street, while crude oil rebounded on indications that supply is gradually tightening, especially in the United States.

U.S. stocks surged, with information technology shares rising 1.45%, while European shares snapped a 3-day losing streak in a broad advance.

A 2.1% slide in the benchmark S&P 500 index over the past 2 weeks led investors to step in, said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas. “Every time we get a pull-back it’s the same damn thing,” said Dick, calling market conditions the most resilient he has seen in his 18 years. “It’s a ‘buy the dip’ mentality market and it doesn’t go away. They call it a correction now, 2 percent!”

U.S. Treasury and gold prices fell ahead of an annual meeting this week of central bankers in Jackson Hole, Wyoming. Federal Reserve Chair Janet Yellen and European Central Bank (ECB) President Mario Draghi are among the scheduled speakers.

A broadly resurgent USD prompted investors to square positions in a thin market before the central bank conference, an annual event organized by the Kansas City Fed, begins on Thursday.

With investors caught between a generally benign economic backdrop that prevents too much of a sell-off without a catalyst for new highs, “We do seem to be settling into more of a range-bound market,” said Larry Hatheway, chief economist at asset manager GAM.

A gauge of global equity markets, MSCI’s all-country world stock index rose 0.69%, while its emerging markets index gained 0.83%.

Wall Street indexes were also helped by 1.2% gains in materials and healthcare stocks.Reuters

Investors seem to be getting over some of the sensitivity that characterized the past week following political turmoil in Washington, terrorist attacks in Europe and ongoing tension between the U.S. and North Korea. Nonetheless, Ray Dalio, the billionaire founder of Bridgewater Associates Inc., the world’s largest hedge fund, said he’s “tactically reducing” risk because he’s concerned about growing internal and external conflict “leading to impaired government efficiency” in the U.S., according to a LinkedIn post Monday.

With little top-tier economic data out this week, markets are set to focus on the annual conference of global central bankers hosted by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming.

“No one has a lot of interest in being very negative in the market right here, knowing that there’s this whatever-it-takes backdrop where central bankers globally just have zero interest in seeing financial conditions tighten too much,” Dennis DeBusschere, head of portfolio strategy at Evercore ISI, said Tuesday in an interview on Bloomberg Television.Bloomberg

Market indices


Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,452.51 +0.99% 2,238.83 +9.54%
DJIA INDU 21,899.89 +0.90% 19,762.60 +10.81%
NASDAQ IXIC 6,297.48 +1.35% 5,383.12 +16.98%

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 2.825 +1.61% 2.105 +34.21%
Valuation Rate USD/AUD 0.79600 -0.34% 0.72663 +9.54%
AUD-denominated Index AUD 3.552 +1.95% 2.895 +22.69%

Portfolio stock prices

:-) PayPal closed on a record high of $60.84, beating its 16 Aug 2017 record of $60.29.
:-) Visa closed on a record high of $104.07, beating its 16 Aug 2017 record of $103.32.

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $940.40 +2.12% $792.45 +18.66%
Alphabet C GOOG $924.69 +1.99% $771.82 +19.80%
Apple AAPL $159.78 +1.63% $115.82 +37.95%
Amazon AMZN $966.90 +1.43% $749.87 +28.94%
Ebay EBAY $34.81 +1.66% $29.69 +17.24%
Facebook FB $169.64 +1.11% $115.05 +47.44%
PayPal PYPL $60.84 +2.42% $39.47 +54.14%
Twitter TWTR $16.63 +3.23% $16.30 +2.02%
Visa V $104.07 +0.82% $78.02 +33.38%
VMware VMW $99.93 +3.01% $78.73 +26.92%



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

The USD rallied after falling for 2 straight days, benefiting from the EUR’s decline following weaker-than-expected euro zone data as well as investors adjusting positions ahead of the central bank conference in Jackson Hole. Bloomberg’s USD Spot Index (DXY) rose 0.43% to 93.497.

The EUR fell 0.45% to USD 1.1761, retracing most of its overnight gains when it posted its biggest single-day rise so far this month.Reuters


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

Oil and Gas Futures

Futures prices

U.S. light, sweet crude (WTI) rose 27 cents to settle at $47.64/barrel.
Benchmark Brent crude settled 21 cents higher at $51.87/barrel.

“U.S. crude oil stocks have been falling consistently in recent weeks,” said Fawad Razaqzada, market analyst at futures brokerage Forex.com.Bloomberg

Prices are as at 15:47 EDT

  • NYMEX West Texas Intermediate (WTI): $47.64/barrel +0.57% Chart
  • ICE (London) Brent North Sea Crude: $51.91/barrel +0.48% Chart
  • NYMEX Natural gas futures: $2.94/MMBTU -0.64% Chart

flag_australia AU: ATO audit of Apple gives all clear.

In April 2017 the ATO announced that its audits of Google, Apple, Microsoft and four other multinationals were likely to result in massive tax bills as the ATO exercises its beefed-up powers. The ATO said on 7 Apr 2017 that it has slugged the companies with a combined AUD 2.9 billion worth of tax liabilities amid an unprecedented crackdown on offshore entities. News

Today however it was reported that the ATO’s rigorous tax audit of Apple’s returns over the past 5 years had given the company a clean slate.

The Australian Financial Review reports “The Australian head of technology giant Apple says a five-year audit of the company’s tax affairs did not result in any penalties or ongoing disputes with the Australian Tax Office. Furthermore, Apple was unaffected by the two major pieces of legislation Australia had introduced to crack down on multinational tax avoidance.

Tony King told a parliamentary inquiry on Tuesday that a “lengthy and rigorous” audit by the Australian Tax Office finished in May. He said there were no issues in dispute. “The audit has concluded and no penalty was imposed by the ATO,” Mr King said. “We have confirmation from the ATO that all our corporate taxes are up to date.”

Apple had not been forced to restructure to change its business model to comply with any new laws, Mr King said. Neither the Multinational Anti-avoidance Law (MAAL) nor Diverted Profits Tax (DPT) had affected Apple, he said.

“The anti-avoidance legislation is designed to look at companies who have their books and records, unlike Apple, on an offshore basis,” he said. “The Diverted Profits Tax … is designed to capture tax on transactions where transfer pricing is not correctly applied. The DPT has only been in existence for two months now. We’ve had a very good look at the legislation, its interpretation, we have spoken to the ATO about the DPT and assuming that our transfer pricing methodology is implemented correctly and our business model remains unchanged, the diverted profits tax does not impact Apple’s operations in Australia.

“We’ve had it confirmed to us that our transfer pricing methodology is correct by virtue of a very comprehensive audit with the ATO so we don’t expect MAAL or DPT to impact Apple’s tax position in Australia. The ATO audit was of Apple’s affairs from 2012 to 2016. During those audit years, Apple paid $630 million in tax, Mr King said. In 2015, for example, Apple paid $146 million tax on revenue of $8 billion.

The cost of sales, which is the purchase of Apple products by Apple Australia, was $7 billion. There were also expenses for 4000 employees, real estate and other expenses, which left net profit of $500 million.AFR AFR

flag_usa US: FHFA House Price Index Q2/2017

Press Release Extract [ser_fhfa]

U.S. house prices rose 1.6 percent in the second quarter of 2017 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). House prices rose 6.6 percent from the second quarter of 2016 to the second quarter of 2017. FHFA’s seasonally adjusted monthly index for June was up 0.1 percent from May. The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac.

“U.S. house prices rose in most states during the second quarter. New home sales are climbing but, relative to the overall population, they still remain low from a historical perspective. The tight inventory is a major explanation for why house prices have been increasing every quarter over the last six years,” said FHFA Senior Economist William Doerner.

Home prices rose in 48 states and the District of Columbia between the second quarter of 2016 and the second quarter of 2017. The top five states in annual appreciation were: 1) Washington 12.4 percent; 2) Colorado 10.4 percent; 3) Idaho 10.3 percent; 4) Florida 9.4 percent; and 5) Utah 9.2 percent.

Among the 100 largest metropolitan areas in the U.S., annual price increases were greatest in the Seattle-Bellevue-Everett, WA (MSAD), where prices increased by 15.7 percent. Prices were weakest in New Haven-Milford, CT, where they rose by 0.1 percent.

Of the nine census divisions, the Pacific division experienced the strongest increase in the second quarter, posting a 2.6 percent quarterly increase and a 8.9 percent increase since the second quarter of last year. House price appreciation was weakest in the Middle Atlantic division, where prices rose 0.8 percent from the last quarter.

Federal Home Finance Agency, “U.S. House Prices Rise 1.6 Percent in Second Quarter“, 22 Aug 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

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