Thu 14 Sep 2017


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In Portfolioticker today

Today at the stock market

bull/bearRising shares of Boeing pulled the Dow Jones Industrial Average up to a record high on Thursday, while the S&P 500 fell as investors saw higher-than-expected inflation increasing the chances of an interest rate hike. The Dow’s third consecutive all-time high was driven in part by Boeing, which rose 1.36% after Deutsche Bank raised its price target on the aerospace and defense stock.

The S&P 500 and Nasdaq moved lower after a Labor Department report showed consumer prices rose more than expected in Aug 2017, boosting the odds of another interest rate hike this year. The consumer price index’s (CPI) 0.4% gain in Aug 2017 was its biggest in 7 months and is the last major economic data to be released ahead of the Federal Reserve’s 19-20 Sep 2017 monetary policy meeting.

  • The S&P 500 fell 0.11% to 2,495.62. The S&P 500, up 11 percent in 2017, is trading at 17.6 times expected earnings, expensive compared with its 10-year average of 14.3, according to Thomson Reuters Datastream.
  • The Dow Jones Industrial Average rose 0.2% to end at a record 22,203.48.
  • The Nasdaq Composite fell 0.48% to 6,429.08, hurt by a 0.86% decline in Apple AAPL.
  • Advancing issues outnumbered declining ones on the NYSE by a 1.09-to-1 ratio; on Nasdaq, a 1.20-to-1 ratio favored decliners.
  • About 6.0 billion shares changed hands on U.S. exchanges, above the 5.8 billion 20-day average.

Commenting on the CPI, Victor Jones, director of trading at TD Ameritrade, said “I don’t think the market was expecting that kind of a strength in terms of inflation. What people want is know is whether or not Yellen is going to talk about the lack of inflation as transitory, or whether it is continuing to concern them.”

After the data, the odds of a hike in December rose above 50% for the first time since Jul 2017, from 41.3%, according to CME Group’s FedWatch tool.

“I‘m not taking money out of stocks, but when new cash comes in, I‘m adding to our fixed income, whether that’s preferred shares, corporate bonds or mortgage-backed securities,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa.

The consumer discretionary index fell 0.54%, pulled down by a 0.74% decline in Amazon.com and a 0.93% dip in Walt Disney.

Equifax fell 2.35% after the Federal Trade Commission opened a probe into the company’s massive data breach.Reuters

Market indices

Market indices
^ Market indices today (mouseover for 12 month view) Chart: Google Finance

:-) The Dow Jones Industrial average closed on a record high of 22,203.48, up 0.20% on yesterday’s record of 22,158.18

Index Ticker Today Change 31 Dec 16 YTD
S&P 500 SPX (INX) 2,495.62 -0.12% 2,238.83 +11.46%
DJIA INDU 22,203.48 +0.20% 19,762.60 +12.35%
NASDAQ IXIC 6,429.08 -0.49% 5,383.12 +19.43%

Portfolio Indices

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 -0.82% 2.105 +34.21%
Valuation Rate USD/AUD 0.80371 +0.05% 0.72663 +10.60%
AUD-denominated Index AUD 3.518 -0.87% 2.895 +21.52%

Portfolio stock prices

:-) Ebay closed on a record high of $38.31, up 0.10% on yesterday’s record of $38.27

Stock Ticker Today Change 31 Dec 16 YTD
Alphabet A GOOGL $940.13 -1.09% $792.45 +18.63%
Alphabet C GOOG $925.00 -1.08% $771.82 +19.84%
Apple AAPL $158.28 -0.86% $115.82 +36.66%
Amazon AMZN $992.21 -0.74% $749.87 +32.31%
Ebay EBAY $38.31 +0.10% $29.69 +29.03%
Facebook FB $170.96 -1.21% $115.05 +48.59%
PayPal PYPL $62.24 +0.32% $39.47 +57.68%
Twitter TWTR $18.21 +0.05% $16.30 +11.71%
Visa V $106.08 +0.23% $78.02 +35.96%
VMware VMW $110.75 +0.28% $78.73 +40.67%

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 0.3%.
The EUR rose 0.2% to USD 1.1903.
Britain’s GBP rose 1.4% to USD 1.3397, the strongest in about a year.
Japan’s JPY was little changed at 110.52 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 gained 0.8% to $49.69/barrel and earlier touched $50.50. Bloomberg

Prices are as at 15:49 EDT

  • NYMEX West Texas Intermediate (WTI): $49.68/barrel +0.77% Chart
  • ICE (London) Brent North Sea Crude: $55.19/barrel +0.05% Chart
  • NYMEX Natural gas futures: $3.07/MMBTU +0.23% Chart

flag_australia AU: Labour Force. Aug 2017

"Collins St, 5p.m.", John Brack (1955) National Gallery of Victoria

“Collins St, 5p.m.”, John Brack (1955) National Gallery of Victoria

Press Release Extract [ser_au_jobs]

Monthly trend full-time employment increased for the 11th straight month in August 2017, according to figures released by the Australian Bureau of Statistics (ABS) today. Full-time employment grew by a further 22,000 persons in August, while part-time employment increased by 6,000 persons, underpinning a total increase in employment of 27,000 persons.

“Full-time employment has now increased by around 253,000 persons since August 2016, and makes up the majority of the 307,000 person increase in employment over the period,” Chief Economist for the ABS, Bruce Hockman, said.

Over the past year, trend employment increased by 2.6 per cent, which is above the average year-on-year growth over the past 20 years (1.9 per cent).

The rate of employment growth (2.6 per cent) was greater than the growth in the population aged 15 years and over (1.7 per cent), which was reflected in an increase in the employment to population ratio (which is a measure of how employed the population is). This ratio increased by 0.6 percentage points since August 2016, up to 61.5. This is the highest it has been since February 2013.

Over the past year the three states and territories with the strongest growth in employment were Tasmania (4.0 per cent), Queensland (3.7 per cent) and Victoria (3.2 per cent).

The trend monthly hours worked increased by 3.9 million hours (0.23 per cent) to 1,708.6 million hours in August 2017.

The trend unemployment rate in Australia remained at 5.6 per cent in August 2017, and the labour force participation rate increased to 65.2 per cent, the highest it has been since April 2012.

The quarterly trend underemployment rate remained steady at 8.7 per cent over the quarter to August 2017 from a revised figure for May 2017 quarter.

“The underemployment rate is an important indicator of the spare capacity of workers in Australia, and it has remained at 8.7 per cent, a historical high, for the third consecutive quarter,” Mr Hockman said.

The quarterly trend underutilisation rate, which includes both unemployment and underemployment, decreased by 0.1 percentage points to 14.2 per cent.

Trend series smooth the more volatile seasonally adjusted estimates and provide the best measure of the underlying behaviour of the labour market.

The seasonally adjusted number of persons employed increased by 54,200 in August 2017. The seasonally adjusted unemployment rate remained steady at 5.6 per cent and the labour force participation rate increased to 65.3 per cent.

Australian Bureau of Statistics, “6202: Labour Force, Australia“, 14 Sep 2017 More

flag_usa US: Consumer Price Index (CPI). Aug 2017

Press Release Extract [ser_us_cpi]

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in August on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 1.9 percent.

us_cpi_20170914_month

us_cpi_20170914_year

Increases in the indexes for gasoline and shelter accounted for nearly all of the seasonally adjusted increase in the all items index. The energy index rose 2.8 percent in August as the gasoline index increased 6.3 percent. The shelter index rose 0.5 percent in August with the rent index up 0.4 percent. The food index rose slightly in August, with the index for food away from home increasing and the food at home index declining.

The index for all items less food and energy rose 0.2 percent in August. Along with the shelter index, the indexes for motor vehicle insurance, medical care, and recreation all increased in August. The indexes for airline fares and for used cars and trucks were among those that declined in August.

The all items index rose 1.9 percent for the 12 months ending August, a larger increase than the 1.7 percent increase for the 12 months ending July. The 12-month change in the index for all items less food and energy remained at 1.7 percent for the fourth month in a row. It has remained in the range of 1.6 percent to 2.3 percent since June 2011. The energy index rose 6.4 percent over the past 12 months, and the food index increased 1.1 percent.

Note: Hurricane Harvey had a very small effect on survey response rates in August. Price collection late in the month was disrupted in 2 of the 87 collection areas.

Bureau of Labor Statistics, “Consumer Price Index (CPI). Aug 2017“, 14 Sep 2017 (08:30) More

flag_usa US: Real Earnings. Aug 2017

Press Release Extract [ser_ser_us_realer]

All employees

Real average hourly earnings for all employees decreased 0.3 percent from July to August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from a 0.1-percent increase in average hourly earnings being more than offset by a 0.4-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

us_realer_20170914

Real average weekly earnings decreased 0.6 percent over the month due to the change in real average hourly earnings combined with a 0.3-percent decrease in the average workweek.

Real average hourly earnings increased 0.6 percent, seasonally adjusted, from August 2016 to August 2017. The increase in real average hourly earnings combined with a 0.3-percent increase in the average workweek resulted in a 0.9-percent increase in real average weekly earnings over this period.

Production and nonsupervisory employees

Real average hourly earnings for production and nonsupervisory employees decreased 0.3 percent from July to August, seasonally adjusted. This result stems from a 0.2-percent increase in average hourly earnings being more than offset by a 0.5-percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

us_realer_20170914_1

Real average weekly earnings decreased 0.3 percent over the month due to the decrease in real average hourly earnings combined with no change in average weekly hours.

From August 2016 to August 2017, real average hourly earnings increased 0.3 percent, seasonally adjusted. The increase in real average hourly earnings combined with a 0.3-percent increase in the average workweek resulted in a 0.7-percent increase in real average weekly earnings over this period.

Bureau of Labor Statistics, “Real Earnings. Aug 2017“, 14 Sep 2017 (08:30) More

flag_usa US: Unemployment Insurance Weekly Claims

Press Release Extract [ser_4]

insurance

In the week ending September 9, the advance figure for seasonally adjusted initial claims was 284,000, a decrease of 14,000 from the previous week’s unrevised level of 298,000. The 4-week moving average was 263,250, an increase of 13,000 from the previous week’s unrevised average of 250,250. This is the highest level for this average since August 13, 2016 when it was 263,250.

Note: Hurricanes Harvey and Irma impacted this week’s initial claims.

unemployment

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending September 2, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 2 was 1,944,000, a decrease of 7,000 from the previous week’s revised level. The previous week’s level was revised up 11,000 from 1,940,000 to 1,951,000. The 4-week moving average was 1,948,500, a decrease of 2,500 from the previous week’s revised average. The previous week’s average was revised up by 2,750 from 1,948,250 to 1,951,000.

Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 14 Sep 2017 (08:30) More

flag_usa US: House of Representatives Spending Bill. FY 2017/8

The U.S. House of Representatives on Thursday passed a $1.2 trillion bill to fund most government activities in the fiscal year beginning 1 Oct 2017, knowing the Senate will disagree with many controversial elements and force a negotiation that could stretch into Dec 2017.

The bill, passed by a 211-198 vote largely along party lines in the Republican-controlled House, provides $658.1 billion for the Department of Defense and $44.3 billion for the Department of Homeland Security, including roughly $1.6 billion for construction of physical barriers along the U.S.-Mexican border.

The $31.4 billion allotted for the Department of the Interior, the Environmental Protection Agency (EPA), the Forest Service, the Indian Health Service and related agencies cut the EPA’s funding by $534 million when compared to the prior fiscal year.

The funding measure also included a provision that would stop the Internal Revenue Service from implementing a provision of the 2010 Affordable Care Act, commonly known as Obamacare, that imposes a tax penalty on individuals who elect to go without health insurance.

Representative Kevin McCarthy, a member of Republican leadership, said the funding measure would make “major changes to the way Washington spends taxpayer dollars.”

“Our funding legislation forces the government to do what it ought to do and to stop doing what it shouldn’t do,” McCarthy said in a statement, praising it for “strengthening our national defense, veterans’ programs, and border security,” and “cutting abusive Washington agencies like the IRS and the EPA.”

Democrats warned that the bill, which bundled together 12 separate funding measures and earned just one Democratic vote, would need substantial revision in the Senate, where Republicans hold 52 of 100 seats but most legislation requires 60 votes for passage.

“These bills cannot be enacted into law because they cannot gain Democratic votes,” Democratic Representative Nita Lowey said in a statement, calling the House-passed bill “inadequate and partisan.”Reuters

flag_usa US: Status of Tax Reform

President Donald Trump said on Wednesday that taxes on rich Americans might rise, as he pursues a tax code overhaul and reaches out to both Democrats and Republicans in a push to win support for a plan still far from complete.

Trump met with the two top congressional Democrats over dinner at the White House in a search for common ground that could make it easier to get a tax-cut package through Congress. Both sides said the meeting, which covered an array of legislative issues, was productive. Earlier, Treasury Secretary Steven Mnuchin said tax reductions would be paid for by faster economic growth.

The White House and the Republican-led Congress have yet to put forth a detailed tax plan, despite months of high-level talks that had until recent days excluded Democrats.

House of Representatives Speaker Paul Ryan said an outline of a plan would be unveiled during the work week beginning 25 Sep 2017, with congressional tax-writing committees crafting detailed legislation in the subsequent weeks.

Mnuchin told Fox News Channel the Trump administration would use its own economic assumptions to gauge the impact of its tax cuts on the federal budget deficit and the $20 trillion national debt, a key issue in Washington’s intensifying tax debate. “It will be revenue neutral under our growth assumptions,” Mnuchin said. “So, we can pay for these tax cuts with economic growth.”

The administration believes tax cuts will lead to much faster growth than do congressional analysts or most private forecasters, a likely fault line in the debate ahead.

As for taxing the rich, Trump said during a meeting with a bipartisan group of lawmakers – his second in as many days – that the wealthy “will not be gaining at all with this plan. … If they have to go higher, they’ll go higher, frankly.”

In a phone call with a small group of reporters, Marc Short, Trump’s legislative affairs director, said the president was not talking about higher tax rates, but that other changes in the tax code could affect the wealthy and how much they pay, the publication Roll Call reported.

Democrats have criticized Republican tax overhaul efforts as benefiting mainly the wealthiest Americans and corporations.

Tax experts said Trump could raise taxes on high-income people by lowering the cap on mortgages eligible for interest deductions to $500,000 from $1 million. Another step might be to close a loophole that lets Wall Street fund managers pay low taxes on much of their income, analysts said.

Trump might also propose eliminating the deduction for state and local taxes, then use the revenue raised to fund tax cuts for the middle class, leaving top earners with a higher effective tax bill. There has also been talk in the Senate about increasing tax rates on capital gains and dividends.

There has been no comprehensive U.S. tax code overhaul since 1986, and starkly different visions embraced by the two parties for how to move forward promise to make the task difficult.

Asked about Trump’s comment on a possible tax increase for the wealthy, House Ways and Means Chairman Kevin Brady said: “My goal is to lower taxes on every American as much as possible and help them keep more of what they earn.”Reuters

North Korea Launches Another Missile

jp_missile_20170914

The Japanese government says a ballistic missile launched from North Korea has likely flown over northern Japan and fallen into the Pacific Ocean, 2000 kilometers off the cape of Erimo in Hokkaido at around 7:16 AM Friday 15 Sep 2017 local time. South Korea’s Yonhap news agency is quoting the country’s military who say the missile was fired at around 6:57 AM from Sunan, a city near Pyongyang. The Japanese government’s top spokesperson says no debris has fallen. The government will hold a national security council meeting.NHK

North Korea launched a ballistic missile eastward from its capital Pyongyang on Friday, the country’s first missile launch after the United Nations Security Council adopted a fresh sanctions resolution.

“North Korea fired an unidentified missile from near Sunan, Pyongyang, around 6:57 a.m. (Friday 15 Sep 2017 local time) which flew over Japan to the North Pacific,” the Joint Chiefs of Staff (JCS) said.

The missile soared as high as some 770 kilometers and flew some 3,700 km, the JCS said, adding that South Korea and the United States are jointly studying further information.

The South’s presidential office Cheong Wa Dae immediately convened a National Security Council meeting, as the country’s troops conducted a ballistic missile training in the East Sea in response to the North’s latest provocation.

Japan’s NHK broadcaster reported that the North seems to have fired the missile toward the northeastern region of Japan. Late last month, the North lobbed a Hwasong-12 intermediate-range ballistic missile over the island nation.

The launch marks the North’s first provocation following the UNSC sanctions for which the communist country has warned of retaliation.Yonhap

South Korean and U.S. militaries were analyzing details of the launch, the South’s Office of the Joint Chiefs of Staff said. South Korea’s presidential Blue House has called an urgent National Security Council meeting.

The North’s launch comes a day after the North threatened to sink Japan and reduce the United States to “ashes and darkness” for supporting a U.N. Security Council resolution imposing new sanctions against it for its 3 Sep 2017 nuclear test. The North previously launched a ballistic missile from Sunan on 29 Aug 2017 which flew over Japan’s Hokkaido island and landed in the Pacific waters.Reuters

South Korea Considering Humanitarian Aid to Horth Korea

South Korea explained its possible move to provide humanitarian assistance to North Korea “in advance” to the United States and Japan, the (South Korean) foreign ministry said Thursday, emphasizing that the three countries remain in close consultation on issues related to the North. “We have been in close consultation with countries such as the U.S. and Japan on our government’s basic stance on humanitarian aid and other overall policies related to the North,” Cho June-hyuck, foreign ministry spokesman, told a regular press briefing. “We explained (to them) in advance on this case as well.”

The unification ministry handling inter-Korean affairs said earlier in the day that the government is considering providing US$8 million in aid to North Korea via international organizations. The government plans to hold a meeting on inter-Korean cooperation on 21 Sep 2017 to finalize whether to offer humanitarian assistance to those who are vulnerable in North Korea, it added.

Asked about the apparent displeasure voiced by Japan over the latest move, Cho said that humanitarian aid is not prohibited by existing resolutions adopted against the North and that the Seoul government has been in pursuit of providing such help regardless of the political situation.

Earlier, Japan’s Chief Cabinet Secretary Yoshihide Suga told reporters in Tokyo that it is necessary to avoid action that could weaken pressure being applied to North Korea, adding that the U.N. Security Council recently adopted new sanctions to punish the North for its sixth nuclear test on Sept. 3.

The spokesman emphasized that the Seoul government’s recognition of the current grave situation remains unchanged and that it still believes that the North’s continued provocations should be met by “sanctions” and “pressure.”Yonhap

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

Fixed Asset Investment. Aug 2017

cn_fixed_asset_20170914

Non-farm fixed asset investment in China went up 7.8 percent year-on-year to CNY 394,150 billion during January to August of 2017, easing from an 8.3 percent rise in the first seven months of the year and missing market estimates of an 8.2 percent increase. It was the weakest gain in fixed asset investment since 1999, as investment in ongoing construction projects rose at a slower pace (18.6 percent from 19.4 percent in the prior period) and domestic-funded investment increased less (8.4 percent from 8.9 percent). Meanwhile, investment from the central government slumped (-27.6 percent from -7.2 percent in January-July) and foreign investments shrank further (-6.7 percent from -5.7 percent). On a monthly basis, fixed asset investment increased by 0.57 percent in August. Fixed Asset Investment in China averaged 20.84 percent from 1996 until 2017, reaching an all time high of 53 percent in February of 2004 and a record low of 6.30 percent in December of 1999.TradingEconomics

Retail Sales. Aug 2017

cn_retail_20170914

Retail sales in China rose 10.1 percent from a year earlier in August of 2017, following a 10.4 percent increase in the previous month and missing market consensus of 10.5 percent. It was the weakest gain in retail trade since February, as sales went up at a slower pace for: oil, oil products (4.5 percent from 5.6 percent in July); automobiles (7.9 percent from 8.1 percent); building materials (8.8 percent from 13.1 percent); furniture (11.3 percent from 12.4 percent); office supplies (5.8 percent from 10.8 percent); home appliances (8.4 percent from 13.1 percent) and personal care (7.0 percent from 7.1 percent). Meantime, sales rose more than in a month earlier for: telecoms (12.2 percent from 7.9 percent); garments (8.9 percent from 6.4 percent); cosmetics (14.7 percent from 12.7 percent) and jewelry (6.4 percent from 2.6 percent). TradingEconomics

Industrial Production. Aug 2017

cn_production_20170914

China’s industrial production rose 6.0 percent year-on-year in August of 2017, following a 6.4 percent increase in the prior month and missing market expectations of 6.6 percent. It was the weakest gain in industrial production since December, as output increased at a slower pace for electricity, gas and water production (8.7 percent from 9.8 percent in July) and fell further for mining (-3.4 percent from -1.3 percent). Meantime, manufacturing output grew further (6.9 percent from 6.7 percent in July). Industrial Production in China averaged 12.36 percent from 1990 until 2017, reaching an all time high of 29.40 percent in August of 1994 and a record low of -21.10 percent in January of 1990.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