Tue 26 Sep 2017

watch Nightly Business Report. watch Bloomberg Tech. watch PBS NewsHour.
watch Bloomberg: Yellen comments on inflation goal.
watch Bloomberg: Trump comments on North Korea.
watch Bloomberg: Trump comments on proposed tax framework.

In Portfolioticker today

read_this Hey Jarvis, how did we go today?

  • Today at the stock market Opinion
  • The portfolio today Opinion
  • News
  • flag_japan Japan Update
  • flag_china China Update
  • Today at the stock market

    bull/bearThe S&P 500 ended flat on Tuesday and the Nasdaq posted modest gains as technology shares bounced from sharp losses in the prior session and comments from Fed Chair Janet Yellen boosted expectations of a December rate hike.

    • The S&P 500 rose 0.23 points, or 0.01%, to 2,496.89.
    • The Dow Jones Industrial Average fell 10.05 points, or 0.05%, to 22,286.04.
    • The Nasdaq Composite rose 9.57 points, or 0.15%, to 6,380.16.
    • Advancing issues outnumbered declining ones on the NYSE by a 1.31-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored advancers.
    • About 5.81 billion shares changed hands in U.S. exchanges, compared with the 5.96 billion daily average over the last 20 sessions.

    Yellen said the Fed needs to continue gradual rate hikes and it would be imprudent to leave rates on hold until inflation reached the Fed’s 2% target Bloomberg. Earlier in the session, Atlanta Fed Chief Raphael Bostic, a non-voting member this year, said he would want “clear evidence” that prices were firming before committing to another rate increase, but did not rule out another hike in 2017.

    Chances of a rate hike in December rose to 78% from about 40% a month ago, according to CME Group’s FedWatch tool.

    “Investors should be looking out for a Dec 2017 hike given we don’t know what happens to the Fed chair position next year. (Yellen), probably wants to be able to, knowing anyone new in that role might not feel comfortable tightening the first month. It is a little bit of a relief knowing perhaps investors still believe in buying the dips even after the Fed’s announcement of reduced balance sheet purchases,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

    President Donald Trump warned North Korea any U.S. military option would be “devastating” for Pyongyang, but said the use of force was not Washington’s first option to deal with the North’s ballistic and nuclear weapons program.Bloomberg

    Economic data showed U.S consumer confidence fell in Sep 2017 while home sales dropped to an 8-month low in Aug 2017 due to the impact of Hurricanes Harvey and Irma.

    Technology, up 0.4%, was the best performing major sector, recovering somewhat from losses in the prior session. Tech shares suffered their worst one-day drop in 5 weeks on Monday as concerns over tensions with North Korea prompted investors to book profits in what has been the best performing sector this year.

    • Apple rose 1.72% after 4 straight sessions of losses to help prop up the three major indexes, after Raymond James boosted its price target on the iPhone maker to $180 from $170.
    • Red Hat rose climbed 4.09% after the Linux distributor’s quarterly profit came in above estimates and the company raised its full-year forecast.Reuters

    “It looks like the FOMC is headed toward a December hike unless something disappoints on the inflation side. But beside that, it’s total uncertainty because Yellen is less likely to be here after that. What the speech seemed to do is give you a lot of different scenarios, all of which will be the job for the new Fed chair to handle,” Dennis DeBusschere, head of portfolio strategy at Evercore ISI, said by phone.

    Markets have been oscillating between risk-on and risk-off stances since early August as tensions simmer on the Korean Peninsula. Now, an assortment of geopolitical risks appear set to further cloud the outlook, not least the worry that gains by far-right parties in Germany’s vote signal a new populist bent in Europe.Bloomberg

    Market indices

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

    Index Ticker Today Change 31 Dec 16 YTD
    S&P 500 SPX (INX) 2,496.84 +0.01% 2,238.83 +11.52%
    DJIA INDU 22,284.32 -0.06% 19,762.60 +12.76%
    NASDAQ IXIC 6,380.16 +0.15% 5,383.12 +18.52%

    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 2.737 +1.17% 2.105 +30.05%
    Valuation Rate USD/AUD 0.79349 -0.63% 0.72663 +9.20%
    AUD-denominated Index AUD 3.453 +1.80% 2.895 +19.26%

    Portfolio stock prices

    Stock Ticker Today Change 31 Dec 16 YTD
    Alphabet A GOOGL $937.43 +0.34% $792.45 +18.29%
    Alphabet C GOOG $924.86 +0.42% $771.82 +19.82%
    Apple AAPL $153.14 +1.72% $115.82 +32.22%
    Amazon AMZN $938.60 -0.13% $749.87 +25.16%
    Ebay EBAY $37.85 +0.19% $29.69 +27.48%
    Facebook FB $164.21 +0.82% $115.05 +42.72%
    PayPal PYPL $62.94 -0.88% $39.47 +59.46%
    Twitter TWTR $16.59 -2.30% Thumbs Down $16.30 +1.77%
    Visa V $102.94 -0.08% $78.02 +31.94%
    VMware VMW $107.83 +0.29% $78.73 +36.96%



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

    The Bloomberg Dollar Spot Index (DXY) rose 0.3% to the highest since Aug 2017.

    The EUR fell 0.5% to USD 1.1792, the weakest in 5 weeks, following the steepest drop of the year on Monday after U.K. Prime Minister Theresa May’s comments on Brexit negotiations.
    Britain’s GBP dipped 0.1% to USD 1.3451, the lowest in more than a week.
    The JPY pared some of the previous day’s gains, which followed North Korea’s declaration it could shoot down U.S. warplanes.


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

    Oil and Gas Futures

    Futures prices

    WTI crude declined, though was still close to a five-month high after Turkey threatened to shut down Kurdish crude shipments.Bloomberg

    Prices are as at 15:49 EDT

    • NYMEX West Texas Intermediate (WTI): $51.90/barrel -0.61% Chart
    • ICE (London) Brent North Sea Crude: $58.42/barrel -1.02% Chart
    • NYMEX Natural gas futures: $2.92/MMBTU -0.07% Chart

    flag_usa US: New Residential Sales. Aug 2017

    Press Comment: Bloomberg

    Buyers are competing for a limited number of for-sale homes, allowing sellers to boost asking prices. Property values are consistently outpacing wage growth, helping explain why the share of first-time buyers of previously owned homes in August was at a one-year low. At the same time, owners’ equity as a share of total real-estate holdings climbed in the second quarter to the highest level in 11 years.

    Home prices may also get a boost in coming months after hurricanes Harvey and Irma reduced housing supply in parts of Texas and Florida. Affordability may remain challenging, as both sales and construction are interrupted by clean-up efforts. At the same time, a strong labor market and low-borrowing costs continue to encourage hopeful homebuyers.

    While home prices continued to advance strongly along the northwest part of the country, values were also picking up in Denver, Dallas and Las Vegas — underscoring a broadening of appreciation throughout the U.S. Las Vegas, one of the hardest-hit cities during the housing collapse, registered the third-largest year-over-year advance in July.

    “While the gains in home prices in recent months have been in the Pacific Northwest, the leadership continues to shift among regions and cities across the country. Rebuilding following hurricanes across Texas, Florida and other parts of the south will lead to further supply pressures,” David Blitzer, chairman of the S&P index committee, said in a statement.Bloomberg

    Press Release Extract [ser_us_housing]

    New Home Sales

    Sales of new single-family houses in August 2017 were at a seasonally adjusted annual rate of 560,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 3.4% (±13.0 %) below the revised July rate of 580,000 and is 1.2 % (±18.5 %) below the August 2016 estimate of 567,000.


    Sales Price
    The median sales price of new houses sold in August 2017 was $300,200. The average sales price was $368,100.

    For Sale Inventory and Months’ Supply

    The seasonally-adjusted estimate of new houses for sale at the end of August was 284,000. This represents a supply of 6.1 months at the current sales rate.

    U.S. Census Bureau and the U.S. Department of Housing and Urban Development, “Monthly New Residential Sales, Aug 2017“, 26 Sep 2017 (10:00)More

    flag_usa US: CB Consumer Confidence Index. Sep 2017

    Press Release Extract [ser_us_cci]

    The Conference Board Consumer Confidence Index®, which had improved marginally in August, declined slightly in September. The Index now stands at 119.8 (1985=100), down from 120.4 in August. The Present Situation Index decreased from 148.4 to 146.1, while the Expectations Index rose marginally from 101.7 last month to 102.2.

    The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was September 18.

    “Consumer confidence decreased slightly in September after a marginal improvement in August,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Confidence in Texas and Florida, however, decreased considerably, as these two states were the most severely impacted by Hurricanes Harvey and Irma. Despite the slight downtick in confidence, consumers’ assessment of current conditions remains quite favorable and their expectations for the short-term suggest the economy will continue expanding at its current pace.”

    Consumers’ assessment of current conditions moderated in September. Those saying business conditions are “good” decreased slightly from 34.5 percent to 33.9 percent, while those saying business conditions are “bad” increased from 13.2 percent to 13.8 percent. Consumers’ appraisal of the labor market was also somewhat less upbeat. Those stating jobs are “plentiful” declined from 34.4 percent to 32.6 percent, however, those claiming jobs are “hard to get” decreased marginally from 18.4 percent to 18.1 percent.

    Consumers’ optimism about the short-term outlook was somewhat better in September. The percentage of consumers expecting business conditions to improve over the next six months rose slightly from 19.8 percent to 20.2 percent, but those expecting business conditions to worsen increased from 8.0 percent to 9.9 percent.

    Consumers’ outlook for the labor market was more favorable than in August. The proportion expecting more jobs in the months ahead increased from 16.8 percent to 19.5 percent, while those anticipating fewer jobs rose marginally from 13.2 percent to 13.5 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement increased moderately from 19.9 percent to 20.5 percent, while the proportion expecting a decline was virtually unchanged at 8.3 percent.

    The Conference Board, “The Conference Board Consumer Confidence Index Declined Slightly in September 2017“, 26 Sep 2017 (10:00)More

    flag_usa US: Trump to announce 35pct individual tax rate

    [After markets closed] “President Donald Trump and Republican leaders will announce their long-awaited tax overhaul plan Wednesday, cutting rates for corporations and pass-through business. They’ll also propose a top individual rate of 35% but leave to Congress the decision of whether to create a higher bracket for top earners.

    The rate on corporations would be set at 20%, down from the current 35% rate, and businesses would be allowed to immediately write off their capital expenditures for at least five years, three people familiar with the plan told Bloomberg News.

    The White House didn’t respond to a request for comment.

    The plan will set out three tax brackets for individuals — 12%, 25% and 35%, down from the current top rate of 39.6%. But that’s not firmly set, as Congressional tax-writing committees will be given flexibility to add a fourth rate on the highest earners — an effort to prevent the overhaul from providing too much of a benefit for the wealthy.

    The announcement is the result of a months-long process to craft a tax overhaul plan that was a key promise in Trump’s campaign — but marks only the start of what could be a brutal fight in Congress among lawmakers who disagree on key elements of the plan. One influential skeptic has been Senate Finance Committee Chairman Orrin Hatch, a Utah Republican, who pledged his committee would not be a “rubber stamp” for the framework.

    On the international side, companies with offshore profits would be subject to a one-time tax to bring home, or repatriate, those earnings. That rate is unclear, but it would vary depending on whether the income was held in cash or less liquid investments.

    So-called pass-through entities, which include partnerships and limited liability companies, would see their rate capped at 25%. Currently, those businesses — which can range from mom-and-pop grocers to hedge funds — pass their income through to their owners, who then pay tax based on their individual income-tax rates.

    Measures would be adopted to ensure that individuals don’t recharacterize their personal wages as business income, according to the people, who asked not to be identified because the framework is not yet public.

    The plan also calls for repealing the alternative minimum tax and estate tax, both of which would be a boon for higher earners and the wealthy.Bloomberg

    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