In Portfolioticker today
- Energy: Oil and Gas Futures
- NZ: RBNZ Interest Rate Decision
- AU: Australian National Accounts: Finance and Wealth. Jun 2017
- EU: Business Climate Indicator (BCI). Sep 2017
- EU: Economic Sentiment Indicator (ESI). Sep 2017
- US: Monthly Advance Economic Indicators Report (International Trade, Retail, & Wholesale). Aug 2017
- US: Unemployment Insurance Weekly Claims
- US: Gross Domestic Product (Third Estimate). Q2/2017
- Japan Update
- China Update
Today at the stock market
“Wall Street edged higher on Thursday, as the S&P 500 eked out a record on gains in McDonald’s and healthcare names, while investors continued to hope President Donald Trump will be able to make progress on tax reform.
Shares in MacDonalds rose 2.23%, their biggest single-day percentage gain in more than 2 months, after Longbow Research upgraded the stock to “buy.”
Financials rose 0.12%, and the Russell 2000 index of smallcap stocks rose 0.27%. These are expected to be among the beneficiaries of a tax reduction, turned higher after trading lower in the early portion of the session.
But gains were tempered with equities at record highs and valuations elevated. The forward price-to-earnings ratio (P/E) on the S&P stood at 17.9 compared with its long-term average of 15.1 while the forward P/E on the Russell is 26.3 against an average of 21.3.
“It looks like the market doesn’t want to sell strength here, it wants to buy weakness,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.
U.S. Treasury Secretary Steven Mnuchin said Trump’s proposal for a cut in the corporate income tax rate to 20 percent was “not negotiable.”
The plan, which called for tax cuts for most Americans, also drew criticism for favoring business and the rich and potentially adding trillions of dollars to the deficit.
A Commerce Department report showed the economy grew a bit faster than previously estimated in Q2/2017, but the momentum probably slowed in Q3/2017 as Hurricanes Harvey and Irma temporarily curbed activity. The storms also pushed up initial claims for state unemployment benefits for the week, the Labor Department said.
“People are waiting to see if the economy actually picks up, they are going to be waiting a long time if they are anticipating it is going to pick up meaningfully,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.” Reuters
“Trump’s tax plan is expected to be a boon for businesses and the wealthy, with specific cuts aimed at them. However, it’s difficult to determine precisely what the benefits would amount to since there are few details so far. This puts investors in a quandary, trying to guess which parts of the package the administration is prioritizing. And that’s before the fighting begins in Congress over passing it as a bill.
“U.S. tax policy is key right now but we don’t have a lot of details. The key is we don’t know the trade-off, we don’t know who wins and we don’t know who loses,” said Mark McCormick, North American head of foreign-exchange strategy at Toronto-Dominion Bank.” Bloomberg
The S&P500 Index closed on a record high of 2,510.06, beating its 20 Sep 2017 record of 2,508.24.
^ Market indices today (mouseover for 12 month view) Chart: Google Finance
|Index||Ticker||Today||Change||31 Dec 16||YTD|
|S&P 500||SPX (INX)||2,510.06||+0.12%||2,238.83||+12.11%|
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting
|Index||Currency||Today||Change||31 Dec 16||YTD|
Portfolio stock prices
|Stock||Ticker||Today||Change||31 Dec 16||YTD|
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg
“The Bloomberg Dollar Spot Index (DXY) fell 0.2%.
The EUR rose 0.3% to USD 1.1783, its biggest gain in a week.” Bloomberg
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com
Oil and Gas Futures
“West Texas Intermediate crude fell 1% to $51.59/barrel, reversing course after touching the highest level since Apr 2017 earlier in the session.” Bloomberg
Prices are as at 15:49 EDT
- NYMEX West Texas Intermediate (WTI): $51.59/barrel -1.05% Chart
- ICE (London) Brent North Sea Crude: $57.57/barrel -0.57% Chart
- NYMEX Natural gas futures: $3.02/MMBTU -1.21% Chart
NZ: RBNZ Interest Rate Decision
“The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 1.75 percent.
Global economic growth has continued to improve in recent quarters. However, inflation and wage outcomes remain subdued across the advanced economies and challenges remain with on-going surplus capacity. Bond yields are low, credit spreads have narrowed and equity prices are near record levels. Monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward.
The trade-weighted exchange rate has eased slightly since the August Statement. A lower New Zealand dollar would help to increase tradables inflation and deliver more balanced growth.
GDP in the June quarter grew in line with expectations, following relative weakness in the previous two quarters. While exports recovered, construction was weaker than expected. Growth is projected to maintain its current pace going forward, supported by accommodative monetary policy, population growth, elevated terms of trade, and fiscal stimulus.
House price inflation continues to moderate due to loan-to-value ratio restrictions, affordability constraints, and a tightening in credit conditions. This moderation is expected to continue, although there remains a risk of resurgence in prices given population growth and resource constraints in the construction sector.
Annual CPI inflation eased in the June quarter, but remains within the target range. Headline inflation is likely to decline in coming quarters, reflecting volatility in tradables inflation. Non-tradables inflation remains moderate but is expected to increase gradually as capacity pressure increases, bringing headline inflation to the midpoint of the target range over the medium term. Longer-term inflation expectations remain well anchored at around two percent.
Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.“
Reserve Bank of New Zealand, “Official Cash Rate unchanged at 1.75 percent“, 28 Sep 2017 Press Release
Press Release Extract [ser_abs]
AU: Australian National Accounts: Finance and Wealth. Jun 2017
Press Release Extract [ser_abs]
“In the June quarter 2017, non-financial corporations and households invested $47.1b and $40.4b respectively. Both non-financial corporations and households funded these investments mainly through gross saving $43.4b and $34.0b respectively. The general government sector invested $22.9b and funded it through gross saving ($14.9b) and net borrowing ($3.5b).
In original terms national investment increased $15.6b in the June quarter 2017 to $113.5b from the March quarter 2017 estimate.
Private non-financial corporations investment was $40.5b in June quarter 2017 having fallen from its peak in June quarter 2013 ($63.1b). Household investment was $40.4b in June quarter 2017, compared to $25.8b recorded in March quarter 2013.
During June quarter 2017, national net borrowing was $3.9b with financial corporations borrowing of $8.1b. General government borrowed $3.5b. By contrast, non-financial corporations and households lent $4.4b and $3.2b to other sectors respectively.
Net borrowing of $8.1b by financial corporations was a result of incurring $91.8b in liabilities and acquisition of financial assets ($83.7b). Financial corporations net incurrence of liabilities was driven by an increase of net equity in reserves ($55.1b), issuance of debt securities ($14.1b), loans and placements borrowing ($13.8b) and acceptance of deposits ($11.6b). The net acquisition of financial assets by financial corporations was driven by an increase in loans and placements ($50.0b), acquisition of bonds ($21.1b) and acquisition of deposits assets ($10.5b).
Non-financial corporations were net lenders ($4.4b), acquiring $26.8b in financial assets while incurring $22.4b in liabilities. Financial assets acquired were deposits ($7.8b), offset by a repayment of loans ($2.1b). Non-financial corporations incurred liabilities through issuances of equity ($14.7b), incurrence of other accounts payable ($6.6b) and loan borrowing ($5.0b), offset by repayments of bills of exchange ($1.9b) and bonds redemption ($1.5b).
Net borrowing of $3.5b by general government was a result of incurring $22.1b in liabilities and acquisition of financial assets ($18.7b). National general government borrowed $18.0b through bonds issuances while increasing assets through the acquisition of deposits $16.8b and holding $6.2b of one name paper. During the quarter state and local general government acquired loan and placement assets of $8.4b while disposing of $9.3b equity assets. National general government and state and local general government incurred unfunded superannuation liabilities of $2.5b and $0.8b respectively.
Households were net lenders ($3.2b) in June quarter 2017. Households acquired $58.0b in net equity in reserves of pension, of which unfunded super contributed $3.2b. Households incurred liabilities through loan borrowings ($36.7b) and other accounts payable ($23.0b).”
Australian Bureau of Statistics, “5232.0 – Australian National Accounts: Finance and Wealth. Jun 2017“, 28 Sep 2017 More
EU: Business Climate Indicator (BCI). Sep 2017
Press Release Extract [ser_eu_bci]
“Business Climate Indicator increases in September
In September 2017, the Business Climate Indicator (BCI) for the euro area increased (+0.26 points to +1.34). Managers’ production expectations, views on overall order books and, in particular, their appraisals of export order books, as well as past production improved. By contrast, the assessments of the stocks of finished products remained unchanged.”
European Commission, Directorate-General Economic and Financial Affairs (DG ECFIN), “ Business Climate Indicator (BCI). Sep 2017“, 28 Sep 2017 More
EU: Economic Sentiment Indicator (ESI). Sep 2017
Press Release Extract [ser_eu_esi]
“September 2017: Economic Sentiment continues to rise in the euro area and the EU
In September, the Economic Sentiment Indicator (ESI) continued the upward trend prevailing since autumn last year, increasing by 1.1 points in both the euro area and the EU to levels last seen in the summer of 2007 (113.0 points in both regions).
Euro area developments
Euro-area sentiment firmed on the back of higher industry, retail trade and construction confidence. Sentiment in the services sector and among consumers, by contrast, remained virtually unchanged. The ESI rose in all of the largest euro-area economies, most so in the Netherlands (+1.9) and Italy (+1.8), followed by Spain (+0.6), Germany (+0.5) and France (+0.4).
Industry confidence (+1.6) continued the rally it had embarked upon last autumn, thanks to managers’ higher production expectations and improved appraisals of the current level of overall order books. The assessments of the stocks of finished products, by contrast, remained flat. The positive trend was also reflected in the questions not included in the confidence indicator (assessments of past production and export order books), both of which improved markedly.
Broadly flat developments in services confidence (+0.2) resulted from improved assessments of past demand being partially offset by lower demand expectations, as well as unchanged views on the past business situation.
For the third month in a row, consumer confidence remained broadly unchanged (+0.3) on a historically high level. Brighter assessments of the future general economic situation and households’ improved saving expectations contrasted with grimmer views on future unemployment and, to a lesser extent, households’ future financial situation.
Retail trade confidence (+1.4) firmed due to managers’ more upbeat appraisals of the present business situation, the adequacy of the volume of stocks and, in particular, the expected business situation.
Also construction confidence (+1.6) improved, fuelled by upward revisions in both managers’ employment expectations and their assessment of the level of order books.
Deviating from the other sectors, financial services confidence (not included in the ESI) slipped (-6.8) due to markedly worsened assessments of the past business situation and past demand, which were only weakly counteracted by somewhat improved demand expectations.
Employment plans remained broadly unchanged in industry, services and retail trade, while they were revised upwards in construction. Selling price expectations firmed across all surveyed sectors, in line with higher price expectations among consumers.
Developments in EU sentiment were perfectly in line with those at euro-area level, the EU ESI registering the same increase (+1.1) and settling at the identical level (113.0 points). Of the largest non-euro area EU economies, Poland posted upbeat results (+2.1), while the UK ESI shed 0.4 points. The developments at sectoral level were broadly in line with the euro area, an exception being mildly deteriorating services and slightly improving consumer confidence.
As in the euro area, EU managers reported either upward revisions (construction) or broadly unchanged appraisals (industry, retail trade) of their employment plans. The only deviation were strongly capped (instead of virtually unchanged) employment plans in the services sector. In respect of managers’ and consumers’ (selling) price expectations, the expected upward trend in the euro area was echoed at EU level.”
European Commission, Directorate-General Economic and Financial Affairs (DG ECFIN), “Economic Sentiment Indicator (ESI). Sep 2017“, 25 Sep 2017 More
US: Monthly Advance Economic Indicators Report (International Trade, Retail, & Wholesale). Aug 2017
Press Release Extract [ser_us_economy]
“Advance International Trade in Goods
The international trade deficit was $62.9 billion in August, down $0.9 billion from $63.9 billion in July. Exports of goods for August were $128.9 billion, $0.3 billion more than July exports. Imports of goods for August were $191.8 billion, $0.6 billion less than July imports.
Advance Wholesale Inventories
Wholesale inventories for August, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $608.4 billion, up 1.0 percent (±0.2 percent) from July 2017, and were up 4.6 percent (±0.7 percent) from August 2016. The June 2017 to July 2017 percentage change was unrevised at up 0.6 percent (±0.4 percent).
Advance Retail Inventories
Retail inventories for August, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $625.0 billion, up 0.7 percent (±0.2 percent) from July 2017, and were up 3.7 percent (±0.5 percent) from August 2016. The June 2017 to July 2017 percentage change was revised from down 0.1 percent (±0.2 percent) to virtually unchanged (±0.2 percent).”
US Census Bureau, “Monthly Advance Economic Indicators Report (International Trade, Retail, & Wholesale). Aug 2017“, 28 Sep 2017 (08:30) More
US: Unemployment Insurance Weekly Claims
Press Release Extract [ser_4]
“In the week ending September 23, the advance figure for seasonally adjusted initial claims was 272,000, an increase of 12,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 259,000 to 260,000. The 4-week moving average was 277,750, an increase of 9,000 from the previous week’s unrevised average of 268,750. This is the highest level for this average since February 6, 2016 when it was 277,750.
Hurricanes Harvey and Irma impacted this week’s claims.
The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending September 16, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 16 was 1,934,000, a decrease of 45,000 from the previous week’s revised level. The previous week’s level was revised down by 1,000 from 1,980,000 to 1,979,000. The 4-week moving average was 1,949,750, a decrease of 2,750 from the previous week’s revised average. The previous week’s average was revised down by 500 from 1,953,000 to 1,952,500.
The advance number of actual initial claims under state programs, unadjusted, totaled 215,024 in the week ending September 23, an increase of 2,062 (or 1.0 percent) from the previous week. The seasonal factors had expected a decrease of 7,541 (or -3.5 percent) from the previous week. There were 198,455 initial claims in the comparable week in 2016.
The advance unadjusted insured unemployment rate was 1.2 percent during the week ending September 16, unchanged from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 1,642,371, a decrease of 93,485 (or -5.4 percent) from the preceding week. The seasonal factors had expected a decrease of 55,421 (or -3.2 percent) from the previous week. A year earlier the rate was 1.3 percent and the volume was 1,756,097.
The total number of people claiming benefits in all programs for the week ending September 9 was 1,765,477, an increase of 37,410 from the previous week. There were 1,874,794 persons claiming benefits in all programs in the comparable week in 2016.
No state was triggered “on” the Extended Benefits program during the week ending September 9.
Initial claims for UI benefits filed by former Federal civilian employees totaled 649 in the week ending September 16, a decrease of 11 from the prior week. There were 708 initial claims filed by newly discharged veterans, an increase of 53 from the preceding week.
There were 8,022 former Federal civilian employees claiming UI benefits for the week ending September 9, a decrease of 47 from the previous week. Newly discharged veterans claiming benefits totaled 9,390, an increase of 310 from the prior week.
The highest insured unemployment rates in the week ending September 9 were in Puerto Rico (3.3), New Jersey (2.3), Alaska (2.1), California (1.9), Connecticut (1.9), Pennsylvania (1.8), Texas (1.7), Illinois (1.6), Nevada (1.6), the District of Columbia (1.5), Massachusetts (1.5), and New York (1.5).
The largest increases in initial claims for the week ending September 16 were in California (+9,497), Florida (+5,279), Ohio (+4,068), Puerto Rico (+2,133), and South Carolina (+1,533), while the largest decreases were in Texas (-23,637), Iowa (-665), Oklahoma (-368), Michigan (-308), and Nevada (-305).“
Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 28 Sep 2017 (08:30) More
US: Gross Domestic Product (Third Estimate). Q2/2017
Press Release Extract [ser_us_gdp]
“Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the second quarter of 2017, according to the “third” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.2 percent.
The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 3.0 percent. With this third estimate for the second quarter, private inventory investment increased more than previously estimated, but the general picture of economic growth remains the same.
Real gross domestic income (GDI) increased 2.9 percent in the second quarter, compared with an increase of 2.7 percent in the first. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 3.0 percent in the second quarter, compared with an increase of 2.0 percent in the first quarter.
The increase in real GDP in the second quarter primarily reflected positive contributions from PCE, nonresidential fixed investment, exports, federal government spending, and private inventory investment that were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP in the second quarter reflected an upturn in private inventory investment, an acceleration in PCE, a deceleration in imports, and an upturn in federal government spending that were partly offset by a downturn in residential fixed investment, a deceleration in exports, and a downturn in state and local government spending.
Current-dollar GDP increased 4.1 percent, or $192.3 billion, in the second quarter to a level of $19,250.0 billion. In the first quarter, current-dollar GDP increased 3.3 percent, or $152.2 billion.
The price index for gross domestic purchases increased 0.9 percent in the second quarter, compared with an increase of 2.6 percent in the first quarter. The PCE price index increased 0.3 percent, compared with an increase of 2.2 percent. Excluding food and energy prices, the PCE price index increased 0.9 percent, compared with an increase of 1.8 percent.
Profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) increased $14.4 billion in the second quarter, in contrast to a decrease of $46.2 billion in the first quarter.
of domestic financial corporations decreased $33.8 billion in the second quarter, compared with a decrease of $40.7 billion in the first. Profits of domestic nonfinancial corporations increased $59.1 billion, compared with an increase of $3.8 billion. Rest-of-the-world profits decreased $10.8 billion, compared with a decrease of $9.3 billion. In the second quarter, receipts increased $5.5 billion, and payments increased $16.3 billion.”
Bureau of Economic Analysis, “Gross Domestic Product (Third Estimate). Q2/2017“, 28 Sep 2017 (08:30) More
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
Stockmarket: Nikkei 225
^ Nikkei N225 movements over the past week Chart: Google Finance
“China’s current account surplus narrowed sharply to USD 50.9 billion in the second quarter of 2017 from USD 65.1 billion in the same period of the previous year, below the preliminary estimate of USD 52.9 billion. The goods trade surplus was recorded at USD 132.1 billion, while the service deficit came in at USD 74.4 billion, the primary income deficit at USD 3.0 billion, and the secondary income gap at USD 3.8 billion. In the first half of 2017, the current account surplus narrowed to USD 69.3 billion, equivalent to 1.2 percent of GDP, from USD 104.4 billion in the same period of 2016. Current Account in China averaged 413.39 USD HML from 1998 until 2017, reaching an all time high of 1330.85 USD HML in the fourth quarter of 2008 and a record low of -8.96 USD HML in the second quarter of 2001.” TradingEconomics
^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
^ Shanghai CSI300 movements over the past week Chart: Google Finance