Mon 30 Oct 2017


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In Portfolioticker today

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  • 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/bearWall Street pulled back from record-high territory on Monday, weighed down by a drop in Merck shares and a report that U.S. lawmakers are discussing a gradual phase-in of much-anticipated corporate tax cuts. Market watchers pointed to declines steepening after a Bloomberg report that the House of Representatives was discussing a gradual cut in corporate tax rates over several years.

    • The S&P 500 index fell 8.24 points, or 0.32%, to 2,572.83
    • The Dow Jones Industrial Average fell 85.45 points, or 0.36%, to 23,348.74
    • The Nasdaq Composite index fell 2.30 points, or 0.03%, to 6,698.96. The index touched an intraday record high earlier in the session before pulling back.
    • Declining issues outnumbered advancing ones on the NYSE by a 1.55-to-1 ratio; on Nasdaq, a 1.96-to-1 ratio favored decliners.
    • About 6.6 billion shares changed hands in U.S. exchanges, above the 6 billion daily average over the last 20 sessions.

    “A lot of people are looking to that corporate tax cut as a reason for the next leg up in stocks. “We are in a market that has just been on an absolute low-volatility, steady climb for quite a while, so you don’t need much of a reason for it to take a periodic step back, particularly a small step back,said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

    Investors were also digesting the impact to Trump’s agenda from news that his former campaign manager, Paul Manafort, was charged with money laundering in the federal probe into Russian meddling in the 2016 presidential election.

    Stocks pared losses late in the day amid signs that Trump was close to picking Federal Reserve Governor Jerome Powell as head of the U.S. central bank.

    The New York Times reported Trump was “expected to” name Powell as soon as Thursday to replace Janet Yellen as Fed chair, after Reuters reported earlier that Trump was likely to pick him.

    The S&P tech sector rose 0.4%, following big gains on Friday in the wake of a strong batch of earnings.

    Apple shares gained 2.3% after analysts pointed to strong demand for the iPhone X.

    Merck shares fell 6.1% after a setback to its key cancer medicine. The stock was among the top drags on the S&P 500 and Dow industrials.

    In other corporate news, the board of Japan’s SoftBank Group Corp is having doubts about the merger it has been negotiating between its U.S. wireless subsidiary Sprint Corp and T-Mobile US Inc, due to fears of losing control of a combined entity, a source familiar with the matter told Reuters. Sprint shares fell 9.3% and T-Mobile ended off 5.4%.

    Market watchers readied for another big week of corporate results. With more than half the S&P 500 reported, third-quarter earnings are expected to have climbed 6.7%, up from an expectation of 5.9% growth at the start of Oct 2017, according to Thomson Reuters I/B/E/S.

    The Fed is also due to meet this week, adding to the heavy week of economic and financial news. “No one is expecting a rate hike, but the statement will be important,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. “This market has a confluence of headline-grabbing releases this week.”

    The October jobs report is due on Friday.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) 2,572.83 -0.32% 2,238.83 +14.91%
    DJIA INDU 23,348.74 -0.37% 19,762.60 +18.14%
    NASDAQ IXIC 6,698.96 -0.04% 5,383.12 +24.44%

    Portfolio Indices

    :-) Our USD-denominated index closed at a record 3.009, above 3.0 for the first time.
    :-) Our AUD-denominated index closed at a record 3.889.

    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 3.009 +1.59% 2.105 +42.94%
    Valuation Rate USD/AUD 0.77404 +0.23% 0.72663 +6.52%
    AUD-denominated Index AUD 3.889 +1.36% 2.895 +34.32%

    Portfolio stock prices

    :-) Apple closed on a record high of $166.72, beating its 1 Sep 2017 record of $164.05.
    :-) Amazon closed on a record high of $1,110.85, up 0.90% on Friday’s record of $1,100.95.
    :-) Facebook closed on a record high of $179.87, up 1.12% on Friday’s record of $177.88.
    :-) Visa closed on a record high of $110.04, beating last Thursday’s record of $109.80.

    Stock Ticker Today Change 31 Dec 16 YTD
    Alphabet A GOOGL $1,033.13 -0.05% $792.45 +30.37%
    Alphabet C GOOG $1,017.11 -0.21% $771.82 +31.78%
    Apple AAPL $166.72 +2.25% $115.82 +43.94%
    Amazon AMZN $1,110.85 +0.90% $749.87 +48.13%
    Ebay EBAY $37.00 +0.54% $29.69 +24.62%
    Facebook FB $179.87 +1.12% $115.05 +56.34%
    PayPal PYPL $71.15 +0.13% $39.47 +80.26%
    Twitter TWTR $21.25 -1.98% $16.30 +30.36%
    Visa V $110.04 +0.30% $78.02 +41.04%
    VMware VMW $119.93 -0.86% $78.73 +52.33%

    FX: USD/AUD

    USD

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

    AUD

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

    Oil and Gas Futures

    Futures prices

    U.S. crude exports have boomed since the decades-old ban was lifted less than 2 years ago, with shipments recently hitting a record of 2 million barrels per day (bpd). But shippers and traders fear the rising trend is not sustainable, and if limits are hit, it could pressure the price of U.S. oil.

    How much crude the United States can export is a mystery. Most terminal operators and companies will not disclose capacity, and federal agencies like the U.S. Energy Department do not track it. Still, oil export infrastructure will probably need further investment in coming years. Bottlenecks would hit not only storage and loading capacity, but also factors such as pipeline connectivity and shipping traffic.

    Analysts believe operators will start to run into bottlenecks if exports rise to 3.5 million to 4 million bpd. RBC Capital analysts put the figure lower, around 3.2 million bpd.

    The United States has not come close to that yet. A total of the highest loading days across Houston, Port Arthur, Corpus Christi and St. James/New Orleans – the primary places where crude can be exported – comes to about 3.2 million bpd, according to Kpler, a cargo tracking service.

    But with total U.S. crude production currently at 9.5 million bpd and expected to add 800,000 to 1 million bpd annually, export capacity could be tested before long. Over the past 4 weeks, exports averaged 1.7 million bpd, more than triple a year earlier.Reuters

    Brent oil held above $60 / barrel on Monday, near its highest since mid-2015, on expectations OPEC-led production cuts would be extended beyond Mar 2018 although rising Iraqi exports put a lid on prices.

    The Organization of the Petroleum Exporting Countries (OPEC) plus Russia and 9 other producers agreed to cut 1.8 million barrels per day (bpd) from Jan 2016 to clear a supply glut.

    The pact, already renewed once, now runs to Mar 2018, but Saudi Arabia and Russia, who are leading the effort, have voiced support to for a further extension.

    OPEC Secretary General Mohammad Barkindo said Russian-Saudi backing for an extension cleared the fog before the group’s meeting in Vienna on 30 Nov 2017.

    Saudi Crown Prince Mohammad bin Salman repeated the kingdom’s support for extending the deal at the weekend.

    However, traders said a 900,000 bpd export capacity increase from Iraq’s southern ports to 4.6 million bpd had prevented Brent rising further.Reuters

    Prices are as at 15:49 EDT

    • NYMEX West Texas Intermediate (WTI): $54.16/barrel +0.48% Chart
    • ICE (London) Brent North Sea Crude: $60.89/barrel +0.74% Chart
    • NYMEX Natural gas futures: $2.98/MMBTU +0.40% Chart

    flag_usa US Personal Income and Outlays. Sep 2017

    Press Comment: Bloomberg

    U.S. consumer spending recorded its biggest increase in more than 8 years in Sep 2017, likely as households in Texas and Florida replaced flood-damaged motor vehicles, but underlying inflation remained muted.

    The Commerce Department said on Monday consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 1.0% in Sep 2017. The increase, which also included a boost from higher household spending on utilities, was the largest since Aug 2009.

    Consumer spending rose by an unrevised 0.1% in Aug 2017. Economists polled by Reuters had forecast consumer spending increasing 0.8% in Sep 2017.

    Prices of U.S. Treasuries were higher in early morning trading while the USD was weaker against a basket of currencies. U.S. stock index futures were mixed. The data was included in last Friday’s Q3/2017 GDP report, which showed consumer spending growth slowing to a 2.4% annualized rate after a robust 3.3% pace in Q2/2017.

    The moderation in consumption was offset by a rise in inventory investment, business spending on equipment and a drop in imports, which left the economy growing at a 3.0% rate in the third quarter after the April-June period’s brisk 3.1% pace.

    The Commerce Department said September data reflected the effects of Hurricanes Harvey and Irma, but said it could not quantify the total impact of the storms on consumer spending and personal income.

    Consumer spending in Sep 2017 was buoyed by purchases of motor vehicles, probably as drivers in Texas and Florida replaced automobiles that were destroyed when Harvey and Irma slammed the states in late Aug 2017 and early Sep 2017. Spending on long-lasting goods like autos surged 3.2% in Sep 2017. Outlays on services rose 0.5%.

    Core Inflation Benign

    Though disruptions to the supply chain as a result of the hurricanes also likely contributed to an uptick in inflation in Sep 2017, underlying price pressures remained benign.

    The Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, edged up 0.1% in Sep 2017. The so-called core PCE has now increased by 0.1% for 5 straight months.

    The core PCE increased 1.3% in the 12 months through Sep 2017 after a similar gain in Aug 2017. The core PCE has undershot the Fed’s 2% target for nearly 5½ years.

    The soft core PCE readings are likely to intensify the inflation debate among Fed officials, who are holding a policy meeting on Tuesday and Wednesday. The FOMC is not likely to raise interest rates this week, but is expected to do so in Dec 2017. It has raised rates twice this year.

    When adjusted for inflation, consumer spending increased 0.6% in Sep 2017 after slipping 0.1% in Aug 2017.

    While that put consumer spending on a higher growth trajectory heading into Q4/2017, it is unlikely to be sustained as households increasingly rely on dwindling savings to fund purchases.

    Personal income rose 0.4% in Sep 2017 after increasing 0.2% in Aug 2017. Wages advanced 0.4%. Savings fell to $441.9 billion in Sep 2017, the lowest level since Aug 2008, from $521.4 billion in the prior month.Reuters

    Press Release Extract [ser_us_pio]

    Personal income increased $66.9 billion (0.4 percent) in September according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $53.0 billion (0.4 percent) and personal consumption expenditures (PCE) increased $136.0 billion (1.0 percent).

    Real DPI decreased less than 0.1 percent in September and Real PCE increased 0.6 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.1 percent.

    The increase in personal income in September primarily reflected increases in wages and salaries and nonfarm proprietors’ income.

    The $76.0 billion increase in real PCE in September reflected an increase of $59.1 billion in spending for goods and a $21.6 billion increase in spending for services. Within goods, new motor vehicles was the leading contributor to the increase. Within services, the largest contributor to the increase was spending for household utilities.

    Personal outlays increased $132.5 billion in September. Personal saving was $441.9 billion in September and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.1 percent.

    US Bureau of Economic Analysis, “Personal Income and Outlays: September 2017“, 30 Oct 2017 (08:30) 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

    Industrial Profits. First 3 Quarters of 2017

    Press Release Extract

    In the first nine months of 2017, the profits made by industrial enterprises above the designated size achieved 5,584.6 billion yuan, a year-on-year increase of 22.8 percent, and the growth rate increased by 1.2 percentage points from the first eight months.

    cn_profits_20171030

    In the first nine months, the profits of state-holding industrial enterprises above the designated size gained 1,257.74 billion yuan, up by 47.6 percent year-on-year; that of collective-owned enterprises reached 32.34 billion yuan, an increase of 4.3 percent; that of joint-stock enterprises stood at 3,909.67 billion yuan, up by 24.6 percent; that of foreign funded enterprises, and enterprises funded from Hong Kong, Macao and Taiwan achieved 1,351.43 billion yuan, increased by 18.5 percent; and that of private enterprises gained 1,828.59 billion yuan, an increase of 14.5 percent.

    In the first nine months, the profits of mining and quarrying reached 369.2 billion yuan, up by 4.7 times year-on-year; that of manufacturing was 4,898.43 billion yuan, an increase of 19.6 percent; that of production and distribution of electricity, heat, gas and water reached 316.97 billion yuan, down by 18.3 percent.

    In the first nine months, within 41 branches of industrial divisions, the industrial profits of 39 industrial divisions increased year-on-year, and that of 2 decreased. In view of the profit growth of major industries, the profits of mining and washing of coal increased by 7.2 times year-on-year, that of processing of food from agricultural products increased by 6.0 percent year-on-year, that of manufacture of textile up by 3.7 percent, that of processing of petroleum, coking, processing of nucleus fuel increased by 38.4 percent, that of manufacture of chemical raw material and chemical products increased by 37.9 percent, that of manufacture of non-metallic mineral products increased by 24.6 percent, that of manufacture and processing of ferrous metals increased by 1.2 times, that of manufacture and processing of non-ferrous metals increased by 47.1 percent, that of manufacture of general-purpose machinery up by 15.8 percent, that of manufacture of special-purpose machinery up by 24.5 percent, that of manufacture of motor vehicles increased by 10.3 percent, that of manufacture of electrical machinery and equipment increased by 8.8 percent, that of manufacture of computer, communication equipment and other electronic equipment increased by 17.6 percent, extraction of petroleum and natural gas turned losses in the same period into profits, and the profits of production and supply of electric power and heat power down by 23.7 percent.

    In the first nine months, the revenue from principal activities of industrial enterprises above the designated size reached 90.5 trillion yuan, increased by 12.5 percent year-on-year. The costs of principal activities were 77.4 trillion yuan, up by 12.2 percent. The profit rate of revenue from principal activities was 6.17 percent, an increase of 0.51 percentage points year-on-year.

    By the end of September, the total assets of industrial enterprises above the designated size was 110.5 trillion yuan, increased by 7.9 percent year-on-year; the total liabilities reached 61.6 trillion yuan, increased by 6.7 percent; the total owners’ equity was 48.9 trillion yuan, increased by 9.4 percent. The asset-liability ratio was 55.7 percent, a decrease of 0.6 percentage points year-on-year.

    By the end of September, the total volume of receivable accounts for industrial enterprises above designated hit 13.2 trillion yuan, went up by 8.8 percent year-on-year. The total value of finished products for industrial enterprises accounted for 4,099.66 billion yuan, increased by 7.8 percent.

    In the first nine months, the costs for per-hundred-yuan turnover of principal activities stood at 85.56 yuan, a decrease of 0.23 yuan year-on-year; the expenses for per-hundred-yuan turnover of principal activities stood at 7.34 yuan, a decrease of 0.27 yuan; the revenue from principal activities brought by per hundred yuan assets was 113.2 yuan, an increase of 4.8 yuan; the revenue from principal activities per capita was 1342 thousand yuan, an increase of 160 thousand yuan; the turnover days of finished goods were 13.7 days, a decrease of 0.6 days; the days sales outstanding hit an average of 37.3 days, a decrease of 1.0 day.

    In September, the profits made by industrial enterprises above the designated size achieved 662.18 billion yuan, a year-on-year increase of 27.7 percent, and the growth rate increased by 3.7 percentage points from August.

    National Bureau of Statistics of China, “Industrial Profits Increased in the First Nine Months of 2017“, 30 Oct 2017 More

    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