In Portfolioticker today
Today at the stock market
“Declines in chipmaker shares weighed on stocks across the globe on Monday, while U.S. energy shares fell as crude dropped and the USD slipped against the JPY.
Tech stocks in Europe fell 0.7%.
The Consumer Discretionary sector was among the top boosts to the S&P, lead by Amazon, as sales data indicated an upbeat consumer during the first weekend of the U.S. holiday shopping season.
“The (US stock) market is looking at the rest of the world and seeing it’s a little bit soft, while the early read on holiday sales has been pretty good,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
The pan-European FTSEurofirst 300 index lost 0.43% and MSCI’s gauge of stocks across the globe shed 0.26% after 6 consecutive sessions of gains and a record closing high hit on Friday.
Emerging market stocks lost 0.86%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.85% lower.” Reuters
“Western Digital Corp., Seagate Technology Plc and Micron Technology Inc. dragged on the Nasdaq 100 Index after Morgan Stanley downgraded Western Digital. Reports of North Korea preparing a missile launch may also have affected markets, as the JPY moved higher.
Meanwhile, investors are gearing up for a big week, with U.S. President Donald Trump scheduled to address Senate Republicans Tuesday ahead of a potential vote on a tax overhaul. Federal Reserve Chair Janet Yellen testifies before the congressional Joint Economic Committee in Washington, and the confirmation hearing for her nominated successor, Jerome Powell, begins. Adding to the mix are data on U.S. GDP, prices and jobs.
“To me, Powell is probably going to largely continue the existing policy. But the real question is what’s the real composition of the Fed going to look like in 2018? People keep talking about the Fed’s intentions for 2018, but we’ve largely got an empty board there,” Jerry Paul, senior vice president of fixed income and portfolio manager at Icon Funds in Denver, said by phone.” Bloomberg
^ Market indices today (mouseover for 12 month view) Chart: Google Finance
|Index||Ticker||Today||Change||31 Dec 16||YTD|
|S&P 500||SPX (INX)||2,601.42||-0.04%||2,238.83||+16.19%|
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting
Our AUD-denominated index closed on a record high of 4.108.
|Index||Currency||Today||Change||31 Dec 16||YTD|
Portfolio stock prices
Alphabet Class A shares closed on a record high of $1,072.26 beating their 8 Nov 2017 record of $1,058.29
Alphabet Class C shares closed on a record high of $1,054.82 up 1.37% on Friday’s record of $1,040.61
Amazon closed on a record high of $1,195.62 up 0.78% on Friday’s record of $1,086.41
Facebook closed on a record high of $183.05 up 0.15% on Friday’s record of $182.78
VMware closed on a record high of $126.21 beating its 21 Nov 2017 record of $125.39
|Stock||Ticker||Today||Change||31 Dec 16||YTD|
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg
“Bloomberg’s Dollar Spot Index (DXY) rose 0.15%, with the EUR down 0.27% to USD 1.1898.
Japan’s JPY rose 0.41% to 111.09 per USD, the strongest level for the Japanese currency since mid Sep 2017.
Britain’s GBP was last trading at USD 1.3316, down 0.14% on the day.
Treasury yields rose briefly after data showed U.S. new home sales surged to their highest in 10 years and were last little changed on the day. Benchmark 10-year notes last rose 3/32 in price to yield 2.33%, from 2.34% late on Friday.
The gap between U.S. 2-year note and U.S. 10-year note yieldscontracted to 56.30 basis points, the tightest in over a decade. The gap was last at 58.4 basis points. The 30-year bond last fell 5/32 in price to yield 2.7685%, from 2.761% late on Friday.
Spot gold rose 0.5% to $1,294.01/ounce. U.S. gold futures rose 0.52% to $1,294.00/ounce.” Reuters
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com
Oil and Gas Futures
“Energy stocks fell the most on the S&P 500, down 1.0%. The slide tracked a 1.9% decline in U.S. crude to $57.83 per barrel while Brent was last at $63.73, down 0.2% on the day.
Prospects of higher U.S. supply from a planned restart of the Keystone crude pipeline and uncertainty about Russia’s resolve to join in extending output cuts ahead of this week’s OPEC meeting weighed on oil prices.
“It’s the OPEC parlor game that we’re all playing. The Russians being quiet about their intentions about the OPEC deal is a little unsettling,” said John Kilduff, partner at Again Capital LLC in New York.” Reuters
“West Texas Intermediate crude slipped after U.S. drillers expanded operations while OPEC and Russia prepare to discuss longer supply curbs. The S&P 500 Index fell less than 0.05 percent, giving up early gains, as companies including Marathon Oil Corp. and Newfield Exploration Co. dropped.
“After rallying to a two-and-a-half year high, WTI is stumbling lower ahead of the OPEC meeting later this week, as fears creep in that a production cut extension may not be formally announced,” Matt Smith, director of commodity research at Clipper Data, said in an email.” Bloomberg
Prices are as at 15:48 ET
- NYMEX West Texas Intermediate (WTI): $57.95/barrel -1.70% Chart
- ICE (London) Brent North Sea Crude: $63.85/barrel -0.02% Chart
- NYMEX Natural gas futures: $2.94/MMBTU +4.55% Chart
AU: Australia Pushing Property to the Limit
Bloomberg Businessweek Article
“Australia’s housing market dwarfs its economy after five years of red-hot price growth. The value of the nation’s homes has ballooned to A$7.3 trillion ($5.6 trillion) — or more than four times gross domestic product. Not even the U.S. and U.K. markets achieved such heights at their peaks a decade ago before prices spiraled lower and dragged their economies with them. “The risk is that it leaves the Australian economy extremely exposed, and a minor shock could become far more significant,” said Daniel Blake, an economist at Morgan Stanley in Sydney.”
Chris Bourke, “Aussie Housing Market Is Four Times the Size of Economy“, 24 Nov 2017 Bloomberg
One in seven homeowners would be unable to meet mortgage repayments if they were to lose their job, according a survey of homeowners. The survey by Canstar revealed that 43 per cent of borrowers have fewer than three months’ worth of repayments saved to cope with unexpected changes to their financial situation.
The Canstar Consumer Pulse Report, which asked 2026 Australian consumers about their views on financial security and housing affordability, also found that 39 per cent of the homeowners who had money saved, either in an offset account or through extra repayments on their loan, had dipped into their financial buffer in the last 12 months. “It’s a bit disturbing,” said Canstar group executive of financial services Steve Mickenbecker.
AMP Capital Chief Economist Shane Oliver said that low interest rates had been reflected in high house prices and increasing levels of debt, which had placed additional strain on households as wages were not keeping pace. “People are borrowing more but their income is not going up the way it used to, so the burden is lingering for a lot longer,” he said. Mr Oliver said it would take much tighter labour market, lower unemployment and particularly lower underemployment to see an increase in wages. “People have had jobs but they haven’t had the hours that they would like, so underemployment is quite high,” he said. “If there was a significant rise in unemployment it could create problems for the property market.”
Daniel Butkovich, “‘It’s disturbing’: One in seven homeowners with a mortgage have no buffer saved“, 24 Nov 2017 Domain
US: New Residential Sales. Oct 2017
Press Comment: Reuters
“Sales of new U.S. single-family homes unexpectedly rose in Oct 2017 to hit a 10-year high amid robust demand across the country, offering a boost to the housing market.
The upbeat report from the Commerce Department on Monday was the latest indication that housing was regaining momentum after treading water for much of the year because of a dearth of homes for sale and shortages of labor and suitable land for building. It underscored the economy’s strength early in the fourth quarter.
“New home sales are a leading indicator and the jump in October sales are leading the economy higher as we finish out the year,” said Chris Rupkey, chief economist at MUFG in New York. “You have to be very confident to make the biggest big-ticket purchase of your life.”
The Commerce Department said new home sales increased 6.2% to a seasonally adjusted annual rate of 685,000 units in Oct 2017, the highest level since Oct 2007. The pace of sales in Sep 2017 was revised down to 645,000 units from the previously reported 667,000 units.
Economists had forecast new home sales, which account for 11% of overall home sales, falling 6.0% to a pace of 625,000 units in Oct 2017. Sales surged 18.7% on a year-on-year basis from Oct 2016.
New home sales, which have now increased for 3 straight months, added to strong homebuilding and existing home sales data in painting a positive picture of the housing market after it appeared to stall this year.
Activity was also temporarily restrained by Hurricanes Harvey and Irma. Housing has been a drag on economic growth since Q2/2017. There are concerns that an effort by Republicans in the U.S. Congress to overhaul the tax code could undermine the housing market.
Republicans in the House of Representatives have proposed allowing interest payment deductions on mortgage debt only up to $500,000, and only on a primary residence. Their colleagues in the Senate want to keep the existing limit at $1 million but eliminate the deduction of interest on home-equity loans
The PHLX housing index was trading lower as shares in the nation’s largest homebuilder, D.R. Horton, declined 1.1% and Pultegroup fell 0.90%.
Some economists said mild weather helped to boost new home sales last month. Sales soared 30.2% in the Northeast to their highest level since Oct 2007. They rose 1.3% in the South also to a 10-year high. Sales jumped 17.9% in the Midwest and climbed 6.4% in the West.
“Sales rose sharply in the Northeast and Midwest, which are the smallest regions for new home sales and often greatly influenced by atypical swings in the weather,” said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.
More than two-thirds of the new homes sold last month were either under construction or yet to be started. The inventory of new homes on the market increased 1.4% to 282,000 units, the highest level since May 2009.
Houses under construction or yet to be started accounted for about 77% of the inventory in Oct 2017.
At October’s brisk sales pace it would take 4.9 months to clear the supply of houses on the market, the fewest since Jul 2016 and down from 5.2% months in Sep 2017. A 6-month supply is viewed as a healthy balance between supply and demand.
“The market is starving for affordable new homes, and builders cannot and will not ignore this hungry market. Land, labor and lumber prices are only expected to keep rising, which will force those builders looking to meet market demand to search for less expensive development options farther away from urban job cores,” said Svenja Gudell, chief economist at Zillow.” Reuters
Press Release Extract [ser_us_newres]
New Home Sales
Sales of new single-family houses in October 2017 were at a seasonally adjusted annual rate of 685,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.2 percent (±18.0 percent) above the revised September rate of 645,000 and is 18.7 percent (±23.5 percent) above the October 2016 estimate of 577,000.
The median sales price of new houses sold in October 2017 was $312,800. The average sales price was $400,200.
For Sale Inventory and Months’ Supply
The seasonally-adjusted estimate of new houses for sale at the end of October was 282,000. This represents a supply of 4.9 months at the current sales rate. ”
U.S. Census Bureau and the U.S. Department of Housing and Urban Development, “New Residential Sales. Oct 2017“, 27 Nov 2017 (10:00) More
US: Cyber Monday Retail Sales
“Adobe (Nasdaq:ADBE) today released its 2017 online shopping data for Cyber Monday and the holiday weekend overall. Cyber Monday is projected to hit a new record as the largest online sales day in history with $6.59 billion by the end of the day. This marks a 16.8 percent year-over-year (YoY) increase as of 10:00 p.m. ET. In comparison, Black Friday and Thanksgiving Day brought in $5.03 billion and $2.87 billion in revenue respectively. Top sellers on Cyber Monday included the Nintendo Switch, PJ Masks and Hatchimals & Colleggtibles figurines, Apple AirPods, streaming devices like Google Chromecast and Roku, and Super Mario Odyssey, the video game. The holiday shopping season so far (November 1 to 27) drove a total of $50 billion in online revenue, a 16.8 percent increase. Adobe predicts this will be the first-ever holiday season to break $100 billion in online sales.
Overall web traffic to retail sites increased by 11.9 percent on Cyber Monday, with the season average at 5.7 percent. Mobile set a new record representing 47.4 percent of visits (39.9 percent smartphones, 7.6 percent tablets) and 33.1 percent of revenue (24.1 percent smartphones, 9.0 percent tablets). Smartphone traffic specifically grew 22.2 percent YoY while revenue coming from smartphones ($1.59 billion) saw 39.2 percent growth YoY, a new all-time high. Mobile transactions are closing at a 12 percent higher rate compared to Cyber Monday 2016. For purchases made on smartphones, Apple iOS led with an average order value (AOV) of $123, in comparison to Google Android at $110.
“Shopping and buying on smartphones is becoming the new norm and can be attributed to continued optimizations in the retail experience on mobile devices and platforms,” said Mickey Mericle, vice president, Marketing and Customer Insights at Adobe. “Consumers are also becoming more savvy and efficient online shoppers. People increasingly know where to find the best deals and what they want to purchase, which results in less price matching behavior typically done on desktops. Millennials were likely another reason for the dramatic growth in mobile, with 75 percent expecting to shop via their smartphone.”
Additional findings include:
- Top sellers: Best-selling electronics include Google Chromecast, Apple iPads, Samsung Tablets, Apple AirPods, and Sony Playstation VR. Video games and consoles include Super Mario Odyssey, Nintendo Switch and Microsoft Xbox One X. Toys include PJ Masks and Hatchimals & Colleggtibles, Funko Pop and L.O.L. Surprise dolls, as well as Ride On Cars.
- Biggest discounts: Largest price drops heading into Cyber Monday were for toys with an average discount of 18.8 percent, followed by TVs at 21.1 percent and computers at 14.7 percent. Black Friday saw the largest discounts for computers (15.9 percent on average), followed by TVs (21.6 percent) and toys (17.3 percent). On Giving Tuesday, pet products as well as furniture and bedding are expected to see the best deals with 22 and 13 percent respectively.
- Expected shopping surge in the late hours of Cyber Monday: Three hours in the evening of Cyber Monday (8-11 p.m. in each local market) are expected to bring in more online revenue than the average 24-hour day. Conversion rates will reach their peak during the last hour of Cyber Monday (11 p.m. – midnight) at four times the annual average.
- Large and small retailers win: Large retailers (over $100 million in annual revenue) saw higher AOVs and desktop conversion rates. Small retailers (under $10 million in annual revenue) saw 30 percent higher conversion rates on smartphones than large retailers.
- Top retail promotion drivers: Search drove the majority of online sales on Cyber Monday at 41.7 percent (paid search at 22.9 percent, organic search at 18.8 percent). Direct traffic and email drove 24.8 percent and 24.9 percent respectively. Paid search saw the strongest growth at 8.3 percent YoY.
- Record Thanksgiving week online sales: November 23 through 26 totaled $13.03 billion, a 14.4 percent increase YoY. Thanksgiving Day spend totaled $2.87 billion (18.3 percent growth YoY) while Black Friday hit $5.03 billion (up 16.9 percent YoY). Thanksgiving weekend (November 25 and 26) saw $5.12 billion in revenue. Online spend surpassed at least $1 billion every day in the lead up to Thanksgiving.
- Full holiday season online sales: For the rest of the season, 13 days are projected to exceed $2 billion in online sales bringing the total to 18 $2 billion days this holiday season, over double the number from last year.“
Adobe, “Adobe Data Shows Cyber Monday Is Largest Online Sales Day in History with $6.59 Billion“, 27 Nov 2017 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
^ CNY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
Industrial Profits. Oct 2017 YTD
“In the first ten months of 2017, the profits made by industrial enterprises above the designated size achieved 6,245.08 billion yuan, a year-on-year increase of 23.3 percent, and the growth rate increased by 0.5 percentage points from the first nine months.
In the first ten months, the profits of state-holding industrial enterprises above the designated size gained 1,409.71 billion yuan, up by 48.7 percent year-on-year; that of collective-owned enterprises reached 37.13 billion yuan, an increase of 3.2 percent; that of joint-stock enterprises stood at 4,372.3 billion yuan, up by 25.3 percent; that of foreign funded enterprises, and enterprises funded from Hong Kong, Macao and Taiwan achieved 1,513.28 billion yuan, increased by 18.5 percent; and that of private enterprises gained 2,028.56 billion yuan, an increase of 14.2 percent.
In the first ten months, the profits of mining and quarrying reached 411.16 billion yuan, up by 4.1 times year-on-year; that of manufacturing was 5,484.78 billion yuan, an increase of 20.1 percent; that of production and distribution of electricity, heat, gas and water reached 349.14 billion yuan, down by 16.3 percent.
In the first ten months, within 41 branches of industrial divisions, the industrial profits of 38 industrial divisions increased year-on-year, and that of 3 decreased. In view of the profit growth of major industries:
- mining and washing of coal increased by 6.3 times year-on-year,
- processing of food from agricultural products increased by 5.1 percent year-on-year,
- manufacture of textile up by 3.2 percent,
- processing of petroleum, coking, processing of nucleus fuel increased by 41.1 percent,
- manufacture of chemical raw material and chemical products increased by 37.9 percent,
- manufacture of non-metallic mineral products increased by 23.2 percent,
- manufacture and processing of ferrous metals increased by 1.6 times,
- manufacture and processing of non-ferrous metals increased by 44.1 percent,
- manufacture of general-purpose machinery up by 14.6 percent,
- manufacture of special-purpose machinery up by 27.1 percent,
- manufacture of motor vehicles increased by 8.8 percent,
- manufacture of electrical machinery and equipment increased by 9.1 percent,
- manufacture of computer, communication equipment and other electronic equipment increased by 19.3 percent,
- extraction of petroleum and natural gas turned losses in the same period into profits, and
- profits of production and supply of electric power and heat power went down by 21.7 percent.
In the first ten months, the revenue from principal activities of industrial enterprises above the designated size reached 100.1 trillion yuan, increased by 12.4 percent year-on-year. The costs of principal activities were 85.5 trillion yuan, up by 12.0 percent. The profit rate of revenue from principal activities was 6.24 percent, an increase of 0.55 percentage points year-on-year.
By the end of October, the total assets of industrial enterprises above the designated size was 111.5 trillion yuan, increased by 7.7 percent year-on-year; the total liabilities reached 62.1 trillion yuan, increased by 6.7 percent; the total owners’ equity was 49.4 trillion yuan, increased by 9.0 percent. The asset-liability ratio was 55.7 percent, a decrease of 0.5 percentage points year-on-year.
By the end of October, the total volume of receivable accounts for industrial enterprises above designated hit 13.5 trillion yuan, went up by 8.4 percent year-on-year. The total value of finished products for industrial enterprises accounted for 4,190.82 billion yuan, increased by 9.0 percent.
In the first ten months, the costs for per-hundred-yuan turnover of principal activities stood at 85.46 yuan, a decrease of 0.26 yuan year-on-year; the expenses for per-hundred-yuan turnover of principal activities stood at 7.38 yuan, a decrease of 0.25 yuan; the revenue from principal activities brought by per hundred yuan assets was 112.1 yuan, an increase of 4.6 yuan; the revenue from principal activities per capita was 1339 thousand yuan, an increase of 159 thousand yuan; the turnover days of finished goods were 13.9 days, a decrease of 0.6 days; the days sales outstanding hit an average of 38.0 days, a decrease of 1.0 day.
In October, the profits made by industrial enterprises above the designated size achieved 745.41 billion yuan, a year-on-year increase of 25.1 percent, and the growth rate decreased by 2.6 percentage points from September.“
National Bureau of Statistics of China, “Industrial Profits Increased in the First Ten Months of 2017“, 27 Nov 2017 TradingEconomics
^ Shanghai CSI300 movements over the past week Chart: Google Finance
“The CSI300, a composite of stocks listed in Shenzhen and Shanghai, went down 1.3% to a near-3-week low of 4,051, while Hong Kong’s Hang Seng index dropped 0.6% to 29,686.
The Shanghai Composite index fell 32 points, or 0.9%, to 3,322 on Monday, marking the biggest three-day decline since Jun 2016, amid rising concerns about a government crackdown on leverage levels. Consumer, technology and financials shares were among the worst performers.
Historically, the China Shanghai Composite Stock Market Index reached an all time high of 6092.06 in Oct 2007 and a record low of 99.98 in Dec 1990.” TradingEconomics