Fri 15 Dec 2017


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  • Today at the stock market

    bull/bearWall Street’s three major indexes climbed to record closing highs on Friday with broad-based gains as a long-awaited bill to cut corporate tax rates looked like it would win enough support from lawmakers to pass.

    • The S&P 500 index rose 23.8 points, or 0.90%, to 2,675.81.
      • The S&P’s Energy index was the only one of its 11 majors in the red with a 0.03% dip.
      • Technology and Healthcare indexes led the advance with 1.24% and 1.17% gains, respectively.
      • The S&P financial index closed up 1.04%, paring earlier gains. Banks are seen as one of the biggest beneficiaries of tax reform.
      • The S&P consumer staples index rose 1.12%. Costco was its biggest percentage gainer, up 3.7%, after the retailer reported upbeat results.
    • The Dow Jones Industrial Average rose 143.08 points, or 0.58%, to 24,651.74.
    • The Nasdaq Composite index rose 80.06 points, or 1.17%, to 6,936.58.
    • The S&P 500 and the Dow closed higher for the fourth week in a row, while the Nasdaq saw its first weekly gain out of three.
    • “Quadruple witching,” the simultaneous expiration of U.S. options and futures contracts for stocks and indexes, boosted volume to 10.7 billion shares, well above the 6.73 billion average over the last 20 trading days, and the highest since a year ago.
    • Advancing issues outnumbered declining ones on the NYSE by a 2.24-to-1 ratio; on Nasdaq, a 2.32-to-1 ratio favored advancers.
    • The S&P 500 posted 37 new 52-week highs and 1 new low; the Nasdaq Composite recorded 85 new highs and 54 new lows.

    Tax Bill
    U.S. congressional Republicans were expected to release final details of their plan late on Friday, with decisive votes planned for next week after lawmakers who had previously criticized the bill started to voice their support.

    Republican Senator Bob Corker joined Senator Marco Rubio in signaling support in the late afternoon. Rubio had criticized the initial proposal, saying it did not give enough tax relief to working families, while Corker, had expressed concerned about the bill’s impact on the federal deficit.

    The bill is expected to drop corporate tax rates to 21% from 35% and some investors are betting that companies will put most of the savings toward a boost in shareholder payouts.

    “It’s meaningful in terms of its impact on shareholders. You’re going to see an increase in stock buybacks, maybe some dividend payouts,” said David Joy, chief market strategist at Ameriprise Financial in Boston.

    “By and large there’s a high correlation between higher equity prices and consumer confidence and consumer spending. Some translates into rising consumer sentiment and better feelings about job security,” he said.

    However, as the tax package has evolved, it has tilted increasingly toward benefiting businesses and the wealthy, a trend that concerned some lawmakers.

    The S&P was up 1% after Corker announced his support, but couldn’t sustain those levels as investors awaited tax bill details, according to Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

    “We don’t know how stimulative it will actually be,” said Battle. “There shouldn’t be any surprises. The stuff they were apart on seems manageable.”Reuters

    Latest on Tax Bill

    Congressional Republicans on Friday unveiled the final version of their dramatic U.S. tax overhaul – debt-financed cuts for businesses, the wealthy and some middle-class Americans – and picked up crucial support from two wavering senators ahead of planned votes by lawmakers early next week.

    Passage of the biggest U.S. tax rewrite since 1986 would provide Republican lawmakers and President Donald Trump their first major legislative victory since he took office in January. Prospects for approval soared after Republican senators Marco Rubio and Bob Corker pledged support.

    Three Republican senators, enough to defeat the measure in a Senate that Trump’s party controls with a slim 52-48 majority, remained uncommitted: Susan Collins, Jeff Flake and Mike Lee.

    The final version hammered out between Senate and House of Representatives Republicans after each chamber previously passed competing versions contained no surprises.

    It would cut the corporate income tax rate to 21% from 35%, according to a summary distributed to reporters by congressional tax writers. Corporate tax lobbyists have been seeking a tax cut of this magnitude for many years.

    The bill, the summary showed, would create a 20% business income tax deduction for owners of “pass-through” businesses, such as partnerships and sole proprietorships; allow for immediate write-off by corporations of new equipment costs; and eliminate the corporate alternative minimum tax.

    Under a new territorial system, the bill would exempt U.S. corporations from taxes on most of their future foreign profits. It also sets a one-time tax for companies to repatriate more than $2.6 trillion now held overseas, at rates of 15.5% for cash and cash-equivalents and 8% for illiquid assets.

    If passed by Congress, the changes would be in effect for 2018 taxes, with tax returns for 2017 unaffected.

    Democrats have been unified against the measure, calling it a giveaway to corporations and the rich that would drive up the federal deficit.

    The tax bill was expected to add at least $1 trillion to the 20 trillion U.S. national debt over 10 years, making it an unusual example of deficit spending on stimulative tax cuts at a time when the economy is already expanding.

    The Republican bill would maintain the existing seven individual and family income tax brackets with rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%. That top rate, for the highest-earning Americans, would be cut from today’s 39.6%.

    Republicans abandoned their quest to eliminate the estate tax on inherited assets, a move that would have benefited the richest Americans. But they did propose increasing the exemption for the tax to $10 million from $5 million person.

    The bill does not eliminate Wall Street’s so-called carried interest loophole that allows fund managers to claim a lower capital gains tax rate on profits from investments held more than a year. Getting rid of the loophole was a Trump campaign pledge. Instead, the legislation makes it harder for some fund managers to take advantage of the loopholes by requiring them to hold investments for more than three years before claiming it.

    As the tax package evolved, it tilted increasingly toward benefiting businesses and the wealthy. Provisions for offsetting the revenue costs of last-minute changes were troublesome for some lawmakers.

    Rubio said he would support the bill after its approach to the child tax credit was changed. The bill doubles the credit, meant to help reduce the costs of raising kids, to $2,000 per dependent child under the age of 17, with a refundable portion of $1,400. That refundable portion was raised from $1,100 at the last minute to win Rubio’s backing.

    Lee called the change to the child credit “a big win” but stopped short of endorsing the bill until he saw the details.

    Corker, a fiscal hawk who opposed an earlier bill that passed the Senate because of its deficit impact, said the final measure was “far from perfect” but he would support it, calling it a “once-in-a-generation opportunity” to help U.S. businesses.

    Collins has remained non-committal, in part out of concern about a provision that would repeal the fine imposed under the Affordable Care Act, or Obamacare, on Americans who do not obtain health insurance.

    Flake has said he needs to see all the details before supporting the measure.

    The Senate vote outlook has been complicated by Republican Senator John McCain’s hospitalization for treatment for side effects of cancer therapy. His office said he “looks forward to returning to work as soon as possible.”

    Vice President Mike Pence has delayed a trip to the Middle East in case his vote is needed to break a Senate tie.Reuters

    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) 2,675.81 +0.89% 2,238.83 +19.51%
    DJIA INDU 24,651.74 +0.58% 19,762.60 +24.73%
    NASDAQ IXIC 6,936.58 +1.16% 5,383.12 +28.85%

    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 3.135 +0.99% 2.105 +48.95%
    Valuation Rate USD/AUD 0.76953 -0.36% 0.72663 +5.90%
    AUD-denominated Index AUD 4.076 +1.35% 2.895 +40.77%

    Portfolio stock prices

    :-) Alphabet closed on a record high of $2,136.19 beating its 27 Nov 2017 record of $2,127.08:

    • At $1,072.00 Class A shares closed 0.02% below their 27 Nov 2017 record of $1,072.26
    • At $1,064.19 Class C shares closed above their 27 Nov 2017 record of $1,054.82

    :-) Visa closed on a record high of $113.82, beating its 12 Dec 2017 record of $113.46

    Stock Ticker Today Change 31 Dec 16 YTD
    Alphabet A GOOGL $1,072.00 +1.37% $792.45 +35.27%
    Alphabet C GOOG $1,064.19 +1.43% $771.82 +37.88%
    Apple AAPL $173.97 +1.01% $115.82 +50.2%
    Amazon AMZN $1,179.14 +0.41% $749.87 +57.24%
    Ebay EBAY $38.37 +2.04% $29.69 +29.23%
    Facebook FB $180.18 +1.00% $115.05 +56.61%
    PayPal PYPL $75.65 +1.87% $39.47 +91.66%
    Twitter TWTR $22.23 -1.56% $16.30 +36.38%
    Visa V $113.82 +0.79% $78.02 +45.88%
    VMware VMW $123.8 +2.10% $78.73 +57.24%

    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) rose 0.4%.
    The EUR fell 0.2% to USD 1.1756.
    Britain’s GBP fell 0.8% to USD 1.3319.
    South Africa’s ZAR rose 2.5% to 13.1764 per USD, the strongest in 3 months.
    Bloomberg

    AUD

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

    Oil and Gas Futures

    Futures prices

    Prices are as at 15:48 ET

    • NYMEX West Texas Intermediate (WTI): $57.31/barrel +0.47% Chart
    • ICE (London) Brent North Sea Crude: $63.25/barrel -0.09% Chart
    • NYMEX Natural gas futures: $2.62/MMBTU -2.38% Chart

    flag_europe EU: International Trade in Goods. Oct 2017

    Press Release Extract [ser_eu_trade]

    Euro area

    The first estimate for euro area (EA19) exports of goods to the rest of the world in October 2017 was €187.9 billion, an increase of 8.8% compared with October 2016 (€172.6 bn). Imports from the rest of the world stood at €168.9 bn, a rise of 10.1% compared with October 2016 (€153.4 bn). As a result, the euro area recorded a €18.9 bn surplus in trade in goods with the rest of the world in October 2017, compared with +€19.2 bn in October 2016. Intra-euro area trade rose to €160.0 bn in October 2017, up by 9.7% compared with October 2016.

    eu_trade1_20171215

    In January to October 2017, euro area exports of goods to the rest of the world stood at €1 812.6 bn (+7.5% compared with January-October 2016) and imports at €1 624.7 bn (+10.4% compared with January-October 2016). As a result the euro area recorded a surplus of €187.9 bn, compared with +€213.8 bn in January-October 2016. Intra-euro area trade rose to €1 529.3 bn in January-October 2017, up by 7.6% compared with January-October 2016.

    European Union

    The first estimate for extra-EU28 exports of goods in October 2017 was €159.4 billion, up by 8.6% compared with October 2016 (€146.8 bn). Imports from the rest of the world stood at €159.6 bn, up by 10.6% compared with October 2016 (€144.4 bn). As a result, the EU28 recorded a €0.3 bn deficit in trade in goods with the rest of the world in October 2017, compared with a surplus of €2.4 bn in October 2016. Intra-EU28 trade rose to €292.8 bn in October 2017, +10.7% compared with October 2016.

    eu_trade2_20171215

    In January to October 2017, extra-EU28 exports of goods stood at €1 549.7 bn (+8.9% compared with January-October 2016) and imports at €1 544.5 bn (+9.0% compared with January-October 2016). As a result, the EU28 recorded a surplus of €5.2 bn, compared with +€5.3 bn in January-October 2016. Intra-EU28 trade rose to €2 778.2 bn in January-October 2017, up by 7.5% compared with January-October 2016.

    Eurostat, “October 2017: Euro area international trade in goods surplus €18.9 bn. €0.3 bn deficit for EU28“, 15 Dec 2017 More

    flag_usa US: Employer Costs for Employee Compensation. Sep 2017

    Press Release Extract [us_employercosts]

    Employer costs for employee compensation averaged $35.64 per hour worked in September 2017, the U.S. Bureau of Labor Statistics reported today. Wages and salaries averaged $24.33 per hour worked and accounted for 68.3 percent of these costs, while benefit costs averaged $11.31 and accounted for the remaining 31.7 percent. Total employer compensation costs for private industry workers averaged $33.55 per hour worked in September 2017. Total employer compensation costs for state and local government workers averaged $48.78 per hour worked in September 2017.

    Highlights of employer compensation costs per hour worked for state and local government workers, September 2017:

    • State and local government employers spent an average of $48.78 per hour worked for employee total compensation.
    • Employer costs for wages and salaries averaged $30.54 per hour and accounted for 62.6 percent of compensation costs.
    • Employer costs for benefits averaged $18.24 per hour worked and accounted for the remaining 37.4 percent.
    • Employer costs by occupational group ranged from $33.64 per hour worked for sales and office workers to $58.76 per hour worked for management, professional, and related workers. This major occupational group includes teachers, whose compensation costs averaged $64.77 per hour worked. Service workers averaged $35.59.
    • Employers spent $5.56 per hour worked, or 11.4 percent of total compensation for retirement and savings benefits.
    • Employer costs for retirement and savings for management, professional, and related workers averaged $6.68 per hour worked. Employer costs for retirement and savings for sales and office workers averaged $3.44, and service workers averaged $4.48.
    • Included in retirement and savings benefits were employer costs for defined benefit plans, which averaged $5.16 per hour (10.6 percent of total compensation), and defined contribution plans, which averaged 39 cents (0.8 percent).
    • Insurance benefit costs averaged $5.80 per hour, or 11.9 percent of total compensation. The largest component of insurance costs was health insurance, which averaged $5.65, or 11.6 percent of total compensation.
    • Employer costs for paid leave include vacation, holiday, sick leave, and personal leave. The average cost for paid leave was $3.68 per hour worked for state and local government employees.
    • Employer costs for legally required benefits, including Social Security, Medicare, unemployment insurance (both state and federal), and workers’ compensation, averaged $2.71 per hour worked.

    Benefit costs in private industry
    Private industry employer costs for paid leave averaged $2.32 per hour worked or 6.9 percent of total compensation, supplemental pay averaged $1.19 or 3.6 percent, insurance benefits averaged $2.68 or 8.0 percent, retirement and savings costs averaged $1.39 or 4.1 percent, and legally required benefits averaged $2.62 per hour worked or 7.8 percent.

    Bureau of Labor Statistics, “Employer Costs for Employee Compensation. Sep 2017“, 15 Dec 2017 (10:00) 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

    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

    The Shanghai Composite lost 26 points or 0.8% to 3266 on Friday December 15th, the lowest close since August 16th. Tech and financial shares were among the worst performers. On the week, the benchmark index shed 0.7%, marking the 5th week of losses.

    In Hong Kong, the Hang Seng fell 318 points or 1.1% to 28848, with Sunac China Holdings plunging 10.6% after the company said it would sell near $1 billion in new shares to Chairman Sun Hongbin’s Sunac International Investment Holdings.

    Also, concerns over the US tax reform weighed on investors’ mood after senator Marco Rubio said he would oppose the tax bill if no changes were made to child tax credits.TradingEconomics