Wed 20 Dec 2017


watch Nightly Business Report. watch PBS NewsHour.

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/bearWall Street’s main indexes dipped on Wednesday, pausing after recent record highs as both houses of Congress approved a long-anticipated tax overhaul. Four of the 11 major S&P sectors ended higher, led by a 1.4% gain in energy.

    • The S&P 500 index fell 2.22 points, or 0.08%, to 2,679.25
    • The Dow Jones Industrial Average fell 28.1 points, or 0.11%, to 24,726.65
    • The Nasdaq Composite index fell 2.89 points, or 0.04%, to 6,960.96
    • Advancing issues outnumbered declining ones on the NYSE by a 1.01-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored advancers.
    • Volume so far on U.S. exchanges was 6.17 billion shares, compared to the 6.84 billion average for the full session over the last 20 trading days.

    Energy stocks were fueled as oil prices rose about 1%, supported by a larger-than-expected drop in U.S. inventories.

    Telecoms saw a 0.6% rise. The sector is considered by some analysts to be the biggest beneficiary of lower taxes. AT&T gained 1.3%.

    The Dow Jones Transport Index jumped 0.9% to a record high close, helped by a surge in FedEx. The company’s shares were up 3.5% and earlier in the session touched a record high, a day after it reported a stronger-than-expected quarterly profit.

    Technology stocks, expected to benefit the least from lower taxes, were down 0.1% on the S&P 500. Chipmaker Micron was up 4.0% after strong results and forecast.

    The consumer staples index fell 0.4%, weighed by a 2.5% slide in Philip Morris International Inc.

    Reuters reported former Philip Morris employees detailed irregularities in clinical trials for the company’s e-cigarette, due to be voted on by the U.S. FDA next year.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) 2,679.25 -0.09% 2,238.83 +19.67%
    DJIA INDU 24,726.65 -0.12% 19,762.60 +25.11%
    NASDAQ IXIC 6,960.96 -0.05% 5,383.12 +29.31%

    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 3.139 -0.28% 2.105 +49.12%
    Valuation Rate USD/AUD 0.77158 +0.02% 0.72663 +6.18%
    AUD-denominated Index AUD 4.07 -0.30% 2.895 +40.56%

    Portfolio stock prices

    Stock Ticker Today Change 31 Dec 16 YTD
    Alphabet A GOOGL $1,073.56 -0.58% $792.45 +35.47%
    Alphabet C GOOG $1,064.95 -0.54% $771.82 +37.97%
    Apple AAPL $174.35 -0.11% $115.82 +50.53%
    Amazon AMZN $1,177.62 -0.83% $749.87 +57.04%
    Ebay EBAY $37.93 +0.34% $29.69 +27.75%
    Facebook FB $177.89 -0.91% $115.05 +54.61%
    PayPal PYPL $74.00 -0.68% $39.47 +87.48%
    Twitter TWTR $25.20 +0.47% $16.30 +54.60%
    Visa V $112.12 -0.02% $78.02 +43.70%
    VMware VMW $128.62 +0.37% $78.73 +63.36%

    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) plied a narrow range, trading little changed at 5 p.m. New York time.
    The EUR rose 0.3% Wednesday and was recently at USD 1.1873.
    Britain’s GBP fell 0.1% and was trading at USD 1.3376.
    Japan’s JPY rose slid 0.5%, trading at 113.39 per USD.
    Bloomberg

    AUD

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

    Oil and Gas Futures

    Crude prices rose on Wednesday, supported by a larger-than-expected drop in U.S. inventories and the continued outage of the North Sea Forties pipeline system.
    U.S. crude stocks fell by 6.5 million barrels, more than expected, in the week to 15 Dec 2017, while gasoline stocks rose 1.2 million barrels, less than anticipated, the Energy Information Administration said on Wednesday, even though refining activity rose.

    West Texas Intermediate crude futures settled up 53 cents at $58.09/barrel, while Brent crude ended up 76 cents at $64.56 a barrel.

    Crude stocks, excluding the U.S. Strategic Petroleum Reserve, are at 436.5 million barrels, the lowest since October 2015.

    Inventories have been steadily declining in the United States due to strong export demand and efforts by major oil producers to restrict supply.

    Refiners in the United States continue to run at above-average rates than is typical for this time of year, which is offsetting strong U.S. production, and resulting in product that is ready for export or domestic use.

    For the most recent week, refiner capacity utilization rose to 94.1%, the highest since the summer, and above average for December, notes Richard Hastings, macro strategist at Seaport Global Securities in Charlotte.

    “Crude oil stocks are getting gobbled up and that is preventing a buildup from U.S. oil production,” he said. “It’s a stable story where the floor for crude prices is looking very firm.”

    OPEC and 10 other producers led by Russia last month extended an agreement to cut oil production by 1.8 million bpd until the end of next year to eliminate an oil glut.

    Some producers, including Russia, had raised concerns over whether the deal should continue through the end of 2018. On Wednesday, Saudi Arabian energy minister Khalid al-Falih said it would be premature to discuss changes to OPEC’s policy. He said the drawdown of inventories would likely take through the second half of 2018.

    On Wednesday, Kuwait’s oil minister Bakhit al-Rashidi said compliance among both OPEC and non-OPEC members currently stands at 122%, highest since the deal was implemented in Jan 2017.

    Rising U.S. crude production, which has soared by 16% since mid-2016 to 9.8 million bpd, was capping prices. The all-time U.S. production record of more than 10 million bpd was set in the early 1970s and is based on monthly EIA figures.

    Most analysts expect U.S. output to break that record soon, and take it to levels on a par with top exporter Saudi Arabia and close to top producer Russia, which pumps around 11 million bpd.

    Prices have been supported by the continuing outage of Britain’s Forties pipeline in the North Sea, which delivers crude underpinning Brent futures.

    Operator Ineos said repairs were under way on Wednesday after a crack was found that closed the pipeline on 11 Dec 2017. Repairs are expected to take two to four weeks.Reuters

    Futures prices

    Prices are as at 15:49 ET

    • NYMEX West Texas Intermediate (WTI): $58.09/barrel +0.92% Chart
    • ICE (London) Brent North Sea Crude: $64.56/barrel +1.19% Chart
    • NYMEX Natural gas futures: $2.65/MMBTU -1.60% Chart

    flag_australia AU: Finance and Wealth. Q3/2017

    Press Release Extract [au_wealth]

    In the September quarter 2017, non-financial corporations and households invested $52.9b and $40.5b respectively. Households funded these investments mainly through gross saving ($52.9b) while non-financial corporations funded investment through a mix of gross saving ($25.7b) and net borrowing ($4.7b). The general government sector invested $13.4b and funded it through net borrowing ($15.7b) and gross saving ($2.4b).

    In original terms national investment decreased $1.3b in the September quarter 2017 to $109.6b from June quarter 2017.

    Private non-financial corporations investment was $47.6b in September quarter 2017 having fallen from its peak in June quarter 2013 ($63.5b). Household investment was $40.5b in September quarter 2017, compared to $25.4b recorded in March quarter 2013.

    During September quarter 2017, national net borrowing was $14.2b with financial corporations borrowing of $37.0b, general government borrowing $15.7b and non-financial corporations borrowing $4.7b. In contrast, households lent $43.2b to other sectors.

    au_investment_20171220

    Net borrowing of $37.0b by financial corporations was a result of disposal of financial assets $19.0b and incurring $17.9b in liabilities. The disposal of financial assets by financial corporations was driven by settlement in derivatives assets ($25.2b), disposal of bonds ($15.1b) and one name paper ($11.8b), which was partly offset by the acquisition of equities $33.2b. Financial corporations net incurrence of liabilities was driven by an increase of net equity in reserves $27.5b and the issuance of debt securities $21.7b, which was partly offset by settlement in derivatives liabilities ($31.1b).

    Net borrowing of $4.7b by non-financial corporations was a result of incurring $34.3b in liabilities and acquisition of financial assets $29.6b. Financial assets acquired were loans and placements ($6.5b), deposits ($5.8b) and equities ($4.9b). Non-financial corporations incurred liabilities through the issuance of equity ($30.7b).

    Net borrowing of $15.7b by general government was a result of disposal of financial assets ($12.6b) and incurring $3.1b in liabilities. National general government withdrew $21.2b deposit assets, partly offset by acquisition of equities ($3.0b) and one name paper ($1.3b). National general government and state and local general government incurred unfunded superannuation liabilities of $1.8b and $0.8b respectively.

    Households were net lenders ($43.2b) in September quarter 2017. Households acquired $29.9b in net equity in reserves of pension, of which unfunded super contributed $2.6b. Households also acquired $24.1b in deposits. Households incurred liabilities through loan borrowings ($16.6b).

    Australian Bureau of Statistics, “5232.0 Australian National Accounts: Finance and Wealth, September 2017“, 20 Dec 2017 More

    flag_europe EU: ECB Balance of Payments. Oct 2017

    Press Release Extract [eu_ecb_bop]

    In October 2017 the current account of the euro area recorded a surplus of €30.8 billion.

    In the financial account, combined direct and portfolio investment recorded net acquisitions of assets of €61 billion and net disposals of liabilities of €18 billion.

    Current account

    The current account of the euro area recorded a surplus of €30.8 billion in October 2017. This reflected surpluses for goods (€26.2 billion), primary income (€9.8 billion) and services (€7.3 billion), which were partly offset by a deficit for secondary income (€12.5 billion).

    The 12-month cumulated current account for the period ending in October 2017 recorded a surplus of €349.6 billion (3.2% of euro area GDP), compared with one of €363.4 billion (3.4% of euro area GDP) for the 12 months to October 2016. This development was due to a decrease in the surplus for goods (from €373.7 billion to €340.4 billion) and an increase in the deficit for secondary income (from €137.9 billion to €150.6 billion). These were partly offset by increases in the surpluses for services (from €48.4 billion to €66.2 billion) and primary income (from €79.1 billion to €93.6 billion).

    Financial account

    In October 2017 combined direct and portfolio investment recorded net acquisitions of assets of €61 billion and net disposals of liabilities of €18 billion.

    Euro area residents recorded a net increase of €35 billion of direct investment assets as a result of net investments in debt instruments (€49 billion), which were partly offset by net disinvestments in equity (€13 billion). Direct investment liabilities increased by €6 billion as a result of net acquisitions of euro area debt instruments (€11 billion) by non-euro area residents. This was partly offset by net disposals of euro area equity by non-euro area residents (€5 billion).

    With regard to portfolio investment assets, euro area residents made net purchases of foreign securities amounting to €26 billion. This resulted from net acquisitions of equity (€25 billion) and long-term debt securities (€13 billion), which were partly offset by net sales/amortisations of short-term debt securities (€12 billion). Portfolio investment liabilities decreased by €25 billion as a result of non-euro area residents’ net sales of euro area short-term and long-term debt securities (€26 billion and €46 billion respectively), which were partly offset by net acquisitions of euro area equity (€48 billion).

    The euro area net financial derivatives account (assets minus liabilities) recorded negative net flows of €1 billion.

    Other investment recorded net acquisitions of assets amounting to €131 billion and net incurrences of liabilities of €170 billion. The net acquisition of assets was explained by Monetary Financial Institutions (MFIs) (excluding the Eurosystem) (€118 billion) and, to a lesser extent, by other sectors (€16 billion), and was partly offset by decreases in assets of the Eurosystem (€3 billion). The incurrence of liabilities were attributable to MFIs (excluding the Eurosystem) (€204 billion) and other sectors (€2 billion). These were partly offset by non-euro area residents’ net disposals of assets vis-à-vis the Eurosystem (€36 billion).

    In the 12 months to October 2017 combined direct and portfolio investment recorded net acquisitions of assets of €721 billion and net incurrences of liabilities of €298 billion, compared with €967 billion and €262 billion respectively in the 12 months to October 2016. This resulted primarily from a decrease in the direct investment activities of both euro area residents abroad and non-residents in the euro area, with the net acquisition of equity assets decreasing from €548 billion to €75 billion and a shift in equity liabilities, from net investments of non-euro area residents of €410 billion to net disinvestments of €84 billion. The changes in direct investment were partly offset by developments in portfolio investment, in particular those related to transactions in equity. On the asset side, there was a shift from net sales of foreign equity by euro area residents of €2 billion to net purchases of €169 billion. On the liabilities side, the non-euro area residents increased the net purchases of euro area equities from €128 billion to €368 billion.

    According to the monetary presentation of the balance of payments, the net external assets of euro area MFIs decreased by €77 billion in the 12 months to October 2017, compared with a decrease of €293 billion in the 12 months to October 2016. The counterpart entries of the current and capital account surplus are essentially reflected in the net financial transactions of the non-MFIs, although in a more limited manner than in the 12 months to October 2016.

    In October 2017, the Eurosystem’s stock of reserve assets increased to €676.5 billion from €674.8 billion in the previous month. This increase (€1.7 billion) was mainly explained by positive exchange rate developments (€3 billion) and positive price changes (€0.9 billion), which more than offset net disinvestments (€2.7 billion).

    European Central Bank “Euro area monthly balance of payments (October 2017)“, 20 Dec 2017 (08:30) More

    flag_usa US: State Personal Income. Q3/2017

    Press Release Extract [us_income_states]

    State personal income increased 0.7 percent on average in the third quarter of 2017, according to estimates released today by the Bureau of Economic Analysis. In the second quarter, state personal income increased 0.6 percent. Increases in earnings and personal current transfer receipts were the leading contributors to the acceleration in personal income in the third quarter.

    Personal income increased 1.0 percent in Washington, faster than in any other state. Texas had the next largest increase at 0.9 percent. South Dakota, New Mexico, Nebraska, Kansas, and Iowa had the slowest increases in personal income.

    us_state_perincome_20171220

    Earnings

    For the nation, earnings increased 0.8 percent in the third quarter of 2017, after increasing 0.6 percent in the second quarter. Earnings increased in 22 of the 24 industries for which BEA prepares quarterly estimates. Earnings increases in three industries—health care and social assistance; finance and insurance; and construction—were the leading contributors to the overall increase in personal income.

    Earnings was the leading contributor to the increase in personal income in most states. The percentage change in earnings ranged from an increase of 1.2 percent in Washington to a decrease of less than 0.1 percent in South Dakota.

    • Information earnings, which increased 0.6 for the nation, increased 5.7 percent in Washington, contributing to more than one-third of the increase in the state’s total earnings. The increase in Washington’s third quarter earnings reflected the vesting of employee stock grants.
    • Construction earnings, which increased 1.5 percent for the nation, was the leading contributor to the increases in total earnings in Nevada, Alaska, and Utah.
    • Finance and insurance earnings, which increased 1.5 percent for the nation, was the leading contributor to the increase in total earnings in New York.
    • Health care earnings, which increased 1.4 percent for the nation, was the leading contributor to the increases in total earnings in Pennsylvania, Ohio, Massachusetts, and New Hampshire.
    • Wholesale trade earnings, which increased 1.2 percent for the nation, was the leading contributor to the increase in total earnings in Texas.
    • Farm earnings decreased for the nation and in most states in the third quarter, and was the leading contributor to the decrease in total earnings in South Dakota, and to the relatively small increases in total earnings in Nebraska, Kansas, Iowa, and North Dakota.

    Transfer Receipts

    Transfer receipts increased 0.7 percent for the nation in the third quarter of 2017, up from 0.2 percent in the second quarter. The percentage change in transfer receipts ranged from 1.5 percent in Washington to -0.1 percent in New Mexico. Transfer receipts increased 1.3 percent in Texas and 1.1 percent in Florida, reflecting disaster related assistance following hurricanes Harvey and Irma.

    Property Income

    Property income increased 0.2 percent in the third quarter of 2017, down from 0.8 percent in the second quarter. The percentage change in property income ranged from 0.5 percent in Michigan to -0.2 percent in Rhode Island.

    Bureau of Economic Analysis, “State Quarterly Personal Income. Q3/2017“, 20 Dec 2017 (08:30) More

    flag_usa US: Existing Home Sales. Nov 2017

    Press Release Extract [us_housing]

    Existing-home sales surged for the third straight month in November and reached their strongest pace in almost 11 years, according to the National Association of Realtors®. All major regions except for the West saw a significant hike in sales activity last month.

    Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 5.6 percent to a seasonally adjusted annual rate of 5.81 million in November from an upwardly revised 5.50 million in October. After last month’s increase, sales are 3.8 percent higher than a year ago and are at their strongest pace since December 2006 (6.42 million).

    Lawrence Yun, NAR chief economist, says home sales in most of the country expanded at a tremendous clip in November. “Faster economic growth in recent quarters, the booming stock market and continuous job gains are fueling substantial demand for buying a home as 2017 comes to an end,” he said. “As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of the sales activity last month. The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”

    The median existing-home price for all housing types in November was $248,000, up 5.8 percent from November 2016 ($234,400). November’s price increase marks the 69th straight month of year-over-year gains.

    Total housing inventory at the end of November dropped 7.2 percent to 1.67 million existing homes available for sale, and is now 9.7 percent lower than a year ago (1.85 million) and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago.

    “The anticipated rise in mortgage rates next year could further cut into affordability if these staggeringly low supply levels persist,” said Yun. “Price appreciation is too fast in a lot of markets right now. The increase in homebuilder optimism must translate to significantly more new construction in 2018 to help ease these acute inventory shortages.”

    First-time buyers were 29 percent of sales in November, which is down from 32 percent both in October and a year ago. NAR’s 2017 Profile of Home Buyers and Sellers – released earlier this year – revealed that the annual share of first-time buyers was 34 percent.

    Matching the highest share since May, all-cash sales were 22 percent of transactions in November, which is up from 20 percent in October and 21 percent a year ago. Individual investors, who account for many cash sales, purchased 14 percent of homes in November, up from 13 percent last month and unchanged from a year ago.

    “The elevated presence of investors paying in cash continues to add a layer of frustration to the supply and affordability headwinds aspiring first-time buyers are experiencing,” said Yun. “The healthy labor market and higher wage gains are expected to further strengthen buyer demand from young adults next year. Their prospects for becoming homeowners will only improve if more lower-priced and smaller-sized homes come onto the market.”

    Properties typically stayed on the market for 40 days in November, which is up from 34 days in October but down from 43 days a year ago. Forty-four percent of homes sold in November were on the market for less than a month.

    Realtor.com®’s Market Hotness Index, measuring time on the market data and listings views per property, revealed that the hottest metro areas in November were San Jose-Sunnyvale-Santa Clara, Calif.; Vallejo-Fairfield, Calif.; San Francisco-Oakland-Hayward, Calif.; San Diego-Carlsbad, Calif.; and Stockton-Lodi, Calif.

    According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage increased for the second straight month to 3.92 percent in November from 3.90 percent in October. The average commitment rate for all of 2016 was 3.65 percent.

    On the topic of tax reform, NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says it’s good news homeowners can continue to count on tax incentives such as the mortgage interest deduction and the state and local tax deduction.

    “Only 6 percent of homeowners have mortgages exceeding $750,000, and only 5 percent pay more than $10,000 in property taxes, but most homeowners won’t itemize under the new regime,” she said. “While we’re pleased that important homeownership incentives such as the capital gains exclusion survived in conference, additional changes are required to truly incentivize homeownership in the tax code.”

    Distressed sales – foreclosures and short sales – were 4 percent of sales for the fourth straight month in November, and are down from 6 percent a year ago. Three percent of November sales were foreclosures and 1 percent were short sales.

    Single-family and Condo/Co-op Sales

    Single-family home sales grew 4.5 percent to a seasonally adjusted annual rate of 5.09 million in November from 4.87 million in October, and are now 3.2 percent above the 4.93 million pace a year ago. The median existing single-family home price was $248,800 in November, up 5.4 percent from November 2016.

    Existing condominium and co-op sales increased 14.3 percent to a seasonally adjusted annual rate of 720,000 units in November, and are now 7.5 percent above a year ago. The median existing condo price was $242,500 in November, which is 8.8 percent above a year ago.

    Regional Breakdown

    November existing-home sales in the Northeast leaped 6.7 percent to an annual rate of 800,000, (unchanged from a year ago). The median price in the Northeast was $273,600, which is 4.0 percent above November 2016.

    In the Midwest, existing-home sales jumped 8.4 percent to an annual rate of 1.42 million in November, and are now 6.8 percent above a year ago. The median price in the Midwest was $196,100, up 8.8 percent from a year ago.

    Existing-home sales in the South expanded 8.3 percent to an annual rate of 2.34 million in November, and are now 4.0 percent higher than a year ago. The median price in the South was $216,200, up 4.8 percent from a year ago.

    Existing-home sales in the West declined 2.3 percent to an annual rate of 1.25 million in November, but are still 2.5 percent above a year ago. The median price in the West was $375,100, up 8.2 percent from November 2016.

    National Association of Realtors, “Existing Home Sales. Nov 2017“, 20 Dec 2017 (10:00) More

    flag_usa US: Senate Passes Tax Bill, With Amendments

    The Senate approved the bill in the wee hours of Wednesday morning on a 51-48 vote but had to send it back to the House, which had passed it on Tuesday, for another vote due to a procedural foul-up that embarrassed Republicans, but was not expected to change the outcome.More Final Version

    flag_usa US: House Approves Senate Changes

    tax_bill_house_20171220

    House Republicans passed the most extensive rewrite of the U.S. tax code in more than 30 years — hours after the Senate passed the legislation — handing President Donald Trump his first major legislative victory.

    The White House is planning to hold a “bill passage event” with House and Senate members at 3 p.m. But the gathering won’t be a signing event, which will happen at a “later date,” White House Press Secretary Sarah Huckabee Sanders said in an emailed statement.Bloomberg

    flag_usa US: President Tax Bill Signoff 3 Jan 2017

    President Donald Trump plans to sign the tax bill on 3 Jan 2017 to ensure automatic spending cuts to Medicare and other programs don’t take effect, according to a House Republican aide familiar with the plans.

    The White House informed House GOP members of the timetable, following the likely decision by House Republicans to leave the so-called PAYGO provision out of a year-end spending deal to avoid a government shut down before Friday, the person said who asked not to be named because the plan hasn’t been publicly announced.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