In Portfolioticker today
Today at the stock market
“The S&P 500 extended its winning streak for 2018 on Monday although its advance slowed to a crawl as the healthcare and financial sectors weighed and investors awaited the start of the quarterly earnings season.
The three major indexes kicked off 2018 with their strongest first four trading days in more than a decade, according to Reuters data. The Dow had its strongest start since 2003, and the Nasdaq and S&P 500 had their strongest starts since 2006.
Historically, the first 5 trading days of January can be an indicator for the market’s direction for the full year, according to the Stock Traders Almanac.
“We had a big move last week and everyone knows earnings is coming up. People don’t want to chase too much further when you have a round of fundamental inputs in the next few weeks,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
Health (healthcare and biotech)
The healthcare sector was the S&P’s worst performer on Monday. The S&P 500’s healthcare sector ended 0.4% lower. Last week it rose 3.2%.
The Nasdaq biotech index fell 1.4%, on track for its biggest one-day percentage decline since mid-Dec 2017, led by a 3.7% drop in Biogen Inc and a 3.3% decline in Regeneron Pharmaceuticals Inc.
Investors were cautious about pouring money into bank stocks before the companies kick off the fourth-quarter earnings season later this week.
A 0.4% decline in the bank subsector pressured the broader financials index, which fell 0.1%. Investors were waiting for more details about the impact of recent U.S. corporate tax cuts in fourth-quarter earnings calls when the reporting season begins later in the week.
Wells Fargo and Citigroup fell more than 1% while Goldman Sachs declined 1.5%. Most big U.S. lenders have estimated one-off charges to their Q4/2017 earnings on account of U.S. tax cuts.
Utilities were the S&P’s biggest percentage gainers, regaining some ground lost in the previous week along with real estate.
Caterpillar closed up 2.5 percent to $166.03, just below a record high set earlier in the day, after JP Morgan upgraded the stock saying the tax overhaul could help North America’s construction business cycle extend in 2018.
Kohl’s Corp rose 4.7% after the department store operator posted far stronger same-store sales for the holidays than its bigger peers.
GoPro Inc shares ended down 12.8% at $6.56 after the company said it would be open to a sale but is not actively pursuing one. Earlier in the day, GoPro shares lost about a third of their value, hitting a record low at $5.04, after GoPro announced preliminary fourth-quarter revenue that was well below expectations and said it would exit the drone business.” Reuters
^ Market indices today (mouseover for 12 month view) Chart: Google Finance
|Index||Ticker||Today||Change||31 Dec 17||YTD|
|S&P 500||SPX (INX)||2,747.71||+0.16%||2,238.83||+2.77%|
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting
|Index||Currency||Today||Change||31 Dec 17||YTD|
Portfolio stock prices
All of our portfolio stocks, other than for Apple, Twitter and VMware, closed on record highs.
Apple remains 1.17% below its 18 Dec 2017 record high of $176.42.
|Stock||Ticker||Today||Change||31 Dec 17||YTD|
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg
“The Bloomberg Dollar Spot Index (DXY) rose 0.3%, the biggest increase in more than three weeks.
The EUR fell 0.5% to USD 1.1964, in the largest decrease in almost 6 weeks.
Britain’s GBP fell 0.2% to USD 1.3546.” Bloomberg
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com
Oil and Gas Futures
Prices are as at 15:49 ET
- NYMEX West Texas Intermediate (WTI): $61.87/barrel +0.70% Chart
- ICE (London) Brent North Sea Crude: $67.85/barrel +0.34% Chart
- NYMEX Natural gas futures: $2.82/MMBTU +1.00% Chart
EU: The path to Greece’s 4th Bailout
Press Report Extract [Bloomberg]
“This week, the government plans to submit to parliament a bill to implement all the measures needed to conclude the third bailout review. New policies have to be voted on by Jan. 17 so that auditors monitoring the program can present Greece’s compliance report at the Jan. 22 Eurogroup meeting, which will then approve the disbursement of the next bailout tranche.
In late January, European banking authorities will finalize the scenarios under which the balance sheets of Greek lenders will be stress-tested. The banks have to conclude these audits of their capital adequacy earlier than their EU counterparts.
By early February, Greece intends to issue a new bond, with a maturity most likely of three or seven years, as it strives to regain full market access after years in the wilderness.
During the first 10 days of February, the European Stability Mechanism is expected to disburse the bailout tranche attached to the implementation of the third review’s conditions. The amount of money Greece will get has yet to be agreed on, but it will be at least 5.5 billion euros ($6.6 billion), according to the Greek Finance Ministry.
In February, Greek banks will start sending data to the Bank of Greece and European authorities for the stress tests.
The Greek government expects that in February creditors will start discussing further debt relief measures.
In early March, the fourth bailout review is expected to begin. It isn’t clear yet when creditor representatives will return to Athens, but the review has to start in March if Greece wants to complete another 82 measures on time.
One of the most important gatherings between creditors before the end of the current bailout program will take place in Washington on April 20-22. The IMF’s spring meetings will probably give creditors the opportunity to discuss debt relief and what’s next for Greece.
In early May, the stress test results will be announced. This will show if Greek lenders need more capital and, if so, how serious the problem is for them and for Greece.
By the end of May or June, both the Greek government and creditors want to conclude the fourth bailout review and strike a deal on the conditions for any further debt relief and the post-program life for Greece. Greek authorities are ruling out any kind of new program, but the Bank of Greece’s Governor Yannis Stournaras recently said a credit line after August would boost investor confidence. European officials also say there will be some kind of “follow-up arrangement until 2022,” according to a person with knowledge of the discussions, since Greece has committed to primary budget surpluses of 3.5 percent of gross domestic product until then.”
Sotiris Nikas, “Greece’s 10-Step Road Map to a Bailout Program Exit in August“, 7 January 2018 Bloomberg
EU: Retail Trade. Nov 2017
Press Release Extract [eu_retail]
In November 2017 compared with October 2017, the seasonally adjusted volume of retail trade increased by 1.5% in both the euro area (EA19) and the EU28, according to estimates from Eurostat, the statistical office of the European Union. In October, the retail trade volume fell by 1.1% in the euro area and by 0.6% in the EU28.
In November 2017 compared with November 2016, the calendar adjusted retail sales index increased by 2.8% in the euro area and by 2.7% in the EU28.”
Monthly comparison by retail sector and by Member State
The 1.5% increase in the volume of retail trade in the euro area in November 2017, compared with October 2017, is due to rises of 2.3% for non-food products, of 1.2% for “Food, drinks and tobacco” and of 0.3% for automotive fuel. In the EU28, the 1.5% increase in the volume of retail trade is due to rises of 2.1% for non-food products, of 1.2% for “Food, drinks and tobacco” and of 0.3% for automotive fuel.
Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Portugal (+3.9%), Slovenia (+2.8%), Germany (+2.3%) and Croatia (2.1%), while the only decrease was observed in Estonia (-0.2%).
Annual comparison by retail sector and by Member State
The 2.8% increase in the volume of retail trade in the euro area in November 2017, compared with November 2016, is due to rises of 4.1% for non-food products, of 1.6% for “Food, drinks and tobacco” and of 0.2% for automotive fuel. In the EU28, the 2.7% increase in retail trade volume is due to rises of 4.1% for non-food products, of 1.4% for “Food, drinks and tobacco” and of 0.9% for automotive fuel.
Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Romania (+10.9%), Poland (+7.6%) and Malta (+7.0%), while the only decrease was observed in Estonia (-1.2%).
Eurostat, “November 2017 compared with October 2017: Volume of retail trade up by 1.5% in both euro area and EU28“, 8 Jan 2018 More
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
Japan’s stock exchanges are closed for Coming of Age Day.
Foreign Reserves. Dec 2017
“China’s foreign exchange reserves rose to their highest in more than a year in Dec 2017, blowing past economists’ estimates, as tight regulations and a strong yuan continued to discourage capital outflows, central bank data showed on Sunday.
Notching up their 11th straight month of gains, reserves rose $20.2 billion in December to $3.14 trillion, the highest since September 2016 and the biggest monthly increase since July. That compares with an increase of $10 billion in November.
Economists polled by Reuters had expected reserves to rise by $6 billion to $3.125 trillion.
Capital flight had been seen as a major risk for China at the start of 2017, but a combination of tighter capital controls and a faltering dollar helped the yuan stage a strong turnaround, bolstering confidence in the economy.
The yuan rose around 6.8 percent against the greenback in 2017, recovering from a 6.5 percent loss in 2016 and reversing three straight years of depreciation.
For the full year, China’s FX reserves rose $129.5 billion from $3.011 trillion at the end of 2016. That’s the first annual rise since 2014.
China’s foreign exchange regulator said in a statement on its website that it would keep the nation’s forex reserves and international balance of payments “balanced and stable” in 2018.” Reuters
^ 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