Fri 19 Jan 2018


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  • Today at the stock market Opinion
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  • Today at the stock market

    bull/bearWall Street rose on Friday, led by gains in consumer stocks, even as a possible government shutdown loomed. The S&P 500 and the Nasdaq hit record closing highs, while the Dow ended the day higher after trading in a narrow range.

    • The S&P 500 index rose 12.27 points, or 0.44%, to 2,810.30
    • The Dow Jones Industrial Average rose 53.91 points, or 0.21%, to close at 26,071.72
    • The Nasdaq Composite index rose 40.33 points, or 0.55%, to 7,336.38
    • For the week, the Dow rose 1.04%, the S&P 500 added 0.86% and the Nasdaq gained 1.04%.
    • 9 of the 11 major S&P sectors were higher, led by a 1.1% gain in the consumer staples index and a 0.9% rise in consumer discretionary stocks
    • Advancing issues outnumbered declining ones on the NYSE by a 1.98-to-1 ratio; on Nasdaq, a 2.51-to-1 ratio favored advancers.
    • The S&P 500 posted 105 new 52-week highs and nine new lows; the Nasdaq Composite recorded 171 new highs and 30 new lows.
    • Volume on U.S. exchanges was 6.82 billion shares, compared to the 6.32 billion average over the last 20 trading days.

    Nike Inc, Philip Morris International Inc and Home Depot Inc rose between 1.5% and 4.8% on upbeat analyst expectations, helping to boost the S&P 500. Conversely, losses in International Business Machines Corp and American Express capped gains on the Dow:

    • A disappointing full-year profit forecast from IBM pushed its shares down 4.0%, the biggest single-day loss since Jul 2017.
    • American Express fell 1.8% after posting its first quarterly loss in 26 years and suspending share buybacks for the next 6 months.

    “The market has a few jitters as the result of a potential shutdown, From a longer-term perspective, corporate earnings are still strong, and we’re about to engage in the benefits of tax reform,” said Kevin Miller, chief executive of E-Valuator Funds in Bloomington, Minnesota.

    The U.S. Senate was racing to avert a shutdown ahead of a midnight deadline on the spending measure amid lingering disagreements between Democrats and Republicans. Negotiations continued on Friday after Senate Democratic leader Chuck Schumer met with President Donald Trump at the White House to address the impasse.Reuters

    Market indices

    Market indices
    ^ Market indices today (mouseover for 12 month view) Chart: Google Finance

    Index Ticker Today Change 31 Dec 17 YTD
    S&P 500 SPX (INX) 2,810.30 +0.43% 2,673.61 +5.11%
    DJIA INDU 26,071.72 +0.20% 24,719.22 +5.47%
    NASDAQ IXIC 7,336.38 +0.55% 6,903.39 +6.27%

    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 17 YTD
    USD-denominated Index USD 3.261 -0.16% 3.068 +6.32%
    Valuation Rate USD/AUD 0.80451 -0.03% 0.78528 +2.44%
    AUD-denominated Index AUD 4.057 -0.14% 3.909 +3.81%

    Portfolio stock prices

    :-) Alphabet Class A closed on a record high of $1,143.50, beating its 17 Jan 2018 record of $1,139.10.
    :-) Alphabet Class C closed on a record high of $1,137.51, beating its 17 Jan 2018 record of $1,131.98.
    :-) PayPal closed on a record high of $83.84, up 1.09% on yesterday’s record of $82.94.
    :-) VMware closed on a record high of $136.04, up 0.30% on yesterday’s record of $135.63.

    Stock Ticker Today Change 31 Dec 17 YTD
    Alphabet A GOOGL $1,143.50 +0.66% $1,053.00 +8.59%
    Alphabet C GOOG $1,137.51 +0.68% $1,045.65 +8.78%
    Apple AAPL $178.46 -0.45% $169.23 +5.45%
    Amazon AMZN $1,294.58 +0.09% $1,169.54 +10.69%
    Ebay EBAY $38.43 -0.81% $37.76 +1.77%
    Facebook FB $181.29 +0.82% $176.46 +2.73%
    PayPal PYPL $83.84 +1.08% $73.61 +13.89%
    Twitter TWTR $23.66 -1.59% $24.01 -1.46%
    Visa V $122.70 -0.34% $114.02 +7.61%
    VMware VMW $136.04 +0.30% $125.32 +8.55%

    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 0.1%.
    The EUR fell 0.2% to USD 1.222.
    Britain’s GBP fell 0.2% to USD 1.3863, its first decrease in more than a week.
    japan’s JPY rose 0.3% to 110.79 per USD.
    Bloomberg

    AUD

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

    Oil and Gas Futures

    Oil prices ended down on Friday and broke a four-week winning streak after a rally that had taken benchmarks to three-year highs, as investors sold positions on re-emerging U.S. production concerns.

    Brent crude futures fell 70 cents, or 1%, to settle at $68.61/barrel after hitting a session low of $68.28. On Monday, they hit their highest since Dec 2014 at $70.37.

    U.S. West Texas Intermediate (WTI) crude futures settled at $63.37 a barrel, down 58 cents, or 0.9%. WTI marked a Dec 2014 peak of $64.89/barrel on Tuesday.

    On a weekly basis, Brent settled 1.8% lower while WTI was down 1.5%.

    “We had such a meteoric rise in the oil market recently and we were overbought quite a bit. This is the first time we’ve taken a breath.
    The pullback in relationship to the recent run-up is still very modest,” said Phil Flynn, analyst at Price Futures Group in Chicago.

    The International Energy Agency (IEA) said in its monthly report that global oil stocks have tightened substantially, aided by OPEC cuts, demand growth and Venezuelan production hitting near 30-year lows.

    But it warned that rapidly increasing production in the United States could threaten market balancing.

    “Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico,” the IEA said of 2018 production.

    The energy watchdog forecast U.S. supply growth will push its output past 10 million barrels per day (bpd), overtaking Saudi Arabia and rivaling Russia.

    U.S. crude oil production rose nearly 300,000 bpd to 9.75 million bpd last week, according to government data.

    The U.S. oil rig count, an indicator of future production, fell by five this week but at 747, was still much higher than the 551 rigs a year ago, according to General Electric Co’s Baker Hughes energy services firm.

    “The drop in the rig count should place a little bit of doubt about the IEA’s forecast of explosive growth. People are starting to really question the validity of demand,” Flynn said.

    Overall, however, oil prices remain well supported, and most analysts do not expect steep declines.

    Hedge funds have been increasing long positions steadily on expectations that tightening supply will keep prices buoyant. Money managers raised their net long U.S. crude futures and options positions in New York and London by 40,855 contracts to 541,990 in the week to 16 Jan 2018, a record high, the U.S. Commodity Futures Trading Commission (CFTC) said.

    In a separate report, Intercontinental Exchange Inc said speculators trimmed positions in Brent in the week to 16 Jan 2018 from a record the week before, dropping 3,357 contracts to 570,795.

    The main price driver has been a production cut by major producers led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia since January last year.

    The supply cuts, scheduled to last throughout 2018, were aimed at tightening the market to prop up prices.

    Even in the United States, not part of the pact to curb output, crude inventories fell 6.9 million barrels last week to 412.65 million barrels, the lowest seasonal level in 3 years and below the 5-year average marker around 420 million barrels.Reuters

    Futures prices

    Prices are as at 15:49 ET

    • NYMEX West Texas Intermediate (WTI): $63.55/barrel -0.63% Chart
    • ICE (London) Brent North Sea Crude: $68.77/barrel -0.78% Chart
    • NYMEX Natural gas futures: $3.19/MMBTU -0.09% Chart

    flag_australia AU: Lending Finance. Nov 2017

    lineofcredit

    Press Release Extract [au_lending]

    November Key Figures Oct 17 Nov 17 Change
    Trend Estimates
    Housing finance for owner occupation $ 21.072 bn $ 21.086 bn +0.1%
    Personal finance $ 6.343 bn $ 6.409 bn +1.0%
    Commercial finance $ 42.178 bn $ 42.386 bn +0.5%
    Lease finance $0.562 bn $0.556 bn -1.2%
    Seasonally Adjusted Estimates
    Housing finance for owner occupation $ 20.764 bn $ 21.322 bn +2.7%
    Personal finance $ 6.362 bn $ 6.431 bn +1.1%
    Commercial finance $ 39.734 bn $ 45.594 bn +14.7%
    Lease finance $0.586 bn $0.539 bn -8.0%

    NOVEMBER 2017 COMPARED WITH OCTOBER 2017:

    Housing finance for owner occupation

    • The total value of owner occupied housing commitments excluding alterations and additions rose 0.1% in trend terms.
    • The seasonally adjusted series rose 2.7%.

    Personal finance

    • The trend series for the value of total personal finance commitments rose 1.0%.
    • Fixed lending commitments rose 1.7%, while revolving credit commitments fell 0.2%.
    • The seasonally adjusted series for the value of total personal finance commitments rose 1.1%.
    • Revolving credit commitments rose 2.8% and fixed lending commitments rose 0.1%.

    Commercial finance

    • The trend series for the value of total commercial finance commitments rose 0.5%.
    • Fixed lending commitments rose 0.6% and revolving credit commitments rose 0.1%.
    • The seasonally adjusted series for the value of total commercial finance commitments rose 14.7%.
    • Fixed lending commitments rose 22.0%, while revolving credit commitments fell 8.1%.

    Lease finance

    • The trend series for the value of total lease finance commitments fell 1.2% in November 2017
    • The seasonally adjusted series fell 8.0%, after a rise of 4.1% in October 2017.

    Australian Bureau of Statistics, “5671.0 Lending Finance. Nov 2017“, 19 Jan 2018 More

    flag_europe EU: Balance of Payments. Nov 2017

    Press Release Extract [eu_bop]

    In November 2017 the current account of the euro area recorded a surplus of €32.5 billion.

    In the financial account, combined direct and portfolio investment recorded net acquisitions of assets of €45 billion and net incurrences of liabilities of €30 billion.

    eu_bop_20180119

    Current account Data

    The current account of the euro area recorded a surplus of €32.5 billion in November 2017. This reflected surpluses for goods (€31.1 billion), primary income (€10.5 billion) and services (€4.5 billion), which were partly offset by a deficit for secondary income (€13.6 billion).

    The 12-month cumulated current account for the period ending in November 2017 recorded a surplus of €386.1 billion (3.5% of euro area GDP), compared with one of €375.1 billion (3.5% of euro area GDP) for the 12 months to November 2016. This development was due to increases in the surpluses for services (from €43.4 billion to €73.7 billion) and primary income (from €98.7 billion to €112.6 billion). These were partly offset by a decrease in the surplus for goods (from €371.9 billion to €349.1 billion) and an increase in the deficit for secondary income (from €138.9 billion to €149.4 billion).

    Financial account Data

    In November 2017 combined direct and portfolio investment recorded net acquisitions of assets of €45 billion and net incurrences of liabilities of €30 billion.

    Euro area residents recorded net disposals of €5 billion of direct investment assets as a result of net disinvestments in equity (€6 billion), which were partly offset by net investments in debt instruments (€1 billion). Direct investment liabilities increased by €13 billion as a result of net acquisitions of euro area equity (€24 billion) by non-euro area residents. This was partly offset by net disposals of euro area debt instruments by non-euro area residents (€11 billion).

    As regards portfolio investment assets, euro area residents made net purchases of foreign securities amounting to €50 billion. This resulted from net acquisitions of long-term debt securities (€41 billion) and equity (€10 billion), which were partly offset by net sales/amortisations of short-term debt securities (€2 billion). Portfolio investment liabilities increased by €17 billion as a result of non-euro area residents’ net acquisitions of euro area equity (€16 billion) and long-term debt securities (€10 billion), which were partly offset by net sales/amortisations of short-term debt securities (€10 billion).

    The euro area net financial derivatives account (assets minus liabilities) was close to balance.

    Other investment recorded net acquisitions of assets amounting to €1 billion and net disposals of liabilities of €12 billion. The net acquisition of assets was explained by other sectors (€18 billion) and, to a lesser extent, by the Eurosystem (€3 billion). These were almost offset by decreases in assets of MFIs (excluding the Eurosystem) (€19 billion). The net disposal of liabilities was mainly attributable to MFIs (excluding the Eurosystem) (€20 billion) and general government (€2 billion). These were partly offset by net incurrences of liabilities by other sectors (€10 billion).

    In the 12 months to November 2017 combined direct and portfolio investment recorded net acquisitions of assets of €776 billion and net incurrences of liabilities of €313 billion, compared with €915 billion and €300 billion respectively in the 12 months to November 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 €552 billion to €77 billion and a shift in equity liabilities, from net investments of non-euro area residents of €448 billion to net disinvestments of €74 billion. Regarding portfolio investment, on the asset side there was an increase in the net purchases of foreign equity by euro area residents from €6 billion to €191 billion. On the liabilities side, non-euro area residents increased the net purchases of euro area equities from €95 billion to €450 billion.

    According to the monetary presentation of the balance of payments, the net external assets of euro area monetary financial institutions (MFIs) decreased by €38 billion in the 12 months to November 2017, compared with a decrease of €285 billion in the 12 months to November 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 November 2016.

    In November 2017 the Eurosystem’s stock of reserve assets decreased to €673.2 billion from €676.4 billion in the previous month. This decrease (€3.2 billion) was mainly explained by negative exchange rate (€4.5 billion) and price (€4.8 billion) changes, which were only partly offset by net acquisitions of assets (€6.2 billion).Data

    European Central Bank, “Euro Area Monthly Balance of Payments. Nov 2017“, 19 Jan 2018 More

    flag_usa US: Consumer Confidence Index. Jan 2018

    Press Release Extract [ser_11]
    Index Jan 2018 Dec 17 Jan 2017 M-M% Y-Y%
    Index of Consumer Sentiment 94.4 95.9 98.5 -1.6% -4.2%
    Current Economic Conditions 109.2 113.8 111.3 -4.0% -1.9%
    Index of Consumer Expectations 84.8 84.3 90.3 +0.6% -6.1%

    Surveys of Consumers chief economist, Richard Curtin

    While the preliminary January reading for the Sentiment Index was largely unchanged from last month (-1.5%), consumers evaluated current economic conditions less favorably (-4.6%). This small decrease in current conditions produced a small overall decline. Importantly, the survey recorded persistent strength in personal finances and buying plans, while favorable levels of buying conditions for household durables have receded to preholiday levels in early January, largely due to less attractive pricing. The Expectations Index remained virtually unchanged at 84.8. Tax reform was spontaneously mentioned by 34% of all respondents; 70% of those who mentioned tax reform thought the impact would be positive, and 18% said it would be negative. The disconnect between the future outlook assessment and the largely positive view of the tax reform is due to uncertainties about the delayed impact of the tax reforms on the consumers. Some of the uncertainty is related to how much a cut or an increase people, especially high income households who live in high-tax states, face. Near and long term gas price expectations inched upward in early January but remained significantly below their peak. While long term inflation expectation remained at its 2017 average level and short term inflation expectation inched upward, consumers continued to remain very optimistic about the low national unemployment rate.

    University of Michigan, “UOM Consumer Confidence Index (Preliminary). Jan 2018“, 19 Jan 2018 (10:00) More

    flag_usa US: GDP by Industry. Q3/2017

    Press Release Extract [us_gdp]

    Finance and insurance; durable goods manufacturing; and information services were the leading contributors to the increase in U.S. economic growth in the third quarter of 2017. According to gross domestic product (GDP) by industry statistics released by the Bureau of Economic Analysis, 18 of 22 industry groups contributed to the overall 3.2 percent increase in real GDP in the third quarter.

    us_gdp1_20180119

    • For the finance and insurance industry group, real value added—a measure of an industry’s contribution to GDP—increased 14.7 percent in the third quarter, after decreasing 6.6 percent in the second quarter. This was the largest increase since the second quarter of 2009 and primarily reflected increases in securities, commodity contracts, and investments.
    • Durable goods manufacturing increased 7.5 percent, after increasing 2.9 percent. The third quarter growth primarily reflected increases in computer and electronic products manufacturing.
    • Information services increased 9.0 percent, after increasing 7.0 percent. The third quarter growth primarily reflected an increase in broadcasting and telecommunications. This was the largest increase since the fourth quarter of 2015.

    us_gdp2_20180119

    Other highlights

    • Nondurable goods manufacturing decreased 4.1 percent in the third quarter, after increasing 3.5 percent in the second. The decrease was primarily attributed to a decrease in petroleum and coal products manufacturing.
    • Retail trade increased 6.3 percent, after increasing 5.6 percent. This primarily reflected increases in other retail, which includes building material and garden equipment and supplies dealers, nonstore retailers, and gasoline stations.
    • Professional, scientific, and technical services increased 2.7 percent, after increasing 5.1 percent. The third quarter increase was primarily attributed to an increase in computer systems design and related services.

    Gross output by industry

    Economy-wide, real gross output—principally a measure of an industry’s sales or receipts, which includes sales to final users in the economy (GDP) and sales to other industries (intermediate inputs)—increased 2.1 percent in the third quarter. This reflected an increase of 2.3 percent in real gross output for the private services-producing sector, an increase of 1.8 percent for the private goods-producing sector, and an increase of 1.5 percent for the government sector. Overall, 15 of 22 industry groups contributed to the increase in real gross output.

    us_gdp3_20180119

    • Real gross output for durable goods manufacturing increased 6.8 percent, after increasing 0.8 percent in the second quarter. This was the largest increase since the third quarter of 2014, and primarily reflected increases in other transportation equipment manufacturing and computer and electronic products manufacturing.
    • Retail trade increased 6.2 percent, after increasing 2.0 percent.
    • Information services increased 8.9 percent, after increasing 4.0 percent. The increase was primarily attributed to information and data processing services, which has increased for six consecutive quarters.

    Bureau of Economic Analysis, “Gross Domestic Product by Industry: Third Quarter 2017 – Finance and Insurance Led Growth in the Third Quarter“, 19 Jan 2018 (08:30) More

    flag_usa US: Budget Funding (Borrowing Limit) Deadline

    Press Release Extract [us_borrowing]

    Democratic Senate leader Chuck Schumer met with President Donald Trump at the White House on Friday to search for ways to avert a U.S. government shutdown, but Schumer said afterward that disagreements remained as the clock ticked toward a midnight deadline to pass a funding bill.

    Trump invited Schumer to the White House as a stopgap bill to fund the federal government through Feb. 16 appeared on the verge of collapse in the Senate, where Democratic votes are needed to pass it.

    “We had a long and detailed meeting,” Schumer told reporters on his return to the U.S. Capitol after the approximately 90-minute meeting. The chiefs of staff for each man – John Kelly for Trump and Mike Lynch for Schumer – also attended.

    “We discussed all of the major outstanding issues. We made some progress, but we still have a good number of disagreements. The discussions will continue,” Schumer said.

    The Republican-controlled House of Representatives approved the stopgap spending measure late on Thursday, but it has been sidetracked in the Senate by a dispute over immigration. The House had planned to recess later on Friday for a weeklong break but members were warned they could be called back for votes.

    White House budget director Mick Mulvaney said on Thursday he was ratcheting up the likelihood of a government shutdown from 30% to 50%.

    The showdown follows months of struggle in Congress to agree on government funding levels and the immigration issue. The federal government is operating on a third temporary funding measure since the new fiscal year began in Oct 2017.

    Democrats have demanded the bill include protections from deportation for 700,000 young undocumented immigrants. Those children, known as “Dreamers,” were brought into the United States as children, largely from Mexico and Central America, and given temporary legal status under a program started by former President Barack Obama. Many have been educated in the United States and know no other country.

    In September, Trump announced he was ending the program and giving Congress until 5 Mar 2018 to come up with a legislative replacement.

    Leaders of both parties blamed each other for the impasse.

    “Now that we’re 13 hours away from a government shutdown that Democrats would initiate and Democrats would own, the craziness of this seems to be dawning on my friend the Democratic leader,” Senate Republican leader Mitch McConnell said, referring to Schumer.

    Dick Durbin, the No. 2 Democrat in the Senate, said Republicans needed to sit down and negotiate and called on House Republicans not to leave town until the crisis was averted.Reuters

    Update: Partial Shutdown Initiated

    The U.S. government officially entered a partial shutdown early Saturday as Senate leaders struggled to reach a deal to at least temporarily resume funding for federal operations before Americans awoke to a political breakdown.

    Senate Republican Leader Mitch McConnell held a key procedural vote open past the midnight deadline to pass a spending bill with the chamber well short of the 60 votes needed to advance a House Republican measure to fund the government for another 30 days.

    After a day of recriminations and frantic back-and-forth talks, senators milled on the floor of the chamber with the vote still open. McConnell and Democratic Leader Chuck Schumer engaged in shuttle diplomacy, alternating between conferring with their members and each other.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 225 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