Tue 13 Feb 2018


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  • 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 climbed on Tuesday for a third straight session, buoyed by Amazon.com and Apple, while investors focused on inflation data on Wednesday that could upset the market’s fragile recovery – or clear the way for more gains.

    • The S&P 500 index rose 6.94 points, or 0.26%, to 2,662.94
    • The Dow Jones Industrial Average rose 39.18 points, or 0.16%, to 24,640.45
    • The Nasdaq Composite index rose 31.55 points, or 0.45%, to 7,013.51.

    Major stock indexes in the U.S. and Europe inched lower and a gauge of global equity performance fell modestly, with gains in Asian heavyweights Tencent, Samsung, Alibaba and Taiwan Semiconductor offsetting some downward pressure.

    Economists expect the U.S. consumer price index to have risen month over month by 0.3% in Jan 2018 with a core reading of 0.2% when the Labor Department report is released on Wednesday, according to a Reuters poll.

    The CPI data is one of the most eagerly awaited macroeconomic reports in recent memory, said Mike Terwilliger, portfolio manager of Resource Liquid Alternatives for the Resource Credit Income Fund. “After years of pronouncing inflation ‘dead,’ the market is now suddenly focused on and dreading inflation, which of course was at the cornerstone of this most recent period of market volatility,” he said.

    The prospect of heightening inflation and a U.S. budget that contemplates even greater deficit spending could lead to a radical repricing of all fixed-income assets, he said.

    Gennadiy Goldberg, interest rates strategist at TD Securities in New York, said the U.S. government debt market was a little on edge ahead of the report. “It’s unwilling to put in strong positions ahead of that report. People want to see if it would confirm the recent trend of strong inflation and strong growth,” Goldberg said.

    A faster pace of inflation is likely to fan fears that the Fed would increase the number of rate hikes this year – the same worries that sparked the market rout that began 2 Feb 2018 after a jobs report showed the strongest annual wage growth since 2009.

    “I expect a continued stream of volatility, driven by uncertainty among investors with fears of accelerating rates. I don’t think that’s going away any time soon,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

    MSCI’s gauge of stock markets in 47 countries was down just 0.03% and its emerging markets index rose 1.00%.Reuters

    The S&P 500 Index climbed for a third day, its longest winning streak since mid-January, amid a rally in financial shares and food retailers. Assets seen as safe havens gained as last week’s surge in volatility continued to weigh on traders, with the yen set for the strongest close since November 2016 and the Swiss franc up with gold. The dollar’s three-day loss left it at the lowest in more than a week.

    Volatility levels remained elevated even after stocks’ modest recovery of the past few days, showing continued unease after the rout that wiped $2 trillion from U.S. shares last week. Consumer-price data due Wednesday could give some clues on where markets are heading, given that pressure on equities has been emanating from the outlook for inflation.

    “As we move through the rest of this economic cycle and market cycle, higher volatility is going to be normal,” said Jeffrey Schulze, the chief investment strategist at Clearbridge Investments. “And a lot of that has to do with the normalization of interest rates.”

    Hedge funds and other large speculators have boosted bets on Treasury futures to a record, indicating they expect the 2018 bond-market rout will resume in the days ahead. An investor at Goldman Sachs Asset Management warned 10-year yields could rise to as high as 3.5% in the next 6 months as the market prices in a steeper pace of Federal Reserve tightening.Bloomberg

    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) 2,662.94 +0.26% 2,673.61 -0.40%
    DJIA INDU 24,640.45 +0.15% 24,719.22 -0.32%
    NASDAQ IXIC 7,013.51 +0.45% 6,903.39 +1.59%

    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 3.087 +0.87% 3.068 +0.65%
    Valuation Rate USD/AUD 0.79095 +0.13% 0.78528 +0.72%
    AUD-denominated Index AUD 3.906 +0.73% 3.909 -0.06%

    Portfolio stock prices

    Stock Ticker Today Change 31 Dec 17 YTD
    Alphabet A GOOGL $1,054.14 -0.04% $1,053.00 +0.10%
    Alphabet C GOOG $1,052.10 +0.01% $1,045.65 +0.61%
    Apple AAPL $164.34 +1.00% $169.23 -2.89%
    Amazon AMZN $1,414.51 +2.04% $1,169.54 +20.94%
    Ebay EBAY $42.15 -0.41% $37.76 +11.62%
    Facebook FB $173.15 -1.85% $176.46 -1.88%
    PayPal PYPL $74.97 -0.42% $73.61 +1.84%
    Twitter TWTR $33.44 +8.04% $24.01 +39.27%
    Visa V $118.35 -0.11% $114.02 +3.79%
    VMware VMW $120.08 +3.00% $125.32 -4.19%

    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) fell 0.4% to the lowest in more than a week.
    The EUR rose 0.5 percent to USD 1.2358.
    Japan’s JPY rose 0.8 % to 107.8 per USD.
    South Africa’s ZAR fell 0.1% to 11.9442 per USD.

    The yield on 10-year Treasuries fell three basis points to 2.83%.
    Germany’s 10-year yield fell one basis point to 0.74%.
    Britain’s 10-year yield rose one basis point to 1.61%.
    Bloomberg

    AUD

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

    Oil and Gas Futures

    Oil fell to its lowest in two months, giving up early gains after a forecasting agency estimated world crude supply could overtake demand this year, potentially undermining producer efforts to curb supply.

    The Paris-based International Energy Agency (IEA) raised its forecast for oil demand growth in 2018 to 1.4 million barrels per day, from a previous projection of 1.3 million bpd.Reuters

    Futures prices

    Prices are as at 15:49 ET

    • NYMEX West Texas Intermediate (WTI): $59.20/barrel -0.15% Chart
    • ICE (London) Brent North Sea Crude: $62.78/barrel +0.30% Chart
    • NYMEX Natural gas futures: $2.60/MMBTU +2.04% Chart

    flag_australia Launch of the New Payments Platform (NPP)

    A new payments system has officially launched in Australia today, giving consumers and businesses access to the most modern payments system in the world. Soon services that use the Platform’s capabilities will commence rolling out from about 60 banks, building societies and credit unions across the country, giving consumers and businesses the ability to:

    • transfer money instantly between accounts at different financial institutions
    • make these payments any time of day, any day of the year
    • include more accompanying information with these payments than ever before
    • use a PayID, a simpler way to pay that lets you see the name of the person or business you are paying before sending the payment

    The Platform went live in November last year and has supported funds transfers between employees at a number of different banks, building societies and credit unions. The Platform’s public launch occurred in the very early hours of this morning — at 12.01am to be precise — when CEO of NPP Australia Adrian Lovney marked the occasion by making a donation to the Alannah and Madeline Foundation Charity for Children.

    According to Adrian Lovney, the New Payments Platform’s capabilities are set to transform the way people pay.

    “We know that Australians are frustrated about the amount of time it takes to move money between accounts at different banks, which can sometimes be as long as two to three days. We expect that over the next month or so, Australians will be able to transfer money instantly to each other through products like Osko by BPAY™. And they will be able to make those transfers 24 hours a day, seven days a week, every day of the year, including public holidays,” Mr Lovney said.

    Osko® is the first product to be developed using the Platform’s capabilities. As it rolls out to the first wave of participating financial institutions, it will be available through online or mobile banking applications without the need to download an app or go to another website. According to John Banfield, CEO of BPAY Group, the new person-to-person service will mean Australians will be able to pay their friends, family or even freelancers, usually in under a minute, within the security of their usual online or mobile banking.

    “Osko by BPAY is a big step forward for Australian payments. It will make payments faster, easier, and more convenient than ever before. With Osko, you’ll no longer have to dash to the ATM late at night to get money for the babysitter. You’ll be able to pay them on the spot in under a minute, in your secure banking environment, 24 hours a day, seven days a week.”

    “Most Australians will be able to use Osko in the next few months as it rolls out across financial institutions. Each institution will tailor the experience to best meet the needs of their customers. They will all make payments to a PayID possible within Osko — which makes using Osko even easier,” Mr Banfield said.

    Mr Lovney said that over time more payments products and services are likely to make use of the New Payments Platform’s PayID functionality.

    “PayID will make payments simpler because it means you don’t have to remember, or share, your BSB and account details with others. Being able to see the name of the person you are paying before you confirm the payment provides more reassurance,” Mr Lovney said.

    While today’s launch of the New Payments Platform is the result of unprecedented collaboration between 13 members of Australia’s financial services industry, including Australia’s four major banks and the Reserve Bank of Australia, a large number of additional financial institutions will also connect to the infrastructure through one of the initial participants.

    “As you can imagine, rolling out something as complex as real-time payments can’t simply happen overnight – it needs to be carefully planned. We do expect that within about a month after launch around four in five Australian accounts will be connected to the Platform, through a wide and diverse range of banks, building societies and credit unions. And because the Platform can support multiple products like Osko by BPAY, and the ways in which consumers and businesses will benefit will only grow and evolve over time,” Mr Lovney said.

    NPP Australia, “The New Payments Platform Launches“, 13 Feb 2018 More

    Press Release Extract [au_rba]

    Today, the Reserve Bank of Australia and its Payments System Board (PSB) welcome the public launch of the New Payments Platform (NPP). The NPP is an important addition to Australia’s payments infrastructure and it will provide a platform for innovation and competition in the provision of payment services.

    The Reserve Bank and the PSB thank the NPP Australia Board, NPP financial institutions and their thousands of staff who have contributed to the development of the platform over a number of years. It has been a highly collaborative industry program, which has involved considerable planning, effort and investment.

    Philip Lowe, Governor and Chair of the PSB, said, ‘The public launch of the NPP represents the delivery of a major piece of national infrastructure. I would like to thank everyone who has been involved in the NPP project and I look forward to the payment innovations it will make possible and the benefits this will generate for all Australians.’

    The launch of the NPP means that the industry is delivering on the key strategic objectives that were established by the PSB in June 2012 as part of its Strategic Review of Innovation in the Payments System. In particular, the NPP and the initial overlay service, Osko, will allow financial institutions to provide improved services to Australian businesses and consumers, including to:

    • make real-time payments, with close to immediate funds availability to the recipient
    • make and receive payments on a 24/7 basis
    • have the capacity to send more complete remittance information with payments
    • address payments in a relatively simple way.

    Around 60 banks, credit unions and building societies will begin rolling out services to their customers from today, with the number of financial institutions and accounts linked to the NPP progressively increasing over the coming months. More

    The Reserve Bank developed new infrastructure, the RITS Fast Settlement Service, to enable the settlement of NPP transactions between financial institutions in real time on a 24/7 basis across exchange settlement accounts at the Reserve Bank. The Reserve Bank is also an NPP participant with newly developed services utilising the NPP for its government customers.

    Reserve Bank of Australia, “Launch of the New Payments Platform“, 13 Feb 2018 More

    flag_australia AU: Lending Finance. Dec 2017

    Press Release Extract [au_lending]

    Housing Finance for Owner Occupation

    The total value of owner occupied housing commitments excluding alterations and additions rose 0.1% in trend terms and the seasonally adjusted series fell 1.0%.

    Personal Finance

    The trend series for the value of total personal finance commitments fell 0.2% in December 2017 compared with November 2017. Revolving lending commitments fell 1.4%, while fixed lending commitments rose 0.5%.

    The seasonally adjusted series for the value of total personal finance commitments fell 4.9%. Revolving lending commitments fell 6.8% and fixed lending commitments fell 3.9%.

    Commercial Finance

    The trend series for the value of total commercial finance commitments rose 0.2% in December 2017 compared with November 2017. Fixed lending commitments rose 0.3%, while revolving credit commitments fell 0.3%.

    The seasonally adjusted series for the value of total commercial finance commitments fell 6.1% in December 2017, after a rise of 14.7% in November 2017. Fixed lending commitments fell 11.0%, after a rise of 22.3% in the previous month. Revolving lending commitments rose 14.3%, after a fall of 9.0% in the previous month.

    The value of commitments for the purchase of dwellings by individuals for rent or resale (trend) fell 1.0% in December 2017 and the seasonally adjusted series fell 1.3%.

    Lease Finance

    The trend series for the value of total lease finance commitments fell 0.1% in December 2017 while the seasonally adjusted series rose 8.3%, after a fall of 7.6% in November 2017.

    Australian Bureau of Statistics, “5671.0 Lending Finance. Dec 2017“, 13 Feb 2018 (11:30 AEDT) More

    flag_usa US: Metro Home Prices. Q4/2017

    Press Release Extract [us_housing]

    An uptick in existing-home sales in the final three months of 2017 pulled down housing inventory to an all-time low and kept home-price growth at its recent robust pace, according to the latest quarterly report by the National Association of REALTORS®.

    The national median existing single-family home price in the fourth quarter was $247,800, which is up 5.3 percent from the fourth quarter of 2016 ($235,400). The median price during last year’s third quarter climbed 5.6 percent from the third quarter of 2016.

    Single-family home prices last quarter increased in 92 percent of measured markets, with 162 out of 177 metropolitan statistical areas1 (MSAs) showing sales price gains in the fourth quarter compared to a year ago. Twenty-six metro areas (15 percent) experienced double-digit increases (11 percent in the third quarter), and 18 metros eclipsed their previous peak sales price. Overall, home prices are now at their all-time high in 114 markets (64 percent).

    Lawrence Yun, NAR chief economist, says 2017 capped off another year where home prices in most markets ascended at a steady clip amidst improving sales and worsening inventory conditions. “A majority of the country saw an upswing in buyer interest at the end of last year, which ultimately ended up putting even more strain on inventory levels and prices,” he said. “Remarkably, home prices have risen a cumulative 48 percent since 2011, yet during this same timeframe, incomes are up only 15 percent. In the West region, where very healthy labor markets are driving demand, the gap is even wider.

    Regional Breakdown

    Total existing-home sales in the Northeast jumped 10.1 percent in the fourth quarter but are 0.4 percent below the fourth quarter of 2016. The median existing single-family home price in the Northeast was $268,100 in the fourth quarter, up 4.2 percent from a year ago.

    In the Midwest, existing-home sales rose 6.0 percent in the fourth quarter and are 2.3 percent above a year ago. The median existing single-family home price in the Midwest grew 7.2 percent to $193,800 in the fourth quarter from the same quarter a year ago.

    Existing-home sales in the South increased 3.8 percent in the fourth quarter and are 1.8 percent higher than the fourth quarter of 2016. The median existing single-family home price in the South was $221,600 in the fourth quarter, 5.0 percent above a year earlier.

    In the West, existing-home sales in the fourth quarter were at an annualized rate of 1.23 million (unchanged from the third quarter), up 0.3 percent from a year ago. The median existing single-family home price in the West increased 7.2 percent to $374,400 in the fourth quarter from the fourth quarter of 2016.”

    Added Yun, “These consistent, multi-year price gains have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation; however, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”

    Total existing-home sales2, including single family and condos, increased 4.3 percent to a seasonally adjusted annual rate of 5.62 million in the fourth quarter from 5.39 million in the third quarter, and are 1.3 percent higher than the 5.55 million pace during the fourth quarter of 2016.

    At the end of the fourth quarter, there were 1.48 million existing homes available for sale3, which was 10.3 percent below the 1.65 million homes for sale at the end of the fourth quarter in 2016. The average supply during the fourth quarter was 3.5 months – down from 4.2 months in the fourth quarter of last year.

    The national family median income rose to $74,4924 in the fourth quarter, but overall affordability still edged downward compared to a year ago because of the combination of rising mortgage rates and home prices. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $55,585, a 10 percent down payment would require an income of $52,659, and $46,808 would be needed for a 20 percent down payment.

    “While tight supply is expected to keep home prices on an upward trajectory in most metro areas in 2018, both the uptick in mortgage rates and the impact of the new tax law on some high-cost markets could cause price growth to moderate nationally,” said Yun. “In areas where homebuilding has severely lagged job creation in recent years, it’s going to be a slow slog before there’s enough new construction to cool price appreciation to a pace that aligns more closely with incomes.”

    The five most expensive housing markets in the fourth quarter were the San Jose, California metro area, where the median existing single-family price was $1,270,000; San Francisco-Oakland-Hayward, California, $920,000; Anaheim-Santa Ana-Irvine, California, $785,000; urban Honolulu, $760,600; and San Diego-Carlsbad, $610,000.

    The five lowest-cost metro areas in the fourth quarter were Cumberland, Maryland, $84,600; Youngstown-Warren-Boardman, Ohio, $90,200; Decatur, Illinois, $100,000; Binghamton, New York, $108,900; and Wichita Falls, Texas, $110,400.

    Metro area condominium and cooperative prices – covering changes in 61 metro areas – showed the national median existing-condo price was $237,500 in the fourth quarter, up 7.0 percent from the fourth quarter of 2016 ($222,000). Eighty-four percent of metro areas showed gains in their median condo price from a year ago.

    National Association of Realtors, “Metro Home Prices. Q4/2017“, 13 Feb 2018 (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 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