Fri 16 Feb 2018


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  • Today at the stock market Opinion
  • The portfolio today Opinion
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  • flag_japan Japan Update
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  • Today at the stock market

    bull/bearThe S&P 500 ended marginally higher on Friday and closed out its fastest-climbing week since 2013, although it surrendered most of its earlier gain for the day after a U.S. grand jury indicted several Russians for meddling in the 2016 presidential election. Indictment

    U.S. Special Counsel Robert Mueller’s office said a U.S. federal grand jury indicted 13 Russian nationals and three Russian entities accused of interfering with U.S. elections in an effort to support then-candidate Donald Trump. More

    The S&P 500 had been up over half a percent but lost nearly all of that after the announcement of the indictments:

    • The S&P 500 index rose 0.04% to 2,732.22, barely staying in positive territory. The S&P 500’s 4.3% gain for the week was its biggest weekly advance since Jan 2013 – but it remains down nearly 5% from its record high on 26 Jan 2018.
    • The Dow Jones Industrial Average rose 0.08% to end at 25,219.38 points. The Dow rose 4.25% for the week, its strongest weekly gain since Nov 2016.
    • The Nasdaq Composite index fell 0.23% to 7,239.47. The Nasdaq rose 5.31% for the week, its best week since Dec 2011.
    • The CBOE volatility index (VIX) rose to 19.4 but remained way off the 50-point level it hit during the peak of the sell-off.
    • Advancing issues outnumbered declining ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.34-to-1 ratio favored advancers.
    • Volume on U.S. exchanges was 7.1 billion shares, below the 8.5 billion average for the full session over the last 20 trading days.

    “The market was looking for an excuse to roll over and Russia headlines would do it. You’ve had such a rally for the week, and people have been looking for an excuse to take profits heading into the weekend,” said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas.

    A market correction sparked by inflation concerns earlier in February raised fears that a nine-year bull market had ended, but data on consumer prices and retail sales this week left investors less worried.

    Investors on Friday snapped up shares of Johnson & Johnson, Abbvi and Pfizer, all up more than 1.4% and supporting the S&P 500 more than any other stocks.

    A strong fourth-quarter reporting season and deep corporate tax cuts introduced this year have led analysts to increase their estimates for 2018 S&P 500 earnings growth to 19% from 12% in early Jan 2018.

    “The fundamental story has not changed,” said Ben Phillips, Chief Investment Officer of EventShares. “We really have not seen the tax reform start flowing through yet into company earnings. We think it’s going to cause a second wave of earnings optimism.”

    U.S. stock markets are unlikely to return to the unusually calm conditions seen last year, even though equities have already recovered more than half the ground lost in the recent selloff and traders have rapidly dialed down fear.

    Economic data out on Friday painted a rosy picture. Homebuilding increased to more than a one-year high in January, boosted by strong increases in the construction of single- and multi-family housing units. A different report showed import prices jumped last month.

    Coca-Cola rose 0.45% after the company reported better-than-expected profit and sales as it sold more teas, coffees and vitamin water.

    Among the big decliners was Kraft Heinz, which dropped 2.63% after quarterly profit and sales missed analysts’ estimates.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) 2,732.22 +0.03% 2,673.61 +2.19%
    DJIA INDU 25,219.38 +0.07% 24,719.22 +2.02%
    NASDAQ IXIC 7,239.47 -0.24% 6,903.39 +4.86%

    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 3.216 -0.36% 3.068 +4.85%
    Valuation Rate USD/AUD 0.79571 -0.41% 0.78528 +1.32%
    AUD-denominated Index AUD 4.045 +0.04% 3.909 +3.49%

    Portfolio stock prices

    Stock Ticker Today Change 31 Dec 17 YTD
    Alphabet A GOOGL $1,095.50 +0.37% $1,053.00 +4.03%
    Alphabet C GOOG $1,094.80 +0.48% $1,045.65 +4.70%
    Apple AAPL $172.43 -0.33% $169.23 +1.89%
    Amazon AMZN $1,448.69 -0.90% $1,169.54 +23.86%
    Ebay EBAY $43.34 +0.76% $37.76 +14.77%
    Facebook FB $177.36 -1.45% $176.46 +0.51%
    PayPal PYPL $78.37 +0.09% $73.61 +6.46%
    Twitter TWTR $33.06 -1.64% $24.01 +37.69%
    Visa V $121.85 -0.36% $114.02 +6.86%
    VMware VMW $124.55 +0.75% $125.32 -0.62%

    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 0.5%, the first advance in more than a week, against which:

    • The EUR fell 0.8% to USD 1.2406.
    • Britain’s GBP fell 0.6% to USD 1.4013, the first retreat in a week.
    • Japan’s JPY fell 0.2% to 106.35 per USD.

    The yield on 10-year Treasuries fell 4 basis points to 2.87%.
    Germany’s 10-year yield fell 6 basis points to 0.7%.
    Britain’s 10-year yield fell 7 basis points to 1.58%.
    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 15:49 ET

    • NYMEX West Texas Intermediate (WTI): $61.62/barrel +0.46% Chart
    • ICE (London) Brent North Sea Crude: $64.94/barrel +0.95% Chart
    • NYMEX Natural gas futures: $2.56/MMBTU -0.62% Chart

    flag_usa US: Import and Export Price Indexes. Jan 2018

    Press Release Extract [us_impexpr]

    U.S. import prices increased 1.0 percent in January, the U.S. Bureau of Labor Statistics reported today, after rising 0.2 percent in December. Higher prices for both nonfuel imports and fuel imports contributed to the January advance. Prices for U.S. exports rose 0.8 percent in January following a 0.1 percent increase the previous month.

    IMPORTS

    All Imports: The price index for U.S. imports rose 1.0 percent in January, after increases of 0.2 percent in December and 1.0 percent in November. The 1.0 percent advances were the largest 1-month rises since the index increased 1.2 percent in May 2016. Import prices advanced 3.6 percent between January 2017 and January 2018.

    us_imp_20180216_month

    us_imp_20180216_year

    Fuel Imports: Fuel prices increased 4.7 percent in January following a 2.9 percent advance in December and a 9.8 percent rise in November. Higher prices for petroleum and natural gas contributed to the increases in all 3 months. Prices for petroleum advanced 4.3 percent in January, after rising 2.3 percent the previous month and 9.5 percent in November. The price index for natural gas increased 20.7 percent in January following advances of 20.0 percent in December and 25.7 percent in November. Prices for fuel imports rose 19.7 percent over the past 12 months. Petroleum prices increased 20.9 percent for the year ended in January and prices for natural gas advanced 16.2 percent over the same period.

    All Imports Excluding Fuel: Prices for nonfuel imports advanced 0.4 percent in January, after edging down 0.1 percent the previous month. The January increase was the largest monthly advance since the index rose 0.4 percent in March 2012. The last time the index increased more than 0.4 percent was a 0.8 percent rise in April 2011. Prices for nonfuel industrial supplies and materials; automotive vehicles; foods, feeds, and beverages; and capital goods all contributed to the January advance. The price index for nonfuel imports increased 1.9 percent over the past 12 months, the largest over-the-year rise since the index advanced 2.0 percent in March 2012. The January 12-month advance was primarily driven by rising prices for nonfuel industrial supplies and materials.

    EXPORTS

    All Exports: U.S. export prices increased 0.8 percent in January. The index has not risen by more than 0.8 percent since the index advanced 1.1 percent in May 2016. In January, the increase in nonagricultural prices more than offset a decline in agricultural prices. The price index for exports increased 3.4 percent over the past 12 months.

    us_exp_20180216_month

    us_exp_20180216_year

    Agricultural Exports: Prices for agricultural exports edged down 0.1 percent in January, after falling 0.3 percent the previous month. The January drop was driven by a 5.8-percent decline in soybean and other oilseeds prices. Despite the recent decreases, prices for agricultural exports rose 1.4 percent over the past year. Rising meat prices were the primary contributor to the advance in agricultural prices for the year ended in January.

    All Exports Excluding Agriculture: Nonagricultural export prices advanced 0.9 percent in January following a 0.1-percent rise in December. The price indexes for nonagricultural industrial supplies and materials; capital goods; automotive vehicles; and consumer goods all rose in January. Prices for nonagricultural export indexes advanced 3.7 percent from January 2017 to January 2018, the largest 12- month increase since a 4.0-percent rise for the year ended December 2011.

    SELECTED JANUARY HIGHLIGHTS

    Import Prices

    Imports by Locality of Origin: Prices for imports from Japan increased 0.6 percent in January, after recording no change the previous month. The January advance was the first monthly rise since the index ticked up 0.1 percent in September and the largest 1-month advance since a 0.6 percent rise in January 2011. In January, import prices from China recorded no change for the second consecutive month. The price index for imports from China rose 0.2 percent for the year ended in January, the first 12-month advance since the index increased 0.1 percent in October 2014 and the largest since the index advanced 0.3 percent in July 2014. Higher fuel prices led the January increase for import prices from Canada, up 2.5 percent, and Mexico, up 0.7 percent. Prices for imports from the European Union also rose, increasing 0.5 percent.

    Nonfuel Industrial Supplies and Materials: The price index for nonfuel industrial supplies and materials increased 1.8 percent in January following a 0.2 percent drop in December. The January rise was driven by higher metals prices and was the largest monthly advance since a 2.0 percent rise in March 2011.

    Finished Goods: Finished goods prices were mostly up in January. Prices for automotive vehicles advanced 0.5 percent in January led by rising prices for passenger cars. The price index for capital goods also rose in January, ticking up 0.1 percent. Consumer goods prices recorded no change.

    Foods, Feeds, and Beverages: Foods, feeds, and beverages prices rose 0.8 percent in January following a 0.9 percent decline in December. The January increase was driven by higher prices for fruit, bakery products, and vegetables.

    Transportation Services: Import air passenger fares fell 3.2 percent in January, after increasing 6.5 percent in December. The January decline was led by an 11.1 percent drop in Asian fares and a 13.0 percent decrease in Latin American/Caribbean fares, which more than offset higher European fares. Despite the January decline, import air passenger fares rose 2.6 percent over the past year. The price index for import air freight prices decreased 3.0 percent in January and increased 8.7 percent over the past 12 months.

    Export Prices

    Nonagricultural Industrial Supplies and Materials: Nonagricultural industrial supplies and materials prices increased 2.1 percent in January, after edging down 0.1 percent in December. The January advance was driven by a 4.5 percent rise in fuel prices and a 3.0 percent increase in metals prices.

    Finished Goods: Prices for each of the major finished goods categories increased in January. Capital goods prices advanced 0.5 percent. Higher prices for nonelectrical machinery, transportation equipment, and electrical machinery all contributed to the January advance. The price indexes for consumer goods and automotive vehicles also rose in January, each increasing 0.3 percent.

    Transportation Services: Export air passenger fares advanced 5.6 percent in January following a 3.3- percent rise the previous month. Both increases were driven by higher Asian and Latin American/Caribbean fares which more than offset lower European fares in January and December. Despite the recent increases, export air passenger fares fell 1.0 percent for the year ended in January. Prices for export air freight increased 0.2 percent in January and 7.5 percent over the past year.

    Bureau of Labor Statistics, “U.S. Import and Export Price Indexes. Jan 2018“, 16 Feb 2018 (08:30) More

    flag_usa US: Consumer Confidence Index (Preliminary). Feb 2018

    Press Release Extract [ser_uom]
    Index Feb 2018 Jan 2018 Feb 2017 M-M% Y-Y%
    Index of Consumer Sentiment 99.9 95.7 96.3 +4.4% +3.7%
    Current Economic Conditions 115.1 110.5 111.5 +4.2% +3.2%
    Index of Consumer Expectations 90.2 86.3 86.5 +4.5% +4.3%

    Surveys of Consumers chief economist, Richard Curtin

    Consumer sentiment rose in early February to its second highest level since 2004 despite lower and much more volatile stock prices. Even among households in the top third of the income distribution, the Sentiment Index rose to 112.8, the highest level since the prior peak of 114.2 was repeatedly recorded in 2007, 2004, and 2000.

    Stock market gyrations were dominated by rising incomes, employment growth, and by net favorable perceptions of the tax reforms. Indeed, when asked to identify any recent economic news they had heard, negative references to stock prices were spontaneously cited by just 6% of all consumers.

    In contrast, favorable references to government policies were cited by 35% in February, unchanged from January, and the highest level recorded in more than a half century. In addition, the largest proportion of households reported an improved financial situation since 2000, and expected larger income gains during the year ahead. To be sure, higher interest rates during the year ahead were expected by the highest proportion of consumers since August 2005. Consumers also anticipated a slightly higher inflation rate, although the year-ahead inflation rate has remained relatively low and unchanged for the past three months.

    Purchase plans have been transformed from the attraction of deeply discounted prices and interest rates that outweighed economic uncertainty, to being based on a sense of greater income and job security as the fewest consumers in decades mentioned the favorable impact of low prices and interest rates. Overall, the data signal an expected gain of 2.9% in real personal consumption expenditures during 2018.

    University of Michigan, “Consumer Confidence Index (Preliminary). Feb 2018“, 16 Feb 2018 (10:00) More

    flag_usa US: New Residential Construction. Jan 2018

    Press Release Extract [us_newres]

    Building Permits

    Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,396,000. This is 7.4 percent (±1.2 percent) above the revised December rate of 1,300,000 and is 7.4 percent (±1.9 percent) above the January 2017 rate of 1,300,000. Single-family authorizations in January were at a rate of 866,000; this is 1.7 percent (±1.3 percent) below the revised December figure of 881,000. Authorizations of units in buildings with five units or more were at a rate of 479,000 in January.

    us_housing_20180216

    Housing Starts

    Privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,326,000. This is 9.7 percent (±16.8 percent) above the revised December estimate of 1,209,000 and is 7.3 percent (±15.0 percent) above the January 2017 rate of 1,236,000. Single-family housing starts in January were at a rate of 877,000; this is 3.7 percent (±9.7 percent) above the revised December figure of 846,000. The January rate for units in buildings with five units or more was 431,000.

    Housing Completions

    Privately-owned housing completions in January were at a seasonally adjusted annual rate of 1,166,000. This is 1.9 percent (±7.8 percent) below the revised December estimate of 1,188,000, but is 7.7 percent (±11.9 percent) above the January 2017 rate of 1,083,000. Single-family housing completions in January were at a rate of 850,000; this is 2.2 percent (±8.3 percent) above the revised December rate of 832,000. The January rate for units in buildings with five units or more was 305,000.

    U.S. Census Bureau and U.S. Department of Housing and Urban Development, “US: New Residential Construction. Jan 2018“, 16 Feb 2018 (08:30) More

    flag_usa US: Advance Services Report. Q4/2017

    Press Release Extract [us_services]

    Selected Services Total

    Advance U.S. selected services total revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $3,792.8 billion, an increase of 2.4 percent (± 0.4 percent) from the third quarter of 2017 and up 5.2 percent (± 3.6 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of 1.1 percent (± 0.2 percent) to 1.0 percent (± 0.2 percent).

    us_services_20180216

    Utilities

    Advance U.S. utilities revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $147.1 billion, a decrease of 6.3 percent (± 2.7 percent) from the third quarter of 2017 and up 4.5 percent (± 7.6 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of 14.2 percent (± 3.8 percent) to 13.7 percent (± 3.6 percent).

    Transportation and warehousing

    Advance U.S. transportation and warehousing revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $229.9 billion, a decrease of 1.0 percent (± 0.9 percent) from the third quarter of 2017 and up 3.2 percent (± 7.0 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was not revised from the preliminary estimate of 0.3 percent (± 0.9 percent).

    Information

    Advance U.S. information sector revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $424.1 billion, an increase of 8.0 percent (± 0.8 percent) from the third quarter of 2017 and up 6.6 percent (± 3.4 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of 1.1 percent (± 0.6 percent) to 1.1 percent (± 0.4 percent).

    Finance and insurance

    Advance U.S. finance and insurance revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $1,165.0 billion, an increase of 1.9 percent (± 0.8 percent) from the third quarter of 2017 and up 6.4 percent (± 10.2 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of 1.1 percent (± 0.4 percent) to 0.8 percent (± 0.4 percent).

    Real estate and rental and leasing

    Advance U.S. real estate and rental and leasing revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $174.7 billion, an increase of 1.5 percent (± 1.1 percent) from the third quarter of 2017 and up 6.8 percent (± 10.4 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of 1.3 percent (± 1.1 percent) to 0.9 percent (± 1.3 percent).

    Professional, scientific, and technical services

    Advance U.S. professional, scientific, and technical services revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $453.3 billion, an increase of 4.2 percent
    (± 1.1 percent) from the third quarter of 2017 and up 1.6 percent (± 6.3 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of -1.7 percent (± 1.1 percent) to -1.8 percent (± 1.1 percent).

    Administrative and support and waste management and remediation services

    The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of 1.6 percent (± 1.1 percent) to 1.9 percent (± 0.9 percent).

    Educational services

    Advance U.S. educational services revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $16.9 billion, a decrease of 0.5 percent (± 3.6 percent) from the third quarter of 2017 and up 7.7 percent (± 11.2 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of -1.9 percent (± 3.8 percent) to -3.4 percent (± 4.0 percent).

    Health care and social assistance

    Advance U.S. health care and social assistance revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $649.6 billion, an increase of 3.2 percent (± 0.6 percent) from the third quarter of 2017 and up 3.7 percent (± 2.7 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of -0.3 percent (± 0.4 percent) to -0.2 percent (± 0.6 percent).

    Arts, entertainment, and recreation

    Advance U.S. arts, entertainment, and recreation revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $69.8 billion, a decrease of 4.1 percent (± 2.8 percent) from the third quarter of 2017 and up 4.4 percent (± 7.6 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of 7.8 percent (± 1.7 percent) to 7.6 percent (± 2.1 percent).

    Accommodation

    Advance U.S. accommodation revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $59.0 billion, a decrease of 12.9 percent (± 0.8 percent) from the third quarter of 2017 and down 0.5 percent (± 7.8 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was revised from the preliminary estimate of 0.4 percent (± 1.1 percent) to 0.3 percent (± 1.3 percent).

    Other services (except public administration)

    Advance U.S. other services (except public administration) revenue for the fourth quarter of 2017, not adjusted for seasonal variation or price changes, was $159.0 billion, an increase of 11.6 percent (± 4.2 percent) from the third quarter of 2017 and up 10.4 percent (± 10.4 percent) from the fourth quarter of 2016. The second quarter of 2017 to third quarter of 2017 percentage change was not revised from the preliminary estimate of 1.0 percent (± 4.7 percent).

    US Census Bureau, “Advance Services Report. Q4/2017“, 16 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

    Net selling of Japanese stocks by foreign investors last week hit the highest since China’s stock market crash in 2015, as a sharp sell-off on Wall Street triggered a global flight from riskier assets, exchange data showed.

    Foreign investors, who were also net sellers in the previous four weeks, sold JPY 1.8 trillion (USD 17.03 billion) of Japanese cash and futures stocks on a net basis during the week of 5-9 Feb 2018, the largest amount since late Aug 2015, according to data released by the Japan Exchange Group on Friday.

    In recent weeks, Japanese stocks have been volatile, retreating from a 26-year peak hit last month. The Nikkei share average has surrendered all of its year-to-date gains and is now down about 5%.

    “Investors were spooked by sharp drops in U.S. shares and unloaded risky assets,” said Yutaka Miura, a senior technical analyst at Mizuho Securities. “The excessive risk averse mood may have eased, but they haven’t turned risk on yet.”

    Conversely, trust banks, which manage corporate pension trusts and national pension fund trusts, bought a net JPY 194.7 billion in Japanese stocks. They were net buyers of Japanese cash stocks for the third consecutive week.

    As for cash stocks, retail investors bought a net JPY 746.7 billion, the highest since Oct 1987.

    The Nikkei 225 Index ended 1.2% higher at 21,720.25 on Friday.Reuters

    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

    The Shanghai Stock Exchange is closed for the second day of the Lunar New Year holiday period: 15-21 Feb 2018.
    Today is the Lunar New Year, introducing the Year of the Dog.