In Portfolioticker today
Today at the stock market
“To celebrate the bull market’s ninth birthday on Friday, the three major U.S. stock indexes climbed almost 2 percent and the Nasdaq closed at a record high, as February’s jobs report assuaged fears of inflation and aggressive interest rate hikes.
The S&P closed 3% below its January record high but 10% above last month’s lows.
While the Dow ended 4.8% below January’s record high, it was 8.5% above its February lows.
A month ago, the market had been spooked by wage growth that fueled inflation fears, leading to a spike in volatility and a stock market correction. That sentiment has reversed over recent weeks with the market gradually nudging higher.
The bull market, which began on 9 Mar 2009, is the second longest on record, leading to questions about how much longer it can last.
Along with the jobs data, stocks were supported by easing fears of trade wars and signs of a thaw in nuclear tensions with North Korea after U.S. President Donald Trump said he was prepared to meet the country’s leader.
Inflationary fears dissipated on Friday after U.S. Labor Department data showed nonfarm payrolls jumped by 313,000 jobs in Feb 2018, while average hourly earnings rose only 0.1% in Feb 2018 compared with a 0.3% rise in Jan 2018.
“If we can continue like that – keep the participation increasing and keep wages steady – that’s going to be a positive scenario so the market doesn’t get overly worried about inflation running away,” said Catherine Avery, President of Catherine Avery Investment Management in Greenwich, Connecticut.
But investors will be watching closely to see if data from one month becomes a trend, Avery said.
The S&P spiked higher ahead of the close around the time the Wall Street Journal issued a report that Trump’s lawyers are seeking to use an interview with the president as leverage to end special counsel Robert Mueller’s Russia investigation. The story cited an unnamed person familiar with the discussions.
“The market is being driven by a very strong jobs report and lack of wage inflation. The Goldilocks economy reappears. But anything that accelerates the (Russia probe) and removes some uncertainty is good. The financial markets really dislike uncertainty,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.” 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)||2,786.57||+1.73%||2,238.83||+4.22%|
Both of our indices closed on record highs today thanks to Apple and Amazon, although many of our smaller positions are significantly below their record highs.
^ USD and AUD denominated indices over the past 52 weeks Chart: Bunting
|Index||Currency||Today||Change||31 Dec 17||YTD|
Portfolio stock prices
Apple closed on a record high of $179.98, beating its 18 Jan 2018 record of $179.26 (at last!)
Amazon closed on a record high again today: $1,578.89, up 1.74% on yesterday’s record of $1,551.86. Amazon is up 35% so far this year and, with fast growth and a market cap of $764 billion is challenging Apple ($913 billion) in the race to be the world’s first trillion dollar company.
Alphabet’s Class C share buyback program saw those shares close just 80 cents below the Class A share price. Both classes are up more than 10% so far this year.
Twitter, the stock that no-one wanted to buy last year, is up more than 47% so far this year.
|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) fell less than 0.1%.
The EUR rose less than 0.1% to USD 1.2313.
Britain’s GBP rose 0.3% to USD 1.3852.
Japan’s JPY fell 0.6% to 106.85 per USD, the biggest dip in more than 2 weeks.
The yield on 10-year Treasuries advanced 4 basis points to 2.89%, the biggest gain in a week.
Germany’s 10-year yield climbed 2 basis points to 0.65%.
Britain’s 10-year yield gained 2 basis points to 1.492%.” Bloomberg
^ AUD movements against the USD today (mouseover for 12 month view) Chart: xe.com
Oil and Gas Futures
Prices are as at 15:47 ET
- NYMEX West Texas Intermediate (WTI): $62.03/barrel +3.18% Chart
- ICE (London) Brent North Sea Crude: $65.51/barrel +2.99% Chart
- NYMEX Natural gas futures: $2.73/MMBTU -0.94% Chart
Exposure of US Techs to US Tariffs on China
US: Employment Situation (Jobs Report). Feb 2018
Press Release Extract [us_empsit]
Total nonfarm payroll employment increased by 313,000 in February, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in construction, retail trade, professional and business services, manufacturing, financial activities, and mining.
Household Survey Data
In February, the unemployment rate was 4.1 percent for the fifth consecutive month, and the number of unemployed persons was essentially unchanged at 6.7 million.
Among the major worker groups, the unemployment rate for Blacks declined to 6.9 percent in February, while the jobless rates for adult men (3.7 percent), adult women (3.8 percent), teenagers (14.4 percent), Whites (3.7 percent), Asians (2.9 percent), and Hispanics (4.9 percent) showed little change.
The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.4 million in February and accounted for 20.7 percent of the unemployed. Over the year, the number of long-term unemployed was down by 369,000.
The civilian labor force rose by 806,000 in February. The labor force participation rate increased by 0.3 percentage point over the month to 63.0 percent but changed little over the year.
In February, total employment, as measured by the household survey, rose by 785,000. The employment-population ratio increased by 0.3 percentage point to 60.4 percent in February, following 4 months of little change.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed at 5.2 million in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been cut or because they were unable to find full-time jobs.
In February, 1.6 million persons were marginally attached to the labor force, little different from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
Among the marginally attached, there were 373,000 discouraged workers in February, down by 149,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.2 million persons marginally attached to the labor force in February had not searched for work for reasons such as school attendance or family responsibilities.
Establishment Survey Data
Total nonfarm payroll employment rose by 313,000 in February. Job gains occurred in construction, retail trade, professional and business services, manufacturing, financial activities, and mining.
In February, construction employment increased by 61,000, with gains in specialty trade contractors (+38,000) and construction of buildings (+16,000). Construction has added 185,000 jobs over the past 4 months.
Retail trade employment increased by 50,000 over the month. Within the industry, employment rose in general merchandise stores (+18,000) and in clothing and clothing accessories stores (+15,000). However, over the past 4 months, which traditionally see the bulk of the holiday hiring and layoff, employment in these industries has changed little on net. Elsewhere in retail trade, building material and garden supply stores added jobs over the month (+10,000).
Employment in professional and business services increased by 50,000 in February and has risen by 495,000 over the year. Employment in temporary help services edged up over the month (+27,000).
Manufacturing added 31,000 jobs in February. Within the industry, employment rose in transportation equipment (+8,000), fabricated metal products (+6,000), machinery (+6,000), and primary metals (+4,000). Over the past year, manufacturing has added 224,000 jobs.
Financial activities added 28,000 jobs over the month, with gains in credit intermediation and related activities (+8,000); insurance carriers and related activities (+8,000); and securities, commodity contracts, and investments (+5,000). Over the year, financial activities has added 143,000 jobs.
Employment in mining rose by 9,000 in February, with most of the increase in support activities for mining (+7,000). Since a recent low in October 2016, mining has added 69,000 jobs.
Employment in health care continued to trend up in February (+19,000), with a gain of 9,000 in hospitals. Health care has added 290,000 jobs over the past year.
Employment in other major industries, including wholesale trade, transportation and warehousing, information, leisure and hospitality, and government, showed little change over the month.
The average workweek for all employees on private nonfarm payrolls rose by 0.1 hour to 34.5 hours in February. In manufacturing, the workweek increased by 0.2 hour to 41.0 hours, while overtime edged up by 0.1 hour to 3.6 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls increased by 0.2 hour to 33.8 hours.
In February, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $26.75, following a 7-cent gain in January. Over the year, average hourly earnings have increased by 68 cents, or 2.6 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 6 cents to $22.40 in February.
The change in total nonfarm payroll employment for December was revised up from +160,000 to +175,000, and the change for January was revised up from +200,000 to +239,000. With these revisions, employment gains in December and January combined were 54,000 more than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.) After revisions, job gains have averaged 242,000 over the last 3 months.”
Bureau of Labor Statistics, “Employment Situation (Jobs Report). Feb 2018“, 9 Mar 2018 (08:30) More
“Nonfarm payrolls jumped by 313,000 jobs in Feb 2018, boosted by the largest rise in construction jobs since 2007. The payrolls gain was the biggest since Jul 2016 and triple the roughly 100,000 jobs the economy needs to create each month to keep up with growth in the working-age population.
The labor market is benefiting from strong domestic demand, an improvement in global growth as well as robust U.S. business sentiment following the Trump administration’s $1.5 trillion income tax cut package that come into effect in January.
Average hourly earnings edged up 4 cents, or 0.1%, to $26.75 in Feb 2018, a slowdown from the 0.3% rise in Jan 2018. That lowered the year-on-year increase in average hourly earnings to 2.6% in Feb 2018 from 2.8% in Jan 2018.
Economists polled by Reuters had forecast payrolls rising by 200,000 jobs in Feb 2018 and the unemployment rate falling to 4.0 percent. Average hourly earnings had been expected to increase 0.2% in Feb 2018.
Data for Dec 2017 and Jan 2018 was revised to show the economy adding 54,000 more jobs than previously reported.” Reuters
US: Monthly Wholesale Trade: Sales and Inventories. Jan 2018
Press Release Extract [us_wholesale]
January 2018 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $492.6 billion, down 1.1 percent (±0.7 percent) from the revised December level, but were up 6.7 percent (±1.2 percent) from the January 2017 level. The November 2017 to December 2017 percent change was revised from the preliminary estimate of up 1.2 percent (±0.7 percent) to up 0.8 percent (±0.7 percent).
Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $619.1 billion at the end of January, up 0.8 percent (±0.4 percent) from the revised December level. Total inventories were up 4.8 percent (±0.7 percent) from the revised January 2017 level. The December 2017 to January 2018 percent change was revised from the advance estimate of up 0.7 percent (±0.4 percent) to up 0.8 percent (±0.4 percent).
The January inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.26. The January 2017 ratio was 1.28.”
US Census Bureau, “Monthly Wholesale Trade: Sales and Inventories. Jan 2018“, 9 Mar 2018 (10:00) More
Press Release Extract [jp_boj]
1. At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided
upon the following.
- Yield curve control
The Bank decided, by an 8-1 majority vote, to set the following guideline for market operations for the intermeeting period.
The short-term policy interest rate:
The Bank will apply a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank.
The long-term interest rate:
The Bank will purchase Japanese government bonds (JGBs) so that 10-year JGB yields will remain at around zero percent. With regard to the amount of JGBs to be purchased, the Bank will conduct purchases at more or less the current pace — an annual pace of increase in the amount outstanding of its JGB holdings of about 80 trillion yen — aiming to achieve the target level of the long-term interest rate specified by the guideline.
- Guidelines for asset purchases
With regard to asset purchases other than JGB purchases, the Bank decided, by a unanimous vote, to set the following guidelines.
a) The Bank will purchase exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs) so that their amounts outstanding will increase at annual paces of about 6 trillion yen and about 90 billion yen, respectively.
b) As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen, respectively.
2. Japan’s economy is expanding moderately, with a virtuous cycle from income to spending operating. Overseas economies have continued to grow firmly on the whole. In this situation, exports have been on an increasing trend. On the domestic demand side, business fixed investment has continued on an increasing trend with corporate profits and business
sentiment improving. Private consumption has been increasing moderately, albeit with fluctuations, against the background of steady improvement in the employment and income situation. Housing investment has been weakening somewhat.
Meanwhile, public investment has been more or less flat, remaining at a relatively high level. Reflecting these increases in demand both at home and abroad, industrial production has been on an increasing trend, and labor market conditions have continued to tighten steadily. Financial conditions are highly accommodative. On the price front, the year-on-year rate of change in the consumer price index (CPI, all items less fresh food) is around 1 percent. Inflation expectations have been more or less unchanged.
3. With regard to the outlook, Japan’s economy is likely to continue its moderate expansion. Domestic demand is likely to follow an uptrend, with a virtuous cycle from income to spending being maintained in both the corporate and household sectors, on the back of highly accommodative financial conditions and underpinnings through the government’s past stimulus measures. Exports are expected to continue their moderate increasing trend on the back of the firm growth in overseas economies. The year-on-year rate of change in the CPI is likely to continue on an uptrend and increase toward 2 percent, mainly on the back of an improvement in the output gap and a rise in medium- to long-term inflation expectations.
4. Risks to the outlook include the following: the U.S. economic policies and their impact on global financial markets; developments in emerging and commodity-exporting economies; negotiations on the United Kingdom’s exit from the European Union (EU) and their effects; and geopolitical risks.
5. The Bank will continue with “Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control,” aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner. The Bank will make policy adjustments as appropriate, taking account of developments in economic activity and prices as well as financial conditions, with a view to maintaining the momentum toward achieving the price stability target.”
Bank of Japan, “Statement on Monetary Policy“, 9 Mar 2018 More
^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com
Stockmarket: Nikkei 225
^ Nikkei 225 movements over the past week Chart: Google Finance
Monthly Report on Consumer Price Index. Feb 2018
“China’s consumer prices rose by 2.9% year-on-year in Feb 2018, after a 1.5% rise in Jan 2018 and above market consensus of 2.5%. It was the highest inflation rate since Nov 2013, as cost of food rebounded sharply and cost non-food rose faster.
On a monthly basis, consumer prices increased by 1.2%, much faster than a 0.6% gain in Jan 2018 and above estimates of a 0.8% rise. It was the highest monthly figure since Feb 2016.
Inflation Rate in China averaged 5.27% from 1986 until 2018, reaching an all time high of 28.40% in Feb 1989 and a record low of -2.20% in Apr of 1999.” TradingEconomics
Press Release Extract [cn_cpi]
In February 2018, the consumer price index (CPI) went up by 2.9 percent year-on-year. The prices grew by 3.0 percent in cities and 2.7 percent in rural areas. The food prices went up by 4.4 percent, and the non-food prices increased 2.5 percent. The prices of consumer goods went up by 2.5 percent and the prices of services grew by 3.6 percent. On average from January to February, the overall consumer prices were up by 2.2 percent from the same period of the previous year.
In February, the consumer prices went up by 1.2 percent month-on-month. Of which, prices grew by 1.3 percent in cities and 1.1 percent in rural areas. The food prices went up by 4.4 percent, and the non-food prices went up by 0.5 percent. The prices of consumer goods increased 1.4 percent, and the prices of services increased 1.0 percent.
I. Year-on-Year Changes of Prices of Different Categories
Prices of food, tobacco and liquor, went up by 3.6 percent year-on-year, affecting nearly 1.09 percentage points increase in the CPI. Of which, the prices of eggs, went up by 22.5 percent, affecting nearly 0.12 percentage points increase in the CPI; fresh vegetables, up by 17.7 percent, affecting nearly 0.47 percentage points increase in the CPI; aquatic products and fresh fruits, both up by 8.7 percent, affecting nearly 0.31 percentage points increase in the CPI in total; meat, down by 3.1 percent, affecting nearly 0.15 percentage points decrease in the CPI (price of pork was down by 7.3 percent, affecting nearly 0.20 percentage points decrease in the CPI).
The prices of all the other seven categories increased year-on-year. Of which, the prices of health care, education, culture and recreation, residence, increased 6.0, 3.7 and 2.2 percent respectively, household articles and services, other articles and services, increased 1.8 and 1.7 percent respectively, transportation and communication, clothing, increased 1.5 and 1.1 percent respectively.
II. Month-on-Month Changes of Prices of Different Categories
Prices of food, tobacco and liquor went up by 3.1 percent year-on-year, affecting nearly 0.93 percentage points increase in the CPI. Of which, prices for fresh vegetables, went up by 18.1 percent, affecting nearly 0.47 percentage points increase in the CPI; aquatic products, up by 8.0 percent, affecting nearly 0.15 percentage points increase in the CPI; fresh fruits, up by 6.4 percent, affecting nearly 0.11 percentage points increase in the CPI; meat, up by 2.0 percent, affecting nearly 0.09 percentage points increase in the CPI (price of pork was up by 2.0 percent, affecting nearly 0.05 percentage points increase in the CPI).
Among the prices of the other seven categories, five increased, one decreased and one remained unchanged month-on-month. Of which, the prices of education, culture and recreation, transportation and communication, other articles and services, increased 1.8, 0.9 and 0.4 percent respectively, household articles and services, health care, increased 0.3 and 0.1 percent respectively, clothing decreased 0.6 percent, residence remained unchanged.”
National Bureau of Statistics of China, “Monthly Report on Consumer Price Index. Feb 2018“, 9 Mar 2018 (Released 13 Mar 2018) More
Producer Prices for the Industrial Sector. Feb 2018
“The producer prices in China increased by 3.7% from a year earlier in Feb 2018, the least since Nov 2016, and compared to a 4.3% rise in the prior month and markets estimates of a 3.8% gain. Still, it was the 18th straight month of rise in producer inflation. Cost rose at a softer pace for means of production (4.8% from 5.7% in Jan 2018) namely extraction (6.4%), raw materials (5.9%) and processing (4.2%).
Meantime, inflation was steady for consumer goods (0.3%) namely daily use goods (1.1%), clothing (0.5%) while food production was flat. At the same time, prices of consumer durable goods continued to decline (-0.1% from -0.3% in the prior month).
On a monthly basis, producer prices fell by 0.3%, following a 0.3% gain in Jan 2018.
Producer Prices Change in China averaged 1.23% from 1995 until 2018, reaching an all time high of 13.47% in Jul 1995 and a record low of -8.20% in Jul 2009.” TradingEconomics
Press Release Extract [cn_ppi]
In February 2018, Producer Price Index (PPI) for manufactured goods increased 3.7 percent year-on-year, and decreased 0.1 percent month-on-month. The purchasing price index for manufactured goods increased 4.4 percent year-on-year, and increased 0.1 percent month-on-month. On average from January to February, the PPI increased 4.0 percent year-on-year, the purchasing price index for manufactured goods went up by 4.8 percent year-on-year.
1. Year-on-Year Changes of Prices of Different Categories
The year-on-year change of producer prices for means of production increased 4.8 percent, meaning 3.60 percentage points increase in the overall price level. Of which, producer prices for mining and quarrying industry increased 6.4 percent; that of raw materials industry increased 5.9 percent; that of manufacturing and processing industry increased 4.2 percent. Producer prices for consumer goods increased 0.3 percent year-on-year, meaning 0.08 percentage points increase in the overall price level. Of which, producer prices for foodstuff remained unchanged, that of clothing increased 0.5 percent, that of commodities went up by 1.1 percent, and that of durable consumer goods went down by 0.1 percent.
The year-on-year purchaser price indices for building materials and non-metallic went up by 12.1 percent, non-ferrous metal materials and wires went up by 8.3 percent, ferrous metal materials increased 7.0 percent, fuel and power increased 6.0 percent.
2. Month-on-Month Changes of Prices of Different Categories
The producer prices for means of production decreased 0.1 percent month-on-month, meaning 0.08 percentage points decrease in the overall price level. Of the total, producer prices for mining and quarrying industry increased 0.6 percent, that of raw materials industry remained unchanged, that of manufacturing and processing industry decreased 0.2 percent. Producer prices for consumer goods remained unchanged, month-on-month. Of which, producer prices for foodstuff and clothing remained unchanged, that of commodities decreased 0.1 percent, that of durable consumer goods increased 0.1 percent.
The month-on-month purchaser price indices for fuel and power increased 0.9 percent, ferrous metal materials went up by 0.1 percent, non-ferrous metal materials and wires decreased 0.6 percent.”
National Bureau of Statistics of China, “Producer Prices for the Industrial Sector. Feb 2018“, 9 Mar 2018 (Released 13 Mar 2018) More
^ 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