Thu 15 Mar 2018


Shows:  watch Nightly Business Report. watch PBS NewsHour. watch Bloomberg Technology.
Indices: chart Market Today. Market (52 weeks). Portfolio (52 weeks).
FX:        chart USD Today. USD Year. AUD Today. AUD Year.


In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearThe S&P 500 ended slightly lower on Thursday after a report that U.S. Special Counsel Robert Mueller had issued a subpoena for documents related to U.S. President Donald Trump’s businesses offset strong jobs and manufacturing data. NYTimes Reuters Bloomberg

  • The S&P 500 index fell 2.15 points, or 0.08%, to 2,747.33.
  • The Dow Jones Industrial Average rose 115.54 points, or 0.47%, to close at 24,873.66.
  • The Nasdaq Composite index fell 15.07 points, or 0.2%, to 7,481.74.
  • Declining issues outnumbered advancing ones on the NYSE by a 1.71-to-1 ratio; on Nasdaq, a 1.31-to-1 ratio favored decliners.
  • Volume on U.S. exchanges was 6.65 billion shares, compared to the 7.08 billion average over the last 20 trading days.

The S&P fell to a session low soon after the New York Times report was released but recovered much of its losses by the market close. It has fallen for 4 straight days, its longest losing streak since Dec 2017. The Dow pared some gains but still ended higher for the first time in 4 days.

As earnings season has drawn to a close, political developments, such as the ouster of Secretary of State Rex Tillerson this week, have significantly influenced the direction of U.S. stocks.

“The market is looking to bite on something to push it out of its trading range,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Earlier, the S&P had opened with gains as government data showed weekly U.S. jobless claims fell last week, pointing to a strong labor market. Manufacturing surveys from the New York Fed Report and Philadelphia Fed Report also pointed to a tightening labor market.

It also got a boost after Peter Navarro, the White House’s top adviser on international trade, said in a CNBC interview Trump’s tough approach to global trade, including tariffs on metals imports, would not necessarily provoke retaliation.

The S&P industrial index, however, rose 0.3%, leading all sectors, and posted its first session of gains in 4 days as worries of a trade war eased. Caterpillar was up 1.3%.

Among stocks, Alibaba jumped 3.4% on a report that the Chinese e-commerce company was planning a secondary listing in China.

Dollar General rose 4.8% after the discount retailer’s quarterly same-store sales beat estimates.

Qorvo fell 3.9% after Bank of America said the radio frequency chipmaker could lose out to Broadcom for a spot in upcoming iPhones.Reuters

The Empire Manufacturing Index Report exceeded projections and initial jobless claims came in just below estimates, signaling continuing strength in the U.S. economy. While an increase in borrowing costs at the Fed meeting is seen as a done deal, it remains an open question whether U.S. policy makers will lift their expectations for the pace of future increases.

“The factory orders number in conjunction with the possibility of another round of tax cuts would bolster the somewhat weakening growth story we’ve seen the past two weeks,” Kevin Caron, a senior portfolio manager at Washington Crossing Advisors, said by phone.

Pipeline stocks plunged after the Federal Energy Regulatory Commission ruled that master-limited partnerships can no longer recover a key income-tax allowance. More: Reuters

Investors are weighing prospects for more U.S. trade protectionism after new White House appointee Larry Kudlow signaled support for a strong dollar and took a tough line on China. Gold declined after Kudlow said he’d sell the metal and buy the greenback, which gained.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) 2,747.33 -0.08% 2,673.61 +2.75%
DJIA INDU 24,873.66 +0.46% 24,719.22 +0.62%
NASDAQ IXIC 7,481.74 -0.21% 6,903.39 +8.37%

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 3.357 -0.01% 3.068 +9.45%
Valuation Rate USD/AUD 0.78509 -1.02% 0.78528 -0.03%
AUD-denominated Index AUD 4.279 +1.00% 3.909 +9.47%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,150.61 +0.14% $1,053.00 +9.26%
Alphabet C GOOG $1,149.58 +0.00% $1,045.65 +9.93%
Apple AAPL $178.65 +0.11% $169.23 +5.56%
Amazon AMZN $1,582.32 -0.55% $1,169.54 +35.29%
Ebay EBAY $42.59 -0.57% $37.76 +12.79%
Facebook FB $183.86 -0.18% $176.46 +4.19%
PayPal PYPL $82.57 -0.89% $73.61 +12.17%
Twitter TWTR $35.80 -2.19% $24.01 +49.10%
Visa V $123.41 +0.67% $114.02 +8.23%
VMware VMW $125.51 +0.60% $125.32 +0.15%

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) advanced 0.5%, the biggest rise in over 2 weeks.
The EUR fell 0.5% to USD 1.2301.
Britain’s GBP fell 0.2% to USD 1.3938.
Japan’s JPY rose less than 0.05%.

The yield on 10-year Treasuries rose one basis point to 2.82%.
Germany’s 10-year yield decreased two basis points to 0.58%, the lowest in 7 weeks.
Britain’s 10-year yield gained less than one basis point to 1.438%.
Bloomberg

AUD

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

Australia 10Y Bond Yield Hits 8-week Low: “The yield on Australian Government bonds fell 0.05% to 2.71 on 15 Mar 2018 from 2.75 in the previous trading session. Historically, the Australia Government Bond 10Y reached an all time high of 16.50 in Aug 1982 and a record low of 1.83 in Aug 2016.TradingEconomics

Oil and Gas Futures

Oil prices edged higher in choppy trade on Thursday after the International Energy Agency (IEA) said global oil demand is expected to pick up this year, but warned supply is growing at a faster pace.

Prices notched their second consecutive day of gains, as West Texas Intermediate (WTI) crude futures rose 23 cents to settle at $61.19/barrel, a 0.4% gain. Brent crude futures rose 23 cents to settle at $65.12/barrel.

Rising global oil demand, along with supply constraints from the Organization of the Petroleum Exporting Countries, has helped keep oil above $60/barrel.

The IEA said global crude demand would pick up this year, which was “reassuring” to investors, said Phillip Streible, senior market strategist at RJO Futures in Chicago.

However, the IEA also noted rising supply, limiting crude gains. The IEA believes non-OPEC supply, led by the United States, will grow by 1.8 million bpd this year, while demand will grow by about 1.5 million bpd.

The relentless climb in U.S. crude output has loomed over markets, as production hit another record last week at 10.38 million bpd.

OPEC on Wednesday raised its forecast for non-member oil supply this year to almost double the growth predicted 4 months ago.

OPEC and other producers led by Russia began cutting supply in January 2017 to erase a global crude glut that had built up since 2014. This has been somewhat offset by surging U.S. crude production.

Prices bounced around after the United States announced new sanctions against Russian individuals and groups, including Moscow’s intelligence services and a Russian propaganda organization.

“The rising tensions between the West and Russia raise the potential for reduced trade flows and economic activity, which would diminish energy demand growth,” said John Kilduff, partner at investment manager Again Capital in New York.

Prices were supported in the morning by a pickup on Wall Street, but U.S. stocks retreated throughout the day. The Dow Jones Industrial Average was still up about 0.5%, but the S&P 500 edged lower.Reuters

Futures prices

Prices are as at 15:46 EDT

  • NYMEX West Texas Intermediate (WTI): $61.20/barrel +0.39% Chart
  • ICE (London) Brent North Sea Crude: $65.10/barrel +0.32% Chart
  • NYMEX Natural gas futures: $2.68/MMBTU -1.76% Chart

FANG Rally

The rally in the FANG block of tech shares and its megacap brethren just surpassed a dubious milestone.

An index of 10 tech growth shares pushed its advance to 23 percent so far this year, giving the group an annualized return since early 2016 of 67 percent. That frenzied pace tops the Nasdaq Composite Index’s 66 percent return in the final two years of the dot-com bubble.

“Lately, it seems, these stocks can do no wrong,” George Pearkes, a macro strategist at Bespoke Investment Group, wrote in a note. It makes “us wonder if this is a mini-1999 all over again,” he said.

Consider Wednesday, when the NYSE FANG+ rallied 1 percent even as the four major U.S. benchmark indexes retreated. The group was little changed as of 3:07 p.m. in New York, while the S&P 500 was down 0.1 percent.

In addition to the quartet of Facebook, Amazon, Netflix and Google, the NYSE index also includes Apple, Twitter, Alibaba, Baidu, Nvidia and Tesla. These companies have drawn money as investors bet that their dominance in areas from social media to e-commerce will foster faster growth.

Analysts expect their profits to increase 22 percent over the next three to five years, double the pace in the S&P 500, estimates compiled by Bloomberg show.

It’s not the first time that Wall Street voiced warnings on FANG stocks. In November 2016, Jeff Gundlach, chief investment officer at DoubleLine Capital LP, urged investors to avoid the group. Eight months later, Howard Marks, the co-chairman of Oaktree Capital Group LLC, listed addiction to FAANG-fomented gains among a handful of investor vulnerabilities that could spell doom for the bull market.

That hasn’t stopped investors from flocking to these high flyers. In fact, their gains have been accelerating. The NYSE FANG index has risen 76 percent in the past year, picking up pace from 41 percent in the previous 12 months.

And their valuations are rivalling those that tech stocks fetched during the heyday of the dot-com era. At 64 times earnings, the companies in the NYSE FANG+ Index are valued at a multiple that’s almost three times the broader gauge’s. That compared with 2.7 in March 2000.” Lu Wang Bloomberg

flag_usa US: Import and Export Price Indexes. Feb 2018

Press Release Extract [us_ximpim]

U.S. import prices increased 0.4 percent in February, the U.S. Bureau of Labor Statistics reported today, after rising 0.8 percent in January. In February, higher nonfuel prices more than offset declining prices for imported fuel. Prices for U.S. exports rose 0.2 percent in February following a 0.8-percent advance the previous month.

IMPORTS

All Imports: The price index for U.S. imports rose 0.4 percent in February, the seventh consecutive monthly increase, after advancing 0.8 percent in January. The last time the index declined on a monthly basis was a 0.2-percent drop in July 2017. Import prices advanced 3.5 percent for the 12-month period ended in February, matching the 12-month rise in November. Those were the largest annual increases since the index rose 3.6 percent for the 12-month period ended April 2017.

us_impx_month_20180315

us_impx_year_20180315

Fuel Imports: The price index for fuel imports declined 0.6 percent in February, the first monthly decline since July. Prior to February, the index for fuel imports rose 29.1 percent between July 2017 and January 2018. Both petroleum and natural gas prices contributed to the decline in overall fuel prices in February. Petroleum prices fell 0.5 percent and prices for natural gas decreased 3.0 percent. Despite the February decline, the price index for fuel imports rose 17.4 percent over the past 12 months. Petroleum prices increased 18.3 percent for the year ended in February and prices for natural gas advanced 17.9 percent over the same period.

All Imports Excluding Fuel: The price index for nonfuel imports advanced 0.5 percent in February, after rising 0.5 percent the previous month. The last time the index increased by more than 0.5 percent was a 0.8- percent advance in April 2011. Prices for capital goods; consumer goods; nonfuel industrial supplies and materials; foods, feeds, and beverages; and automotive vehicles all contributed to the February advance. The price index for nonfuel imports increased 2.1 percent over the past 12 months, the largest over-the-year rise since the index advanced 2.4 percent for the year ended February 2012. The primary contributor to the 12- month advance in February was higher prices for nonfuel industrial supplies and materials.

EXPORTS

All Exports: U.S. export prices increased 0.2 percent in February after rising 0.8 percent in January. The last time the index declined on a monthly basis was a 0.1-percent decrease in June 2017. In February, higher prices for both nonagricultural and agricultural exports contributed to the increase in overall export prices. The price index for U.S. exports increased 3.3 percent over the past 12 months.

us_expx_month_20180315

us_expx_year_20180315

Agricultural Exports: The price index for agricultural exports rose 0.6 percent in February, after ticking up 0.1 percent the previous month. The February advance was the largest increase since the index rose 2.0 percent in October and was driven by higher prices for corn and soybeans, which increased 7.2 percent and 2.5 percent, respectively. Prices for agricultural exports rose 0.8 percent over the past year. Rising meat prices were the primary contributor to the advance in agricultural prices for the year ended in February.

All Exports Excluding Agriculture: Nonagricultural export prices advanced 0.2 percent in February following a 0.8-percent rise in January. The price indexes for nonagricultural industrial supplies and materials, consumer goods, capital goods, and automotive vehicles all contributed to the monthly increase. Over the past 12 months prices for nonagricultural exports advanced 3.6 percent, which matched the 12- month increase in January. Those were the largest 12-month rises since a 4.0-percent advance for the year ended December 2011.

SELECTED FEBRUARY HIGHLIGHTS

Import Prices

Imports by Locality of Origin: Prices for imports from China increased 0.2 percent in February, the first monthly advance since the index rose 0.3 percent in November. The price index for imports from China increased 0.3 percent for the 12-month period ended in February, the largest 12-month advance since the index rose 0.4 percent for the year ended June 2014. Import prices from Japan advanced 0.2 percent in February, after a 0.5-percent rise in January. Despite the increase, prices for imports from Japan declined 0.1 percent over the past 12 months. The last time the index advanced on a 12-month basis was an increase of 0.5 percent in July 2017. Import prices from Canada increased 0.2 percent in February and prices for imports from the European Union rose 0.7 percent. In contrast, the import price index from Mexico decreased 0.5 percent in February, the largest monthly drop since the index fell 1.2 percent in January 2017.

Nonfuel Industrial Supplies and Materials: Nonfuel industrial supplies and materials prices increased 0.9 percent in February following a 1.8-percent advance in January. The rise in February was driven by higher prices for chemicals and iron and steel mill products.

Finished Goods: Prices for each of the finished goods categories increased in February. Prices for capital goods advanced 0.6 percent, led by rising prices for computers, peripherals, and semiconductors. The price indexes for consumer goods and automotive vehicles also rose in February, increasing 0.5 percent and 0.2 percent, respectively.

Foods, Feeds, and Beverages: Import prices for foods, feeds, and beverages rose 1.1 percent in February after advancing 0.8 percent the previous month. The February increase was driven by higher prices for vegetables, which advanced 4.3 percent.

Transportation Services: Import air passenger fares rose 0.9 percent in February, after decreasing 3.2 percent in January. The February advance was led by a 1.9-percent rise in European fares and a 4.6-percent increase in Latin American/Caribbean fares, which more than offset lower Asian fares. Import air passenger fares rose 4.2 percent over the past year. Import air freight prices increased 1.6 percent in February and 11.4 percent over the past 12 months.

Export Prices

Nonagricultural Industrial Supplies and Materials: The price index for nonagricultural industrial supplies and materials rose 0.3 percent in February. The advance was driven by a 1.5-percent increase in chemicals prices and a 2.0-percent rise in the price index for nonferrous metals.

Finished Goods: Prices for each of the major finished goods categories increased in February. Consumer goods prices advanced 0.3 percent, led by higher prices for medicinal, dental, and pharmaceutical preparatory materials. The price indexes for capital goods and automotive vehicles each ticked up 0.1 percent in February.

Transportation Services: Export air passenger fares decreased 8.9 percent in February, the largest decline since the index fell 11.6 percent in February 2017. The decreases were driven by lower Asian and Latin American/Caribbean fares which more than offset higher European fares. Despite the monthly decreases, export air passenger fares rose 1.2 percent for the year ended in February. Prices for export air freight increased 0.2 percent in February and 7.1 percent over the past year.

Bureau of Labor Statistics, “U.S. Import and Export Price Indexes. Feb 2018“, 15 Mar 2018 (08:30) More

flag_usa US: Unemployment Insurance Weekly Claims Report

Press Release Extract [ser_4]

In the week ending March 10, the advance figure for seasonally adjusted initial claims was 226,000, a decrease of 4,000 from the previous week’s revised level. The previous week’s level was revised down by 1,000 from 231,000 to 230,000. The 4-week moving average was 221,500, a decrease of 750 from the previous week’s revised average. The previous
week’s average was revised down by 250 from 222,500 to 222,250.

Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

us_ue_20180301

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending March 3, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 3 was 1,879,000, an increase of 4,000 from the previous week’s revised level. The previous week’s level was revised up 5,000 from 1,870,000 to 1,875,000. The 4-week moving average was 1,890,750, a decrease of 17,250 from the previous week’s revised average. The previous week’s average was revised up by 1,250 from 1,906,750 to 1,908,000.

us_ue_20180301

Unadjusted Data

The advance number of actual initial claims under state programs, unadjusted, totaled 204,591 in the week ending March 10, a decrease of 20,922 (or -9.3 percent) from the previous week. The seasonal factors had expected a decrease of 17,011 (or -7.5 percent) from the previous week. There were 222,227 initial claims in the comparable week in 2017.

The advance unadjusted insured unemployment rate was 1.6 percent during the week ending March 3, unchanged from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,187,125, a decrease of 45,451 (or -2.0 percent) from the preceding week. The seasonal factors had expected a decrease of 50,613 (or -2.3 percent) from the previous week. A year earlier the rate was 1.7 percent and the volume was 2,349,381.

The total number of people claiming benefits in all programs for the week ending February 24 was 2,265,961, a decrease of 27,890 from the previous week. There were 2,490,291 persons claiming benefits in all programs in the comparable week in 2017.

Extended benefits were payable in Alaska and the Virgin Islands during the week ending February 24.

Initial claims for UI benefits filed by former Federal civilian employees totaled 636 in the week ending March 3, an increase of 51 from the prior week. There were 685 initial claims filed by newly discharged veterans, an increase of 130 from the preceding week.

There were 11,217 former Federal civilian employees claiming UI benefits for the week ending February 24, a decrease of 1,737 from the previous week. Newly discharged veterans claiming benefits totaled 8,341, an increase of 145 from the prior week.

The highest insured unemployment rates in the week ending February 24 were in the Virgin Islands (9.2), Alaska (3.6), Connecticut (3.0), New Jersey (3.0), Montana (2.9), Puerto Rico (2.9), Rhode Island (2.9), Massachusetts (2.7), Pennsylvania (2.5), and Illinois (2.4).

The largest increases in initial claims for the week ending March 3 were in New York (+18,249), California (+11,646), Washington (+1,011), Texas (+873), and New Jersey (+804), while the largest decreases were in Massachusetts (-3,871), Rhode Island (-1,082), Kentucky (-690), Michigan (-637), and Kansas (-463).

Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 15 Mar 2018 (08:30) More

Comment: Reuters

The number of Americans filing for unemployment benefits fell last week, pointing to sustained labor strength even as economic growth appears to have slowed early in the first quarter. Other data on Thursday showed an increase in the prices of imported goods in February amid weakness in the U.S. dollar and rising commodity prices, bolstering expectations that inflation will pick up this year.

Import prices are likely to rise further after President Donald Trump last week imposed tariffs on steel and aluminum imports to shield domestic industries from what he has described as unfair competition from other countries.

Labor market strength and a steady increase in price pressures could pave the way for the Federal Reserve to raise interest rates at its FOMC policy meeting on 20-21 Mar 2018. The U.S. central bank has forecast 3 rate increases for this year, but some economists believe it will raise its projection to 4 hikes at the meeting.

“The strong willingness of companies to hold onto labor is a strong signal of the difficulty of replacing workers. At this point we would expect another robust gain in jobs (in March) and a drop in the unemployment rate to 4.0 percent,” said John Ryding, chief economist at RDQ Economics in New York.

The economy created 313,000 jobs in Feb 2018 and the unemployment rate remained at a 17-year low of 4.1%.

Initial claims for state unemployment benefits declined 4,000 to a seasonally adjusted 226,000 for the week ended 10 Mar 2018, the Labor Department said. Claims fell to 210,000 during the week ended 24 Dec 2018, the lowest level since Dec 1969. Claims have now been below the 300,000 threshold, which is associated with a strong labor market, for 158 straight weeks. That is the longest such stretch since 1970, when the labor market was much smaller. Fed officials consider the labor market to be near or a little beyond full employment.

Economists are optimistic that tightening labor market conditions will boost wage growth in the second half of this year. That should help to underpin consumer spending, which slowed at the start of the year.

The government reported on Wednesday that retail sales fell in February for a third straight month. Data on home sales, business spending on equipment and industrial production in January have also been weak.

Gross domestic product growth estimates for the first quarter are as low as 1.7% at an annualized rate. The economy grew at a 2.5% pace in Q4/2017, the government reported last month.

But revisions to Dec 2017 data on construction spending, factory orders and inventories have suggested the fourth-quarter growth estimate could be raised to a 3.1% pace. The government will publish its third GDP growth estimate for Q4/2017 later this month.

Bloomberg’s US Dollar Spot Index (DXY) was stronger against a basket of currencies in midday trading. U.S. government bond prices were slightly weaker and U.S. stock indexes rose as industrial stocks mounted a recovery after three days of losses.

Diminishing labor market slack is also expected to help boost inflation toward the Fed’s 2% target. Manufacturing surveys from the New York Fed and Philadelphia Fed published today showed a mixture of tightening labor market conditions and rising prices for inputs:

  • The Philadelphia Fed said firms in the mid-Atlantic region reported difficulties finding skilled workers, especially those with specific machine and tool skills. It said more than half the firms were raising wages to address the shortages.
  • The New York Fed’s “Empire State” survey showed manufacturers in New York state continuing to pay more for inputs, with the survey’s prices paid index rising this month to its highest level since March 2012.

The firming inflation trend was corroborated by a fourth report from the Labor Department showing import prices rising 0.4% in Feb 2018 after accelerating 0.8% in Jan 2018.

That lifted the year-on-year increase in import prices to 3.5% from Jan 2018. Prices for imported capital goods jumped 0.6% in Feb 2018, the biggest increase since Apr 2008, after being unchanged in Jan 2018.

Prices of imported consumer goods excluding automobiles rose 0.5%, the largest gain since Jan 2014, after edging up 0.1% in the prior month. These price increases likely reflected the USD’s depreciation against the currencies of the United States’ main trading partners, and will eventually filter through to core producer and consumer inflation.

The USD has lost 9.1% of its value on a trade-weighted basis since Jan 2017. Imported iron and steel prices increased 2.2% in Feb 2018 and were up 12.6% on a year-on-year basis. The cost of imported aluminium rose 0.4%, pushing the annual increase to 10.3%.

Trump slapped tariffs of 25% on steel imports and 10% on aluminium imports.

“Leading up to the March announcement of steel and aluminium tariffs, import prices for both metals were already up by double-digits this past year. Assuming tariffs are limited to aluminium and steel, we expect only a marginal effect on final consumer prices,” said Sarah House, a senior economist at Wells Fargo Securities in New York.Reuters

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