Fri 16 Mar 2018


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearThe S&P 500 and the Dow Industrials rose on Friday, boosted by strong industrial output numbers, though all three of Wall Street’s major indexes posted losses for the week.

Friday’s gains came at the end of a rocky week dominated by concerns of a U.S. trade war with China and political turmoil, which began with the ouster of Secretary of State Rex Tillerson. Stocks traded in a narrow range, Lerner said, as investors unwound positions in futures and options contracts expiring on Friday, in a phenomenon known as “quadruple-witching.” The Nasdaq was barely changed at Friday’s market close.

  • The S&P 500 index rose 4.68 points, or 0.17%, to 2,752.01
  • The Dow Jones Industrial Average rose 72.85 points, or 0.29%, to 24,946.51
  • The Nasdaq Composite index added 0.25 point to 7,481.99.
  • For the week, the S&P was down 1.04%, the Dow was down 1.57%, and the Nasdaq was down 1.27%.
  • Advancing issues outnumbered declining ones on the NYSE by a 2.01-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favoured advancers.
  • The S&P 500 posted 25 new 52-week highs and three new lows; the Nasdaq Composite recorded 178 new highs and 50 new lows.
  • Volume on U.S. exchanges was 9.54 billion shares, compared to the 7.2 billion average over the last 20 trading days.

February industrial production rose 1.1%, the largest increase in 4 months.

Energy led the major sectors of the S&P 500 with a 1.0% gain, as oil prices rose 1.7%.

“Today, there are not a lot of headlines out of Washington, so the focus is more on the economy,” said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta.

Investors were also looking ahead to next week, when the Federal Reserve is expected to raise benchmark U.S. interest rates. Rate-sensitive sectors, such as utilities and real estate, rose on Friday, but they could perform poorly if rates increase sharply.

“Many portfolio managers are starting to anticipate that eventually, maybe not at this meeting but in future months, that the Fed will become a little bit more hawkish in its behavior,” said Chad Morganlander, portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

Walmart Inc rose 1.9% after the University of Michigan’s preliminary reading of its consumer sentiment index rose more than expected to 102.0.

Adobe Systems Inc was up 3.1%, hitting an all-time high during the session, after the Photoshop maker topped analysts’ profit and revenue estimates for the 7th straight quarter.

Micron Technology Inc rose 3.0% after Baird analysts raised their price target on the stock by $40 to $100. Western Digital Corp gained 4.1%, hitting a 3-year high during the session, after Baird upgraded the stock’s rating to “outperform.”Reuters

The last batches of economic data released before the Fed meeting were mixed. U.S. factory production bounced back in Feb 2018, exceeding estimates, according to Federal Reserve data, and consumer sentiment jumped to its highest since 2004. But unexpectedly weak Feb 2018 retail sales pushed down forecasts for the annualized pace of expansion in Q1/2018.

“We’re probably at the peak of growth right now, over to a gentle rollover. I wouldn’t say it’s going to be a growth scare where the markets are going to say, ‘Holy smokes! We’re going to sell off 10 percent in equities because the Fed’s overtightened,”’ Barbara Reinhard, head of asset allocation for multi-asset strategies at Voya Investment Management, said by phone. “But what this probably does is, it probably takes some of the interest rate tightening concerns and fears, which got so overblown in January, out of the markets, and that’s a good thing.”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) 2,752.01 +0.17% 2,673.61 +2.93%
DJIA INDU 24,946.51 +0.29% 24,719.22 +0.91%
NASDAQ IXIC 7,481.99 +0.003% 6,903.39 +8.38%

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 3.343 -0.43% 3.068 +8.98%
Valuation Rate USD/AUD 0.77629 -1.13% 0.78528 -1.15%
AUD-denominated Index AUD 4.308 +0.69% 3.909 +10.23%

Portfolio stock prices

Note the impact Alphabet’s Class C stock buyback program is having on its stock price. This is a rare situation (if not the first one) in which Class C shares are priced higher than Class A shares.

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,134.42 -1.41% $1,053.00 +7.73%
Alphabet C GOOG $1,135.73 -1.21% $1,045.65 +8.61%
Apple AAPL $178.02 -0.36% $169.23 +5.19%
Amazon AMZN $1,571.68 -0.68% $1,169.54 +34.38%
Ebay EBAY $42.46 -0.31% $37.76 +12.44%
Facebook FB $185.09 +0.66% $176.46 +4.89%
PayPal PYPL $82.16 -0.50% $73.61 +11.61%
Twitter TWTR $35.58 -0.62% $24.01 +48.18%
Visa V $124.53 +0.90% $114.02 +9.21%
VMware VMW $124.47 -0.83% $125.32 -0.68%

FX: USD/AUD

USD

DXY movements
^ Bloomberg Dollar Spot Index (DXY) movements today (mouseover for 12 month view) Chart: Bloomberg

The Bloomberg Dollar Spot Index (DXY) rose 0.1% to its highest in almost 2 weeks.
The EUR fell 0.2% to USD 1.2286.
Britain’s GBP rose 0.1% to USD 1.3934.
Japan’s JPY rose 0.3% to 106.06 per USD.

The yield on 10-year Treasuries rose 2 basis points to 2.84%.
Germany’s 10-year yield fell 1 basis point to 0.57%.
Britain’s 10-year yield fell 1 basis point to 1.429%.
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 15:48 EDT

  • NYMEX West Texas Intermediate (WTI): $62.30/barrel +1.81% Chart
  • ICE (London) Brent North Sea Crude: $66.16/barrel +1.60% Chart
  • NYMEX Natural gas futures: $2.69/MMBTU +0.48% Chart

flag_europe EU: Inflation (HICP). Feb 2018

Press Release Extract [eu_cpi]

Euro area annual inflation rate was 1.1% in February 2018, down from 1.3% in January. In February 2017, the rate was 2.0%. European Union annual inflation was 1.3% in February 2018, down from 1.6% in January. A year earlier the rate was 2.0%.

eu_cpi_20180316

The lowest annual rates were registered in Cyprus (-0.4%), Greece (0.4%), Denmark and Italy (both 0.5%). The highest annual rates were recorded in Romania (3.8%), Estonia and Lithuania (both 3.2%). Compared with January, annual inflation fell in eighteen Member States, remained stable in two and rose in seven.

eu_cpi_states_20180316

In February 2018, the highest contribution to the annual euro area inflation rate came from services (+0.57 percentage point), followed by food, alcohol & tobacco and energy (+0.21 pp each), and non-energy industrial goods (+0.14 pp).

Eurostat, “Inflation (HICP). Feb 2018“, 16 Mar 2018 More

flag_europe EU: Job Vacancy. Q4/2017

Press Release Extract [eu_jobvacancies]

The job vacancy rate in the euro area (EA19) was 2.0% in the fourth quarter of 2017, up from 1.9% recorded in the previous quarter and from 1.7% in the fourth quarter of 2016, according to figures published by Eurostat, the statistical office of the European Union. In the EU28, the job vacancy rate was 2.0% in the fourth quarter of 2017, stable compared with the previous quarter, but up from 1.8% in the fourth quarter of 2016.

eu_vacancies_20180316

In the euro area, the job vacancy rate in the fourth quarter of 2017 was 1.7% in industry and construction, and 2.3% in services. In the EU28, the rate was 1.8% in industry and construction, and 2.3% in services.

Member States

Among the Member States for which comparable data are available (see country notes), the highest job vacancy rates in the fourth quarter of 2017 were recorded in the Czech Republic (4.4%), Belgium (3.4%), Germany (2.8%), the Netherlands and the United Kingdom (both 2.6%). In contrast, the lowest rates were observed in Greece (0.1%), Spain (0.7%), Bulgaria and Portugal (both 0.8%).

eu_vacancies_states_20180316

Compared with the same quarter of the previous year and among the Member States for which data are comparable over time (see country notes), the job vacancy rate in the fourth quarter of 2017 rose in twenty-three Member States, remained stable in Bulgaria and Spain, but fell in Greece and Romania (both -0.2 percentage points – pp). The largest increases were registered in the Czech Republic (+1.4 pp), the Netherlands (+0.6 pp), Belgium, Hungary, Austria and Finland (all +0.5 pp).

Eurostat, “Job vacancy. Q4/2017“, 16 Mar 2018 More

flag_europe EU: Labour Cost Index. Q4/2017

Press Release Extract [eu_labourcost]

Hourly labour costs rose by 1.5% in the euro area (EA19) and by 2.3% in the EU28 in the fourth quarter of 2017, compared with the same quarter of the previous year. In the third quarter of 2017, hourly labour costs increased by 1.6% and 2.2% respectively.

eu_lci_20180316

The two main components of labour costs are wages & salaries and non-wage costs. In the euro area, the cost of wages & salaries per hour worked grew by 1.7% and the non-wage component by 1.0%, in the fourth quarter of 2017 compared with the same quarter of the previous year. In the third quarter of 2017, the annual changes were +1.6% and +1.5% respectively. In the EU28, the cost of hourly wages & salaries rose by 2.4% and the non-wage component by 2.0% in the fourth quarter of 2017. In the third quarter of 2017, annual changes were +2.1% and +2.2% respectively.

Breakdown by economic activity

In the fourth quarter of 2017 compared with the same quarter of the previous year, hourly labour costs in the euro area rose by 1.3% in industry, by 2.1% in construction, by 1.9% in the services and by 1.1% in the (mainly) non- business economy. In the EU28, labour costs per hour grew by 2.3% in industry, by 2.5% in construction, by 2.7% in services and by 1.9% in the (mainly) non-business economy.

Member States

In the fourth quarter of 2017, the highest annual increases in hourly labour costs for the whole economy were registered in Romania (+14.3%), Bulgaria (+12.2%) and Hungary (+8.6%). Small decreases were recorded in Finland (-0.7%) and Italy (-0.2%).

Eurostat, “Labour Cost Index. Q4/2017“, 16 Mar 2018 More

flag_usa US: Job Openings and Labor Turnover Survey. Jan 2018

Press Release Extract [us_jolts]

The number of job openings increased to 6.3 million on the last business day of January, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.6 million and 5.4 million, respectively. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.2 percent and 1.2 percent, respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions. The release also includes 2017 annual estimates for hires and separations. The annual number of hires at 65.3 million and the annual number of quits at 38.2 million increased in 2017. The annual number of layoffs and discharges at 20.7 million edged up in 2017.

Job Openings

On the last business day of January, the job openings level increased to a series high of 6.3 million (+645,000). The job openings level increased for total private (+608,000) and edged up for government. The job openings rate increased to 4.1 percent in January. The number of job openings increased in professional and business services (+215,000), transportation, warehousing, and utilities (+113,000), construction (+101,000), and several other industries. The number of job openings increased in the South, Midwest, and West regions.

us_jolts1_20180316

Hires

The number of hires was little changed at 5.6 million in January. The hires rate was little changed at 3.8 percent. The number of hires was little changed for total private and for government. Hires increased in federal government (+10,000). The number of hires was little changed in all four regions.

us_jolts2_20180316

Separations

Total separations includes quits, layoffs and discharges, and other separations. Total separations is referred to as turnover. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.

There were 5.4 million total separations in January, little changed from December. The total separations rate in January was little changed at 3.7 percent. The number of total separations was little changed for total private and edged down for government. Total separations increased in health care and social assistance (+52,000) but decreased in federal government (-6,000). The number of total separations was little changed in all four regions.

The number of quits was little changed at 3.3 million in January. The quits rate was little changed at 2.2 percent. Over the month, the number of quits was little changed for total private and for government. Quits increased in arts, entertainment, and recreation (+13,000) but decreased in professional and business services (-71,000). The number of quits decreased in the West region.

There were 1.8 million layoffs and discharges in January, little changed from December. The layoffs and discharges rate was little changed at 1.2 percent in January. The number of layoffs and discharges was little changed for total private and for government. The layoffs and discharges level increased in health care and social assistance (+52,000). Layoffs and discharges were little changed in all four regions.

In January, the number of other separations increased for total nonfarm (+57,000) and for total private (+56,000). The number of other separations was little changed for government. Other separations increased in retail trade (+26,000) but decreased in federal government (-4,000). Other separations increased in the West region.

Net Change in Employment

Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in January, hires totaled 65.4 million and separations totaled 63.2 million, yielding a net employment gain of 2.1 million. These totals include workers who may have been hired and separated more than once during the year.

Annual Levels and Rates

Calculating annual levels and rates allows additional comparisons across years. Annual levels for hires, quits, layoffs and discharges, other separations, and total separations are the sum of the 12 published monthly levels. Annual rates are computed by dividing the annual level by the Current Employment Statistics (CES) annual average employment level, and multiplying that quotient by 100. Consistent with BLS practice, annual estimates are published only for not seasonally adjusted data and are released with the January news release each year. Note that annual estimates are not calculated for job openings because job openings are a stock, or point-in-time, measurement for the last business day of each month.

In 2017, there were 65.3 million hires, an increase from 2016. Total separations (the sum of quits, layoffs and discharges, and other separations) rose in 2017 to 63.0 million. Quits rose for the eighth consecutive year reaching 38.2 million in 2017 and comprised 61 percent of total separations. Layoffs and discharges edged up in 2017 to 20.7 million and comprised 33 percent of total separations. Other separations declined in 2017 to 4.2 million and comprised 7 percent of total separations.

The annual hires for 2017 was 44.5 percent of the annual average CES employment level. This rate has been trending upwards since 2009. The annual total separations rate for 2017 was 43.0 percent. The annual rates for the components of total separations were 26.0 percent for quits, 14.1 percent for layoffs and discharges, and 2.8 percent for other separations.

Bureau of Labor Statistics, “Job Openings and Labor Turnover Survey. Jan 2018“, 16 Mar 2018 (10:00 EDT) More

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

Press Release Extract [ser_uom]
Index Mar 2018 Feb 2018 Mar 2017 M-M% Y-Y%
Index of Consumer Sentiment 102.0 99.7 96.9 +2.3% +5.3%
Current Economic Conditions 122.8 114.9 113.2 +6.9% +8.5%
Index of Consumer Expectations 88.6 90.0 86.5 -1.6% +2.4%

Surveys of Consumers chief economist, Richard Curtin

Consumer sentiment rose in early March to its highest level since 2004 due to a new all-time record favourable assessment of current economic conditions. All of the gain in the Sentiment Index was among households with incomes in the bottom third (+15.7), while the economic assessments of those with incomes in the top third posted a significant monthly decline (-7.3). The decline among upper income consumers was focused on the outlook for the economy and their personal finances. Consumers continued to adjust their expectations in reaction to new economic policies.

In early March, favourable mentions of the tax reform legislation were offset by unfavourable references to the tariffs on steel and aluminium – each was spontaneously cited by one-in-five consumers. Importantly, near term inflation expectations jumped to their highest level in several years, and interest rates were expected to increase by the largest proportion since 2004. These trends have prompted consumers to more favourably cite buying as well as borrowing in advance of those expected increases.

While income gains are still anticipated, the March survey found that the size of the expected income increase returned to the lows recorded in the past year. Among the top-third income households, income expectations fell more and inflation expectations rose more; as these households account for more than half of all consumption expenditures, the data suggest that the relative lull in consumption in the 1st quarter may persist for another quarter.

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

flag_usa US: New Residential Construction. Feb 2018

Press Release Extract [us_const]

Building Permits

Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,298,000. This is 5.7 percent (±0.7 percent) below the revised January rate of 1,377,000, but is 6.5 percent (±2.4 percent) above the February 2017 rate of 1,219,000. Single-family authorizations in February were at a rate of 872,000; this is 0.6 percent (±0.9 percent) below the revised January figure of 877,000. Authorizations of units in buildings with five units or more were at a rate of 385,000 in February.

us_newresconst_20180316

Housing Starts

Privately-owned housing starts in February were at a seasonally adjusted annual rate of 1,236,000. This is 7.0 percent (±16.7 percent) below the revised January estimate of 1,329,000 and is 4.0 percent (±12.2 percent) below the February 2017 rate of 1,288,000. Single-family housing starts in February were at a rate of 902,000; this is 2.9 percent (±10.8 percent) above the revised January figure of 877,000. The February rate for units in buildings with five units or more was 317,000.

Housing Completions

Privately-owned housing completions in February were at a seasonally adjusted annual rate of 1,319,000. This is 7.8 percent (±14.8 percent) above the revised January estimate of 1,224,000 and is 13.6 percent (±16.0 percent) above the February 2017 rate of 1,161,000. Single-family housing completions in February were at a rate of 895,000; this is 3.0 percent (±10.6 percent) above the revised January rate of 869,000. The February rate for units in buildings with five units or more was 418,000.

US Census Bureau, “New Residential Construction (Building Permits Housing Starts and Housing Completions). Feb 2018“, 16 Mar 2018 (08:30 EDT) 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