Mon 19 Mar 2018


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearU.S. stocks dropped on Monday, with the S&P and Nasdaq suffering their worst day in just over five weeks, as concerns over increased regulation for large tech companies was spearheaded by a plunge in Facebook shares.

  • The S&P 500 index fell 39.09 points, or 1.42%, to 2,712.92
  • The Dow Jones Industrial Average fell 335.6 points, or 1.35%, to 24,610.91
  • The Nasdaq Composite fell 137.74 points, or 1.84%, to 7,344.24
  • Declining issues outnumbered advancing ones on the NYSE by a 3.71-to-1 ratio; on Nasdaq, a 2.68-to-1 ratio favored decliners.
  • Volume on U.S. exchanges was 6.9 billion shares, compared to the 7.2 billion average over the last 20 trading days.

Facebook shares tumbled 6.8% as Chief Executive Mark Zuckerberg faced calls from both U.S. and European lawmakers to explain how a consultancy that worked on President Donald Trump’s election campaign gained access to data on 50 million Facebook users. The stock had its worst day since Mar 2014 and was down 10.8% from its closing record hit on 1 Feb 2018, to put the stock squarely in correction territory, a drop of 10% from its high.

Facebook’s plunge weighed heavily on the S&P technology sector, down 2.11%, as well as the Nasdaq, off more than 2%. Both indexes had their worst daily performance since 8 Feb 2018.

Other major companies with large tech businesses also dropped as recent concerns over regulation in the arena increased. Apple fell 1.53%, Alphabet fell 3% and Microsoft fell 1.8%.

“What’s chilling to an investor is whether Facebook will be able to get advertisers to pay for the rich data they pay for today,” said Kim Forrest, Senior Portfolio manager, Fort Pitt Capital, Pittsburgh. “Investors are not only concerned about losing advertising dollars. They’re also concerned these companies might come under relatively heavy regulation.”

The S&P once again fell below its 50-day moving average, seen as a technical support level, for the first time since early Mar 2018. The Nasdaq came about 2 points from its 50-day before paring losses.

Investors were also cautious ahead of a two-day monetary policy meeting at the U.S. Federal Reserve starting on Tuesday.

The market believes the Fed is set to raise interest rates on Wednesday as Thomson Reuters data shows traders expect a quarter-percentage-point hike to be a certainty. Investors are now grappling with the question of whether an improving economy could lead to more hikes than anticipated.

“Some of the more salient questions investors have is, has the tone of the Fed, which this time last year was certainly more skewed towards being dovish, has it now extended to becoming more hawkish?” said Eric Freedman, chief investment officer for U.S. Bank Wealth Management in Minneapolis.

Industrials fell 0.82% against the backdrop of worries about a global trade war, which are set to dominate a two-day G20 meeting in Argentina.

Selling was broad, with each of the 11 major S&P sectors in the red. The CBOE Volatility index touched a high of 21.87 in one of its sharpest gains since the market sell-off in Feb 2018.Reuters

U.S. stocks slumped as tech companies were roiled by reports of a Facebook Inc. data breach and Apple Inc. efforts to develop its own screens. That sapped Asian equities, while tech also led a retreat for the Stoxx Europe 600 Index. Facebook fell the most in almost four years. The tech rout added to pressure that had mounted over the weekend in Washington, as speculation grew that President Donald Trump could be preparing to fire Robert Mueller.

“If the Facebook news didn’t exist there would be all sorts of jitters here just given the Trump stuff,” said Michael Purves, Weeden & Co.’s chief global strategist. “If the regulatory clouds come on Facebook, certainly Google and Amazon will face increasing questions about their ability to generate outsized earnings growth if the regulators are going to be beating them.”

Meanwhile, large digital companies operating in the European Union, such as Alphabet Inc. or Twitter Inc., could face a 3% tax on their gross revenues based on where their users are located, according to a draft proposal by the European Commission.

Sterling rallied as the U.K. and EU reached a deal on the transition agreement for the period immediately after Brexit.

In a busy week, the biggest focus for global markets will be the first U.S. interest rate decision under new Federal Reserve Chairman Jerome Powell. It comes after he hinted to investors that he’s open to lifting the policy rate four times this year, rather than the three currently reflected in dot-plot forecasts. Some Wall Street banks such as Goldman Sachs Group Inc. expect the median projection to rise to four on Wednesday, while others say there will be no change following a round of mediocre data and policy makers’ stated intentions to move gradually.

“Today’s a combination of a little bit of nervousness ahead of Fed activity later in the week and then also tech getting hit,” said Craig Birk, an executive vice president of portfolio management at Personal Capital in San Francisco.

Trade tensions also remain in the spotlight as U.S. Treasury official David Malpass said he misspoke hours after claiming America was pulling out of decade-old formal economic talks with Beijing. Meanwhile, investors are assessing the implications of a new head at China’s central bank.

Elsewhere, the ruble weakened for a 6th day, the longest losing streak since Oct 2017, as Russian President Vladimir Putin won a landslide victory in a tightly controlled election.

West Texas oil edged lower and gold gained for the first time in 4 days.Bloomberg

Market indices

Market indices
^ Market indices today (mouseover for 12 month view) Chart: Yahoo Finance

Index Ticker Today Change 31 Dec 17 YTD
S&P 500 SPX (INX) 2712.92 -1.43% 2,673.61 +1.47%
DJIA INDU 24,610.91 -1.35% 24,719.22 -0.44%
NASDAQ IXIC 7,344.24 -1.85% 6,903.39 +6.38%

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 3.278 -1.95% 3.068 +6.86%
Valuation Rate USD/AUD 0.77675 +0.05% 0.78528 -1.09%
AUD-denominated Index AUD 4.222 -2.01% 3.909 +8.02%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,100.07 -3.03% $1,053.00 +4.47%
Alphabet C GOOG $1,099.82 -3.17% $1,045.65 +5.18%
Apple AAPL $175.30 -1.53% $169.23 +3.58%
Amazon AMZN $1,544.93 -1.71% $1,169.54 +32.09%
Ebay EBAY $42.09 -0.88% $37.76 +11.46%
Facebook FB $172.56 -6.77% $176.46 -2.22%
PayPal PYPL $80.30 -2.27% $73.61 +9.08%
Twitter TWTR $34.98 -1.69% $24.01 +45.68%
Visa V $123.21 -1.06% $114.02 +8.05%
VMware VMW $125.59 +0.89% $125.32 +0.21%

Selected Tech News Headlines

  • EU Tax: Tech companies with annual worldwide revenues above EUR 750 million and annual “taxable” revenues above EUR 50 million in the EU28 could be hit with a 3% turnover (revenue) tax. Reuters
  • AAPL: Apple is developing its own screens to replace Samsung screens Bloomberg
  • AMZN: Amazon tracks repeat shoppers for line-free Seattle store – and there are many Reuters
  • DBX: Dropbox IPO oversubscribed Reuters
  • FB: The New York Times and London’s Observer reported on Saturday that private information from more than 50 million Facebook users improperly ended up in the hands of data analytics firm Cambridge Analytica, and that the information had not been deleted despite Facebook demands dating back to 2015.Reuters
    • Cambridge Analytica Facebook data breach explained SBS
    • About Cambridge Analytica Reuters FactBox
    • How Cambridge Analytica obtained its data from Facebook: “Data was harvested by an application developed by British academic Aleksandr Kogan. Some 270,000 people downloaded the application and logged in with their Facebook credentials, according to Facebook. The application gathered their data and data about their friends, and then Kogan passed the data to Cambridge Analytica, according to both Cambridge Analytica and Facebook.Reuters FactBox
  • FX: USD/AUD

    USD

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

    The Bloomberg Dollar Spot Index (DXY) fell 0.2%, the first drop in 3 days.
    The EUR rose 0.4% to USD 1.2341.
    Britain’s GBP rose 0.7% to USD 1.403, the biggest increase in almost 8 weeks.
    Japan’s JPY was little changed at 106.11 per USD.
    The MSCI Emerging Markets Currency Index fell 0.2% on the largest decrease in more than a week.

    The yield on 10-year Treasuries were little changed at 2.85%, after rising as much as 3 basis points.
    Germany’s 10-year yield was little changed at 0.57%, after posting the largest climb in almost 2 weeks.
    Britain’s 10-year yield rose 2 basis points to 1.44%, after seeing the biggest surge in almost 11 weeks.
    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 15:46 EDT

    • NYMEX West Texas Intermediate (WTI): $62.18/barrel -0.26% Chart
    • ICE (London) Brent North Sea Crude: $66.18/barrel -0.05% Chart
    • NYMEX Natural gas futures: $2.66/MMBTU -1.19% Chart

    flag_europe EU: International Trade in Goods. Jan 2018

    Press Release Extract [eu_trade]

    Euro area

    The first estimate for euro area (EA19) exports of goods to the rest of the world in January 2018 was €178.6 billion, an increase of 9.1% compared with January 2017 (€163.7 bn). Imports from the rest of the world stood at €175.4 bn, a rise of 6.3% compared with January 2017 (€165.0 bn). As a result, the euro area recorded a €3.3 bn surplus in trade in goods with the rest of the world in January 2018, compared with a deficit of €1.4 bn in January 2017. Intra-euro area trade rose to €159.8 bn in January 2018, up by 8.8% compared with January 2017.

    eu_trade_ea_20180319

    In 2017, euro area exports of goods to the rest of the world rose to €2 194.0 bn (an increase of 7.1% compared with 2016), while imports rose to €1 958.0 bn (an increase of 9.8% compared with 2016). As a result the euro area recorded a surplus of €236.0 bn, compared with +€265.3 bn in 2016. Intra-euro area trade rose to €1 844.1 bn in 2017, up by 7.6% compared with 2016.

    European Union

    The first estimate for extra-EU28 exports of goods in January 2018 was €150.5 billion, up by 6.5% compared with January 2017 (€141.3 bn). Imports from the rest of the world stood at €170.8 bn, up by 7.6% compared with January 2017 (€158.7 bn). As a result, the EU28 recorded a €20.3 bn deficit in trade in goods with the rest of the world in January 2018, compared with -€17.4 bn in January 2017. Intra-EU28 trade rose to €288.2 bn in January 2018, +9% compared with January 2017.

    eu_trade_ea_20180319

    In 2017, extra-EU28 exports of goods rose to €1 878.8 bn (an increase of 7.7% compared with 2016), while imports rose to €1 855.9 bn (an increase of 8.4% compared with 2016). As a result, the EU28 recorded a surplus of €22.9 bn, compared with +€32.1 bn in 2016. Intra-EU28 trade rose to €3 347.3 bn in 2017, +7.4% compared with 2016.

    Eurostat, “International Trade in Goods. Jan 2018“, 19 Mar 2018 More

    flag_usa US: Retail Trade. Q4/2017

    Press Release Extract [us_retail]

    U.S. Retail Trade Corporations Quarterly After-Tax Profits:

    • Fourth Quarter 2017: $28.2 billion
    • Third Quarter 2017 (Revised): $20.0 billion
    • Fourth Quarter 2016 (Revised): $28.1 billion

    After-Tax Profits and Sales, Fourth Quarter 2017 – Seasonally Adjusted

    Seasonally adjusted after-tax profits of U.S. retail corporations with assets of $50 million and over totalled $28.2 billion, up $8.2 (±0.2) billion from the $20.0 billion recorded in the third quarter of 2017, and up $0.1 (±0.1) billion from the $28.1 billion recorded in the fourth quarter of 2016.

    Seasonally adjusted sales for the quarter totalled $744.3 billion, up $11.1 (±6.3) billion from the $733.2 billion recorded in the third quarter of 2017, and up $30.8 (±2.2) billion from the $713.5 billion recorded in the fourth quarter of 2016.

    After-Tax Profits and Sales, Fourth Quarter 2017 – Not Seasonally Adjusted

    Fourth quarter 2017 after-tax profits of U.S. retail corporations with assets of $50 million and over totalled $31.0 billion, up $0.2 (±0.1) billion from the after-tax profits of $30.8 billion recorded in the fourth quarter of 2016, and up $12.3 (±0.2) billion from the after-tax profits of $18.7 billion recorded in the third quarter of 2017.

    Sales in the fourth quarter of 2017, were $782.9 billion, up $31.6 (±2.2) billion from the $751.3 billion recorded in the fourth quarter of 2016, and up $59.7 (±6.3) from the $723.1 billion recorded in the third quarter of 2017.

    US Census Bureau, “US Census Bureau, “Quarterly Financial Report – Large US Retail Trade Corporations. Q4/2017“, 19 Mar 2018 (10:00) More

    flag_usa US: Manufacturing Mining Wholesale Trade and Selected Service Industries. Q4/2017

    Press Release Extract [us_indus]

    After-Tax Profits and Sales, Fourth Quarter 2017 – Seasonally Adjusted

    • Fourth Quarter 2017: $117.6 billion
    • Third Quarter 2017 (Revised): $148.4 billion
    • Fourth Quarter 2016 (Revised): $135.0 billion

    Manufacturing Corporations

    U.S. manufacturing corporations’ seasonally adjusted after-tax profits in the fourth quarter of 2017 totalled $117.6 billion, down $30.8 (±1.1) billion from the after-tax profits of $148.4 billion recorded in the third quarter of 2017, and down $17.4 (±0.4) billion from the after-tax profits of $135.0 billion recorded in the fourth quarter of 2016.

    Seasonally adjusted sales for the quarter totalled $1,691.7 billion, up $60.6 (±17.7) billion from the $1,631.1 billion recorded in the third quarter of 2017, and up $103.6 (±6.1) billion from the $1,588.0 billion recorded in the fourth quarter of 2016.

    Nondurable Goods Manufacturers

    Nondurable goods manufacturers’ seasonally adjusted after-tax profits in the fourth quarter of 2017 totalled $79.6 billion, up $11.3 (±0.4) billion from the after-tax profits of $68.4 billion recorded in the third quarter of 2017, and up $12.3 (±0.3) billion from the after-tax profits of $67.3 billion recorded in the fourth quarter of 2016.

    Seasonally adjusted sales for the quarter totalled $819.7 billion, up $39.4 (±12.1) billion from the $780.3 billion recorded in the third quarter of 2017, and up $61.0 (±2.3) billion from the $758.7 billion recorded in the fourth quarter of 2016.

    Durable Goods Manufacturers

    Durable goods manufacturers’ seasonally adjusted after-tax profits in the fourth quarter of 2017 totalled $38.0 billion, down $42.1 (±0.7) billion from the after-tax profits of $80.1 billion recorded in the third quarter of 2017, and down $29.7 (±0.2) billion from the after-tax profits of $67.6 billion recorded in the fourth quarter of 2016.

    Seasonally adjusted sales for the quarter totalled $872.0 billion, up $21.2 (±8.6) billion from the $850.8 billion recorded in the third quarter of 2017, and up $42.7 (±4.2) billion from the $829.3 billion recorded in the fourth quarter of 2016.

    After-Tax Profits and Sales, Fourth Quarter 2017 – Not Seasonally Adjusted

    Manufacturing Corporations

    U.S. manufacturing corporations’ fourth quarter 2017 unadjusted after-tax profits totalled $108.7 billion, down $17.5 (±0.4) from the after-tax profits of $126.1 billion recorded in the fourth quarter of 2016, and down $51.5 (±1.1) billion from the after-tax profits of $160.2 billion recorded in the third quarter of 2017.

    Unadjusted sales for the fourth quarter of 2017 totalled $1,699.5 billion, up $103.8 (±6.1) billion from the $1,595.8 billion recorded in the fourth quarter of 2016, and up $55.0 (±17.7) from the $1,644.5 billion recorded in the third quarter 2017.

    Nondurable Goods Manufacturers

    Nondurable goods manufacturers’ fourth quarter 2017 unadjusted after-tax profits totalled $73.0 billion, up $12.3 (±0.3) billion from the after-tax profits of $60.8 billion recorded in the fourth quarter of 2016, but down $1.7 (±0.4) billion from third quarter 2017 after-tax profits of $74.8 billion.

    Unadjusted sales for the fourth quarter of 2017 totalled $816.0 billion, up $61.1 (±2.3) billion from the $754.9 billion recorded in the fourth quarter of 2016, and up $27.0 (±12.1) billion from third quarter 2017 sales of $789.0 billion.

    Durable Goods Manufacturers

    Durable goods manufacturers’ fourth quarter 2017 unadjusted after-tax profits totalled $35.7 billion, down $29.7 (±0.2) billion from the after-tax profits of $65.4 billion recorded in the fourth quarter of 2016, and down $49.8 (±0.7) billion from third quarter 2017 after-tax profits of $85.5 billion.

    Unadjusted sales for the fourth quarter of 2017 totalled $883.5 billion, up $42.7 (±4.2) billion from the $840.9 billion recorded in the fourth quarter of 2016, and up $28.0 (±8.6) from the $855.5 billion recorded in third quarter 2017.

    Mining Corporations

    Fourth quarter 2017 unadjusted after-tax profits for mining corporations with assets of $50 million and over totalled $8.1 billion, up $17.5 (±0.0) billion from the after-tax losses of $9.4 billion recorded in the fourth quarter of 2016, and up $10.0 (±0.1) billion from the after-tax losses of $1.9 billion recorded in the third quarter of 2017.

    Unadjusted sales for the fourth quarter of 2017 totalled $70.4 billion, up $13.0 (±0.8) billion from the $57.4 billion recorded in the fourth quarter of 2016, and up $7.2 (±1.4) billion from third quarter 2017 sales of $63.2 billion.

    Wholesale Trade Corporations

    Fourth quarter 2017 unadjusted after-tax profits for wholesale trade corporations with assets of $50 million and over totalled $14.6 billion, up $6.2 (±0.0) billion from the after-tax profits of $8.4 billion recorded in the fourth quarter of 2016, and up $3.1 (±0.3) billion from the after-tax profits of $11.5 billion recorded in the third quarter of 2017.

    Unadjusted sales for the fourth quarter of 2017 totalled $701.6 billion, up $48.2 (±1.8) billion from the $653.4 billion recorded in the fourth quarter of 2016, and up $22.4 (±10.6) billion from third quarter 2017 sales of $679.2 billion.

    Information Corporations

    Fourth quarter 2017 unadjusted after-tax profits for information corporations with assets of $50 million and over totalled $88.2 billion, up $53.2 (±0.2) billion from the after-tax profits of $34.9 billion recorded in the fourth quarter of 2016, and up $47.3 (±0.6) billion from the third quarter 2017 after-tax profits of $40.9 billion.

    Unadjusted sales for the fourth quarter of 2017 totalled $324.1 billion, up $16.5 (±0.8) billion from the $307.6 billion recorded in the fourth quarter 2016, and up $23.9 (±4.2) from third quarter 2017 sales of $300.1 billion.

    Professional and Technical Services Corporations (except Legal Services)

    Fourth quarter 2017 unadjusted after-tax profits for professional and technical services corporations (except legal services) with assets of $50 million and over totalled $6.2 billion, up $1.9 (±0.2) billion from the after- tax profits of $4.3 billion recorded in the fourth quarter of 2016, and up $1.9 (±0.7) from third quarter 2017 after-tax profits of $4.3 billion.

    Unadjusted sales for the fourth quarter of 2017 totalled $156.8 billion, up $10.9 (±1.9) billion from the $145.9 billion recorded in the fourth quarter 2016, and up $10.8 (±5.5) billion from third quarter 2017 sales of $146.0 billion.

    US Census Bureau, “Quarterly Financial Report: U.S. Manufacturing, Mining, Wholesale Trade, and Selected Service Industries, Fourth Quarter 2017“, 19 Mar 2018 (10:00) More

    flag_japan Japan update

    Trade Statistics (Provisional). Feb 2018

    Press Release Extract [jp_trade]

    “Value of Exports and Imports February 2018 (Provisional), Total (Census, not seasonally adjusted)

    February 2018 February 2017 Change
    Exports JPY 6,463.000 billion JPY 6,347.123 billion +1.8%
    Imports JPY 6,459.595 billion JPY 5,542.597 billion +16.5%
    Balance JPY 3.405 billion JPY 804.526 billion -99.6%

    Other tables:

    • Value of Exports and Imports by Area (Country)
    • Exports by Principal Commodity
    • Imports by Principal Commodity
    • Exports by Principal Commodity by Area (Country): USA, EU, Asia, China, South Korea, ASEAN, Middle East, Russia
    • Imports by Principal Commodity by Area (Country): USA, EU, Asia, China, South Korea, ASEAN, Middle East, Russia
    • Indexes of Trade

    Ministry of Finance – Customs and Tariff Bureau, “Value of Exports and Imports February 2018 (Provisional)“, 19 Mar 2018 More

    Currency: USD/JPY

    JPY movements
    ^ JPY movements against the USD over the past month (mouseover for inverse) Chart: xe.com

    The Bank of Japan’s (BOJ) holdings of government debt rose to a record in Q4/2017 under its quantitative easing program, underlining concerns about the sustainability of monetary policy.

    The BOJ held a record JPY 449 trillion ($4.24 trillion) in government debt at the end of Dec 2017, up 6.8% from Dec 2016, central bank data showed on Monday.

    The BOJ held 41.1% of all government debt at the end of Dec 2017, also the highest on record. Insurance companies and pensions were the second-largest holders, accounting for 21.6% of all bonds outstanding.

    Overseas investors’ holdings of Japanese government debt rose to JPY 122 trillion at the end of Dec 2017, the highest amount on record.

    The BOJ has slowed the pace of government debt purchases since it switched its policy benchmark in Sep 2016 to targeting interest rates from the size of the monetary base.

    However, the overall size of the BOJ’s government debt holdings have continued to set record highs, which could fuel concerns that quantitative easing will damage liquidity in the bond market.

    Central bank data showed that assets held by Japanese households rose 3.9% in Q4/2017 from Q4/2016 to a record JPY 1,880 trillion due to gains in stocks and investment trusts.Reuters

    Stockmarket: Nikkei 225

    n225 movements
    ^ Nikkei 225 movements today [Chart: Yahoo 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
    ^ CSI 300 (Shanghai) movements today [Chart: Yahoo Finance]