Fri 23 Mar 2018


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearWall Street tumbled on Friday with more than 1,000 points knocked off the Dow in two days as investors, increasingly nervous about a potential U.S. trade war with China, shied away from risk ahead of the weekend and sought shelter from further losses.

  • the S&P 500 index fell 55.43 points, or 2.10%, to 2,588.26 after hitting an intraday low that was barely above its 200-day moving average of 2585.22
  • The Dow Jones Industrial Average fell 424.69 points, or 1.77%, to 23,533.2. The Dow was down 11.6% since its 26 Jan 2018 high, and hit its lowest close since confirming a correction in Feb 2018.
  • The Nasdaq Composite index fell 174.01 points, or 2.43%, to 6,992.67
  • For the week, the S&P 500 was down 5.95%, the Dow was down 5.67%, and the Nasdaq was down 6.54%, marking their biggest weekly percentage falls since Jan 2016
  • The Cboe Volatility Index .VIX, the most widely followed barometer of expected near-term volatility in the S&P 500, finished up 1.53 points at 24.87, its highest close since 13 Feb 2018.
  • Declining issues outnumbered advancing ones on the NYSE by a 3.96-to-1 ratio; on Nasdaq, a 3.72-to-1 ratio favored decliners.
  • The S&P 500 posted two new 52-week highs and 42 new lows; the Nasdaq Composite recorded 23 new highs and 93 new lows.
  • Volume on U.S. exchanges was 8.11 billion shares, above the 7.3 billion average for the last 20 trading days.

In a volatile session, the S&P 500 came within a hair of its 200-day moving average, a key technical level. The benchmark index also nudged closer to its Feb 2018 low, which marked a correction, ending 9.9% lower than its 26 Jan 2018 record.

“There is concern what the trade war could look like. Investors want to manage their risk. If it escalates rapidly, it could be a major headwind for the market,” said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York.

President Donald Trump’s plans for tariffs on up to $60 billion in Chinese goods moved the world’s two largest economies closer to a trade war as China declared plans to levy duties on up to $3 billion of U.S. imports including fruit and wine even as it urged the United States to “pull back from the brink.”

Bloomberg News cited China’s ambassador to the United States saying that the country is “looking at all options” in response to tariffs, which could include scaling back purchases of U.S. Treasuries.

The Nasdaq was weighed down by declines in momentum stocks such as Facebook, Amazon.com, Microsoft and Google’s parent Alphabet.

The semiconductor sector took a fall after Micron Technology’s quarterly report stoked fears about falling NAND prices. The Philadelphia Semiconductor index slumped 3.3%.

The S&P’s financial sector was the S&P’s biggest percentage loser, at 3%, after a volatile session in which it was whip-sawed by volatile Treasury yields.Reuters

The Dow Jones Industrial Average slumped to the lowest since November, led by losses Friday in companies as diverse as 3M Co. to Goldman Sachs Group Inc. The S&P 500 dropped to its least since the volatility-fueled meltdown in early February. Gold rallied and Treasury yields declined as investors sought safe havens.

Global markets were caught in a risk-off mode after China announced retaliation against President Donald Trump’s proposed tariffs announced Thursday. China’s ambassador to the U.S. wouldn’t rule out the possibility of the Asian nation scaling back purchases of Treasuries in response to the tariffs.

It’s been a miserable week for higher-risk markets globally, as a trade war edged closer, the tech sector was roiled by Facebook Inc.’s privacy scandal and data showed European growth sputtering. The tech heavy Nasdaq 100 dropped 7.3 percent this week, the most since 2015. Traders had already been bracing for the possibility of slowing expansion as the Federal Reserve reiterated its commitment to further interest-rate increases after Wednesday’s hike.

“There is a tug of war between Fed tightening, fiscal stimulus, strong earning but slowing sales and now tariffs and potential trade wars,” said Jason Browne, chief investment strategist at FundX Investment Group.

Adding to the image of the ascendance of the “America first” faction, Trump replaced White House National Security Adviser H.R. McMaster with John Bolton, a controversial foreign-affairs specialist whom the U.S. Senate declined to confirm as President George W. Bush’s ambassador to the United Nations.Bloomberg

Market indices

Market indices
^ S&P500 Index today (mouseover for 12 month view) [Chart: Google Finance]

Index Ticker Today Change 31 Dec 17 YTD
S&P 500 SPX (INX) 2,588.26 -2.10% 2,673.61 -3.20%
DJIA INDU 23,533.20 -1.78% 24,719.22 -4.80%
NASDAQ IXIC 6,992.67 -2.43% 6,903.39 +1.29%

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 3.095 -2.46% 3.068 +0.89%
Valuation Rate USD/AUD 0.77560 -0.02% 0.78528 -1.24%
AUD-denominated Index AUD 3.992 -2.45% 3.909 +2.13%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,026.55 -2.53% $1,053.00 -2.52%
Alphabet C GOOG $1,021.57 -2.63% $1,045.65 -2.31%
Apple AAPL $164.94 -2.32% $169.23 -2.54%
Amazon AMZN $1,495.56 -3.2% $1,169.54 +27.87%
Ebay EBAY $39.71 -2.15% $37.76 +5.16%
Facebook FB $159.39 -3.34% $176.46 -9.68%
PayPal PYPL $76.44 -2.70% $73.61 +3.84%
Twitter TWTR $31.03 -0.55% $24.01 +29.23%
Visa V $117.00 -2.5% $114.02 +2.61%
VMware VMW $122.06 -0.04% $125.32 -2.61%

Selected Tech News Headlines

  • Dropbox IPO and Day 1 Trading: Dropbox Inc’s (DBX) shares closed at $28.42, up more than 35% in their first day of trading on Friday, as investors rushed to buy into the biggest technology initial public offering in more than a year even as the wider sector languished. The stock opened at $29 on the Nasdaq and soared as much as 50% to a high of $31.60 in early trading. At the stock’s opening price, Dropbox had a market valuation of $12.67 billion, well above the $10 billion valuation it had in its last private funding round. Its IPO priced at $21 per share late on Thursday, $1 above the projected range of $18 to $20, and was several times oversubscribed. Reuters
  • Spotify Listing: Streaming music leader Spotify Technology SA on Tuesday filed for a direct listing of its shares. In an amended filing with the U.S. Securities and Exchange Commission, the company expects shareholders to sell up to 55.7 million ordinary shares. Spotify’s direct listing will let investors and employees sell shares without the company raising new capital or hiring a Wall Street bank or broker to underwrite the offering. Reuters
  • London office of Cambridge Analytica raided by UK investigators: Investigators from Britain’s data watchdog on Friday searched the London offices of Cambridge Analytica, the data analytics firm at the centre of a storm over allegations it improperly harvested Facebook data to target American voters. About 20 officials, wearing black jackets with “ICO Enforcement” on them, arrived at the firm’s central London offices soon after a High Court judge granted a search warrant sought by the Information Commissioner’s Office (ICO). Reuters On-site police search completed Guardian (UK) And then there’s Canafian firm Aggregate IQ (AIQ) Guardian (UK)

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 0.3%.
The EUR rose 0.5% to USD 1.2362, the strongest in more than a week.
Britain’s GBP rose 0.3% to USD 1.4137.
Japan’s JPY rose 0.5% to 104.78 per USD, the strongest in more than 16 months.

The yield on 10-year Treasuries fell 1 basis point to 2.82%.
Germany’s 10-year yield was little changed at 0.53%.
Britain’s 10-year yield gained 1 basis points to 1.44%.
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): $65.92/barrel +2.52% Chart
  • ICE (London) Brent North Sea Crude: $70.50/barrel +2.31% Chart
  • NYMEX Natural gas futures: $2.59/MMBTU -0.99% Chart

flag_europe EU: Euro Area Monthly Balance of Payments. Jan 2018

Press Release Extract [eu_bop]

In January 2018 the current account of the euro area recorded a surplus of €37.6 billion.

In the financial account, combined direct and portfolio investment recorded net acquisitions of assets of €122 billion and net incurrences of liabilities of €80 billion.

eu_bop_20180323

Current account

The current account of the euro area recorded a surplus of €37.6 billion in January 2018. This reflected surpluses for goods (€27.1 billion), primary income (€10.7 billion) and services (€9.6 billion), which were partly offset by a deficit for secondary income (€9.8 billion).

The 12-month cumulated current account for the period ending in January 2018 recorded a surplus of €406.1 billion (3.6% of euro area GDP), which compares with €356.5 billion (3.3% of euro area GDP) in the 12 months to January 2017. This development was due to increases in the surpluses for services (from €36.6 billion to €87.5 billion) and primary income (from €99.4 billion to €113.3 billion). These were partly offset by a decrease in the surplus for goods (from €365.8 billion to €351.9 billion) and, to a lesser extent, an increase in the deficit for secondary income (from €145.2 billion to €146.5 billion).

Financial account

In January 2018 combined direct and portfolio investment recorded net acquisitions of assets of €122 billion and net incurrences of liabilities of €80 billion.

Euro area residents recorded net acquisitions of €35 billion of direct investment assets as a result of net investments in equity (€29 billion) and debt instruments (€6 billion). Direct investment liabilities increased by €8 billion as a result of net investments in euro area debt instruments (€59 billion) by non-euro area residents, which were partly offset by net withdrawals of euro area equity by non-euro area residents (€51 billion).

As regards portfolio investment assets, euro area residents made net purchases of foreign securities amounting to €88 billion. The net acquisitions of equity (€51 billion) and long-term debt securities (€40 billion) were only marginally offset by net sales/amortisations of short-term debt securities (€4 billion). Portfolio investment liabilities increased by €73 billion as a result of non-euro area residents’ net purchases of euro area long-term debt securities (€41 billion) and short-term debt securities (€18 billion), as well as equity (€14 billion).

The euro area net financial derivatives account (assets minus liabilities) was close to balance.

Other investment recorded net acquisitions of assets amounting to €182 billion and net incurrences of liabilities of €217 billion. The net increase in assets was mainly due to MFIs (excluding the Eurosystem) (€156 billion) and, to a lesser extent, to other sectors (€36 billion). These were partly offset by decreases in the net assets of the Eurosystem (€8 billion) and general government (€2 billion). The net increase in liabilities was mainly attributable to MFIs (excluding the Eurosystem) (€290 billion) and, to a lesser extent, to other sectors (€48 billion). These were partly offset by decreases in the liabilities of the Eurosystem (€115 billion) and, to a lesser extent, of general government (€6 billion).

In the 12 months to January 2018, combined direct and portfolio investment recorded net acquisitions of assets of €733 billion and net incurrences of liabilities of €310 billion, compared with €863 billion and €257 billion respectively in the 12 months to January 2017.

In direct investment, there was a decrease in the net investments of both euro area residents abroad and non-residents in the euro area. The net acquisitions of equity by euro area residents dropped from €430 billion to €55 billion and the net investments of non-euro area residents shifted from a net investment of €208 billion to a net disinvestment of €115 billion.

Concerning portfolio investment, the net purchases of foreign equity by euro area residents increased from €47 billion to €207 billion. On the liability side, the net purchases of euro area equity by non-euro area residents increased from €159 billion to €438 billion.

According to the monetary presentation of the balance of payments, the net external assets of euro area monetary financial institutions (MFIs) decreased by €98 billion in the 12 months to January 2018, compared with a decrease of €218 billion in the 12 months to January 2017. This was mainly due to developments in portfolio investment.

In January 2018 the Eurosystem’s stock of reserve assets decreased to €663.1 billion from €669.7 billion in the previous month. This reduction (€6.6 billion) was mainly due to negative exchange rate changes (€6.8 billion) and price changes (€1.9 billion), which were partly offset by net acquisitions of assets (€2.3 billion).

European Central Bank, “Euro area monthly balance of payments (Jan 2018)“, 23 Mar 2018 More

flag_usa US: Funding Bill Passed – Shutdown Avoided

U.S. President Donald Trump signed Congress’ newly passed $1.3 trillion spending bill on Friday, ending suspense over a surprising threat he made hours earlier to veto the budget and shut down the federal government.

In the latest episode of the Republican president throwing his White House, Congress and the federal government off balance, Trump had threatened in an early morning tweet to kill the government funding deal.

Initially, it had been a foregone conclusion that Trump would sign the ahead of a midnight deadline to keep the government running.

Trump used the threat to draw attention to his displeasure about immigration issues, although he said the bill would boost funding to the military, one of his top priorities.

“There are a lot of things I’m unhappy about in this bill,” he told reporters, patting the more than 2,000 pages of the bill stacked on a purple box beside him in the Diplomatic Reception Room of the White House. “I will never sign another bill like this again,” he said. “Nobody read it. It’s only hours old.”

The tweeted veto threat had caught Trump’s own aides by surprise, as well as lawmakers in the Republican-dominated Senate and House of Representatives, who had already left Washington for a scheduled two-week spring recess. Trump himself was scheduled on Friday to fly to Florida for a weekend at his private resort.

It was unclear how seriously Republican leaders took Trump’s shutdown threat and neither Speaker Paul Ryan nor Senate Leader Mitch McConnell commented publicly on it.

Trump has been frustrated that Congress has not turned over funding to make good on his campaign promise to build a wall along the U.S.-Mexico border. The bill includes $1.6 billion for six month’s of work on the project but he had sought $25 billion for it.

Trump also has been at odds with Democrats in Congress over the fate of Dreamer immigrants – those brought to the United States illegally when they were children.

Trump canceled the Deferred Action for Childhood Arrivals (DACA) program that gives work permits to the Dreamers and protects them from deportation. The decision is currently tied up in court cases.Reuters

flag_europe US: Durable Goods – Manufacturers Shipments Inventories and Orders. Feb 2018

Press Release Extract [us_dur]

New Orders

New orders for manufactured durable goods in February increased $7.4 billion or 3.1 percent to $247.7 billion, the U.S. Census Bureau announced today. This increase, up three of the last four months, followed a 3.5 percent January decrease. Excluding transportation, new orders increased 1.2 percent. Excluding defense, new orders increased 2.5 percent. Transportation equipment, also up three of the last four months, led the increase, $5.5 billion or 7.1 percent to $83.5 billion.

us_durg_20180323

Shipments

Shipments of manufactured durable goods in February, up nine of the last ten months, increased $2.2 billion or 0.9 percent to $249.7 billion. This followed a 0.5 percent January increase. Machinery, up six of the last seven months, led the increase, $0.6 billion or 1.8 percent to $33.4 billion.

Unfilled Orders

Unfilled orders for manufactured durable goods in February, up five of the last six months, increased $2.3 billion or 0.2 percent to $1,143.3 billion. This followed a 0.3 percent January decrease. Transportation equipment, up two of the last three months, led the increase, $1.4 billion or 0.2 percent to $773.2 billion.

US Census Bureau, “Advance Report on Durable Goods – Manufacturers Shipments Inventories and Orders. Feb 2018“, 23 Mar 2018 (08:30) More

flag_usa US: New Residential Sales. Feb 2018

Press Release Extract [us_newres]

New Home Sales

Sales of new single-family houses in February 2018 were at a seasonally adjusted annual rate of 618,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6 percent (±13.3 percent) below the revised January rate of 622,000, but is 0.5 percent (±16.6 percent) above the February 2017 estimate of 615,000.

us_newressales_20180323

Sales Price

The median sales price of new houses sold in February 2018 was $326,800. The average sales price was $376,700.

For Sale Inventory and Months’ Supply

The seasonally-adjusted estimate of new houses for sale at the end of February was 305,000. This represents a supply of 5.9 months at the current sales rate.

U.S. Census Bureau and the U.S. Department of Housing and Urban Development, “Monthly New Residential Sales. Feb 2018“, 23 Mar 2018 (10:00) More

flag_japan Japan update

Currency: USD/JPY

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

Stockmarket: Nikkei 225

n225 movements
^ Nikkei 225 movements today [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
^ CSI 300 movements today [Chart: Google Finance]