Mon 30 Apr 2018 (EOM)

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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearWall Street fell on Monday as healthcare stocks slid and rising oil prices and a looming deadline for exemptions to U.S. steel and aluminium tariffs weighed on investor sentiment.

  • The S&P 500 index fell 21.83 points, or 0.82%, to 2,648.08
  • The Dow Jones Industrial Average fell 147.49 points, or 0.61%, to 24,163.7
  • The Nasdaq Composite index fell 53.53 points, or 0.75%, to 7,066.27.
  • For the month of Apr 2018, the S&P 500 rose 0.27%, the Dow rose 0.25% and the Nasdaq rose 0.04%.
  • Declining issues outnumbered advancing ones on the NYSE by a 1.74-to-1 ratio; on Nasdaq, a 1.99-to-1 ratio favored decliners.
  • The S&P 500 posted 22 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 55 new highs and 46 new lows.
  • Volume on U.S. exchanges was 6.81 billion shares, compared to the 6.57 billion average over the last 20 trading days.

The healthcare sector which dropped 1.6%, weighed most heavily on the S&P 500, as shares of Allergan plc and Celgene Corp led the sector’s slide.

Some investors suggested that on balance, a strong earnings season has not been enough for U.S. stocks to break out of their recent trading range.

“The earnings are priced in,” said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas. “There’s not a whole lot of reason to buy. We’re stuck in the mud right now.”

Oil prices rallied after Israeli Prime Minister Benjamin Netanyahu said Iran had lied about not pursuing nuclear weapons after signing a 2015 deal with global powers.

Even as companies’ quarterly results have come in strong, their earnings calls have raised concerns that rising commodity prices may pinch profit margins in the future.

The possibility that temporary exemptions on steel and aluminium tariffs might expire for several U.S. allies also weighed on U.S. stocks. Without an extension from U.S. President Donald Trump, the exemptions will expire on Tuesday.

“That might be the most negative (news event) this week. It’s not going to be viewed well by the market,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

Arconic Inc shares fell 20.6% after the aluminium products maker slashed its 2018 forecasts.

Earlier in Monday’s session, U.S. stocks were helped by data on income and spending that kept broader inflation worries in check. U.S. personal income rose 0.3% in Mar 2018, compared with expectations of 0.4%. On the consumption side, personal spending growth in Feb 2018 was revised lower to 0.3%, instead of the previously reported 0.4%.

McDonald’s Corp shares rose 5.8% after the world’s biggest fast-food chain by revenue topped analysts’ forecasts for profit and sales.

Shares of Allergan fell 5.2% after the company’s chief executive said he was opposed to fundamental changes to the drug company’s business strategy.

Celgene shares fell 4.5%. Morgan Stanley said it expects a delay of up to 3 years for Celgene’s key multiple sclerosis drug, ozanimod.

Shares of T-Mobile US Inc and Sprint Corp sank on worries that the two companies’ $26 billion merger would face regulatory challenges. Sprint shares fell 13.7%, and T-Mobile shares fell 6.2%.Reuters

A week full of earnings reports and economic data started on a down note, with U.S. stock benchmarks pulled lower by technology and industrial shares. The dollar had its best month since November 2016 while the pound slipped as U.K. Prime Minister Theresa May lost a key ally.

The S&P 500 Index finished Monday at session lows, led downward by stocks including Boeing Co. and Microsoft Corp., while the Nasdaq 100 also sank beneath the weight of broad-based tech declines, including Celgene Corp. Apple Inc., which reports earnings Tuesday, was among the bright spots, as was McDonald’s Corp., which had its biggest gain since October 2015 after reporting solid results.

“People don’t necessarily have conviction at the moment on their holdings. Every day, there’s sort of a new sector that’s the sector leading the way. Last year, you knew it was going to be technology or financials, primarily the FANG stocks. Now it’s, ‘Oh no, this. Oh no, this.”’,” Joe “JJ” Kinahan, the chief market strategist at TD Ameritrade, said by phone.

Some of the inertia in equities may be pinned on recently announced big-ticket takeovers. T-Mobile US Inc. sank after unveiling plans to acquire Sprint Corp. for $26.5 billion in stock. Sprint fell on concern the deal will be blocked on antitrust grounds. Verizon Communications Inc. dropped, too. Marathon Petroleum Corp., which intends to buy rival oil refiner Andeavor for more than $20 billion, also declined.Bloomberg

Market indices

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

^ S&P500 Index during April 2018 [Chart: Google Finance]

Index Ticker Today Change 31 Dec 17 YTD
S&P 500 SPX (INX) 2,648.05 -0.82% 2,673.61 -0.96%
DJIA INDU 24,163.15 -0.61% 24,719.22 -2.25%
NASDAQ IXIC 7,066.27 -0.76% 6,903.39 +2.35%

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 3.139 +0.90% 3.068 +2.34%
Valuation Rate USD/AUD 0.75777 -0.69% 0.78528 -3.51%
AUD-denominated Index AUD 4.144 +1.58% 3.909 +6.01%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,018.58 -1.25% $1,053.00 -3.27%
Alphabet C GOOG $1,017.33 -1.24% $1,045.65 -2.71%
Apple AAPL $165.26 +1.81% $169.23 -2.35%
Amazon AMZN $1,566.13 -0.42% $1,169.54 +33.9%
Ebay EBAY $37.88 -0.92% $37.76 +0.31%
Facebook FB $172.00 -0.92% $176.46 -2.53%
PayPal PYPL $74.61 +0.64% $73.61 +1.35%
Twitter TWTR $30.31 +4.51% $24.01 +26.23%
Visa V $126.88 +0.69% $114.02 +11.27%
VMware VMW $133.26 +0.15% $125.32 +6.33%

Selected Tech News Headlines

  • EU digital tax on corporate turnover faces uphill road: “A European Commission plan to tax the digital turnover of large companies drew scepticism on Saturday from the global rule-setting body on tax matters and some EU states, which called instead for an international solution. The criticism came at the first meeting of EU ministers to discuss the plan, which was presented by the Commission last month and entails a 3% levy on the digital revenues of large multinational corporations such as Google, Facebook and Amazon. Big Web companies are accused by the Commission and some EU states of paying too little tax in Europe, exploiting an outdated system that has allowed them to shift profits to low-tax countries. Ministers from smaller nations, including Luxembourg and Malta, opposed the plan at a ministerial meeting in the Bulgarian capital, Sofia, arguing that an overhaul of digital taxation should be done globally and involve a long-term solution. German Finance Minister Olaf Scholz, who took office last month, avoided taking a clear line on the issue, in what could be seen as a partial shift from Berlin’s initial open support for a turnover tax. European officials said Berlin fears several German companies could be hit by the tax, and that international partners may respond with retaliatory tax measures that could damage German exporters. Some 200 companies would fall within the scope of the new tax, European officials said, estimating additional annual revenues of about EUR 5 billion (USD 6 billion) at EU level.” Reuters

Currencies: USD/AUD


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

The Bloomberg Dollar Spot Index (DXY) rose 0.3% to the highest in more than 15 weeks.
The EUR fell 0.5% to USD 1.2075, the weakest in more than 15 weeks.
Britain’s GBP fell 0.1% to USD 1.3767, the weakest in 2 months.
Japan;s JPY fell 0.3% to 109.32 per USD.

The yield on 10-year Treasuries fell 1 basis point to 2.95%, the lowest in more than a week.
Germany’s 10-year yield fell 1 basis point to 0.56%.
Britain’s 10-year yield decreased 3 basis points to 1.4185, its 5th straight decline.


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

AUD/USD – Apr 2018

AUD movements
^ AUD movements against the USD this month (mouseover for USD/AUD view) Chart:

Oil and Gas Futures

Europe’s oil refineries are increasingly missing out on Russian crude as the world’s biggest energy producer directs more and more barrels by pipeline to China. Russia will ship an average of 19% less crude through its main ports on the Baltic and Black Seas in the first five months of 2018 compared with a year earlier, according to loading plans obtained by Bloomberg. Meanwhile piped flows to China soared 43% in the first three months, the most recent data from state operator Transneft PJSC show.

The shift is likely to leave Europe’s refineries looking replacement for crudes, according to Alan Gelder, vice president for refining, chemicals and oil markets at Wood Mackenzie Ltd. in London. The continent imports more crude from Russia than any other nation, figures from ITC Trade Map show. The replacement crude is likely to come from Middle East cargoes that would previously have gone to Asia as well as U.S. supply.

“It’s almost like a crude shuffling,” Gelder said. “The Middle East will have less medium-sour crudes going to Asia because of the growth in Russian volumes, so then they would push those barrels into Europe.”

For the time being, the cuts to Russian crude flows aren’t showing up in prices — quite the opposite — thanks to maintenance work at refineries in Europe that turn the oil into fuels. Russia’s Urals crude has been trading near 4-year lows in Europe thanks to that maintenance, as well as an increase in crude flows from the U.S.

However, the lost Russian cargoes are being felt in tanker markets, which had already been beleaguered by an oversupply of ships and OPEC supply cuts that reduced the amount of oil transported. Freight costs to move Russian supplies from its key Black Sea port of Novorossiysk into the Mediterranean Sea averaged less than $1/barrel so far in 2018, putting them on course for the weakest annual average since at least 2009, data compiled by Bloomberg show.Bloomberg

Futures prices

Prices are as at 15:48 EDT

  • NYMEX West Texas Intermediate (WTI): $68.47/barrel +0.54% Chart
  • ICE (London) Brent North Sea Crude: $75.17/barrel +0.71% Chart
  • NYMEX Natural gas futures: $2.76/MMBTU -0.29% Chart

flag_usa US: Personal Income and Outlays. Mar 2018

Press Release Extract [us_pce]

Personal income increased $47.8 billion (0.3 percent) in March according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $39.8 billion (0.3 percent) and personal consumption expenditures (PCE) increased $61.7 billion (0.4 percent).

Real DPI increased 0.2 percent in March and Real PCE increased 0.4 percent. The PCE price index increased less than 0.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

The increase in personal income in March primarily reflected increases in wages and salaries, social security benefits, and dividend income.

The $50.0 billion increase in real PCE in March reflected an increase of $24.2 billion in spending for goods and a $26.8 billion increase in spending for services. Within goods, purchases of recreational goods and vehicles was the leading contributor to the increase. Within services, the largest contributor to the increase was spending for household electricity and gas.

Personal outlays increased $62.3 billion in March. Personal saving was $460.6 billion in March and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.1 percent.

Bureau of Economic Analysis, “Personal Income and Outlays. Mar 2018“, 30 Apr 2018 (08:30) More

Press Comment: Bloomberg

U.S. consumer spending picked up in Mar 2018 while the Federal Reserve’s preferred inflation gauge hit the central bank’s 2% target for the first time in a year, reinforcing the outlook for further interest-rate hikes.

Purchases rose 0.4% during Mar 2018, matching estimates, after being little changed in Feb 2018, Commerce Department figures showed Monday. The price gauge linked to consumption rose 2% from a year earlier after 1.7% in Feb 2018; excluding food and energy, which officials see as a better gauge of underlying trends, it was up 1.9%.

The rise in consumer spending, which accounts for 70% of the economy, gives the economy some momentum at the end of an otherwise weak quarter, and provide some support for forecasts that consumption will accelerate this quarter as tax cuts and a gradual pickup in wages filter into Americans’ bank accounts and sentiment. At the same time, the income figures were slightly below forecasts, reflecting the weakest gain in wages and salaries since Oct 2017.

Even with the Fed’s preferred price measure hitting its target, central bankers are likely to react with restraint and stick to their plan for gradual interest-rate hikes, though the trend could nudge them toward four increases this year. Policy makers are expected to leave borrowing costs unchanged at their two-day meeting concluding Wednesday, then raise rates in Jun 2018 for the second time this year.

Incomes rose 0.3% during Mar 2018, the same as Feb 2018 and less than the projected 0.4% gain; adjusted for taxes and inflation, disposable income was up 0.2% following a 0.1% rise. Wages and salaries rose 0.2%, the smallest gain since Oct 2017, after a 0.4% increase in Feb 2018.

The data in Monday’s report were largely telegraphed in last week’s figures on GDP in Q1/2018, which showed consumers pulled back on their spending after a robust end to 2017.

The tax-cut legislation signed in Dec 2018, and one-time bonuses announced by several companies in its wake, are helping to supplement workers’ pocketbooks. Wages gave a hint of accelerating last week in Labor Department data on the employment cost index, while monthly data due this Friday are projected to show hiring rebounded in Apr 2018.

GDP in Q1/2018 grew at a 2.3% annualized rate, faster than the forecast for a reading of 2% but weaker than the 2.9% in Q4/2017. Consumer spending rose 1.1% following 4% in Q4/2017.Bloomberg

flag_usa US: Pending Home Sales Index. Mar 2018

Press Release Extract [us_nar]

Pending home sales inched higher for the second consecutive month in March, but unrelenting inventory constraints once again kept overall activity below year ago levels, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, inched up 0.4 percent to 107.6 in March from a downwardly revised 107.2 in February. Even with last month’s increase in activity, the index declined on an annualized basis (3.0 percent) for the third straight month.

Lawrence Yun, NAR chief economist, says contract activity is moving sideways and not breaking higher despite the strong job-creating economy. “Healthy economic conditions are creating considerable demand for purchasing a home, but not all buyers are able to sign contracts because of the lack of choices in inventory,” he said. “Steady price growth and the swift pace listings are coming off the market are proof that more supply is needed to fully satisfy demand. What continues to hold back sales is the fact that prospective buyers are increasingly having difficulty finding an affordable home to buy.”

Added Yun, “As anticipated, the multiple winter storms and unseasonably cold weather contributed to the decrease in contract signings in the Northeast.”

Looking ahead to the upcoming peak months for home sales, Yun believes that affordability will be a significant topic of discussion and driving factor of if overall activity can break out above year ago levels. Price appreciation in most markets continues to outpace incomes, and the recent uptick in mortgage rates to over a four-year high only adds to the budget constraints aspiring buyers are feeling this spring.

“Much of the country is enjoying a thriving job market, but buying a home is becoming more expensive,” said Yun. “That is why it is an absolute necessity for there to be a large increase in new and existing homes available for sale in coming months to moderate home price growth. Otherwise, sales will remain stuck in this holding pattern and a growing share of would-be buyers — especially first-time buyers — will be left on the sidelines.”

Yun forecasts for existing-home sales in 2018 to be around 5.61 million — up from 5.51 million in 2017. The national median existing-home price is expected to increase around 4.4 percent. In 2017, existing sales increased 1.1 percent and prices rose 5.8 percent.

The PHSI in the Northeast fell 5.6 percent to 90.6 in March, and is now 8.1 percent below a year ago. In the Midwest the index rose 2.4 percent to 101.3 in March, but is 6.0 percent lower than March 2017. Pending home sales in the South climbed 2.5 percent to an index of 128.6 in March, and are 0.3 percent higher than last March. The index in the West declined 1.1 percent in March to 94.7, and is 2.2 percent below a year ago.

National Association of Realtors, “Pending Home Sales Index. Mar 2018“, 30 Apr 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:

Stockmarket: Nikkei 225

n225 movements
^ Nikkei 225 movements over the past week [Chart: Google Finance]

flag_china China update

Manufacturing PMI. Apr 2018

Press Release Extract [cn_pmi]

…Waiting for Press Release…

National Bureau of Statistics of China, “Manufacturing PMI. Apr 2018“, 30 Apr 2018 More

Non-Manufacturing PMI. Apr 2018

Press Release Extract [cn_pmi]

…Waiting for Press Release…

National Bureau of Statistics of China, “Non-Manufacturing PMI. Apr 2018“, 30 Apr 2018 More

Currency: USD/CNY

CNY movements
^ CNY movements against the USD over the past month (mouseover for inverse) Chart:

Stockmarket: CSI300

CSI300 movements
^ CSI 300 movements over the past week [Chart: Google Finance]