Thu 5 Apr 2018


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearThe Dow and the S&P 500 posted gains for a third day in a row on Thursday, the longest streak in about a month, as investors’ worries of an escalating trade conflict between the United States and China eased and their focus on upcoming earnings grew.

  • The S&P 500 index rose 18.15 points, or 0.69%, to 2,662.84
  • The Dow Jones Industrial Average rose 240.92 points, or 0.99%, to 24,505.22
  • The Nasdaq Composite index rose 34.45 points, or 0.49%, to 7,076.55.
  • The CBOE Volatility Index (VIX), the most widely followed barometer of expected near-term volatility for the S&P 500, closed down 1.12 points at 18.94, its lowest close in more than two weeks.
  • Advancing issues outnumbered declining ones on the New York Stock Exchange by a ratio of 2.76 to 1, while it was the first day of more new 52-week highs on NYSE than 52-week lows since 13 Mar 2018.
  • About 6.4 billion shares changed hands on U.S. exchanges. That compares with the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

On Wednesday, the Dow dropped more than 500 points after China and the United States imposed tariffs on each other’s products, but closed up 230 points after President Donald Trump’s top economic adviser Larry Kudlow said the administration was involved in a “negotiation” with China rather than a trade war.

Facebook, Amazon, Apple, Netflix and Alphabet – collectively known as the “FANG” group – were up between 0.3% and about 3%.

Facebook Chief Executive Mark Zuckerberg said the company had not seen “any meaningful impact” on usage or ad sales since the data privacy scandal.

Amazon rose 2.9% after being repeatedly hammered this week by Trump’s attacks on the online retailer.

Boeing, among the hardest-hit stocks on Wednesday after China retaliated with $50 billion in tariffs on U.S. goods, rose 2.7%, giving the Dow its biggest boost, followed by Goldman Sachs, up 1.3%.

Optimism over first-quarter earnings increased, with JPMorgan Chase and other financials expected to kick off the reporting period next week.

“We’re three to six months away from seeing anything, and in three to six months, there can be a lot of negotiating. It wouldn’t take much to make this a less dramatic issue. We’re going into earnings season with a fair amount of optimism, largely driven by the new, lower tax rates and also driven by other bits of evidence the economy is doing very well,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

Earnings forecasts have increased sharply since Congress approved sweeping changes to the U.S. tax law late last year, with first-quarter earnings growth expected to be the highest in 7 years.Reuters

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) 2,662.84 +0.68% 2,673.61 -0.41%
DJIA INDU 24,505.22 +0.99% 24,719.22 -0.87%
NASDAQ IXIC 7,076.55 +0.48% 6,903.39 +2.50%

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 3.177 +1.06% 3.068 +3.59%
Valuation Rate USD/AUD 0.77291 -0.48% 0.78528 -1.58%
AUD-denominated Index AUD 4.113 +1.54% 3.909 +5.22%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,032.64 +0.28% $1,053.00 -1.94%
Alphabet C GOOG $1,027.81 +0.26% $1,045.65 -1.71%
Apple AAPL $172.80 +0.69% $169.23 +2.10%
Amazon AMZN $1,451.75 +2.91% $1,169.54 +24.12%
Ebay EBAY $40.03 +0.60% $37.76 +6.01%
Facebook FB $159.34 +2.73% $176.46 -9.71%
PayPal PYPL $76.95 +2.90% $73.61 +4.53%
Twitter TWTR $28.64 +1.38% $24.01 +19.28%
Visa V $121.19 +1.15% $114.02 +6.28%
VMware VMW $121.81 -0.02% $125.32 -2.81%

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 0.4% on the biggest advance in more than a week.
The EUR fell 0.4% to USD 1.2234, the weakest in more than 2 weeks.
Britain’s GBP fell 0.6% to USD 1.4000, the biggest fall in more than a week.
Japan’s JPY fell 0.6% to 107.47 per USD.

The yield on 10-year Treasuries rose 3 basis points to 2.83%, the highest in more than a week.
Germany’s 10-year yield rose 2 basis points to 0.52% on the largest surge in more than 2 weeks.
Britain’s 10-year yield rose 3 basis points to 1.401% on its 5th straight advance.
Bloomberg

AUD

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

Oil and Gas Futures

Oil prices rose on Thursday, helped by gains in U.S. equities markets and Saudi Arabia’s unexpected hike in crude prices, though crude’s advance was curbed by strength in the USD.

After a day of concern over tit-for-tat responses between the United States and China over tariffs on various products, market nerves were calmed as U.S. officials said the countries could negotiate.

“Oil prices are profiting from the general brightening of sentiment on the markets as signs emerge that the trade dispute is easing between the U.S. and China,” analysts at Commerzbank said in a note.

All 3 major U.S. stock indexes were higher on Thursday, after the United States said it could negotiate with China on trade issues.

Saudi Arabia’s announcement on Thursday that it would increase its official selling prices of May crude supported prices, said Phil Flynn, analyst at Price Futures Group in Chicago. “It’s kind of bullish that they feel like they can justify those higher prices and not lose market share,” he said.

The strength of the USD, however, was a headwind, analysts said. Bloomberg’s Dollar Spot Index (DXY) rose to its highest in more than one month. Because oil is dollar-priced, a stronger greenback makes purchases in other currencies more expensive, weighing down oil prices.

Market intelligence firm Genscape said inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, rose 2.5 million barrels for the week to 3 Apr 2018, according to traders who saw the data.

Wednesday’s weekly inventory figures showed that U.S. crude stocks unexpectedly declined by 4.6 million barrels in the most recent week.

The extent to which U.S. production, which hit a new high last week, counterbalance output cuts from the Organization of the Petroleum Exporting Countries will be critical, said Gene McGillian, manager of market research at Tradition Energy in Stamford.

The energy minister of OPEC member Qatar told Reuters that the organization and its allies should maintain supply cuts, which are set to run until the end of 2018.

Saudi Arabia has said they could be extended in some form into 2019.Reuters

Futures prices

Prices are as at 15:49 EDT

  • NYMEX West Texas Intermediate (WTI): $63.64/barrel +0.43% Chart
  • ICE (London) Brent North Sea Crude: $68.43/barrel +0.60% Chart
  • NYMEX Natural gas futures: $2.67/MMBTU -1.62% Chart

flag_australia AU: CBA Services PMI. Mar 2018

Press Release Extract [au_psi]

Key Findings:

  • Services PMI: 55.6, up from 54.2 in Feb 2018.
  • Composite PMI: 55.4, up from 54.3 in Feb 2018

Australian services activity expanded strongly and at the fastest pace in eight months during March. New orders grew markedly, leading to a further accumulation of backlogs of work. To accommodate for greater workloads, businesses recruited additional staff at the sharpest rate since September 2017. In turn, employment growth contributed to another month of rising costs, prompting selling charge hikes.

The headline figure derived from the survey is the Commonwealth Bank of Australia Services Business Activity Index, which is designed to provide timely indications of changes in business activity in the Australian service sector. The seasonally adjusted Business Activity Index increased to 55.6 in March, from 54.2 in February, signalling the sharpest rate of output growth in eight months.

Supporting the latest rise in service sector activity was a similarly-strong gain in new business. According to anecdotal evidence, demand from both new and existing clients was greater during March. The rate of new order growth was broadly in line with the seven-month high observed in the previous survey month.

Rising sales tested operating capacities, as evidenced by another increase in outstanding business. Backlogs of work have risen in each month since the survey began in May 2016. That said, the rate of accumulation eased to a four-month low in March and was slightly weaker than the series average.

In line with elevated demand, Australian service providers hired additional staff to cope with the additional workload. In fact, the rate of job creation accelerated to a six-month high, with some panellists expecting further improvements in new business inflows.

However, expanded employment boosted operating costs, according to panellists. Input prices rose sharply during March amid reports of increased wage bills. Furthermore, firms noted that strong input demand enabled suppliers to raise their prices. In turn, service providers increased output charges to share part of the greater cost burden with their clients.

Lastly, business sentiment remained strongly positive during March, with firms anticipating activity to benefit from a broader improvement in the economic climate. Almost two-thirds of survey participants forecast output growth over the coming 12 months.

Composite PMI

The Commonwealth Bank Composite Output Index is a GDP-weighted average of the Commonwealth Bank Manufacturing Output Index and the Commonwealth Bank Services Business Activity Index. It is designed to provide a timely indication of changes in business activity in the Australian private sector economy as a whole.

The seasonally adjusted Commonwealth Bank Composite Output Index increased to 55.4 in March from 54.3 in February, to indicate a strong rate of private sector activity growth. While output expanded at a faster pace in the service sector, production growth at manufacturers softened to a six-month low.

Comment

Commenting on the Commonwealth Bank Services and Composite PMI data, CBA’s Chief Economist, Michael Blythe, said:

“Australia’s pivotal services sector remained in great shape in the first quarter of 2018, continuing the momentum seen at the end of 2017. Business activity is strong, supported by a rapid expansion in new business, and expectations for the year ahead remain elevated. Strong activity is flowing through to labour demand. Panellists are also indicating that strong labour demand is boosting salaries, and that other input costs are also rising. The survey results indicate that service firms are taking advantage of robust demand conditions to pass on this increased cost burden.”

IHS Markit, “Commonwealth Bank Services PMI“, 5 Apr 2018 More

flag_australia AU: International Trade in Goods and Services. Feb 2018

ship_roro

Press Release Extract [au_trade]

BALANCE ON GOODS AND SERVICES

In trend terms, the balance on goods and services was a surplus of $262m in February 2018, an increase of $62m on the surplus in January 2018.
In seasonally adjusted terms, the balance on goods and services was a surplus of $825m in February 2018, a decrease of $127m on the surplus in January 2018.

Dec 2017 Jan 2018 Feb 2018 Change
EXPORTS of goods and services (Credits)
Trend estimates $32,978m $33,440m $33,863m +1.26%
Seasonally adjusted $32,648m $34,227m $34,229m +0.01%
IMPORTS of goods and services (Debits)
Trend estimates $32,801m $33,240m $33,601m +1.09%
Seasonally adjusted $34,093m $33,275m $33,405m +0.39%
BALANCE on goods and services
Trend estimates +$177m +$200m +$262m +31.00%
Seasonally adjusted -$1,445m +$952m +$825m -13.34%

CREDITS (EXPORTS OF GOODS AND SERVICES)

Between January and February 2018, the trend estimate of goods and services credits rose $423m (1%) to $33,863m.

In seasonally adjusted terms, goods and services credits rose $2m to $34,229m. Rural goods rose $552m (17%). Non-monetary gold fell $505m (23%) and non-rural goods fell $90m. Net exports of goods under merchanting remained steady at $7m. Services credits rose $45m (1%).

Exports of Goods

Rural Goods

In trend terms, exports of rural goods fell $42m (1%) to $3,621m.

In seasonally adjusted terms, exports of rural goods rose $552m (17%) to $3,888m.

The main components contributing to the rise in seasonally adjusted estimates were

  • other rural, up $496m (34%)
  • wool and sheepskins, up $76m (25%).

Partly offsetting these rises was cereal grains and cereal preparations, down $45m (8%).

Non-Rural Goods

In trend terms, exports of non-rural goods rose $417m (2%) to $21,216m.

In seasonally adjusted terms, exports of non-rural goods fell $90m to $21,418m.

The main components contributing to the fall in seasonally adjusted estimates were:

  • transport equipment, down $172m (36%)
  • other manufactures, down $127m (7%).

Partly offsetting these falls were:

  • metal ores and minerals, up $200m (3%)
  • other mineral fuels, up $90m (3%).

Net Exports of Goods Under Merchanting

In trend terms, net exports of goods under merchanting fell $3m (33%) to $6m.

In seasonally adjusted terms, net exports of goods under merchanting remained steady at $7m.

Non-Monetary Gold

In trend terms, exports of non-monetary gold rose $65m (4%) to $1,827m.

In original and seasonally adjusted terms, exports of non-monetary gold fell $505m (23%) to $1,693m.

Exports of Services

In trend terms, services credits fell $14m to $7,193m.

In seasonally adjusted terms, services credits rose $45m (1%) to $7,224m.

The main components contributing to the rise in seasonally adjusted estimates were:

  • travel, up $24m (1%)
  • other services, up $14m (1%).

In seasonally adjusted terms, tourism related services credits rose $27m (1%) to $4,844m.

In seasonally adjusted terms, total services credits contributed 21% of total goods and services exported.

DEBITS (IMPORTS OF GOODS AND SERVICES)

Between January and February 2018, the trend estimate of goods and services debits rose $361m (1%) to $33,601m.

In seasonally adjusted terms, goods and services debits rose $130m to $33,405m. Consumption goods rose $547m (7%), non-monetary gold rose $70m (17%) and capital goods rose $60m (1%). Intermediate and other merchandise goods fell $657m (6%). Services debits rose $110m (1%).

Imports of Goods

Consumption Goods

In trend terms, imports of consumption goods rose $98m (1%) to $8,842m.

In seasonally adjusted terms, imports of consumption goods rose $547m (7%) to $8,950m.

The main components contributing to the rise in seasonally adjusted estimates were:

  • non-industrial transport equipment, up $386m (20%)
  • textiles, clothing and footwear, up $83m (6%)
  • food and beverages, mainly for consumption, up $45m (4%).

Capital Goods

In trend terms, imports of capital goods rose $63m (1%) to $6,142m.

In seasonally adjusted terms, imports of capital goods rose $60m (1%) to $6,213m.

The main components contributing to the rise in seasonally adjusted estimates were:

  • machinery and industrial equipment, up $289m (15%)
  • industrial transport equipment n.e.s., up $117m (12%).

Partly offsetting these rises were:

  • capital goods n.e.s., down $152m (22%)
  • civil aircraft and confidentialised items, down $137m (20%).

Intermediate and Other Merchandise Goods

In trend terms, imports of intermediate and other merchandise goods rose $121m (1%) to $10,409m.

In seasonally adjusted terms, imports of intermediate and other merchandise goods fell $657m (6%) to $9,955m.

The main component contributing to the fall in seasonally adjusted estimates was fuels and lubricants, down $601m (19%).

Non-Monetary Gold

In trend terms, imports of non-monetary gold rose $17m (4%) to $447m.

In original and seasonally adjusted terms, imports of non-monetary gold rose $70m (17%) to $480m.

Imports of Services

In trend terms, services debits rose $61m (1%) to $7,760m.

In seasonally adjusted terms, services debits rose $110m (1%) to $7,806m.

The main components contributing to the rise in seasonally adjusted estimates were:

  • travel, up $57m (1%)
  • transport, up $30m (2%).

In seasonally adjusted terms, tourism related services debits rose $49m (1%) to $4,590m.

In seasonally adjusted terms, total services debits contributed 23% of total goods and services imported.

Australian Bureau of Statistics, “5368.0 – International Trade in Goods and Services, Australia, Feb 2018“, 5 Apr 2018 (11:30 AEDT) More

flag_europe EU: IHS Markit Eurozone Composite PMI. Mar 2018

Press Release Extract [eu_composite_pmi]

Key findings:

  • Final Eurozone Composite Output Index: 55.2 (Flash: 55.3, February Final: 57.1)
  • Final Eurozone Services Business Activity Index:54.9 (Flash: 55.0, February Final: 56.2)

eu_psi_20180405

March saw eurozone economic activity expand at the weakest pace since the start of 2017, as rates of increase moderated in both the manufacturing and service sectors. The slowing signalled by the latest PMI data reflected a combination of a mild deceleration in new order growth, bad weather in some northern regions and supply-chain constraints resulting from the recent growth spurt.

The final IHS Markit Eurozone PMI® Composite Output Index posted 55.2 in March, down from 57.1 in February and below the earlier flash estimate of 55.3. The headline index has nonetheless signalled expansion in each of the past 57 months. Manufacturing production rose to the lowest extent since November 2016, whereas service sector business activity increased at the weakest pace since August last year.

National PMI data indicated that the upturn remained broad-based in nature, with output expanding in all of the countries covered. However, signs of a growth slowdown were also widespread, with the ‘big-four’ nations and Ireland all seeing moderations during the latest survey month.

March saw the level of incoming new business rise at the weakest pace for 14 months, with slower increases signalled in Germany, France, Italy and Ireland. The pace of expansion held steady in Spain. Growth in new orders remained sufficient to test capacity, however, as indicated by a further solid increase in backlogs of work.

Companies responded to the increase in outstanding business by raising employment for the forty-first consecutive month during March. Jobs growth remained among the best seen over the past decade, despite easing to its weakest since last September. Rates of increase moderated in all of the nations covered except Spain.

Job creation was also underpinned by solid business optimism in March, with manufacturers and service providers both maintaining positive outlooks for the coming 12 months. Although the combined degree of confidence dipped to a four-month low, it stayed well above its post-financial crisis average.

Price pressures moderated in March. Output charge inflation eased to a three-month low, while costs increased at the slowest pace since last September.

Services

Eurozone service sector activity expanded at the slowest pace in seven months during March, as growth in new business also moderated. The outlook remained positive though, with employment and backlogs of work rising and business optimism remaining above its long-run trend level.

The final IHS Markit Eurozone PMI® Services Business Activity Index fell to 54.9 in March, down from 56.2 in February and the earlier flash estimate of 55.0. Although the average index reading over the opening quarter as a whole was the highest for seven years, the recent growth slowdown suggests that the upturn has lost impetus since the turn of the year. Expansion has been signalled in each of the past 56 months.

Output growth slowed across all of the nations covered by the survey. France (seven-month low), Ireland (four-month low) and Spain (three-month low) registered the steepest rates of expansion. Growth was comparatively moderate in Germany (seven-month low) and Italy (five-month low).

The level of new business received continued to rise at a solid pace in March, albeit the weakest since last August. New order inflows remained sufficient to test capacity, as signalled by backlogs of work rising to one of the greatest extents in the past seven years. This in turn encouraged firms to increase employment, with jobs growth recorded for the forty-first month in a row.

Although the pace of increase in staffing levels eased to a six-month low during March, recent jobs growth has remained among the best seen over the past decade. Increased employment was signalled across the nations covered by the survey, but Spain was the only one to see a faster expansion (an 11- year high) than in February.

Price pressures moderated in March, with rates of increase in output charges and input costs both slowing. That said, almost all of the nations reported higher input and output prices during the month, the sole exception being a slight decrease in output charges at Italian service providers.

Comment

Chris Williamson, Chief Business Economist at IHS Markit said:

“The eurozone economy came off the boil in March, though continued to run hot. Although the final PMI numbers showed the weakest rise in business activity since the start of last year, adding to signs that the growth spurt has peaked, the surveys are still indicative of the economy growing at an impressive 0.6% quarterly rate in March, down from a clearly unsustainably rapid 0.8-0.9% rate around the start of the year.

“Some pull-back from the elevated level of the PMI at the start of the year was always highly likely, and it’s important to note that the slowdown generally represents a reduction in the number of companies reporting month-on-month improvements in business activity, as opposed to a rise in the number of companies reporting a deterioration in business conditions.

“Some of the loss in growth momentum also appears to have been the result of temporary factors, such as bad weather and short-term capacity constraints, notably shortages of supplies and labour. Some reversal of these impediments should therefore hopefully help boost growth in April.

“Gauging the true extent of any slowdown is consequently difficult due to the disruptions to business from bad weather in recent months. April’s PMI data will therefore be particularly important in ascertaining true underlying growth momentum and in providing a steer on the likely timing of any ECB policy changes.”

IHS Markit, “IHS Markit Eurozone Composite PMI. Mar 2018“, 5 Apr 2018 More

flag_europe EU: Retail Trade. Feb 2018

Press Release Extract [eu_retail]

In February 2018 compared with January 2018, the seasonally adjusted volume of retail trade increased by 0.1% in the euro area (EA19) and by 0.2% in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In January, the retail trade volume fell by 0.3% in the euro area and remained unchanged in the EU28.

In February 2018 compared with February 2017, the calendar adjusted retail sales index increased by 1.8% in the euro area and by 2.0% in the EU28.

eu_retail_20180405

Monthly comparison by retail sector and by Member State

The 0.1% increase in the volume of retail trade in the euro area in February 2018, compared with January 2018, is due to rises of 0.9% for automotive fuel and of 0.8% for “Food, drinks and tobacco”, while non-food products fell by 0.5%. In the EU28, the 0.2% increase in the volume of retail trade is due to rises of 1.0% for automotive fuel and of 0.8% for “Food, drinks and tobacco”, while non-food products fell by 0.5%.

Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Estonia (+2.0%), Belgium (+1.6%), Malta and Poland (both +1.5%), while the largest decreases were observed in Latvia and Romania (both -2.3%) and Austria (-1.5%).

Annual comparison by retail sector and by Member State

The 1.8% increase in the volume of retail trade in the euro area in February 2018, compared with February 2017, is due to rises of 2.3% for non-food products, of 1.2% for “Food, drinks and tobacco”, while automotive fuel fell by 0.1%. In the EU28, the 2.0% increase in retail trade volume is due to rises of 2.4% for non-food products, of 1.4% for automotive fuel and of 1.2% for “Food, drinks and tobacco”.

Among Member States for which data are available, the highest increases in the total retail trade volume were registered in Malta (+11.7%), Poland (+7.9%) and Ireland (+7.1%), while decreases were observed in Slovenia (-1.6%) and Austria (-1.2%).

Eurostat, “Retail Trade. Feb 2018“, 5 Apr 2018 More

flag_europe EU: Industrial Producer Prices Domestic Market. Feb 2018

Press Release Extract [eu_ipp]

In February 2018, compared with January 2018, industrial producer prices rose by 0.1% in the euro area (EA19) and remained stable in the EU28, according to estimates from Eurostat, the statistical office of the European Union. In January 2018, prices increased by 0.4% in both zones.

In February 2018, compared with February 2017, industrial producer prices rose by 1.6% in the euro area and by 1.8% in the EU28.

eu_ipp_20180405

Monthly comparison by main industrial grouping and by Member State

The 0.1% increase in industrial producer prices in total industry in the euro area in February 2018, compared with January 2018, is due to rises of 0.3% for intermediate goods and of 0.1% for capital goods, while prices remained stable for both durable and non-durable consumer goods and fell by 0.2% in the energy sector. Prices in total industry excluding energy rose by 0.2%.

Prices in the EU28 remained stable due to rises of 0.3% for intermediate goods and of 0.1% for both capital goods and durable consumer goods, while prices fell by 0.1% for non-durable consumer goods and by 0.8% in the energy sector. Prices in total industry excluding energy rose by 0.1%.

The highest increases in industrial producer prices were observed in Estonia (+2.2%), Denmark (+1.4%), Slovakia (+1.0%) and Latvia (+0.7%), and the largest decreases in Greece (-1.1%), the United Kingdom (-0.7) and Lithuania (-0.6%).

Annual comparison by main industrial grouping and by Member State

The 1.6% increase in industrial producer prices in total industry in the euro area in February 2018, compared with February 2017, is due to rises of 2.4% for intermediate goods, of 2.0% in the energy sector, of 1.0% for both capital goods and durable consumer goods and of 0.9% for non-durable consumer goods. Prices in total industry excluding energy also rose by 1.6%.

In the EU28, the 1.8% price increase is due to rises of 2.6% for intermediate goods, of 2.3% in the energy sector, of 1.2% for both durable and non-durable consumer goods and of 1.0% for capital goods. Prices in total industry excluding energy rose by 1.7%.

The highest increases in industrial producer prices were recorded in Estonia (+5.4%), Bulgaria (+4.4%), Latvia (+3.8%) and Hungary (+3.6%), and the largest decreases in Luxembourg (-2.0%), Greece (-0.7%), Ireland and Cyprus (both -0.6%).

Eurostat, “Industrial Producer Prices Domestic Market. Feb 2018“, 5 Apr 2018 More

flag_usa US: Unemployment Insurance Weekly Claims Report

Press Release Extract [us_ui]

In the week ending March 31, the advance figure for seasonally adjusted initial claims was 242,000, an increase of 24,000 from the previous week’s revised level. The previous week’s level was revised up by 3,000 from 215,000 to 218,000. The 4-week moving average was 228,250, an increase of 3,000 from the previous week’s revised average. The previous week’s average was revised up by 750 from 224,500 to 225,250.

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

us_ui

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending March 24, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 24 was 1,808,000, a decrease of 64,000 from the previous week’s revised level. This is the lowest level for insured unemployment since December 29, 1973 when it was 1,805,000. The previous week’s level was revised up 1,000 from 1,871,000 to 1,872,000. The 4-week moving average was 1,848,250, a decrease of 13,500 from the previous week’s revised average. This is the lowest level for this average since January 5, 1974 when it was 1,838,500. The previous week’s average was revised up by 250 from 1,861,500 to 1,861,750.

us_ue

Unadjusted Data

The advance number of actual initial claims under state programs, unadjusted, totaled 200,909 in the week ending March 31, an increase of 5,797 (or 3.0 percent) from the previous week. The seasonal factors had expected a decrease of 14,372 (or -7.4 percent) from the previous week. There were 208,347 initial claims in the comparable week in 2017.

The advance unadjusted insured unemployment rate was 1.4 percent during the week ending March 24, a decrease of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 1,992,285, a decrease of 115,229 (or -5.5 percent) from the preceding week. The seasonal factors had expected a decrease of 44,920 (or -2.1 percent) from the previous week. A year earlier the rate was 1.6 percent and the volume was 2,221,962.

The total number of people claiming benefits in all programs for the week ending March 17 was 2,141,204, an increase of 155 from the previous week. There were 2,326,608 persons claiming benefits in all programs in the comparable week in 2017.

Extended benefits were payable in Alaska and the Virgin Islands during week ending March 17.

Initial claims for UI benefits filed by former Federal civilian employees totaled 568 in the week ending March 24, unchanged from the prior week. There were 596 initial claims filed by newly discharged veterans, a decrease of 48 from the preceding week.
There were 11,526 former Federal civilian employees claiming UI benefits for the week ending March 17, an increase of 1,060 from the previous week. Newly discharged veterans claiming benefits totaled 7,900, a decrease of 351 from the prior week.

The highest insured unemployment rates in the week ending March 17 were in the Virgin Islands (6.9), Alaska (3.6), Connecticut (2.9), Puerto Rico (2.8), New Jersey (2.7), Massachusetts (2.5), Montana (2.5), Pennsylvania (2.5), Rhode Island (2.5), and California (2.4).

The largest increases in initial claims for the week ending March 24 were in Texas (+2,886), Arkansas (+800), Missouri (+420), Oregon (+290), and Maryland (+246), while the largest decreases were in California (-2,954), New Jersey (- 1,672), New York (-1,226), Connecticut (-774), and Pennsylvania (-509).

Employment and Training Administration, “Unemployment Insurance Weekly Claims Report“, 5 Apr 2018 (08:30) More

flag_usa U.S. International Trade in Goods and Services. Feb 2018

Press Release Extract [us_trade]

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $57.6 billion in February, up $0.9 billion from $56.7 billion in January, revised.

us_trade_20180405

February exports were $204.4 billion, $3.5 billion more than January exports. February imports were $262.0 billion, $4.4 billion more than January imports.

The February increase in the goods and services deficit reflected an increase in the goods deficit of $0.3 billion to $77.0 billion and a decrease in the services surplus of $0.6 billion to $19.4 billion.

Year-to-date, the goods and services deficit increased $21.1 billion, or 22.7 percent, from the same period in 2017. Exports increased $22.4 billion or 5.9 percent. Imports increased $43.6 billion or 9.1 percent.

The average goods and services deficit increased $2.2 billion to $56.1 billion for the three months ending in February.

  • Average exports increased $1.4 billion to $203.0 billion in February.
  • Average imports increased $3.6 billion to $259.1 billion in February.

Year-over-year, the average goods and services deficit increased $10.1 billion from the three months ending in February 2017.

  • Average exports increased $12.2 billion from February 2017.
  • Average imports increased $22.3 billion from February 2017.

Exports

Exports of goods increased $3.0 billion to $137.2 billion in February. Exports of goods on a Census basis increased $3.1 billion.

  • Industrial supplies and materials increased $2.0 billion.
    o Nonmonetary gold increased $0.6 billion.
    o Crude oil increased $0.3 billion.
    o Natural gas increased $0.3 billion.
  • Automotive vehicles, parts, and engines increased $0.9 billion.
    o Passenger cars increased $0.7 billion.
  • Capital goods increased $0.7 billion.
    o Civilian aircraft increased $0.2 billion.
    o Drilling and oilfield equipment increased $0.2 billion.
  • Consumer goods decreased $0.8 billion.
  • o Pharmaceutical preparations decreased $0.6 billion.

Net balance of payments adjustments decreased $0.1 billion.

Exports of services increased $0.5 billion to $67.3 billion in February.

  • Transport increased $0.2 billion.
  • Travel (for all purposes including education) increased $0.1 billion.
  • Charges for the use of intellectual property increased $0.1 billion.

Imports

Imports of goods increased $3.3 billion to $214.2 billion in February. Imports of goods on a Census basis increased $3.5 billion.

  • Capital goods increased $1.8 billion.
    o Civilian aircraft increased $0.5 billion.
    o Materials-handling equipment increased $0.3 billion.
    o Computers increased $0.3 billion.
  • Industrial supplies and materials increased $0.8 billion.
    o Crude oil increased $0.7 billion.
  • Foods, feeds, and beverages increased $0.8 billion.

Net balance of payments adjustments decreased $0.2 billion.

Imports of services increased $1.1 billion to $47.8 billion in February.

  • The largest increase was in charges for the use of intellectual property ($1.0 billion). The increase reflects payments for the rights to broadcast the 2018 Winter Olympic Games.
  • The largest decrease was in travel (for all purposes including education) ($0.2 billion).

Real Goods in 2009 Dollars – Census Basis

The real goods deficit decreased $0.9 billion to $69.1 billion in February.

  • Real exports of goods increased $2.5 billion to $129.4 billion.
  • Real imports of goods increased $1.7 billion to $198.5 billion.

Revisions

Revisions to January exports

  • Exports of goods were revised down $0.1 billion.
  • Exports of services were revised up $0.1 billion.

Revisions to January imports

  • Imports of goods were revised up $0.1 billion.
  • Imports of services were revised down less than $0.1 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis

The February figures show surpluses, in billions of dollars, with South and Central America ($3.4), Hong Kong ($3.1), Brazil ($0.9), United Kingdom ($0.6), and Singapore ($0.5). Deficits were recorded, in billions of dollars, with China ($34.7), European Union ($15.3), Germany ($6.7), Mexico ($6.6), Japan ($6.0), Italy ($2.8), OPEC ($2.3), India ($1.9), Taiwan ($1.5), France ($1.4), South Korea ($1.1), Saudi Arabia ($0.4), and Canada ($0.4).

  • The deficit with Mexico increased $1.0 billion to $6.6 billion in February. Exports decreased less than $0.1 billion to $21.9 billion and imports increased $0.9 billion to $28.5 billion.
  • The deficit with Germany increased $0.4 billion to $6.7 billion in February. Exports decreased $0.2 billion to $4.7 billion and imports increased $0.2 billion to $11.3 billion.
  • The deficit with Canada decreased $1.2 billion to $0.4 billion in February. Exports increased $1.2 billion to $26.1 billion and imports increased less than $0.1 billion to $26.4 billion.

Bureau of Economic Analysis, “U.S. International Trade in Goods and Services. Feb 2018“, 5 Apr 2018 (08:30) More

Comment: Reuters

The U.S. trade deficit increased to a near 9½-year high in Feb 2018, with both imports and exports rising to record highs in a sign of strong domestic and global demand.

News on Thursday of the worsening trade deficit came as the United States and China were embroiled in tit-for-tat tariffs which escalated trade war fears and rattled financial markets.

President Donald Trump’s administration is pursuing import duties to eradicate the deficit and protect domestic industries from what he says is unfair foreign competition. But economists say the trade penalties will not reverse the deficit.

“The U.S. continues to expand faster than most other industrialized countries, so it should not surprise anyone that the trade deficit is worsening,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.”Tariffs may sound like a good way to change the pattern of trade, but they tend to raise prices rather than modify the trade fundamentals.”

The Commerce Department said the trade gap increased 1.6% to $57.6 billion in Feb 2018, the highest level since Oct 2008. The deficit has now increased for 6 straight months. Most of the rise in the trade deficit in Feb 2018 reflected commodity price increases.

Economists polled by Reuters had forecast the trade gap widening to $56.8 billion in Feb 2018. The goods trade deficit was the highest since Jul 2008 and the surplus on services was the lowest since Dec 2012.

While the politically sensitive goods trade deficit with China fell 18.6% to $29.3 billion in Feb 2018, it has increased 20.2% so far in 2018.

The Trump administration on Tuesday targeted 25% tariffs on some 1,300 Chinese industrial technology, transport and medical products, to force changes in Beijing’s intellectual property practices. China swiftly retaliated on Wednesday with a list of similar duties on key American imports including soybeans, planes, cars, beef and chemicals

Trump, who claims the United States is being taken advantage of by its trading partners, has already imposed broad tariffs on imported solar panels and large washing machines. He has also slapped 25% import duties on steel and 10% on aluminum.

While these actions may prove politically popular with Trump’s working class political base, especially in states hard-hit by factory closures and import competition, analysts warn they could undercut economic growth and raise prices for both consumers and producers.

Bloomberg’s Dollar Spot Index (DXY) rose to a 2-week high amid signs the United States was looking to resolve the trade dispute with China. Stocks on Wall Street were trading higher while prices for U.S. Treasuries fell.

The trade deficit is expected to widen further, thanks to an accommodative fiscal policy stance at a time when the economy is operating very close to full capacity. A $1.5 trillion income tax cut package came into effect in January and government spending will increase this year.

The economy’s strong fundamentals were underscored by a report from the Labor Department on Thursday showing the number of Americans on unemployment benefits falling to its lowest level since Dec 1973 during the week ending 24 Mar 2018.

When adjusted for inflation, the trade deficit slipped to $69.11 billion from $69.96 billion in Jan 2018. The so-called real trade deficit average for the first 2 months of 2018 is above the Q4 average of $66.8 billion.

This suggests trade would subtract from Q1/2018 gross domestic product. Trade sliced 1.16% points from Q4/2017 GDP growth. The economy grew at a 2.9% annualized rate during that period. Growth estimates for Q1/2018 are mostly below a 2% rate.

“We suspect widening trade deficits and resulting subtractions from GDP growth will be a persistent feature of GDP this year as domestic demand outpaces the economy’s supply potential,” said John Ryding, chief economist at RDQ Economics in New York. “Tariffs will do nothing to lessen this trade imbalance, unless there is a retaliatory escalation that leads to an economic downturn.”

In Feb 2018, exports of goods increased 2.3% to $137.2 billion, boosted by shipments of crude oil, natural gas, motor vehicles, civilian aircraft, and drilling and oilfield equipment. Exports to China were unchanged in Feb 2018.

Goods imports jumped 1.6% to $214.2 billion in Feb 2018, lifted by food, civilian aircraft, computers and crude oil. Imports of services rose to a record $47.8 billion from $46.8 billion in Jan 2018, boosted by royalties and broadcast license fees related to the Winter Olympics.Reuters

JPMorgan Global Services PMI. Mar 2018

Press Release Extract [global_psi]

The upturn in the global service sector slowed to a 17- month low in March, with a softer expansion in business activity being accompanied by weaker growth of new orders. Business confidence remained positive, but slipped to its weakest in the year-so-far.

The J.P.Morgan Global Services Business Activity Index – a composite index produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – posted 53.2 in March, down from 54.8 in February. The average reading for the opening quarter as a whole (54.1) was still the best outcome since the third quarter of 2014.

global_psi_20180405

Global Services PMI™ Mar 2018:

  • Output: 53.2 (Feb 54.8)
  • New Business: 54.4 (Feb 55.4)
  • Backlogs of Work: 51.1 (Feb 51.3)
  • Input Prices: 55.2 (Feb 56.3)
  • Output Charges: 52.5 (Feb 53.1)
  • Employment: 53.0 (Feb 52.9)
  • Future Activity: 64.9 (Feb 66.4)

The expansion remained broad-based by both nation and sub-sector in March. Output rose across the three categories of activity covered by the survey (business, consumer and financial services) and also in all of the countries included. However, the slowdown was almost as broad as its base of expansion, with growth easing across the three sub-sectors. India (which returned to expansion) and Australia (where growth hit an eight-month high) were the only nations to improved output trends.

Growth was at a two-month low in the US. The euro area saw its rate of expansion ease to a seven-month low, while the upturn in the UK was the slowest during the current 20-month sequence of increase. Some Northern European nations were impacted by adverse weather conditions during the month. Growth in China, Japan, Brazil and Russia slipped to four-, 17-, two- and eight- month lows respectively.

March saw a slight deceleration in the rate of expansion in new orders. However, new business growth remained sufficiently robust to test capacity, leading to a further rise in backlogs of work and another increase in employment.

Price inflation moderated at the end of the first quarter, with March seeing the weakest rates of increase in costs and output charges during the year-so-far. Developed nations and emerging markets registered slower increases in both price measures, although the stronger rates of inflation were again seen in the former.

Business optimism remained positive in March, with companies forecasting (on average) that business activity would be higher one year from now. However, the degree of confidence eased to a three-month low and was below the long-run series average.

J.P.Morgan and IHS Markit in association with ISM and IFPSM, “Global Services PMI. Mar 2018“, 5 Apr 2018 (11:00) More

JPMorgan Global Composite PMI. Mar 2018

Press Release Extract [global_composite_pmi]

March saw the pace of global economic expansion ease to a 16-month low, following tandem slowdowns in the manufacturing and service sectors.

The J.P.Morgan Global All-Industry Output Index posted 53.3, down from February’s 41-month high of 54.8. That said, the average reading over the opening quarter (54.2) was still the best outcome since Q3/2014.

global_composite_pmi_20180405

Global Manufacturing & Services PMI™ Mar 2018:

  • Output: 53.3 (Feb 54.8)
  • New Orders: 54.2 (Feb 55.3)
  • Employment: 52.8 (Feb 52.9)
  • Input Prices: 56.5 (Feb 57.6)
  • Output Charges: 52.8 (Feb 53.4)
  • Backlogs: 51.3 (Feb 51.6)
  • Future Output: 64.9 (Feb 66.0)

The slowdown signalled during March was reflective of a general easing in rates of expansion (in many cases from recent highs) across much of the global economy. On a sector basis, growth of manufacturing production eased to an eight-month low and service sector business activity rose to the weakest extent in almost a year-and-a-half.

Rates of increase in output also moderated in five of the six sub-sectors covered by the survey (business services, consumer goods, consumer services, financial services and intermediate goods). Only the investment goods category saw production rise at a stronger pace.

National PMI data also signalled a widespread growth deceleration. Although all-industry output rose in all of the countries covered, only India (which saw a return to expansion) and Australia (where growth accelerated to a three-month high) saw improved trends in output.

Rates of expansion eased in the US (two-month low), the euro area (14-month low), China (four-month low) and Japan (17-month low). Growth in the UK was the weakest during the current 20-month sequence of increase and also moderated in Brazil (two-month low) and Russia (five- month low).

March saw the rate of increase in incoming new work remain solid, despite easing to a five-month low. The pace of growth was sufficient to test capacity, leading to a further accumulation of outstanding business. Firms responded by raising employment, with jobs growth registered for the ninety-seventh straight month.

Staffing levels were raised in most of the nations covered by the survey, the exceptions being a mild decrease in China and the steepest reduction in Brazil since last August. The US, Japan, Spain and Australia all registered faster increases than in February.

Price pressures moderated in March, with rates of increase in costs and output charges slowing. Inflation for both price measures remained sharper (on average) in developed nations compared to emerging markets.

J.P.Morgan and IHS Markit in association with ISM and IFPSM, “Global Composite PMI. Mar 2018“, 5 Apr 2018 (11:00) More

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