Fri 29 Jun 2018 (flag_australia EOFY)


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearWall Street’s major stock indexes edged higher on Friday, as a surge in Nike Inc shares helped the quarter close out on an upswing while concerns over U.S. international trade relations ebbed.

For the quarter, the Dow, the S&P 500 and the Nasdaq all posted gains. The Dow edged up 0.7%, the S&P 500 rose 2.94%, and the tech-heavy Nasdaq jumped 6.33%. The small-cap Russell 2000, whose components are more domestically focused than their large-cap counterparts, climbed 7.4%.

Like the Russell, the S&P’s major sectors reflected some skittishness over trade. Energy had the biggest percentage gains for the quarter as oil prices jumped, and growth sectors such as technology and consumer discretionary stocks had solid gains. But real estate and utilities, considered defensive sectors, also advanced.

Today’s key measures:

  • Today:
    • The S&P 500 index rose 2.06 points, or 0.08%, to 2,718.37
    • The Dow Jones Industrial Average rose 55.36 points, or 0.23%, to 24,271.41
    • The Nasdaq Composite index rose 6.62 points, or 0.09%, to 7,510.30
  • For the week, however, all 3 indexes registered losses:
    • The S&P 500 fell 1.33%
    • The Dow fell 1.26 percent, making 3 straight weeks of falls for the first time in more than two years
    • The Nasdaq fell 2.37%
  • For the month of Jun 2018
    • The S&P 500 rose 0.49%
    • The Dow fell 0.59%, and
    • The Nasdaq rose 0.92%.
  • Today:
    • Advancing issues outnumbered declining ones on the NYSE by a 1.51-to-1 ratio; on Nasdaq, a 1.19-to-1 ratio favored advancers
    • The S&P 500 posted 10 new 52-week highs and two new lows; the Nasdaq Composite recorded 52 new highs and 67 new lows
    • Volume on U.S. exchanges was 7.16 billion shares, compared to the 7.28 billion average over the last 20 trading days.

Friday’s session reflected momentary relief from trade concerns that rattled the market earlier in the week, several investors said, though the major indexes pared gains in the last hour of trading.

“There’s really not a lot of headlines going on,” said Ryan Detrick, senior market strategist for LPL Financial in Charlotte, North Carolina. “We’re having a late-week bounce back from earlier worries.”

Investors took in stride U.S. Commerce Department data that showed consumer spending slowing as the core personal consumption expenditures price index, a measure of inflation, hit the Federal Reserve’s 2% annual target for the first time in 6 years. On several occasions this year, worries of rising inflation and a subsequent economic slowdown have sent stocks tumbling.

People are squaring away positions going into the month and the quarter’s end,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Nike

On Friday, shares of Nike soared 13% to hit an all-time high of $81 after the world’s largest footwear maker reported a return to growth in North America in the last quarter and gave an upbeat forecast for the year. Nike shares ended the day up 11.1% to $79.68, their biggest one-day gain in nearly 4r years. Nike was the top boost to the Dow and the S&P 500.

Financials

The S&P 500 bank sector index ended the day barely changed after earlier touching a one-week high. The Federal Reserve late on Thursday reported that U.S. lenders cleared the second part of the Fed’s annual stress tests, though the Fed placed conditions on some, restricting Goldman Sachs Group Inc and Morgan Stanley from increasing capital distributions. Wells Fargo & Co was a bright spot, rising 3.4%.

Earnings reports

On Friday, shares of Vertex Pharmaceuticals Inc jumped 15.2%, the most on the S&P 500, after rival Galapagos NV’s cystic fibrosis program reported disappointing trial data.

KB Home shares rose 7.3% after the homebuilder’s second-quarter results beat Wall Street estimates. The strong results also boosted shares of other homebuilders, including D.R. Horton Inc and PulteGroup Inc.

Constellation Brands Inc fell 5.8% after the Corona beer maker’s quarterly profit and full-year earnings forecast missed analysts’ estimates.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) 2,718.37 +0.07% 2,673.61 +1.67%
DJIA INDU 24,271.41 +0.22% 24,719.22 -1.82%
NASDAQ IXIC 7,510.30 +0.08% 6,903.39 +8.79%

Portfolio Indices

Five-Year Portfolio Performance: 2013 – 2018

  • AUD-denominated index:
    • FY 2017-2018: +39.03%
    • FY 2016-2017: +39.75%
    • FY 2015-2016: -10.06%
    • FY 2014-2015: +61.18%
    • FY 2013-2014: +49.26%.
  • USD-denominated index:
    • FY 2017-2018: +33.92%
    • FY 2016-2017: +43.33%
    • FY 2015-2016: -10.89%
    • FY 2014-2015: +32.07%
    • FY 2013-2014: +53.86%.
  • Average annual compounding growth rates over the 5 year period:
    • USD-denominated index +27.19%
    • AUD-denominated index +32.56%

Notes:

  1. Index (asset value) growth does not include dividends – in terms of total returns, dividends need to be added to asset value growth,
  2. The only change in the composition of our portfolio during this 5-year period was the loss of Linkedin, acquired by Microsoft in 2017

Portfolio Performance in Financial Year 2017-2018

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 AUD 3.486 -0.18% 3.068 +13.65%
Valuation Rate USD/AUD 0.74514 +0.68% 0.78528 -5.12%
AUD-denominated Index AUD 4.678 -0.85% 3.909 +19.69%

Portfolio stock prices

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,129.19 +0.21% $1,053.00 +7.23%
Alphabet C GOOG $1,115.65 +0.12% $1,045.65 +6.69%
Apple AAPL $185.11 -0.22% $169.23 +9.38%
Amazon AMZN $1,699.80 -0.10% $1,169.54 +45.33%
Ebay EBAY $36.26 +0.33% $37.76 -3.98%
Facebook FB $194.32 -0.98% $176.46 +10.12%
PayPal PYPL $83.27 +0.95% $73.61 +13.12%
Twitter TWTR $43.67 -2.51% $24.01 +81.88%
Visa V $132.45 -0.22% $114.02 +16.16%
VMware VMW $146.97 +0.58% $125.32 +17.27%

Selected Tech News Headlines

  • Apple rebuilds mapping app, but will still tap TomTom: “Apple Inc is rebuilding the widely used mapping application on its iPhones from the ground up with its own dataset, but Amsterdam-based TomTom NV will continue to be a data provider for Apple’s maps app, Cupertino, California-based Apple told Reuters on Friday. Technology publication TechCrunch reported Apple’s mapping effort earlier on Friday. After the story was published, TomTom shares fell as much as 5% from session highs before closing the day down 1.7% from the previous day at EUR 7.76.Reuters

  • Morgan Stanley: Google needs to give every US home a free smart speaker — or get buried by Amazon: “Smart speakers are white hot right now but for Google‘s there’s a lot more riding on the Home Mini than the sales revenue they generate, says Morgan Stanley. If Google doesn’t get into the home, the company stands to lose a lot moreBusinessInsider

  • Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero: “Down about 70% from its Dec 2017 high after sliding for a fourth straight day on Friday, Bitcoin is getting ever-closer to matching the Nasdaq Composite Index’s 78% peak-to-trough plunge after the U.S. dot-com bubble burst. Hundreds of other virtual coins have all but gone to zero — following the same path as Pets.com and other red-hot initial public offerings that flamed out in the early 2000s. While Bitcoin has bounced back from bigger losses before, it’s far from clear that it can repeat the feat now that much of the world knows about cryptocurrencies and has made up their mind on whether to invest. Bitcoin declined as much as 4.2% to USD 5,791 on Friday, the lowest level since November, according to Bloomberg composite prices. The cryptocurrency recovered on Saturday in Asian hours, rising 8.6% to USD 6,397 at 11:35 a.m. in Tokyo, according to Bitstamp. Still, Bitcoin is down around 55% this year, according to Bitstamp. Other coins including Ether and Litecoin slumped more, while the combined value of tokens tracked by CoinMarketCap.com declined to USD 236 billion. At the peak of crypto-mania, they were worth about USD 830 billion. Lesser-known tokens have been hit the hardest. Dead Coins lists around 800 that are effectively worth nothing, while Coinopsy puts the tally at more than 1,000. Fewer than 4% of coins with market caps from USD 50 million to USD 100 million were successful or promising, according to a Mar 2018 analysis from ICO advisory firm Satis Group.Bloomberg

Currencies: USD/AUD

USD/SDR movements
^ AUD vs Bloomberg Dollar Spot Index (DXY) movements today Chart: Bloomberg

USD

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

The Bloomberg Dollar Spot Index (DXY) fell 0.5%.
The EUR rose 0.9% to USD 1.1678.
Britain’s GBP rose 0.9% to USD 1.3194.
Japan’s JPY fell 0.2% to 110.754 per USD.

Germany’s 10-year yield fell 1 basis point to 0.31%.
Britain’s 10-year yield rose 2 basis points to 1.272%.
The yield on 10-year Treasuries rose 1 basis point to 2.85%.
Bloomberg

Britain’s GBP

Britain’s GBP has suffered its worst quarter since the vote to leave the European Union in Jun 2016 triggered one of the biggest selloffs in the currency’s history. Worries that Britain will run out of time to agree a deal with the European Union for life after Brexit, a resurgent USD and weakness in the economy have combined to hammer the GBP, which had started 2018 as one of the best performing major currencies:

  • The GBP has slumped more than 6% since Apr 2018 to a 7½ month low. That’s bigger than the 5.4% fall in the EUR/USD exchange rate and a 4.1% drop in the JPY this quarter
  • The GBP has fallen 1% against the EUR.

Hedge funds have a net short GBP position for the first time since Nov 2017. That is in stark contrast to early 2018 when long positions were at their biggest in 3 years.

The performance since Apr 2018 is also sterling’s second-worst quarter since the 2008 financial crisis. That matters because a strong GBP is seen as a barometer of confidence in Britain’s economy. Sharp currency drops also risk raising inflation, heaping pressure on the Bank of England (BOE) to raise interest rates even if the economy is floundering.

At present, though, the GBP is being undermined further by economic weakness which has led the BoE to postpone rate hikes. Current bets for an Aug 2018 rise are about 60% but markets are not fully pricing in even 1 hike for 2018.Reuters

AUD

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

Note: Australian Taxation Office FX Rate for 29 Jun 2018 = 0.7714 ATO

aud_ato_20180629

Oil and Gas Futures

Futures prices

Prices are as at 15:49 EDT

  • NYMEX West Texas Intermediate (WTI): $74.26/barrel +1.10% Chart
  • ICE (London) Brent North Sea Crude: $79.44/barrel +2.04% Chart
  • NYMEX Natural gas futures: $2.93/MMBTU -0.51% Chart

flag_europe EU: Flash Estimate Euro Area Inflation. Jun 2018

Press Release Extract [eu_cpi]

Euro area annual inflation is expected to be 2.0% in June 2018, up from 1.9% in May 2018, according to a flash estimate from Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in June (8.0%, compared with 6.1% in May), followed by food, alcohol & tobacco (2.8%, compared with 2.5% in May), services (1.3%, compared with 1.6% in May) and non-energy industrial goods (0.4%, compared with 0.3% in May).

Eurostat, “Flash Estimate Euro Area Inflation. Jun 2018“, 29 Jun 2018 More

flag_usa US: Personal Income and Outlays. May 2018

Press Release Extract [us_dpi]

Personal income increased $60.0 billion (0.4 percent) in May according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $63.2 billion (0.4 percent) and personal consumption expenditures (PCE) increased $27.8 billion (0.2 percent).

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

The increase in personal income in May primarily reflected increases in wages and salaries, personal dividend income, and nonfarm proprietors’ income.
The $1.4 billion decrease in real PCE in May reflected a decrease in spending for services that was partially offset by an increase in spending for goods. Within goods, recreational goods and vehicles was the leading contributor to the increase. Within services, the largest contributor to the decrease was spending for household utilities.

Personal outlays increased $29.2 billion in May. Personal saving was $482.0 billion in May and the personal saving rate, personal saving as a percentage of disposable personal income, was 3.2 percent.

Bureau of Economic Analysis, “Personal Income and Outlays. May 2018“, 29 Jun 2018 (08:30) More

flag_usa US: Consumer Confidence Index (Final). Jun 2018

Press Release Extract [ser_uom]
Index Jun 2018 May 2018 Jun 2017 M-M% Y-Y%
Index of Consumer Sentiment 98.2 98.0 95.0 +0.2% +3.4%
Current Economic Conditions 116.5 111.8 112.4 +4.2% +3.6%
Index of Consumer Expectations 86.3 89.1 83.8 -3.1% +3.0%

Surveys of Consumers chief economist, Richard Curtin

us_uom_20180615

Consumer sentiment retreated in late June to just above the May reading largely due to concerns about the potential impact of tariffs on the domestic economy. The falloff in confidence was minor, as the Sentiment Index has been virtually unchanged for the past three months. The persistent strength has been due to favorable assessments of jobs and incomes. While consumers anticipated rising interest rates during the year ahead, those expected increases were associated with a modest decline in longer term prospects for the national economy. For the year ahead, consumers still anticipated that the economy would produce small additional declines in the unemployment rate as well as higher wage gains. Consumers also anticipated an uptick in inflation during the year ahead, partly due to rising energy prices and partly due to tariffs.

The potential impact of tariffs on the domestic economy was spontaneously cited by one-in-four consumers, with most expecting a negative impact on the domestic economy (21% out of 26%). The primary concerns were a downshift in the future pace of economic growth and an uptick in inflation. A longstanding belief of consumers is that trade with other countries results in a broader range of available goods at lower prices. When asked in a recent survey about their views on international trade, two-thirds of consumers thought that more trade with other countries would be better for the domestic economy (see the chart). To be sure, consumers’ judgements about the impact of higher tariffs will not crystalize until they gain more experience with actual changes in product prices and domestic employment. While tariffs may have a direct impact on only a very small portion of overall GDP, the negative impact could quickly generalize and produce a widespread decline in consumer confidence.

University of Michigan, “Consumer Confidence Index (Final). Jun 2018“, 29 Jun 2018 (10:00 EDT) More

flag_japan Japan update

Currency: USD/JPY

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

Stockmarket: Nikkei 225

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

flag_china China update

Currency: USD/CNY

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

Stockmarket: CSI300

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

Chinese shares plunged on Friday with the benchmark Shanghai Composite Index down 132.20 points, or 4.05%, to close at 3,129.85. The Shenzhen Component Index fell 371.36 points, or 3.58%, to close at 10,001.23. Chinese shares plunged on Friday with the benchmark Shanghai Composite Index down 132.20 points, or 4.05%, to close at 3,129.85. The Shenzhen Component Index fell 371.36 points, or 3.58&, to close at 10,001.23.

China’s Shanghai composite is tracking for its worst year in seven after falling 8% in Jun 2018, amid escalating trade tensions and Beijing’s efforts to reduce reliance on high debt levels. A relentless six-week selling streak has sent the mainland’s benchmark stock index down 13.9% so far this year, to its lowest since 2016 and into a bear market — a more than 20% retracement from a recent high.

Escalation in trade tensions with the U.S. spurred the latest sell-off, analysts said. But they also point to the overarching trend of Beijing’s efforts to deleverage while maintaining economic growth. Neither of those factors are necessarily supportive for the local stock market in the near term.

“The sell-off was and is an impact of regulatory tightening,” said Lauren Gloudeman, a research analyst with Rhodium Group’s China markets research team.

New policies, both recently implemented and forthcoming, limit the scale to which banks can keep riskier items off their balance sheets. A result is that some local non-financial institutions called “trust companies” are exiting their stock holdings, Glouderman said.

At the same time, China is easing monetary policy to help support economic growth. The People’s Bank of China announced Sunday that for the third time in 2018, it would lower its reserve requirement ratio for banks, improving the ability of businesses to get funding, or liquidity.

The cut is set to take place on 5 Jul 2018, one day before U.S. tariffs on $34 billion of Chinese goods are scheduled to take effect as the Trump administration tries to reduce the trade deficit and protect intellectual property rights. Beijing plans to retaliate the same day with its own duties on $34 billion worth of U.S. goods.

The Shanghai composite steadied Friday, closing up 2.2%. But the index lost 8% for Jun 2018 in its worst month since Jan 2016 when it plunged more than 20% on worries of a sharp economic slowdown.CNBC