Fri 6 Jul 2018


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearU.S. stocks climbed on Friday, with the S&P 500 and the Nasdaq hitting their highest levels in two weeks, as strong U.S. jobs growth blunted the impact of an escalating U.S.-China trade dispute.

  • The S&P 500 index rose 23.21 points, or 0.85%, to 2,759.82. All of the 11 major S&P 500 sectors posted gains.
  • The Dow Jones Industrial Average rose 99.74 points, or 0.41%, to 24,456.48
  • The Nasdaq Composite rose 101.96 points, or 1.34 percent, to 7,688.39.
  • For the week, the Dow rose 0.7%, the S&P 500 rose 1.5$, and the Nasdaq rose 2.4%.
  • Advancing issues outnumbered declining ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 2.32-to-1 ratio favored advancers.
  • The S&P 500 posted 22 new 52-week highs and two new lows; the Nasdaq Composite recorded 125 new highs and 17 new lows.
  • Volume on U.S. exchanges was 5.30 billion shares, compared with the 6.98 billion average over the last 20 trading days.

Economic strength: Jobs report

Nonfarm payrolls increased by 213,000 jobs last month, the U.S. Labor Department said, topping expectations of 195,000, while the unemployment rate rose from an 18-year low to 4% and average hourly earnings rose 0.2%. The moderate wage growth allayed fears of a strong buildup in inflation pressures and boosted optimism that the Federal Reserve would stay on a path of gradual interest rate increases.

“This really is the best outcome we could have hoped for, more jobs without a whole lot of wage pressures,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh.

Trade policy

The positive news from the U.S. employment report offset, at least for the moment, heightened trade tensions between the United States and China. The two countries slapped tit-for-tat tariffs on $34 billion worth of each other’s imports on Friday. Beijing accused the White House of triggering the “largest-scale trade war.”

Some investors were encouraged that the value of goods targeted for tariffs so far is smaller than amounts mentioned in previous threats. U.S. President Donald Trump has warned that the United States may ultimately target over $500 billion worth of Chinese goods, an amount that roughly matches its total imports from China last year.

“Even though there is an ongoing trade spat, it’s going to be measured, not $500 billion all at once. It gives the opportunity for negotiations to happen and doesn’t torpedo the economy, which is what people were concerned about,” said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.

Although U.S. stocks appeared minimally affected by American and Chinese tariffs going into effect, some investors warned that prolonged trade tensions could roil the markets, as they have on several occasions this year.

“You’re going to get some stalling of the market, should trade issues begin to accelerate,” said Gerry Sparrow, a portfolio manager for Interactive Brokers Asset Management, a Boston-based online investing company.

Healthcare and technology

The S&P 500 healthcare index rose 1.5%, the greatest percentage gain among the S&P’s major sectors, while the Nasdaq biotech index jumped 3.7%.

Shares of Biogen Inc rose 19.6%, their biggest percentage gain in more than a decade, after the company and Japanese drugmaker Eisai Co said their Alzheimer’s drug showed promise in a mid-stage trial. Biogen led the S&P 500 in percentage gains and was among the biggest boosts to the index.

Besides Biogen, technology heavyweights Apple Inc, Microsoft Corp and Facebook Inc provided the biggest boosts to the S&P 500. The S&P technology index rose 1.2%.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) 2,759.82 +0.84% 2,673.61 +3.22%
DJIA INDU 24,456.48 +0.40% 24,719.22 -1.07%
NASDAQ IXIC 7,688.39 +1.34% 6,903.39 +8.47%

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 AUD 3.548 +1.27% 3.068 +15.68%
Valuation Rate USD/AUD 0.74786 +0.53% 0.78528 -4.77%
AUD-denominated Index AUD 4.745 +0.73% 3.909 +21.39%

Portfolio stock prices

:-) Facebook closed on a record high $203.23, beating its 20 Jun 2018 record of 202.06.
:-) Facebook was added to our portfolio on 13 Sep 2012 at USD 20.75 (AUD 19.987). Today’s close price represents 9.8x our buy-in price. In AUD Facebook is today worth AUD 272.02, representing 13.6x our investment.

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1,155.08 +1.20% $1,053.00 +9.69%
Alphabet C GOOG $1,140.17 +1.41% $1,045.65 +9.03%
Apple AAPL $187.97 +1.38% $169.23 +11.07%
Amazon AMZN $1,710.63 +0.64% $1,169.54 +46.26%
Ebay EBAY $37.39 +0.97% $37.76 -0.98%
Facebook FB $203.23 +2.40% $176.46 +15.17%
PayPal PYPL $85.94 +1.59% $73.61 +16.75%
Twitter TWTR $46.65 +3.52% $24.01 +94.29%
Visa V $134.09 +0.60% $114.02 +17.60%
VMware VMW $157.68 -0.24% $125.32 +25.82%

Selected Tech News Headlines

  • Sonos files for a $100m IPO — on track to do over $1 billion in revenue this year: “Speaker company Sonos has filed to go public. The company reported a net loss of $14.2 million on revenue of $992.5 million for its most recent fiscal year. That’s an improvement from fiscal 2016, when the company posted a net loss of $38.2 million on revenue of $901.3 million. For the 6 months ended 31 Mar 2018, Sonos reported revenue of $655.7 million, an 18% jump from the 6 months ended 31 Mar 2017. Net income for the period totaled $13.1 million, a decrease of 14% from the year-ago period.CNBC Form S-1

  • Sonos warns that Amazon has the power to disable Alexa on Sonos speakers with ‘limited notice,’ and that poses a risk to its business: “In filing to go public on Friday, Sonos mentioned some important concerns and potential risks to its business. The company said Amazon could disable its Alexa voice assistant on specific Sonos speakers with “limited notice,” something that could harm its products’ desirability. Amazon could also demand licensing fees for Alexa that could hurt Sonos’ bottom line.Business Insider

  • Mark Zuckerberg Tops Warren Buffett to Become the World’s Third-Richest Person: “Facebook Inc. co-founder Mark Zuckerberg has overtaken Warren Buffett as the world’s third-richest person, further solidifying technology as the most robust creator of wealth. Mark Zuckerberg ($81.6 billion), who trails only Amazon.com Inc. founder Jeff Bezos ($142 billion) and Microsoft Corp. co-founder Bill Gates ($94.2 billion), eclipsed Warren Buffett ($81.2 billion) Friday as Facebook shares climbed 2.4%, according to the Bloomberg Billionaires Index. It’s the first time that the three wealthiest people on the ranking made their fortunes from technology. Zuckerberg’s ascent has been driven by investors’ continued embrace of Facebook, the social-network giant that shook off the fallout from a data-privacy crisis that hammered its shares, sending them to an 8-month low of $152.22 on 27 Mar 2018. The stock closed Friday at a record $203.23. Technology fortunes make up about a fifth of the more than $5 trillion in wealth tracked by the Bloomberg index, more than any other sector.Bloomberg Bloomberg Billionaires Index
    Shaun Parker (Justin Timberlake) suggests Facebook's potential is a billion dollars.

    Shaun Parker (Justin Timberlake) suggests Facebook’s potential is a billion dollars. YouTube

  • Tech giants could finally win in health care because they’re sticking to what they know: “Health care is notoriously complicated. But it’s also a mega-market rife with waste and inefficiencies. That makes it hard for big tech companies to ignore. In the past five years, Apple, Amazon, Alphabet, Microsoft and Salesforce have all made big moves into the sector, as evidenced by a string of recent hires, product announcements, and acquisitions. Apple CEO Tim Cook summed up big tech’s attitude to health care in a recent interview when asked about whether the company’s focus on health stemmed from altruism, capitalism, or both: “we’re extremely interested in this area — and yes, it is a business opportunity.” Tech companies like IBM, Microsoft and Alphabet, have tried to fix health care before, and failed. As Seattle-based health investor Dave Chase notes, some of these efforts, like Google’s ill-fated “Google Health,” failed to get off the ground, despite an investment of millions of dollars in talent and resources. But health investor Dave Chase believes these companies appear to be learning from their mistakes. Instead of going broad, tech execs are focusing on the corners of the market where they can do well.CNBC

Currencies: USD/AUD

USD/USD

audusd
^ AUD vs Bloomberg Dollar Spot Index (DXY) movements today Chart: Bloomberg

USD

The USD hit 3-week lows on Friday after data showed the U.S. economy created more jobs than expected in Jun 2018, but a closely watched inflation gauge – wage growth – rose less than forecast and the unemployment rate increased. As a result, expectations dimmed somewhat that the Federal Reserve would raise interest rates a 4th time in 2018.

The USD had weakened earlier on Friday as the United States and China imposed tariffs on each other’s imports, but the fall was muted as investors waited for the jobs report.

“We are of the thinking that the strong economic gains make a September hike a likely event. Without an acceleration of wage growth, a fourth hike at the end of the year is a more difficult call and futures shows that hesitation, placing just 50 percent odds on that event,” said Marvin Loh, senior global market strategist at BNY Mellon on Boston.Reuters

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

The USD was lower and Treasuries rose as traders tried to determine how the Federal Reserve will react to the jobs report showing wage increases slowing. “In many respects, it’s the best of a lot of worlds. You’re not seeing inflation in this number. This doesn’t change anything for the Fed, and that I think is very, very important,” David Ader, chief macro strategist at Informa Financial Intelligence, said of the jobs report.

The Bloomberg Dollar Spot Index fell 0.4% to the lowest in about a month.
TheEUR rose 0.5 percent to USD 1.1744, the strongest in more than 3 weeks.
Britain’s GBP rose 0.4% to USD1.3277, the strongest in more than a week.
Japan’s JPY rose 0.2% to 110.44 per USD.

The yield on 10-year Treasuries fell less than 1 basis point to 2.8336%.
Germany’s 10-year yield fell 1 basis point to 0.292%, the lowest in more than five weeks.
Britain’s 10-year yield rose 1 basis point to 1.267%.
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 15:49 EDT

  • NYMEX West Texas Intermediate (WTI): $73.79/barrel +1.17% Chart
  • ICE (London) Brent North Sea Crude: $77.09/barrel -0.39% Chart
  • NYMEX Natural gas futures: $2.86/MMBTU +0.63% Chart

flag_usa US: Employment Situation (Jobs Report). Jun 2018

Press Release Extract [us_jobs]

Total nonfarm payroll employment increased by 213,000 in June, and the unemployment rate rose to 4.0 percent (from 3.8% in May), the U.S. Bureau of Labor Statistics reported today. Job growth occurred in professional and business services, manufacturing, and health care, while retail trade lost jobs.

Household Survey Data

The unemployment rate rose by 0.2 percentage point to 4.0 percent in June, and the number of unemployed persons increased by 499,000 to 6.6 million. A year earlier, the jobless rate was 4.3 percent, and the number of unemployed persons was 7.0 million.

us_ue_20180706

Among the major worker groups, the unemployment rates for adult men (3.7 percent), adult women (3.7 percent), and Asians (3.2 percent) increased in June. The jobless rate for teenagers (12.6 percent), Whites (3.5 percent), Blacks (6.5 percent), and Hispanics (4.6 percent) showed little or no change over the month.

Among the unemployed, the number of job losers and persons who completed temporary jobs increased by 211,000 in June to 3.1 million, and the number of reentrants to the labor force rose by 204,000 to 2.1 million. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search.)

The number of long-term unemployed (those jobless for 27 weeks or more) increased by 289,000 in June to 1.5 million. These individuals accounted for 23.0 percent of the unemployed.

In June, the civilian labor force grew by 601,000. The labor force participation rate edged up by 0.2 percentage point over the month to 62.9 percent but has shown no clear trend thus far this year.

The employment-population ratio, at 60.4 percent, was unchanged in June and has essentially been flat since February.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed in June at 4.7 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

In June, 1.4 million persons were marginally attached to the labor force, little different from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 359,000 discouraged workers in June, down by 155,000 from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.1 million persons marginally attached to the labor force in June had not searched for work for reasons such as school attendance or family responsibilities.

Establishment Survey Data

Total nonfarm payroll employment increased by 213,000 in June and has grown by 2.4 million over the last 12 months. Over the month, job gains occurred in professional and business services, manufacturing, and health care, while employment in retail trade declined.

us_jobs_20180706

Employment in professional and business services increased by 50,000 in June and has risen by 521,000 over the year.

Manufacturing added 36,000 jobs in June. Durable goods manufacturing accounted for nearly all of the increase, including job gains in fabricated metal products (+7,000), computer and electronic products (+5,000), and primary metals (+3,000). Motor vehicles and parts also added jobs over the month (+12,000), after declining by 8,000 in May. Over the past year, manufacturing has added 285,000 jobs.

Employment in health care rose by 25,000 in June and has increased by 309,000 over the year. Hospitals added 11,000 jobs over the month, and employment in ambulatory health care services continued to trend up (+14,000).

Construction employment continued to trend up in June (+13,000) and has increased by 282,000 over the year.

Mining employment continued on an upward trend in June (+5,000). The industry has added 95,000 jobs since a recent low point in October 2016, almost entirely in support activities for mining.

In June, retail trade lost 22,000 jobs, largely offsetting a gain in May (+25,000).

Employment showed little or no change over the month in other major industries, including wholesale trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in June. In manufacturing, the workweek edged up by 0.1 hour to 40.9 hours, and overtime edged up by 0.1 hour to 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours.

In June, average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents to $26.98. Over the year, average hourly earnings have increased by 72 cents, or 2.7 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 4 cents to $22.62 in June.

The change in total nonfarm payroll employment for April was revised up from +159,000 to +175,000, and the change for May was revised up from +223,000 to +244,000. With these revisions, employment gains in April and May combined were 37,000 more than previously reported. After revisions, job gains have averaged 211,000 per month over the last 3 months.

Bureau of Labor Statistics, “Employment Situation. Jun 2018“, 6 Jul 2018 (08:30) More

flag_usa US: International Trade in Goods and Services. May 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 $43.1 billion in May, down $3.0 billion from $46.1 billion in April, revised.

us_trade_20180706

Exports, Imports, and Balance

May exports were $215.3 billion, $4.1 billion more than April exports. May imports were $258.4 billion, $1.1 billion more than April imports.

The May decrease in the goods and services deficit reflected a decrease in the goods deficit of $2.6 billion to $65.8 billion and an increase in the services surplus of $0.5 billion to $22.7 billion.

Year-to-date, the goods and services deficit increased $17.9 billion, or 7.9 percent, from the same period in 2017. Exports increased $84.5 billion or 8.8 percent. Imports increased $102.4 billion or 8.6 percent.

Three-Month Moving Averages

The average goods and services deficit decreased $4.2 billion to $45.4 billion for the three months ending in May.

  • Average exports increased $3.1 billion to $212.4 billion in May.
  • Average imports decreased $1.1 billion to $257.9 billion in May.

Year-over-year, the average goods and services deficit increased $0.2 billion from the three months ending in May 2017.

  • Average exports increased $19.9 billion from May 2017.
  • Average imports increased $20.1 billion from May 2017.

Exports

Exports of goods increased $3.7 billion to $144.9 billion in May.

Exports of goods on a Census basis increased $3.6 billion.

  • Capital goods increased $2.0 billion.
    o Civilian aircraft increased $1.9billion.
  • Foods, feeds, and beverages increased $1.7 billion.
    o Soybeans increased $2.0billion.
  • Other goods increased $0.9 billion.
  • Industrial supplies and materials decreased $1.3 billion.
    o Other petroleum products decreased $0.9billion.

Net balance of payments adjustments increased $0.1 billion.

Exports of services increased $0.4 billion to $70.4 billion in May.

  • Transport increased $0.1 billion.
  • Other business services, which includes research and development services; professional and management services; and technical, trade-related, and other services, increased $0.1 billion.
  • Financial services increased $0.1 billion.

Imports

Imports of goods increased $1.1 billion to $210.7 billion in May.

Imports of goods on a Census basis increased $1.0 billion.

  • Capital goods increased $2.1 billion.
    o Telecommunications equipment increased $0.6 billion.
    o Computers increased $0.4 billion.
    o Civilian aircraft parts increased $0.3 billion.
    o Civilian aircraft engines increased $0.2 billion.
  • Consumer goods decreased $0.5 billion.
    o Pharmaceutical preparations decreased $0.6 billion.
  • Other goods decreased $0.4 billion.

Net balance of payments adjustments increased $0.2 billion.

Imports of services decreased $0.1 billion to $47.7 billion in May.

  • Transport decreased $0.1 billion.
  • Travel (for all purposes including education) decreased $0.1 billion.
  • Other business services increased $0.1 billion.

Real Goods in 2012 Dollars – Census Basis

The real goods deficit decreased $2.2 billion to $75.3 billion in May.

  • Real exports of goods increased $2.6 billion to $153.2 billion.
  • Real imports of goods increased $0.4 billion to $228.5 billion.

Revisions

Revisions to April exports

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

Revisions to April imports

  • Imports of goods were revised up less than $0.1 billion.
  • Imports of services were revised down $0.2 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis

The May figures show surpluses, in billions of dollars, with South and Central America ($3.6), Hong Kong ($2.8), Singapore ($0.9), Brazil ($0.8), United Kingdom ($0.6), and Saudi Arabia (less than $0.1). Deficits were recorded, in billions of dollars, with China ($32.0), European Union ($11.9), Japan ($6.0), Mexico ($5.8), Germany ($5.7), Italy ($2.6), Canada ($2.2), India ($1.9), Taiwan ($1.4), South Korea ($1.4), France ($1.2), and OPEC ($0.2).

  • The deficit with members of OPEC decreased $3.1 billion to $0.2 billion in May. Exports increased $1.3 billion to $5.8 billion and imports decreased $1.9 billion to $6.0 billion.
  • The deficit with the European Union decreased $1.3 billion to $11.9 billion in May. Exports increased $0.2 billion to $27.5 billion and imports decreased $1.2 billion to $39.3 billion.
  • The deficit with China increased $1.2 billion to $32.0 billion in May. Exports increased $0.6 billion to $11.7 billion and imports increased $1.8 billion to $43.7 billion.

U.S. Census Bureau and Bureau of Economic Analysis, “US International Trade in Goods and Services. May 2018“, 6 Jul 2018 (08:30) 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]