Wed 11 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 fell on Wednesday, breaking a four-session streak of gains after Washington’s threat to impose tariffs on an additional $200 billion worth of Chinese goods fanned trade war fears, while a sharp drop in oil prices hit energy shares.

  • The S&P 500 index fell 19.82 points, or 0.71%, to 2,774.02
  • The Dow Jones Industrial Average fell 219.21 points, or 0.88%, to 24,700.45
  • The Nasdaq Composite index fell 42.59 points, or 0.55%, to 7,716.61
  • Declining issues outnumbered advancing ones on the NYSE by a 2.74-to-1 ratio; on Nasdaq, a 1.87-to-1 ratio favored decliners.
  • The S&P 500 posted 13 new 52-week highs and one new low; the Nasdaq Composite recorded 63 new highs and 51 new lows.
  • About 6.0 billion shares changed hands on U.S. exchanges. That compares with the 6.9 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Trade policy impacts

China responded to U.S. President Donald Trump’s threats by accusing the United States of bullying and warned that it would hit back.

Industrial names including Boeing, 3M and Caterpillar, which have been among the hardest hit by the recent trade dispute, were among the Dow’s biggest drags.

Materials, down 1.7%, was another big negative influence on the market, with Freeport-McMoRan down 3.9% as copper prices hit their lowest in about a year.

Investors said trade war worries may slip to the background as investors begin to focus more closely on second-quarter earnings over the coming weeks. Results from JPMorgan Chase and other big banks are due Friday.

“The trade situation is worrisome but nothing more is going to happen right away. This story may recede in people’s consciousness while current stories capture people’s interests, particularly earnings … People are looking for some fairly strong earnings, and there’s certainly potential for disappointment.” said John Carey, portfolio manager at Amundi Pioneer Asset Management in Boston.

Analysts are forecasting S&P 500 companies’ earnings grew about 21% in Q2/2018 from Q2/2017, according to Thomson Reuters data.

Chipmakers, which largely depend on China for their revenue, fell, with the Philadelphia semiconductor index down 2.6%.

The market’s drop was not as steep as what was seen in late Mar 2018 and early Apr 2018 when the escalating trade rhetoric between China and the United States led to the S&P falling more than 2% on 4 occasions.

The market slide may have been contained in part by speculation the Trump administration could change its mind by the end of August, when the tariffs are due to come into effect, some strategists said.

The utilities sector was the only one in positive territory, with a 0.9% gain.

Energy

Also pressuring the market Wednesday, the S&P 500 energy index fell 2.2%, leading sector declines. U.S. crude oil futures settled down 5% on the trade dispute escalation and as expectations of growing supplies increased on news that Libya would reopen ports.

Media

Twenty-First Century Fox fell 4% after the media company raised its offer for Britain’s Sky, seeing off rival bidder Comcast for now. Comcast shares were up 1.3%.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) 2,774.02 -0.71% 2,673.61 +3.75%
DJIA INDU 24,700.45 -0.88% 24,719.22 -0.08%
NASDAQ IXIC 7,716.61 -0.55% 6,903.39 +11.78%

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

:-) Our AUD-denominated index closed on a record high 4.805, beating its 18 Jun 2018 record of 4.785. This was attributed to the significant fall in the value of the AUD against the USD.

Index Currency Today Change 31 Dec 17 YTD
USD-denominated Index AUD 3.564 -0.72% 3.068 +16.19%
Valuation Rate USD/AUD 0.74172 -1.37% 0.78528 -5.55%
AUD-denominated Index AUD 4.805 +0.64% 3.909 +22.93%

Portfolio stock prices

:-) Amazon closed on a record $1,755, beating its 20 Jun 2018 record of $1,750.08
:-) PayPal closed on a record $86.25, beating its 9 Jul 2018 record of $86.23
:-) Visa closed on a record $138.15, up 1.07% on yesterday’s record $136.69

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1171.46 +0.37% $1053 +11.24%
Alphabet C GOOG $1153.90 +0.07% $1045.65 +10.35%
Apple AAPL $187.88 -1.30% $169.23 +11.02%
Amazon AMZN $1755 +0.66% $1169.54 +50.05%
Ebay EBAY $36.98 -0.17% $37.76 -2.07%
Facebook FB $202.54 -0.50% $176.46 +14.77%
PayPal PYPL $86.25 +0.09% $73.61 +17.17%
Twitter TWTR $43.87 +0.27% $24.01 +82.71%
Visa V $138.15 +1.06% $114.02 +21.16%
VMware VMW $153.59 -1.23% $125.32 +22.55%

Selected Tech News Headlines

  • Alphabet says 2 of its ambitious side projects are ready for the big leagues: “Alphabet, Google’s parent company, announced on Wednesday that two research projects, Loon and Wing, would become independent businesses. Loon, the balloon-flying internet-delivery project, and Wing, which is developing a drone-delivery service, are now standalone businesses operating under the Alphabet umbrella. This is likely to mean little for Alphabet’s bottom line for the foreseeable future, but the two projects emerged from Google’s X facility, which is more focused on changing the world.Business Insider
    X’s job is to create radical new technologies and build a bridge from an idea to a proven concept. Now that the foundational technology for these projects is built, Loon and Wing are ready to take their products into the world; this is work best done outside of the prototyping-focused environment of X. With Loon and Wing now leaving X to join the ranks of graduates like Waymo, Chronicle and Verily, we can turn our resources to new moonshot adventures, as well as our ongoing work in robotics, free-space optics and Glass.Alphabet X

  • Ex-Apple engineer arrested on his way to China, charged with stealing company’s autonomous car secrets: “For about two years, Xiaolang Zhang was privy to information to which many in the tech world can only dream of having access: the inner workings of Apple’s secretive autonomous car research. During the weekend, the former Apple engineer was arrested by U.S. authorities at San Jose International Airport while preparing to board a flight to China and charged with stealing proprietary information related to Apple’s self-driving car project. At the time of his arrest, he said he was working for a Chinese start-up that is also developing autonomous vehicles, according to a criminal complaint filed in federal court in San Jose on Monday by the FBI and the U.S. attorney’s office. Zhang, who started working at Apple in December 2015, was accused of downloading files that included engineering schematics and technical reports before leaving to work for Xiaopeng Motors, a Guangzhou-based company also known as XMotors, documents said.Washington Post

  • Russian company had access to Facebook user data through apps: “A Russian internet company with links to the Kremlin was among the firms to which Facebook gave an extension which allowed them to collect data on unknowing users of the social network after a policy change supposedly stopped such collection. Facebook told CNN on Tuesday that apps developed by the Russian technology conglomerate Mail.Ru Group, were being looked at as part of the company’s wider investigation into the misuse of Facebook user data in light of the Cambridge Analytica scandal. Facebook told CNN that the Mail.Ru Group developed hundreds of Facebook apps, some of which were test apps that were not made public. Only two apps were granted an extension, lasting two weeks, that would have allowed them to collect friend data beyond the cut-off date, Facebook said.CNN

  • Twitter’s Crackdown on Fake Accounts Will Make You Look Less Popular: “When Twitter Inc. detects sudden changes in behavior, like spammy tweeting patterns or sharing of misleading web links, it contacts the owner to confirm control of the account. If the owner doesn’t respond and reset their password, Twitter locks the account. This week, the company said it will remove these from profiles, reducing the number of followers users have. The company recently said it’s identifying almost 10 million dubious accounts a week and is putting all accounts through a security check. The stock slumped earlier this week on concern the crackdown would dent user growth. While it excludes spam accounts in reported user data, Twitter noted early this year that monthly active user numbers would be “negatively impacted” by efforts to expunge fake accounts. Removing locked accounts from follower counts won’t impact Twitter’s monthly or daily active user metrics, the company said on Wednesday.Bloomberg ABC

  • Walmart is ‘dead money’ as the Dow stock sits in a bear market: “Costco is at all-time highs, Target is within reach of its best levels of the year, but Walmart has been left in the dust. The original big-box retailer sits in a bear market after punishing sell-offs this year. Some say the stock is a no-touch. “Stay away from it. I think it’s dead money … Investors are really not appreciating how much of a spend it’s going to take to really compete within the e-commerce space. The expense that they’re going to have to incur to get the scales is absolutely going to have an impact on margins, and I think that’s the part that people are just missing,” David Seaburg, head of sales and trading at Cowen & Co., told CNBC’s “Trading Nation” on Tuesday. Walmart agreed to acquire a majority stake in Indian e-commerce retailer Flipkart for $16 billion earlier this year. In 2016, Walmart laid out $3 billion for Jet.com to compete with Amazon on household goods deliveries. Amazon investors put a premium on its growth story even at the expense of profitability. Seaburg says he doubts Walmart investors will have as much patience.CNBC

  • Senate overwhelmingly rebukes Trump with tariff vote: “For the second day in a row, the Senate pushed back on President Donald Trump, showing stiff resistance to his key policy decisions on tariffs and NATO even as the President is at a summit in Europe wrestling with allies over those same issues. Senators voted overwhelmingly Wednesday calling on Trump to get congressional approval before using national security as a reason for imposing tariffs on other nations, as he did recently with steel and aluminium levies against Mexico, Canada and the European Union. The bipartisan 88-to-11 tally on the non-binding resolution sends a message to the White House about how frustrated senators are over Trump’s disruptive moves on tariffs. However, future efforts to pass enforceable legislation likely face an uphill battle over Trump’s objections.CNN

Currencies: USD/AUD

USD/USD

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

USD

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

The Bloomberg Dollar Spot Index rose 0.7%, most since 14 Jun 2018.
Japan’s JPY fell 0.9% to 111.95 per USD.
China’s offshore yuan fell 1.1% to 6.7227 per USD.
The EUR fell 0.6% at USD 1.1671.

The yield on 10-year Treasuries fell less than 1 basis point to 2.84%.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): $70.69/barrel -4.61% Chart
  • ICE (London) Brent North Sea Crude: $74.10/barrel -6.04% Chart
  • NYMEX Natural gas futures: $2.83/MMBTU +1.36% Chart

flag_australia AU: Housing Finance. May 2018

Press Release Extract [au_housing]

DWELLINGS FINANCED

Value of Dwellings Financed

The total value of dwelling commitments excluding alterations and additions (trend) fell 0.7% in May 2018 compared with April 2018, while the seasonally adjusted series rose 0.5% in May 2018.

The total value of owner occupied housing commitments (trend) fell (down $33m, 0.2%) in May 2018. A fall was recorded in commitments for the construction of dwellings (down $35m, 1.8%) while a rise was recorded in commitments for the purchase of new dwellings (up $3m, 0.3%) with commitments for the purchase of established dwellings being flat. The seasonally adjusted series for the total value of owner occupied housing commitments rose 0.7% in May 2018.

The total value of investment housing commitments (trend) fell (down $205m, 1.9%) in May 2018 compared with April 2018. Falls were recorded in commitments for the purchase of dwellings by individuals for rent or resale (down $135m, 1.5%), commitments for the purchase of dwellings by others for rent or resale (down $50m, 5.1%) and commitments for the construction of dwellings for rent or resale (down $21m, 1.9%). The seasonally adjusted series for the total value of investment housing commitments fell 0.1% in May 2018.

Number of Owner Occupied Dwellings Financed

The number of owner occupied housing commitments (trend) fell 0.7% in May 2018, following a fall of 0.8% in April 2018. Falls were recorded in commitments for the purchase of established dwellings (down 246, 0.6%), commitments for the construction of dwellings (down 87, 1.5%) and commitments for the purchase of new dwellings (down 25, 0.9%). The seasonally adjusted series for the total number of owner occupied housing commitments rose 1.1% in May 2018.

Number of Owner Occupied Dwellings Financed – State

Between April 2018 and May 2018, the number of owner occupied housing commitments (trend) fell in Victoria (down 116, 0.7%), Queensland (down 113, 1.1%), New South Wales (down 73, 0.4%), Western Australia (down 43, 0.9%), the Australian Capital Territory (down 21, 1.9%), South Australia (down 20, 0.6%) and the Northern Territory (down 3, 0.9%), while a rise was recorded in Tasmania (up 3, 0.3%).

The seasonally adjusted estimates rose in Victoria (up 532, 3.5%), New South Wales (up 210, 1.3%), Queensland (up 80, 0.8%), Tasmania (up 31, 3.1%) and South Australia (up 22, 0.6%), while falls were recorded in the Australian Capital Territory (down 93, 8.2%), the Northern Territory (down 9, 3.6%) and Western Australia (down 8, 0.2%).

First Home Buyer Commitments

In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments was unchanged from April 2018 to May 2018 at 17.6%. Between April 2018 and May 2018, the average loan size for first home buyers rose $1,800 to $344,600. The average loan size for all owner occupied housing commitments rose $1,500 to $400,100 for the same period.

Number of Owner Occupied Dwellings Financed Excluding Refinancing

The number of owner occupied housing commitments excluding refinancing (trend) fell 0.6% in May 2018, following a fall of 0.8% in April 2018. The seasonally adjusted series rose 1.8% in May 2018, after a fall of 1.2% in April 2018.

PURPOSE OF FINANCE (OWNER OCCUPATION)

Construction of dwellings

The number of finance commitments for the construction of dwellings for owner occupation (trend) fell 1.5% in May 2018, following a fall of 1.7% in April 2018. The seasonally adjusted series rose 1.2% in May 2018, while April 2018 was flat.

Purchase of new dwellings

The number of finance commitments for the purchase of new dwellings for owner occupation (trend) fell 0.9% in May 2018, following a fall of 0.9% in April 2018. The seasonally adjusted series rose 0.1% in May 2018, after a fall of 3.6% in April 2018.

Purchase of established dwellings (including refinancing across lending institutions)

The number of finance commitments for the purchase of established dwellings for owner occupation (trend) fell 0.6% in May 2018, following a fall of 0.7% in April 2018. The seasonally adjusted series rose 1.2% in May 2018, after a fall of 0.9% in April 2018.

Refinancing

The number of refinancing commitments for owner occupied housing (trend) fell 0.9% in May 2018, following a fall of 0.9% in April 2018. The seasonally adjusted series fell 0.2% in May 2018, following a fall of 0.3% in April 2018.

TYPE OF LENDER (OWNER OCCUPATION)

Banks

The number of commitments for owner occupied dwellings financed by banks (trend) fell 0.8% in May 2018, following a fall of 0.9% in April 2018. The seasonally adjusted series rose 0.8% in May 2018, after a fall of 1.2% in April 2018.

Non-banks

The number of commitments for owner occupied dwellings financed by non-banks (trend) rose 0.6% in May 2018, following a rise of 0.3% in April 2018. The seasonally adjusted series rose 4.5% in May 2018, following a rise of 2.3% in April 2018. The number of commitments for owner occupied dwellings financed by permanent building societies (trend) rose 5.7% in May 2018, following a rise of 1.4% in April 2018.

HOUSING LOAN OUTSTANDINGS

At the end of May 2018, the value of outstanding housing loans financed by Authorised Deposit-taking Institutions (ADIs) was $1,667b, up $7b (0.4%) from the April 2018 closing balance. Owner occupied housing loan outstandings financed by ADIs rose $6b (0.5%) to $1,104b and investment housing loan outstandings financed by ADIs rose $0.7b (0.1%) to $563b.

Bank housing loan outstandings rose $6b (0.4%) during May 2018 to reach a closing balance of $1,631b. Owner occupied housing loan outstandings of banks rose $6b (0.5%) to $1,075b and investment housing loan outstandings of banks rose $0.7b (0.1%) to $555b.

Australian Bureau of Statistics, “5609.0 Housing Finance, Australia, May 2018“, 11 Jul 2018 (11:30 AEST) More

flag_australia AU: Building Activity. Mar 2018

Press Release Extract [au_building]

Total Dwellings

  • The trend estimate for the total number of dwelling units commenced rose 1.2% in the March quarter following a rise of 1.8% in the December 2017 quarter.
  • The seasonally adjusted estimate for the total number of dwelling units commenced rose 5.2% to 57,112 dwellings in the March quarter following a fall of 2.2% in the December 2017 quarter.

New Private Sector Houses

  • The trend estimate for new private sector house commencements rose 2.0% in the March quarter following a rise of 2.7% in the December quarter.
  • The seasonally adjusted estimate for new private sector house commencements rose 3.1% to 30,397 dwellings in the March quarter following a rise of 3.3% in the December quarter.

New Private Sector Other Residential Building

  • The trend estimate for new private sector other residential building commencements rose 0.2% in the March quarter following a rise of 0.7% in the December quarter.
  • The seasonally adjusted estimate for new private sector other residential building rose 8.8% to 25,522 dwellings in the March quarter following a fall of 9.1% in the December quarter.

Australian Bureau of Statistics, “8752.0 Building Activity, Australia, March 2018“, 11 Jul 2018 (11:30 AEST) More

flag_usa US: Producer Price Index. Jun 2018

Press Release Extract [us_ppi]

The Producer Price Index for final demand rose 0.3 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.5 percent in May and 0.1 percent in April. On an unadjusted basis, the final demand index moved up 3.4 percent for the 12 months ended in June, the largest 12-month increase since climbing 3.7 percent in November 2011.

us_ppi1_20180711
us_ppi1_20180711

In June, most of the rise in the index for final demand is attributable to a 0.4-percent advance in prices for final demand services. The index for final demand goods edged up 0.1 percent.

Prices for final demand less foods, energy, and trade services moved up 0.3 percent in June after rising 0.1 percent in May. For the 12 months ended in June, the index for final demand less foods, energy, and trade services climbed 2.7 percent.

Final Demand

Final demand services: Prices for final demand services moved up 0.4 percent in June, the largest advance since a 0.5-percent rise in January. In June, half of the broad-based increase in the index for final demand services can be traced to margins for final demand trade services, which climbed 0.7 percent. Prices for final demand services less trade, transportation, and warehousing and for final demand transportation and warehousing services rose 0.3 percent and 0.5 percent, respectively.

Product detail: Over 40 percent of the advance in the index for final demand services is attributable to a 21.8-percent jump in the index for fuels and lubricants retailing. The indexes for hospital outpatient care; health, beauty, and optical goods retailing; truck transportation of freight; automobiles and automobile parts retailing; and food retailing also moved higher. Conversely, prices for apparel, footwear, and accessories retailing declined 2.9 percent. The indexes for inpatient care and airline passenger services also decreased.

Final demand goods: Prices for final demand goods edged up 0.1 percent in June following a 1.0-percent rise in May. Leading the June increase, the index for final demand goods less foods and energy advanced 0.3 percent. Prices for final demand energy climbed 0.8 percent. In contrast, the index for final demand foods fell 1.1 percent.

Product detail: A major factor in the June increase in prices for final demand goods was the index for motor vehicles, which moved up 0.4 percent. Prices for diesel fuel, electric power, industrial chemicals, and fresh fruits and melons also advanced. Conversely, prices for fresh and dry vegetables dropped 13.8 percent. The indexes for corn, pharmaceutical preparations, and residential natural gas also moved lower.

Bureau of Labor Statistics, “Producer Price Index. Jun 2018“, 11 Jul 2018 (08:30) More

flag_usa US: New Foreign Direct Investment. 2017

Press Release Extract [us_inv]

Expenditures by foreign direct investors to acquire, establish, or expand U.S. businesses totaled $259.6 billion (preliminary) in 2017. Expenditures were down 32 percent from $379.7 billion (revised) in 2016 and were below the annual average of $359.9 billion for 2014-2016. As in previous years, acquisitions of existing businesses accounted for a large majority of total expenditures.

us_fdi_20180711

In 2017, expenditures for acquisitions were $253.2 billion, expenditures to establish new U.S. businesses were $4.1 billion, and expenditures to expand existing foreign-owned businesses were $2.4 billion. Planned total expenditures, which include both first-year and planned future expenditures until completion for projects initiated in 2017, were $278.0 billion.

Expenditures by industry, country, and state in 2017

By industry, expenditures for new direct investment were distributed widely. Expenditures in manufacturing, at $103.7 billion, accounted for 40 percent of total expenditures, the largest share among major industries. Within manufacturing, expenditures were largest in food manufacturing ($34.0 billion). There were also large expenditures in information ($25.7 billion) and in real estate, rental, and leasing ($17.0 billion).

By country of ultimate beneficial owner (UBO), a small number of countries accounted for most of the investment. The largest investing country was Canada, with expenditures of $66.2 billion, followed by the United Kingdom ($40.9 billion), Japan ($34.0 billion), and France ($23.1 billion). By region, Europe contributed 40 percent of the new investment in 2017.

By U.S. state, the largest expenditures were in California ($41.6 billion), Texas ($39.7 billion), and Illinois ($26.0 billion).

Greenfield expenditures

Greenfield investment expenditures—expenditures to establish new U.S. businesses and to expand existing foreign-owned U.S. businesses—were $6.4 billion in 2017. Total planned expenditures until completion for greenfield investment initiated in 2017, which include both first-year and future expenditures, were $24.8 billion.

By U.S. industry, greenfield expenditures in 2017 were largest in manufacturing at $1.6 billion, accounting for 24 percent of total greenfield expenditures. By U.S. state, greenfield expenditures in 2017 were largest in Delaware ($1.2 billion) and New York ($0.6 billion).

Employment by newly acquired, established, or expanded foreign-owned businesses

In 2017, employment at newly acquired, established, or expanded foreign-owned businesses in the United States was 554,300 employees. Current employment of acquired enterprises was 549,700. Total planned employment, which includes the current employment of acquired enterprises, the planned employment of newly established business enterprises when fully operational, and the planned employment associated with expansions, was 577,200.

By industry, accommodation and food services accounted for the largest number of employees (255,100), followed by manufacturing (109,000) and administration, support, and waste management services (55,500). By country of UBO, France accounted for the largest number of employees (47,700), followed by the United Kingdom (42,100) and Canada (39,400).

By U.S. state, Virginia was in the largest employment category, but the employment value is suppressed due to confidentiality. The next largest states in employment were Missouri (63,000), California (55,700), and Florida (55,500). Employment for acquired entities that operate in multiple states is attributed to the state where the greatest number of employees are based.

Bureau of Economic Analysis, “New Foreign Direct Investment in the United States. 2017“, 11 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]