Tue 10 Jul 2018


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In Portfolioticker today

read_this Hey Jarvis, how did we go today?

Today at the stock market

bull/bearThe S&P 500 rose on Tuesday to post its highest closing level since 1 Feb 2018, the day before the market began a sharp extended selloff, as strong results from PepsiCo boosted optimism about the earnings season.

  • The S&P 500 rose 9.67 points, or 0.35%, to 2,793.84.
  • The Dow Jones Industrial Average rose 143.07 points, or 0.58%, to 24,919.66
  • The Nasdaq Composite rose 3.00 points, or 0.04%, to 7,759.20.
  • Advancing issues outnumbered declining ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.53-to-1 ratio favored decliners.
  • The S&P 500 posted 30 new 52-week highs and no new lows; the Nasdaq Composite recorded 104 new highs and 26 new lows.
  • Trading volume was among the lowest of the year, with about 5.8 billion shares changing hands on U.S. exchanges. That compares with the 7.0 billion daily average for the past 20 trading days, according to Thomson Reuters data.

The benchmark index is now up 4.5% since the end of 2017. Worries over rising bond yields and potentially firming inflation drove the early February selloff, which confirmed a correction for the market.

Earnings are expected to become key for investors in the coming weeks as the U.S. reporting period kicks into high gear.

JPMorgan Chase, Wells Fargo and Citigroup are scheduled to report results on Friday. Their shares dipped on Tuesday after leading market gains on Monday. PepsiCo’s shares surged after the company’s quarterly results topped estimates on strong sales of snacks. The company also reaffirmed its full-year forecast amid signs of a gradual recovery in its soda business.

Overall, S&P 500 companies are expected to post second-quarter profit growth of around 21%, slightly higher than what was forecast in Apr 2108, according to Thomson Reuters data.

Investors are still, however, expected to parse quarterly reports to gauge the impact of the U.S.-China trade dispute on company earnings.

Also boosting the S&P on Tuesday, utilities and telecom indexes rose about 1% each, bouncing back from Monday’s losses.

Higher oil prices lifted energy shares. The S&P energy index rose 0.7% as crude oil prices gained on growing supply disruptions in Norway and Libya, but gains were pared after the United States said it would consider requests for waivers from Iranian oil sanctions. Shares of Exxon and Chevron were up around 1% each.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) 2,793.84 +0.34% 2,673.61 +4.49%
DJIA INDU 24,919.66 +0.57% 24,719.22 +0.81%
NASDAQ IXIC 7,759.20 +0.03% 6,903.39 +12.39%

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 3.590 -0.07% 3.068 +17.03%
Valuation Rate USD/AUD 0.75196 +0.08% 0.78528 -4.25%
AUD-denominated Index AUD 4.774 -0.15% 3.909 +22.14%

Portfolio stock prices

:-) Visa closed on a record high of $136.69, beating its 6 Jun 2018 record of $136.28.

Stock Ticker Today Change 31 Dec 17 YTD
Alphabet A GOOGL $1167.14 -0.02% $1053 +10.83%
Alphabet C GOOG $1153.07 -0.09% $1045.65 +10.27%
Apple AAPL $190.35 -0.13% $169.23 +12.48%
Amazon AMZN $1743.35 +0.24% $1169.54 +49.06%
Ebay EBAY $37.04 -2.30% $37.76 -1.91%
Facebook FB $203.54 -0.59% $176.46 +15.34%
PayPal PYPL $86.17 -0.07% $73.61 +17.06%
Twitter TWTR $43.75 -0.89% $24.01 +82.21%
Visa V $136.69 +0.86% $114.02 +19.88%
VMware VMW $155.50 +0.43% $125.32 +24.08%

Selected Tech News Headlines

  • Amazon is increasingly tying Whole Foods to its Prime service – and it could be the gateway to $1 trillion: “Amazon is creating a “flywheel effect” with by using Whole Foods to boost its Prime subscription service and vice versa, says GBH Insights analyst Daniel Ives. That’s great for Amazon — but not such good news for its rivalsBusiness Insider

  • Microsoft’s $399 Surface Go hits most of the right notes to compete with the iPad and Chromebooks: “ Microsoft announced the new Surface Go on Tuesday, a cheaper $399 Surface laptop that will compete with Apple’s iPad. It’s the first Surface product that’s priced competitively with an iPad or Chromebook — the larger Surface laptops start at $799 — it’s designed to run all Windows apps (save for high-powered ones, given it operates on a relatively low-power Intel Pentium Gold chip), and some models will include built-in LTE for a connection wherever you go.CNBC

  • SoftBank tightens grip on Yahoo Japan via $2 billion deal with Altaba: “SoftBank Group is increasing its stake in Yahoo Japan through a $2 billion, three-way deal with U.S. firm Altaba to deepen ties with the internet heavyweight ahead of an IPO of its telecoms unit. The transaction, with just $9 million net investment by SoftBank, allows it to boost ownership of Yahoo Japan without pressuring its already strained balance sheet. It also leaves SoftBank’s domestic telecoms unit with a 12 percent stake in Yahoo Japan, highlighting for investors the two companies’ ties ahead of its planned listing.CNBC

  • Australian lawsuit funder files complaint against Facebook, flags suit over privacy breaches: “Litigation funder IMF Bentham Ltd is preparing to potentially sue social media giant Facebook Inc in Australia over its sharing of users’ data with political consultancy Cambridge Analytica. The world’s largest social network said in April that data of up to 87 million people ended up in the hands of Cambridge Analytica, which was employed by Donald Trump’s 2016 U.S. presidential campaign. In Australia, more than 311,000 users data may have been used without authorization, Facebook said in April, when Australia’s Information Commissioner, the country’s privacy regulator, began to investigate. IMF said it has complained to the Australian Information Commissioner alleging breaches of privacy laws over the data sharing. A class action lawsuit seeking compensation for users could follow depending on the regulator’s response, IMF said.Reuters AFR

  • How Apple’s app store changed our world: “A decade ago, Apple opened a store peddling iPhone apps, unlocking the creativity of software developers and letting users truly make their mobile devices their own. The resulting explosion of phone apps — there are now more than 2 million for the iPhone alone — has changed daily life for billions of people around the world. It has unleashed new ways for us to work and play — and to become so distracted that we sometimes forget to look up from our screens. It has created new industries — think ride-hailing services like Uber, which would be unimaginable without mobile apps — and pumped up demand for software developers and coding schools. But it has also opened the door to an age of technology anxiety, rife with concerns that apps are serving us a little too well and holding our attention whether we want them to or not.AP

  • Morgan Stanley says the stock market is taking a major turn for the worse, and it’s bad news for tech stocks: “Morgan Stanley’s equity strategists said it’s time to get more defensive and downgraded the tech sector to underweight, with a list of reasons why the sector may not be as rewarding to investors in the near term. The stock market is at a turning point, according to Morgan Stanley. In a note on Monday, Mike Wilson, the chief US equity strategist, said the market’s turning point arrived in Jun 2018. Since 18 Jun 2018, defensive sectors like utilities and real estate have outperformed cyclical sectors like tech and financials. Wilson also identified that two out of three conditions for a rotation to defensive sectors are happening, and investors are discounting them: peaking S&P 500 earnings-per-share growth on a year-on-year basis, and a top in the 10-year Treasury yield. The third would occur if the 10-year yield falls below the 2-year — a so-called yield-curve inversion. Analysts project 25% earnings growth for tech companies, however, Wilson said there’s not much room to meaningfully beat expectations, even if they’re met. This “remarkable” earnings forecast is already reflected in stock prices, Wilson said. Similarly, the fundamentals that would drive the earnings growth is already priced in. While not in “bubble” territory, the price-to-earnings ratio for S&P 500 tech companies is over 2 standard deviations above the post-crisis average, he added.Business Insider

  • Just three stocks are responsible for most of the market’s gain this year: “Amazon, Netflix and Microsoft together this year are responsible for 71% of S&P 500 returns and for 78% of Nasdaq 100 returns. The 3 stocks make up 35%, 21% and 15% of S&P 500 returns, respectively, while making up 41%, 21% and 15% of Nasdaq 100 returns.CNBC
    cnbc1_20180710

  • Google Works With Shopify to Spur Commerce, Retail Ad Spending: “Shopping ads have become a powerful sales spigot for Alphabet Inc.’s Google. So the company is doubling down on them, launching a new tool designed to draw even more spending from e-commerce businesses and drive offline sales. With the new feature, Google will make it easier for retailers to run ads for consumer products, like sneakers and speakers, on several popular Google services. And marketers will be able to buy these Google ads directly through Shopify Inc., another integration between the two companies that are facing a looming threat from Amazon.com Inc. Google’s commerce tool is one of four new ad products the search giant introduced Tuesday. Each centers on automating the ad-buying process. The tools are also designed to cement a central marketing portal for all things Google. With the retail feature, for instance, marketers can set certain business goals, such as acquiring new customers or driving foot traffic to stores, then spray ads efficiently on Google search, Maps, YouTube and across the web.Bloomberg

  • YouTube is making moves to nab thousands of new advertisers – the kinds of brands that funnels billions to Google: “YouTube has spend the past several years going after brands that primarily run ads on TV. Now it’s launching products designed to appeal to the millions of smaller brands that fuel Google’s massive search ads business.Business Insider

  • Tesla has signed an agreement to build a factory in Shanghai: “Tesla said Tuesday it signed an agreement to build a factory in China to make its electric cars. The news comes days after the automaker has had to raise prices 20% in China to respond to import tariffs. Tesla said it expects construction to begin “in the near future, after we get all the necessary approvals and permits.” From there, it will take about 2 years before Tesla can start making cars, and another 2-3 years before the factory is fully ramped up to its capacity of 500,000 cars. Shares of the company climbed nearly 2% Tuesday morning.CNBC The Street Reuters

  • Online shopping giants fail to keep up with GST: “International online shopping giants appear to be shirking their responsibility to charge GST more than a week after it came into force and two years since the tax estimated to be worth $500 million a year was first announced. UK giant Marks & Spencer, US electronics warehouse B&H and fashion retailer J.Crew are among those who have failed to add GST to their invoices, saving their Australian customers 10% in tax while not disclosing their own tax obligations. Up until 1 Jul 2018, GST was only paid on international purchases worth more than $1000, but that has now been extended to all online products following years of lobbying from local bricks and mortar retailers struggling against the tide of online sales.The Age

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 (DXY) fell 0.1%.
The EUR fell 0.1% to USD 1.1745.
Britain’s GBP rose 0.1% to USD 1.3270.
Japan’s JPY was flat after sinking 0.4% to 110.98 per USD.

The yield on 10-year Treasuries fell 1 basis point to 2.849%.
Germany’s 10-year yield rose 2 basis points to 0.32%.
Britain’s 10-year yield rose 5 basis points to 1.302%.
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): $74.06/barrel +0.28% Chart
  • ICE (London) Brent North Sea Crude: $78.77/barrel +0.90% Chart
  • NYMEX Natural gas futures: $2.79/MMBTU -1.59% Chart

flag_europe EU: House Price Index. Q1/2018

Press Release Extract [eu_housing]

House prices, as measured by the House Price Index, rose by 4.5% in the euro area and by 4.7% in the EU in the first quarter of 2018 compared with the same quarter of the previous year. These figures come from Eurostat, the statistical office of the European Union.

eu_housing1_20180710

Compared with the fourth quarter of 2017, house prices rose by 0.6% in the euro area and by 0.7% in the EU in the first quarter of 2018.

House price developments in the EU Member States

Among the Member States for which data are available, the highest annual increases in house prices in the first quarter of 2018 were recorded in Latvia (+13.7%), Slovenia (+13.4%), Ireland (+12.3%) and Portugal (+12.2%), while prices fell in Sweden and Italy (both -0.4%) as well as in Finland (-0.1%).

Compared with the previous quarter, the highest increases were recorded in Latvia (+7.5%), Hungary and Slovenia (both +4.4%) as well as in Portugal (+3.7%), while the largest decreases were observed in Malta (-4.7%), Cyprus (-1.8%) and Sweden (-0.8%).

Eurostat, “House Price Index. Q1/2018“, 10 Jul 2018 More

flag_europe EU: Population. 2017

Press Release Extract [eu_population]

On 1 January 2018, the population of the European Union (EU) was estimated at 512.6 million, compared with 511.5 million on 1 January 2017. During the year 2017, more deaths than births were recorded in the EU (5.3 million deaths and 5.1 million births), meaning that the natural change of the EU population was negative. The population change (positive, with 1.1 million more inhabitants) was therefore due to net migration.

With 82.9 million residents (or 16.2% of the total EU population on 1 January 2018), Germany is the most populated EU Member State, ahead of France (67.2 million, or 13.1%), the United Kingdom (66.2 million, or 12.9%), Italy (60.5 million, or 11.8%), Spain (46.7 million, or 9.1%) and Poland (38.0 million, or 7.4%). For the remaining Member States, nine have a share of between 1.5% and 4% of the EU population and thirteen a share below 1.5%.

Population increase in nineteen Member States

eu_population_20180710

During 2017, the population increased in nineteen EU Member States and decreased in nine. The largest relative increase was observed in Malta (+32.9 per 1 000 residents), ahead of Luxembourg (+19.0‰), Sweden (+12.4‰), Ireland (+11.2‰) and Cyprus (+11.0‰). In contrast, the largest decrease was recorded in Lithuania (-13.8‰), followed by Croatia (-11.8‰), Latvia (-8.1‰), Bulgaria (-7.3‰) and Romania (-6.2‰). In total, the population of the EU increased by 1.1 million people (+2.1 per 1000 residents) during the year 2017.

Highest birth rate in Ireland, lowest in Italy

During the year 2017, 5.1 million babies were born in the EU, almost 90 000 less than the previous year. Across Member States, the highest crude birth rates in 2017 were recorded in Ireland (12.9 per 1 000 residents), Sweden (11.5‰), the United Kingdom and France (both 11.4‰), while the lowest were registered in Southern Member States: Italy (7.6‰), Greece (8.2‰), Portugal and Spain (both 8.4‰), Croatia (8.9‰) and Bulgaria (9.0‰). At EU level, the crude birth rate was 9.9 per 1 000 residents.

In the meantime, 5.3 million deaths were registered in the EU in 2017, 134 200 fewer than the previous year. Ireland (6.3 per 1 000 residents) and Cyprus (7.0‰) as well as Luxembourg (7.1‰) had in 2017 the lowest crude death rate, followed by Malta (7.6‰), the Netherlands (8.8‰), Spain and France (both 9.0‰). At the opposite end of the scale, Bulgaria (15.5‰), Latvia (14.8‰), Lithuania (14.2‰), Hungary (13.5‰), Romania (13.3‰) and Croatia (12.9‰) recorded the highest. The crude death rate was 10.3 per 1 000 residents in the EU.

Consequently, Ireland (with a natural change of its population of +6.6‰) remained in 2017 the Member State where births most outnumbered deaths, ahead of Cyprus (+3.8‰), Luxembourg (+3.2‰), France (+2.5‰), Sweden (+2.3‰) and the United Kingdom (+2.2‰). In contrast, among the fourteen EU Member States which registered a negative natural change in 2017, deaths outnumbered births the most in Bulgaria (-6.5‰), followed by Croatia and Latvia (both -4.1‰), Lithuania (-4.0‰), Hungary (-3.8‰), Romania (-3.6‰), Greece (-3.3‰) and Italy (-3.2‰).

Eurostat, “First population estimates: EU population up to nearly 513 million on 1 January 2018, Increase driven by migration“, 10 Jul 2018 More

flag_usa US: Job Openings and Labor Turnover Survey. May 2018

Press Release Extract [us_jolts]

The number of job openings edged down to 6.6 million on the last business day of May, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were little changed at 5.8 million and 5.5 million, respectively. Within separations, the quits rate and the layoffs and discharges rate were little changed at 2.4 percent and 1.1 percent, respectively. This release includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by four geographic regions.

Job Openings

On the last business day of May, the job openings level edged down to 6.6 million from a revised April level of 6.8 million, a series high. The job openings rate was 4.3 percent. The number of job openings decreased for total private (-228,000) and was little changed for government. Job openings increased in federal government (+12,000) and mining and logging (+10,000) but decreased in information (-60,000) and arts, entertainment, and recreation (-27,000). The number of job openings decreased in the Northeast region.

us_jolts1_20180710

Hires
The number of hires was little changed at 5.8 million in May. The hires rate was 3.9 percent. The number of hires was little changed for total private. Hires increased in health care and social assistance (+48,000). The number of hires was little changed in all four regions.

us_jolts2_20180710

Separations

Total separations includes quits, layoffs and discharges, and other separations. Total separations is referred to as turnover. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.

The number of total separations was little changed at 5.5 million in May. The total separations rate was 3.7 percent. The number of total separations was little changed for total private. Total separations decreased in arts, entertainment, and recreation (-39,000) and state and local government education (-17,000). The number of total separations was little changed in all four regions.

The number of quits increased in May to 3.6 million (+212,000). The quits rate was 2.4 percent. The number of quits rose for total private (+204,000) and was little changed for government. Quits increased in health care and social assistance (+55,000), finance and insurance (+21,000), and transportation, warehousing, and utilities (+20,000). The number of quits increased in the South region.

The number of layoffs and discharges was little changed at 1.6 million in May. The layoffs and discharges rate was 1.1 percent. The number of layoffs and discharges was little changed for total private. Layoffs and discharges decreased in retail trade (-75,000), arts, entertainment, and recreation (-44,000), and state and local government education (-15,000). The number of layoffs and discharges decreased in the West region.

The number of other separations was little changed in May at 320,000. The number of other separations was little changed for total private and decreased for government (-13,000). Other separations decreased in finance and insurance (-19,000), state and local government education (-7,000), and federal government (-4,000). Other separations was little changed in all four regions.

Net Change in Employment

Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising. Over the 12 months ending in May, hires totalled 66.4 million and separations totalled 63.9 million, yielding a net employment gain of 2.5 million. These totals include workers who may have been hired and separated more than once during the year.

Bureau of Labor Statistics, “Job Openings and Labor Turnover Survey. May 2018“, 10 Jul 2018 (10:00) More

flag_japan Japan update

Currency: USD/JPY

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