Random Market News, 10 July
"The G-20 Summit: Afterword.
This was an unusual G-20 summit inasmuch as one member—the United States—for the first time rejected some basic premises of the organization, namely the commitment to globalization, free trade and to combat climate change. In the end, the final communique reflected a line-up of 19 +1 on climate issues, with the U.S. as the outlier because of President Trump’s commitment to promote hydrocarbons. Nevertheless, the United States and the rest of the G-8 agreed that steps should be taken to reduce some trade imbalances. Yet most G-20 members are wary of the protectionist instincts of the new U.S. president, especially on steel production and exports."
"Germany’s Schäuble wants review of EU finance rules.
At a meeting of European finance ministers, Germany warns that eurozone banking rules need reform amid new criticism that recent rescues of Italian banks failed to heed the lessons of the financial crisis."
"S&P 500 Likely to Report Near Double-Digit Earnings Growth for Q2'17."
"Why Small Investors Are Losers.
Shrinking public markets harm individuals with little access to growth alternatives such as private equity and hedge funds."
"European actuarial body calls for PEPP amendments.
The requirement for the default option for a pan-European personal pension product (PEPP) to offer capital protection could undermine the European Commission’s initiative, according to the Actuarial Association of Europe (AAE).
Under the Commission’s proposal a range of institutions would be allowed to provide a PEPP: insurers, occupational pension funds, investment firms, asset managers and banks."
"UK Watchdog Report Blasts Asset Managers.
The FCA said that when looking at fund performance for both retail and institutional investors, it found that both actively managed and passively managed funds did not outperform their own benchmarks, after fees."
"Seeking Higher Returns, Sweden’s AP Pension Pushes into Private Equity.
Sweden’s $155 billion AP pension system received regulatory approval on Friday to become more aggressive in order to meet liabilities, according to Bloomberg.
AP1, AP2, AP3, and AP4 will now be required to hold 20% of their assets in the safest bonds, down from 30%. The threshold for illiquid investments will now be 40% of their portfolios, scrapping a prior 5% limit on non-listed investments."
"Emerging Hedge Funds Outshine Established Peers as Investors Revisit Asset Class.
Newer and smaller funds post outsized returns, while volatility for former declines to match industry."
"Brown University sued over alleged breach of fiduciary duty in 403(b) plans.
Participants in two Brown University 403(b) plans have sued the Providence, R.I.-based university, alleging the plans' managers breached their fiduciary duties under ERISA by paying "unreasonable and excessive fees" for investments and administrative services and offering too many duplicative investment choices."
"Temporary ring-fencing to help Dutch sector schemes merge.
The outgoing Dutch government wants to enable mandatory sector-wide pension funds to merge for benefits of scale even if their funding differs considerably."
"Singapore state investor GIC braces for protracted uncertainty, low returns.
Singapore’s sovereign wealth fund GIC Pte Ltd, among the world’s biggest investors, said it was turning cautious and expected returns to slow over the next decade, given high valuations, uncertainty over monetary policy and modest economic growth.
Smaller Singapore peer Temasek Holdings focuses on equities, but GIC, set up to manage Singapore’s foreign reserves, adopts a more conservative investment strategy, with the long-term goal of beating global inflation.
On Monday, the fund said its portfolio return was 5.1 percent per annum in U.S. dollar nominal terms over the five years to March 31, 2017, helped by the run-up in global financial assets, versus 3.7 percent a year ago."
"Wang Jianlin sells most of Wanda hotel and tourism portfolio to rival magnate for US$9.3 billion.
Proceeds from the disposal will be used to repay loans, according to a report in Caixin.
The sale includes the US$6 billion Harbin Wanda City, the resort featuring the world’s biggest indoor ski slope that opened two weeks ago.
Together with Anbang Group, Fosun Group and the HNA Group, Wanda was named last month by the China Banking Regulatory Commission for special attention in loans exposure, as the country’s four biggest overseas asset buyers face the equivalent of US$11.5 billion in bonds and loans by the end of 2018, according to Bloomberg’s data."
"European Venture Capital Fundraising Hits Post-Crisis High.
European venture capital funds raised €6.4 billion ($5.6 billion) in 2016, higher than any year since 2007, when they raised €7.7 billion, according to a new report, “The Acceleration Point,” published on Tuesday by industry trade association Invest Europe."
"As US high tech surges, Silicon Valley becomes a diplomatic outpost.
Sometime in August, Denmark's newly appointed ambassador to high tech will settle into Silicon Valley and staff his embassy, a novel kind of diplomatic outpost that recognizes the global clout that U.S. high tech companies now wield."
European Chambers of Commerce also set up outposts there.
Implied rate hike probability on July 26th ~3.1%, September 20th ~13.3%; 0% probability of rate cut through June 13th, 2018.
VIX ~11.11. 10-yr treasury vol (TYVIX) ~4.38.
"European Equities Close In The Green On Monday
The DAX 30 finished up 57 points, or 0.5%, at 12,446 on Monday, boosted by better-than-expected German export data. Also, other major stock markets in Europe closed in the green: The FTSE 100 added 19 points, or 0.3%, to 7,370; the CAC 40 gained 20 points, or 0.4%, to 5,166; the IBEX 35 advanced 21 points, or 0.2%, to 10,510; and the FTSE MIB climbed 176 points, or 0.8%, to 21,191.
German Trade Surplus Widens 6.2% YoY In May
German trade surplus widened to EUR 22.0 billion in May of 2017 from EUR 20.7 billion in the same month a year earlier. Exports increased by 14.1 percent year-on-year to EUR 110.6 billion while imports rose by 16.2 percent to EUR 88.6 billion. Considering the first five months of the year, the trade surplus narrowed to EUR 100.1 billion from EUR 104.8 billion in the same period of 2016. On a seasonally adjusted basis, the trade surplus came in at EUR 20.3 billion in May, as exports rose 1.4 percent from the prior month and imports went up 1.2 percent.
US Consumer Credit Rises More Than Expected In May
Consumer credit in the United States rose by USD 18.4 billion in May 2017, following an upwardly revised USD 12.9 billion gain in April and beating market expectations of USD 12.6 billion. Revolving credit increased by USD 7.4 billion after rising by USD 1.2 billion in the previous month. Nonrevolving credit went up by USD 11.0 billion, compared with a USD 11.8 billion gain in April.
Mexico Stocks Hit All-Time High Ahead Of Earnings
Mexico’s IPC gained 558 points or 1.1 percent to 50617 on Monday July 10th of 2017, notching a new record as earnings season kicks off later in the week. In other economic news, Mexico produced 334.6 thousand vehicles in June of 2017, 4.9 percent more than a year earlier and a record high for a June month, with auto exports advancing 12 percent from a year ago to 276.6 thousand vehicles, also a record high for June. Among other stock markets in America, Brazil’s iBovespa jumped 703 points or 1.1 percent to 63025. Chile’s IPSA climbed 47 points or 1.0 percent to 4902. Canada’s TSX advanced 78 points or 0.5 percent to 15105. Contrastingly, Colombia’s COLCAP lost 3 points or 0.2 percent to 1467, while Peru’s BVL edged down 14 points or 0.1 percent to 16159.
Stocks in Tunisia Hit All-time High
TUN increased to an all-time high of 6161.
Russia Car Sales Rise The Most In 5 Years
Sales of new passenger cars in Russia increased by 15 percent year-on-year to 141,084 in June of 2017, following 14.7 percent jump in the previous month. It was the strongest rise since August of 2012, as sales went up for Lada (23 percent from 22 percent in May); KIA (31 percent from 26 percent); Hyundai (22 percent from 13 percent); Renault (21 percent from 22 percent); Toyota (28 percent from 15 percent); Nissan (15 percent from 7 percent); Škoda (18 percent from 6 percent); BMW (16 percent from 7 percent); Lexus (19 percent from -20 percent) and Datsun (23 percent from -4 percent). In the first six months of the year, sales rose 6.9 percent to 718,529.
Hong Kong Dollar Hits 17-month Low
USDHKD increased to a 17-month high of 7.8139.
Corn Hits 54-week High
Corn increased to a 54-week high of 393.25 ¢USD/bu.
Oat Hits 28-month High
Oat increased to a 28-month high of 305.75 USd/Bu."
Pic of the day: 2016 Global Wealth Pyramid.
"China’s Cosco to Buy Shipping Rival Orient Overseas for $6.3 Billion.
Deal would create world’s third-biggest container carrier.
The move would see a half dozen supercarriers, grouped into three alliances, move about three-quarters of all seaborne trade after a wave of consolidation among the world’s top 20 carriers over the past year."
"Japanese container lines Mitsui O.S.K. Lines (MOL), Kawasaki Kisen Kaisha (“K” Line) and Nippon Yusen Kabushiki Kaisha (NYK) are one step closer to merging their container businesses, having announced the establishment of an integrated container shipping business and holding company."
"American Fast Freight acquires Grand Worldwide Logistics.
Deal expands AFF's logistics platform with clients in beverage and spirits, food, and paper industries.
Fife, Wash.-based AFF is the largest U.S. domestic ocean freight forwarder specializing in less-than-container-load freight shipments.
GWW is a warehouse and third-party logistics (3PL) company serving the beverage and spirits, food, and paper industries. Through the deal, AFF will obtain that business, as well as GWW's customers, management team, more than two million square feet of warehouse space, and over 150 rail spots, the companies said."
"Too many new ships, too few old ones scrapped. Since the financial crisis, after which trade growth slowed, the Baltic Dry Index—a measure of bulk freight rates—has fallen by 93%.
Last year firms scrapped 194 ships, accounting for 3% of global tonnage—a record high. But new ships will add 8% more capacity this year; the net increase is over twice the level of forecast growth in demand.
Executives at bigger lines hope that their own new fuel-efficient liners will push small, independent shipowners to scrap older ones. Yet these are often family businesses and have no such intention, says Basil Karatzas...
Banks have preferred to restructure loans on unprofitable vessels rather than scrap them at a fraction of the value of the debt owed on them."
"Iran sets out bold port expansion plans.
Iran is aiming to triple container port capacity to 14m teu by the end of the decade following the easing of trade sanctions more than a year ago."
"Grocers had to have technology that would allow customers to select from tens of thousands of items — more than other stores; they had to get grocery lists (and payments) to the shoppers, and they had to deliver the food without it spoiling.
In the past few months, companies like Shipt and Instacart, which have Silicon Valley offices, have started offering it in Michigan in a bigger way."
"Disruptions, uneven shipping patterns cause headaches for carriers in so-called “peak” season.
The crush of e-commerce freight is causing strains on last-mile capacity. Uneven shipping patterns are causing freight forecasts to be wrong as often as correct. Inventory-to-sales ratios are falling as manufacturers abhor keeping excess inventory for very long."
"Flexport points to pricing gains on the ocean side and air cargo uptick as Peak Season approaches.
With the second half of the calendar year fully in gear, ocean and air freight rates are seeing upward momentum, according to a July 2017 Market Update recently issued by San Francisco-based freight forwarding and customs brokerage services provider Flexport."
"Tech exits in Q2 2017: More IPOs but slowing M&A activity."
"Microsoft creates Mixed Reality Partner Program to help HoloLens flourish.
While companies are already free to build apps for HoloLens in-house using Microsoft’s software development kit (SDK), they may not always have the relevant expertise, which is why Microsoft has been investing resources in helping creative agencies get up to speed through “extensive, hands-on training.”"
"Pharma IPO Market Picks Back Up, As Overall Exits Decline.
The past 4 years have seen a marked increase in first-time M&A activity of private pharma companies and a steady decline in IPOs. In 2016, there were 140 first-time M&A deals to pharma companies, up 8.5% over 2015. This year, though, M&A activity is somewhat depressed, with only 50 so far through 06/22/17."
"Learning In The Future: 15 Early-Stage Ed Tech Companies To Watch.
Many of these ed tech companies focus on connecting learners and teachers, offering access to experts, and keeping learners entertained."
"Amazon eyes Best Buy’s Geek Squad with smart home consultations.
Amazon is offering in-home consultations to customers interested in installing smart-home technologies. The service, first reported by Recode, is aimed at consumers interested in new Internet of Things gear but perhaps intimidated about setting them up."
"Five reasons why Amazon-Whole Foods won't win grocery war."
"Smartphone Data Used in Global Study of Physical Activity.
Using a larger dataset than for any previous human movement study, National Institutes of Health-funded researchers at Stanford University in Palo Alto, California, have tracked physical activity by population for more than 100 countries. Their research follows on a recent estimate that more than 5 million people die each year from causes associated with inactivity."
"Green method developed for making artificial spider silk."
"DARPA Wants Brain Implants That Record From 1 Million Neurons.
Today’s best brain implants, like the experimental system that a paralyzed man used to control a robotic arm, record from just a few hundred neurons. Recording from 1 million neurons would provide a much richer signal that could be used to better control external devices such as wheelchairs, robots, and computer cursors."
"Underwater Robots Learn a New Language, JANUS.
For decades, global standards defining Wi-Fi and cellular networks have allowed people to exchange data over the air. But those technologies are worthless below the waves, and until now there have been no such standards for underwater communications.
Now, Alves and other NATO researchers have established the first international standard for underwater communications. Named JANUS, after the Roman god of gateways, it creates a common protocol for an acoustic signal with which underwater systems can connect.”
A 19th century subterranean reservoir repurposed as a contemporary art cave."
IT: Industrial Production, 4:00 AM ET
US: NFIB Small Business Optimism Index, 6:00 AM ET
CA: Housing Starts, 8:15 AM ET
US: Redbook, 8:55 AM ET
US: JOLTS, 10:00 AM ET
US: Wholesale Trade, 10:00 AM ET
JP: Producer Price Index, 7:50 PM ET
https://tradingeconomics.com/calendar (More complete listing)