Random Market News, 21 July
"Analysis: OPEC/non-OPEC committee has much to discuss but no consensus yet on deeper oil cuts.
The monitoring committee overseeing the OPEC/non-OPEC production cut agreement will meet this weekend in Russia with no shortage of advice from analysts, consultants and Twitter pundits on how to rally the oil market's flagging confidence in the deal."
"The Upside and Downside of Liquidity-Driven Markets.
Hopes for a rapid economic policy breakthrough powered by the implementation of tax reform and infrastructure programs have been dashed."
"New report: Massive collusion amongst German automakers.
In what could be the biggest case of collusion in German history, news magazine Der Spiegel reports that German car makers have been secretly meeting since the 1990s. This could raise serious questions over Dieselgate."
"Investment funds heat up global real estate market.
Global funds investing in real estate and infrastructure have raised $87.5 billion during the first half of this year, largely from financial institutions and pension funds starved for returns in the face of historically low interest rates.
This record pace of inflow is stoking concerns about an overheated market, especially from central banks in Western nations."
"Chinese courier ZTO sued for 'untrue statements' in $1.4bn US IPO.
In the lawsuit dated May 16, the Birmingham Retirement and Relief System said ZTO had issued "untrue statements" and omitted "crucial realities" in its registration statement. It also said ZTO inflated profit margins by keeping certain low-margin segments of its business out of its financial statements.
ZTO's listing was the largest U.S. listing in 2016 and was the biggest by a Chinese company since the $25 billion IPO of e-commerce giant Alibaba Group Holding Ltd in 2014."
"Housing improves, inflation doesn't.
Housing data are showing new life and the sector may be looking like a positive force once again for the 2017 economy. We'll also be looking at inflation, touching on the topics of lumber duties and what to expect, or not to expect, with cell phones. The latest on manufacturing and employment round out the week, one that precedes July's eventful last week."
"What Mario Draghi did not say.
Three things dominated global investors this past week — an onslaught of earnings reports from key companies in addition to the Bank of Japan and European Central Bank policy announcements. Both central banks kept their respective policies unchanged. But traders were waiting for ECB President Mario Draghi's press conference comments especially given the rising value of the euro. However, he did not attempt to talk the currency down which sent it soaring even higher."
Implied rate hike probability on July 26th ~3.1%, September 20th ~8.2%; 0% probability of rate cut through June 13th, 2018.
VIX ~9.36. 10-yr treasury vol (TYVIX) ~3.64.
"US Stocks Edge Down On Friday To End Mixed Week
Wall Street closed modestly down on Friday July 21st of 2017, as Sean Spicer resigned as White House press secretary amid an investigation into US President Donald Trump that adds to policy uncertainty. Within earnings season, General Electric dipped 2.9% on Friday after posting weak earnings and adjusting guidance downwards. The Dow Jones retreated 32 points or 0.2% to 21580. The S&P 500 edged down 1 point or less than 0.1% to 2473. The Nasdaq dropped 2 points or less than 0.1% to 6388. During the week, the Dow Jones fell by 0.3%. Contrastingly, the S&P 500 advanced 0.5% and the Nasdaq jumped 1.2%.
Canada Retail Sales Rise More Than Expected On Autos
Retail sales in Canada increased by 0.6 percent month-over-month in May 2017, following a downwardly revised 0.7 percent rise in April and well above market expectations of 0.2 percent. Sales at motor vehicle and parts dealers increased 2.4 percent, mainly boosted by higher sales at new car dealers (2.7 percent). Also, higher receipts were reported at food and beverage stores (0.9 percent), and electronics and appliance stores (1.2 percent); while sales declined at general merchandise stores (-1.3 percent), and gasoline stations (-0.6 percent). Excluding autos, retail sales were down 0.1 percent in May.
Mexico Equities Book Fresh Records Amid Strong Earnings
Mexico’s IPC closed at an all-time high of 51565 on Friday July 21st of 2017, jumping 0.8% nudged by America Movil’s (+1.9%) and Gruma’s (+3.3%) solid earnings and by a fresh jobless rate low of 3.3% in June from 3.9% a year earlier. Among other stock markets in America, Argentina’s MERVAL gained 33 points or 0.2% to 21499. Colombia’s COLCAP edged up 3 points or 0.2% to 1471. Contrastingly, Canada’s TSX dropped 82 points or 0.5% to 15183. Chile’s IPSA retreated 25 points or 0.5% to 5010. Brazil’s iBovespa lost 254 points or 0.4% to 64684, dragged by Petrobras.
UK June Budget Deficit Larger Than Expected
Public sector borrowing including banks in the UK increased to GBP 6.28 billion in June 2017 from GBP 4.09 billion in the same month a year earlier, way above market expectations of GBP 4.3 billion. Excluding banks, the public sector had to borrow GBP 6.85 billion to balance the books, up 43 percent compared with the same month last year. Spending on debt interest jumped 33 percent to GBP 4.9 billion, the highest for any month of June since 2011 on the back of rising inflation. Public sector net debt increased by GBP 128.5 billion from the previous year to GBP 1,753.5 billion at the end of June, equivalent to 87.4 percent of GDP.
Brazil Current Account Balance Swings To Surplus In June
Brazil's current account posted a USD 1.33 billion surplus in June 2017, compared with a USD 2.49 billion deficit in the same month a year earlier, as the goods surplus widened sharply to USD 6.96 billion from USD 3.74 billion in June 2016. Meanwhile, the services deficit shrank to USD 3.19 billion from USD 3.59 billion a year ago; and the primary income gap retreated to USD 2.65 billion from USD 2.87 billion. In the first half of 2017, the current account posted a USD 0.72 billion surplus, compared with a USD 8.49 billion gap in the same period of 2016.
Hong Kong Business Confidence At Near 3-Year High In Q3
Business confidence in Hong Kong rose to 6 in the third quarter of 2017 from 5 in the previous period. It is the highest reading since the fourth quarter of 2014. By sector, expectations for the business situation improved in financing and insurance (+19); manufacturing (+18); information and communication (+17); real estate (+6) and transportation (+2). On the other hand, expectations worsened in construction (-9), retail (-4) and in accommodation and food services (-2).
North Korean Economy Grows The Most In 17 Years
The North Korean economy grew 3.9 percent in 2016, recovering from a 1.1 percent contraction in 2015, according to estimates from the Bank of Korea. It was the strongest growth rate since a 6.1 percent expansion in 1999, driven by mining and energy. Also, exports rose by 4.6 percent, the most since an 11.8 percent jump in 2013, despite international sanctions aimed at curbing its pursuit of nuclear weapons.
Stocks in Euro Area Hit 13-week Low
Euro Stoxx 50 decreased to a 13-week low of 3436.
Euro Breaks Above $1.165
The euro continued to rise against the US dollar on Friday, gaining 0.2% to $1.1656 around 8:15 AM London time, after ECB Mario Draghi said the previous day that the central bank would discuss the future of its stimulus programme at one of its next two meetings.
Dollar Index Hits 56-week Low
US Dollar decreased to a 56-week low of 94.07."
"FTR’s Trucking Conditions Index is flat sequentially but remains positive.
The May TCI reading of 7.01 was in line with April’s 7.03, which posted a more than 4 percent gain over April."
"CH Robinson, one of the US’s largest freight companies, today reported double-digit increases in second-quarter revenues, despite a decline in its largest business area, trucking.
Strong results from its ocean and air freight forwarding divisions meant that total group revenue for the quarter increased 12.4% year-on-year to $3.7bn, but operating profit declined 3.4% to $574m."
"Rise in freight volume boosts earnings for Union Pacific."
"Panalpina posts robust ocean, air freight growth."
"Chittagong Port Authority has moved to alleviate the congestion situation at Bangladesh’s top port. Gearless boxships have had to wait on average 12 days to call at the port since May as a result of bad weather, equipment shortages and Ramadan. Two cranes were bashed by a ship in late June, adding to the port’s woes."
"From AT&T To Xerox: 65 Corporate Innovation Labs.
Corporate innovation is critical for established companies looking to stay relevant in the face of disruption from up-and-coming startups. With industries being unbundled left and right (supermarkets, banking, cars — just to name a few) more companies are opening up in-house innovation labs every day."
"Sami Atiya from ABB says industrial robots will add jobs, not take them away.
“If you look at pure data and statistics,” he said, “in the countries that have the highest rates of robots per employees, which is Japan and Germany, they have about 300 robots per 10,000 employees, and they have the least unemployment…in the manufacturing sector.”"
ABB is a robot manufacturer after all. 2016 robots per employee statistics below.
"AI Weekly: Walmart’s machine learning advantage.
Walmart’s brick and mortar innovation is very similar to the Amazon Go concept store, which combines computer vision, machine learning, and sensors to bypass the checkout process entirely."
"Testing the Internet of Things.
That tsunami of new IoT gadgets? They all have to be tested before they roll out into the world, not only to meet government regulations but to verify adherence to a host of voluntary standards, like WiFi, Bluetooth, ZigBee, Thread and others. That is a lot of testing. And that’s why TUV Rheinland recently opened a huge Silicon Valley test facility in Fremont, Calif."
"Unhackable Quantum Networks Take to Space.
In two new trials, satellites set distance records for beaming photons usable in quantum crypto."
Nice chat about mechanics.
"Quantum teleportation is even weirder than you think."
This Brazilian palace island was once the site of the last grand ball before revolution [in November 1889].
The works resulted in a small palace inspired by the works of French architect Viollet-le-Duc with a Gothic-Provence style, it was inaugurated on April 27th, 1889 in a ceremony attended by the Emperor and several foreign guests."
JP: PMI Manufacturing Index Flash, 8:30 PM ET (7/23)
SG: CPI, 1:00 AM ET
FR: PMI Composite FLASH, 3:00 AM ET
DE: PMI Composite FLASH, 3:30 AM ET
EZ: PMI Composite FLASH, 4:00 AM ET
US: PMI Composite Flash, 9:45 AM ET
US: Existing Home Sales, 10:00 AM ET
JP: BoJ MPB Minutes, 7:50 PM ET
https://tradingeconomics.com/calendar (More complete listing, including consensus)