Random Market News, 31 August 2017

Market Info

"At $1 trillion, largest sovereign wealth fund loses taste for new asset classes.

The world's biggest sovereign fund says expanding into new asset classes is now hardly worth the effort.

That means the opportunities for raising returns that Norway's wealth fund once saw in infrastructure and private equity (and spent years trying to get political approval to buy) no longer exist, according to CEO Yngve Slyngstad.

"Today we're close to $1 trillion. Realistically speaking, whether we should invest in infrastructure, private equity or the likes isn't a very important question for the fund," Mr. Slyngstad said in an Aug. 29 interview at his office in Oslo. "It would be such a small proportion, and the duration of implementation would be so long, that if it were to have an impact on returns, it would in reality be if the fund was going down in size.""

http://www.pionline.com/article/20170831/ONLINE/170839967/at-1-trillion-largest-sovereign-wealth-fund-loses-taste-for-new-asset-classes

"Bad debts still mount at China's big four banks.

Aggregate loan-loss allowance up 7% as soured loans top $118bn."

https://asia.nikkei.com/Business/Companies/Bad-debts-still-mount-at-China-s-big-four-banks

Nice summary table here that shows ~1.7% NPL ratio.

Average EM NPL ratio (ex-China) was ~6.5% in 2016.

Applying that rate would suggest ~CNY 3tr NPL at the 4 banks, or ~4% of GDP.

https://www.imf.org/~/media/Files/Publications/GFSR/2017/April/chapter-1/text.ashx

(pg. 21)

"Canon adding new camera plant as production returns to Japan.

Automation makes manufacturing at home more competitive.

This relocation trend has taken off over the past three years. While Canon initially moved production of goods such as cameras abroad to soften the blow of a strong yen, labor costs are now rising elsewhere in Asia and overseas. Factory automation, meanwhile, has made production in Japan more affordable. At a key plant in Oita Prefecture, the manufacture of some products is now more than 70% automated. Various business units are experimenting with automated production of office machinery and other equipment as well."

https://asia.nikkei.com/Business/Trends/Canon-adding-new-camera-plant-as-production-returns-to-Japan

Labor is typically <10% of total cost for high tech manufacturing.

"Betting On Brick-And-Mortar: Alibaba's Billion-Dollar Retail Experiment.

One the past two years, Alibaba has invested as much as $8 billion in brick-and-mortar retailing, acquiring stakes in local supermarket chains while privatizing Chinese luxury mall Intime for $2.6 billion in January. The $392 billion company -- which centers on an online marketplace connecting sellers with buyers (but doesn’t hold its own inventories) -- is going so far as rewriting this asset-light model by opening supermarkets under the Hema Xiansheng brand in China’s biggest cities. Customers can browse aisles of local and imported food in these spacious outlets, or have fresh seafood cooked for dine-in meals on the spot."

https://www.forbes.com/sites/ywang/2017/08/27/betting-on-brick-and-mortar-alibabas-billion-dollar-retail-experiment/#9c3e40825905

"Toyota Grabs Bigger Piece of Ride-Hailing Action.

The Japanese auto giant will install tracking devices on Grab vehicles to gather data on driver behavior.

Toyota Motor Corp. TM 0.61% said Wednesday it plans to dive deeper into the ride-hailing business by teaming up with Singapore-based startup Grab Inc.

Separately, Toyota Group company Toyota Tsusho Corp. said it would invest an undisclosed amount in Grab as part of a $2.5 billion fundraising round announced in July."

https://www.wsj.com/articles/toyota-grabs-bigger-piece-of-ride-hailing-action-1504072197

"Fund managers abandon MiFID II in shift to AIFMD.

A handful of hedge fund managers have dropped their MiFID (Markets in Financial Instruments Directive) licenses, and instead secured AIFMD (Alternative Investment Fund Manager Directive) licenses, in what has raised some industry eyebrows.

The move is quite ironic given that many hedge funds back in 2009 and 2010 invested enormous amounts of energy and accrued significant legal bills trying to figure out elaborate mechanisms by which to avoid AIFMD. However, this latest decision is more borne out of hedge fund hostility to the incoming second MiFID than in any newfound appreciation for AIFMD."

https://www.globalcustodian.com/Market-Infrastructure/Fund-managers-abandon-MiFID-II-in-shift-to-AIFMD/

"eVestment: Traditional managers see $7.9 billion in net outflows in Q2.

Figures by data provider eVestment in its quarterly "Traditional Asset Flows Report" said money managers reported long-only institutional assets under management of $25.3 trillion as of June 30, up 4.1% from a year earlier."

http://www.pionline.com/article/20170831/ONLINE/170839974/evestment-traditional-managers-see-79-billion-in-net-outflows-in-q2

"The New Wave of Activists.

As a flood of passive investments continues to concentrate assets among a small number of giant asset managers, these institutional shareholders are taking an increasingly large role in corporate governance."

http://www.institutionalinvestor.com/article/3747048/investors-registered-investment-advisers/the-new-wave-of-activists.html

"Vanguard Increases Proxy Engagement.

The ETF and index fund manager is increasingly stepping into a more aggressive role at companies in which it invests.

The asset manager engaged with 954 companies this year, jumping 39 percent from 685 companies in 2015, according to the firm’s Investment Stewardship 2017 Annual Report released Thursday."

http://www.institutionalinvestor.com/article/3747046/asset-management-indexing-and-etfs/vanguard-increases-proxy-engagement.html

"Turner Investments Kills Troubled Funds, Pivots to ETFs.

Down from $30 billion in assets to $150 million, the firm is closing its fundamental growth products and has purchased ETF specialist Elkhorn Capital."

http://www.institutionalinvestor.com/article/3746736/asset-management-indexing-and-etfs/turner-investments-kills-troubled-funds-pivots-to-etfs.html

Data dump.

VIX ~10.50. 10-yr treasury volatility (TYVIX) ~4.14.

http://www.cboe.com/products/vix-index-volatility/volatility-on-interest-rates

10yr Sovereigns.

https://www.investing.com/rates-bonds/government-bond-spreads

https://tradingeconomics.com/bonds

FX.

https://www.investing.com/currencies/streaming-forex-rates-majors

https://tradingeconomics.com/currencies

Equity.

https://www.investing.com/indices/major-indices

https://tradingeconomics.com/stocks

Commodities.

https://www.investing.com/commodities/real-time-futures

https://tradingeconomics.com/commodities

News feed.

"US Stocks Close Higher on Thursday

Wall Street closed in the green on Thursday August 31th of 2017, as geopolitical uncertainty continued to diminish and upbeat economic data buoyed investors’ confidence on the growth outlook. The Dow Jones gained 60 points or 0.3% to 21952. The S&P 500 advanced 16 points or 0.6% to 2473. The Nasdaq jumped 60 points or 1.0% to 6429.

Canada GDP Growth at Near 6-Year High in Q2

The Canadian economy expanded 1.1 percent on quarter in the three months to June of 2017, following a 0.9 percent growth in the previous period, mainly boosted by household consumption and exports of goods. The cumulative growth for the first two quarters of the year was 2 percent, the strongest since 2002. Expressed at an annualized rate, real GDP rose 4.5 percent in the second quarter, above 3.7 percent in the previous period and market expectations of 3.7 percent. It is the strongest growth rate since the third quarter of 2011.

Brazil Consumer Confidence Improves In August

Brazilian consumer confidence rose to 101.6 in August 2017 from 99.5 in the previous month. It is the strongest reading since April, as consumers are more upbeat about financial situation, less indebted and more likely to do major purchases. Also, expectations improved regarding unemployment and personal income. Meanwhile, worries about inflation increased.

Eurozone August Inflation Rate Stronger than Expected

Consumer prices in the Euro Area are expected to increase by 1.5 percent year-on-year in August 2017, beating market expectations of 1.4 percent and following a 1.3 percent gain in the previous month, the flash estimate showed. It was the highest inflation rate since April, mainly boosted by rising energy prices. Annual core inflation, which excludes volatile prices of energy and unprocessed food and tobacco and at which the ECB looks in its policy decisions, was unchanged at 1.2 percent.

Botswana Trade Surplus Narrows 72% YoY in May

Botswana recorded a trade surplus of 1134.5 million in May of 2017, well below a BWP 4099 million surplus a year earlier. Exports slumped 38.9 percent year-on-year to BWP 5381.7 million, dragged down mainly by lower sales of diamonds (-37.2 percent) and copper and nickel (-97.5 percent). Imports declined at a much slower 9.9 percent to BWP 4247.3 million, due to a fall in purchases of fuel (-37.2 percent) and machinery and electrical equipment (-38 percent).

India GDP Growth at Over 3-Year Low of 5.7% in Q2

The Indian economy expanded 5.7 percent year-on-year in the second quarter of 2017, below 6.1 percent in the previous period and market expectations of 6.6 percent. It remains the weakest growth rate since the first quarter of 2014 due to a slowdown in consumer spending and exports. On the production side, manufacturing and agriculture eased. Figures for the second quarter of 2017 mark the third consecutive period of slowing growth, following the demonetization program started in November of 2016 that removed 86 percent of India's currency in circulation.

Thailand Manufacturing PMI Lowest in 9 Months

The Nikkei Manufacturing PMI in Thailand edged down to 49.5 in August of 2017 from 49.6 in July. It was the second straight month of decline in manufacturing activity and the weakest reading since November 2016, as output, new orders and employment declined at faster paces. Meantime, new export orders rose the most in 16 months. On the price front, the sustained appreciation of the baht tempered inflationary pressures. At the same time, firms were not optimistic about the business outlook for the first time since the survey began in December 2015.

Vietnam Factory Activity Edges Up in August

The Nikkei Manufacturing PMI in Vietnam edged up to 51.8 in August of 2017 from 51.7 in July. Factory activity increased for twenty-one straight months as output and new orders accelerated slightly. New export orders rose to its fastest in 4 months and new order growth led to the tenth straight month of increase in manufacturing production. Employment continued to improve albeit the slowest in seventeen months. On the price front, there was a marked increase in input costs and companies reduced their output prices for the fourth straight month. Meanwhile, business sentiment rose to 5-month high.

Chinese Yuan Hits 14-month High

USDCNY decreased to a 14-month low of 6.5826.

Australian AIG Manufacturing Index Hits 7-Year High in August

The AIG/Housing Industry Association Performance of Manufacturing Index in Australia increased to 59.8 in August of 2017 from 56 in the previous month. It was the eleventh straight month of expansion in factory and highest since May 2010 as six of the seven activity sub-indexes expanded. Most rose at a faster pace: production (61.4 from 59 in July), new orders (64.3 from 55.8) and inventories (58.9 from 49). In addition, employment, deliveries and sales moderated, while exports moved into contraction. This month's survey suggested that current activity is geared towards future orders and stockpiling rather than for immediate delivery.

South Korea GDP Expands 2.7% YoY in 2Q Final Estimate

The South Korean economy expanded 2.7 percent year-on-year in the second quarter of 2017 according to the final estimate, consistent with the figure given in the advanced estimates and matching estimates of a 2.7 percent expansion and below 2.9 percent growth in the previous quarter. The slower GDP growth was mainly explained by manufacturing and construction, which expanded at a softer pace versus Q1. On the expenditure side, exports remained unchanged and imports lost steam, offsetting faster growth in both private and public consumption.

Nikkei 225 Bounces Back on Thursday

Tokyo's Nikkei 225 advanced 140 points, or 0.7 percent, to 19,646 on Thursday 31st of August as the Yen weakened and the US Dollar staged a recovery, following upbeat economic data yesterday. Automotives and financials lifted the index, while weaker than expected industrial output data was shrugged off. Daiichi Sankyo was the top performer (+5.3 percent), followed by JFE Holdings (+3.4 percent). The broader Topix added up 9.2 points, or 0.6 percent, to 1520.

Japan 10Y Bond Yield Hits 41-week Low

Japan 10 Year Government Bond Yield decreased to a 41-week low of 0.003%."

https://tradingeconomics.com/stream

http://www.marketwatch.com/newsviewer#

https://global.handelsblatt.com/

Logistics

"Harvey Impedes Nearly 10% of U.S. Trucking, Almost 100% on Gulf Coast."

http://www.ttnews.com/articles/harvey-impedes-nearly-10-us-trucking-almost-100-gulf-coast

"26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed.

While a majority of companies strongly agree that transportation is a strategically important function, a significant percentage of them have not organizationally aligned transportation in a manner that supports their goals.

In fact, results from the 2017 study show that roughly 75% of respondents are using the mix strategy (be all things to all people) as the predominant approach for their companies compared to the 51% who we reported utilizing a mix strategy in our 2016 results."

http://www.logisticsmgmt.com/article/26th_annual_study_of_logistics_and_transportation_trends_transportation_at

"Blockchain Group Formed to Advance Use of Digital Ledger.

“In trucking, knowing whoever touched the transaction or did something is much more powerful than knowing the transaction took place,” Craig Fuller, CEO of TransRisk and co-founder of the newly formed Blockchain in Trucking Alliance, told Transport Topics.

BiTA was formed to develop common standards around blockchain applications in the trucking industry, Fuller said. Since a blockchain is an intersection of transactions, “passing off transactions between multiple sources requires common standards.”

Charter members of BiTA include: Convoy, PS Logistics, US Xpress, McLeod Software, TransRisk, Triumph Business Capital and 10-4 Systems Inc., according to BiTA. Another 70 or so companies have expressed strong interest in joining, Fuller said."

http://www.ttnews.com/articles/blockchain-group-formed-advance-use-digital-ledger

"Improving 3PL Management: Glanbia Adds Muscle to Logistics.

In an award-winning collaboration effort with a 3PL and TL partner, this global performance nutrition company has drastically reduced costs—all while improving service through and innovative “embedded” arrangement."

http://www.logisticsmgmt.com/article/improving_3pl_management_glanbia_adds_muscle_to_logistics

"Healthy demand stabilises container shipping spot rates.

An improving demand scenario over the first half of 2017 in the container shipping industry is helping to stabilise freight rates so far this year, says BIMCO.

The rates “may still be at a loss-making level now and so spot rates are not the best indicator for market profitability”.

BIMCO says the China Containerised Freight Index may provide a more realistic indication of industry conditions. The index touched a record low of 632.36 on April 29 last year and recovered to 859.5 on August 11 this year. From a year-to-date perspective, the index rose 20.7% compared with the year-ago period."

http://www.lloydsloadinglist.com/freight-directory/news/Healthy-demand-stabilises-container-shipping-spot-rates/70227.htm

"Court approves Bolloré partial takeover of Necotrans.

Bid focuses on port terminals in West and Central Africa, but is part of a larger joint offer ‘to secure a very large part’ of rival’s business and assets.

A Paris commercial court has approved a partial takeover bid from Bolloré Transport & Logistics for embattled French counterpart Necotrans, which was placed under judicial administration earlier this summer.

The family-owned group’s annual turnover slipped from around €1 billion in 2015 to €830 million last year while debts have risen and are estimated to be close to €200 million."

http://www.lloydsloadinglist.com/freight-directory/news/Court-approves-Bollor%C3%A9-partial-takeover-of-Necotrans/70230.htm

Tech

"US approves breakthrough gene therapy for childhood leukemia.

US regulators have approved a breakthrough treatment that genetically engineers patients' own blood cells to fight childhood leukemia. Experts say it may open the way to treating other cancers with a similar procedure."

http://www.dw.com/en/us-approves-breakthrough-gene-therapy-for-childhood-leukemia/a-40306660

"The first ICO unicorns are here.

Today both OmiseGO (OMG) and Qtum passed a $1 billion market cap today, according to coinmarketcap.com, a site that tracks the value of crypto tokens. In doing so, they became the first ERC20 tokens — subtokens that are built on the Ethereum network and sold to investors via an ICO — to pass the unicorn mark based on the total value of coins that have been distributed.

Most incredibly, both have reached surpassed the landmark in mere months."

https://techcrunch.com/2017/08/31/the-first-ico-unicorns-are-here/

"Is The E-Commerce Slump Finally Over?

After a lackluster 2016 — which saw three consecutive quarters of declining deal activity — H1'17 has seen a resurgence in deals and funding to e-commerce startups.

Despite the uptick in deals, last quarter also saw a decline in dollar funding to $3.4B (down from $4.8B in Q1’17). However, this quarter (though not yet finished) has already seen $4B+ in funding, due to huge $1B+ rounds to Fanatics, Tokopedia, and Flipkart."

https://www.cbinsights.com/research/ecommerce-startups-deals-funding-stage/

"France seeks 600 mn in taxes from Microsoft: report.

France's tax authority is seeking 600 million euros ($715 million) from Microsoft's local subsidiary for billing French customers from Ireland, the weekly L'Express reported on Wednesday.

The magazine reported that the bills concerned internet advertising and keywords for internet searches.

Despite a considerable presence in France, Microsoft paid only 32.2 million euros in corporate tax there last year, according to L'Express."

https://phys.org/news/2017-08-france-mn-taxes-microsoft.html

"Google to Comply With EU Search Demands to Avoid More Fines.

EU gave Google until Tuesday to draw up shopping search plan.

Google risks daily fines if it doesn’t comply by Sept. 28.

The EU fined Google a record 2.4 billion euros ($2.7 billion) in late June for breaking antitrust rules by skewing its general search results to unfairly favor its own shopping service over rival sites."

https://www.bloomberg.com/news/articles/2017-08-29/google-faces-tuesday-deadline-as-clock-ticks-toward-new-eu-fines

"Yahoo must face litigation by data breach victims: U.S. judge.

A U.S. judge said Yahoo must face nationwide litigation brought on behalf of well over 1 billion users who said their personal information was compromised in three massive data breaches."

http://www.reuters.com/article/us-verizon-yahoo-breach-idUSKCN1BB25Q

"St. Louis forms $5 million seed fund to keep its startups in town."

https://venturebeat.com/2017/08/31/st-louis-forms-5-million-seed-fund-to-keep-its-startups-in-town/

"Eye Scans to Detect Cancer and Alzheimer’s Disease.

We recently reported on two AI systems trained to detect eye diseases, specifically diabetic retinopathy and congenital cataracts. Now, we’ve found groups extending that concept to illnesses beyond the eye. Two new projects pair imaging systems with advanced software in an effort to catch early symptoms of pancreatic cancer and Alzheimer’s disease."

https://spectrum.ieee.org/the-human-os/biomedical/diagnostics/eye-scans-to-detect-cancer-and-alzheimers-disease

"Quantum Optical Memory Device One Thousand Times Smaller Than Previous Options.

The prospects for optical quantum networks—in which information is transmitted by encoding data using the quantum state of photons—has been on the upswing lately, leading to some commercial quantum photonics products currently on the market.

However, optical quantum memory, which is one of the key technologies for the realization of widespread, optical, quantum networks, remains a sticking point. Optical quantum memory is a device that takes a photon and encodes it with information. Unfortunately, the devices developed to date have been too large and inefficient to operate in a chip-scale quantum device."

https://spectrum.ieee.org/nanoclast/semiconductors/nanotechnology/quantum-optical-memory-device-one-thousand-times-smaller-than-previous-options

"Someone Else’s Computer: The Prehistory of Cloud Computing.

Well before Amazon Web Services, there was time-sharing and Tymshare’s Tymnet.

The pioneering firm Tymshare produced the button shown above along with the largest commercial computer network of its era. Called Tymnet, it spanned the globe and was by the late 1970s larger than the ARPANET. Compare this schematic of Tymnet, detailing all of its nodes, with the sparser schematics of the ARPANET [PDF] from the same era. By 1975, Tymshare was handling about 450,000 interactive sessions per month.

In 1984, the company was acquired by McDonnell Douglas, and a few years later the Tymnet network was sold off to British Telecom, continuing to operate until 2004."

https://spectrum.ieee.org/tech-history/silicon-revolution/someone-elses-computer-the-prehistory-of-cloud-computing

Startup/SME of the Day.

"BunkerEx.

The world's most transparent bunker broker.

We are completely free to use for buyers. A small and transparent fee is only taken from the supplier once the bunkers are delivered safely."

http://home.bunker-ex.com/

https://techcrunch.com/2017/08/29/bunkerex/

Random

"Laerdal Tunnel.

Longest road tunnel in the world features an air treatment plant and the illusion of daylight.

Since it takes the average driver 20 minutes to travel through the tunnel, special design features were added in order to prevent drivers from falling asleep [and vertigo]."

http://www.atlasobscura.com/places/laerdal-tunnel