Random Market News, 30 June
"With GST, India takes a leap towards 'one nation one tax'.
[T]he new tax regime overnight replaces the messy mix of more than a dozen state and central levies built up over seven decades.
The GST will eliminate the compounding effect of the current multi-layered tax system as well as the cross-state tax heterogeneity by fixing the final tax rate. It is expected to lower the average tax rate on manufactured goods and make them uniform across states by fixing the final tax rate."
"WTO hears widespread criticism of US steel tariff plan.
U.S. President Donald Trump's plan to restrict imports of steel and aluminium for national security reasons came under fire at the World Trade Organization on Friday, with China, the European Union, Brazil, Australia, Taiwan and Russia raising concerns."
"S.E.C. Lets All Firms Keep Parts of I.P.O. Filings Secret.
In an attempt to revitalize the public capital markets, the nation’s top regulator of stocks is turning to stealth mode.
The Securities and Exchange Commission, in Walter J. Clayton’s first major policy move as chairman, is expanding a program that will allow all private companies to keep some details of their finances and business strategies under wraps early in the process of an initial public offering."
"The DOL Officially Moves to Delay Full Fiduciary Rule.
Yesterday the DOL announced it was opening the 15-day comment period for its move to delay the full implementation date of the fiduciary rule, which is due to be enacted in January. Once the request for comment is published in the Federal Register, it will be open for comments (though the request is already published on the DOL's own site)."
"Fintech sales take off after DOL fiduciary rule's partial implementation.
The two provisions that have gone into effect govern adviser interactions with clients in retirement accounts. Under those provisions, advisers must give advice that is in the best interests of their clients, charge reasonable compensation and avoid "misleading statements" about investment transactions and what they're being paid."
Firms include eMoney Advisor, E-Valuator, and Riskalyze.
"Initial Coin Offerings: An Overview of Regulatory Considerations.
Companies considering ICOs should be aware that, depending on the structure of the coins they are offering, an ICO may involve an offering and sale of securities subject to regulation by the Securities and Exchange Commission (SEC) and/or swap contracts subject to regulation by the Commodity Futures Trading Commission (CFTC)."
"Canada Pension Plan Investment Board, Toronto, on Friday announced it had agreed to acquire real estate investment trust Parkway for $1.2 billion, or $23.05 a share, pending approval of Parkway shareholders.
CPPIB had a 23.1% allocation to real assets allocation as of March 31."
"Japan's Government Pension Investment Fund has begun investing 3 trillion yen ($26.7 billion) over three to five years in companies with strong governance that protect the environment and do social good.
By the end of June, the fund had put 1 trillion yen into Japanese shares picked based on environmental, social and governance, or ESG, criteria.
The GPIF has around 30 trillion yen parked in Japanese equities, primarily to track the TOPIX index of all issues on the Tokyo Stock Exchange's first section."
"Asset management roundup: ESG dominates launch and merger activity."
"Emerging-Markets Investing for Wimps.
Multinationals based in developed countries offer an entry point for the cautious."
"Steering though the challenges presented by the late stage of the economic expansion cycle weighs on investors’ minds. Exercising caution given these challenges, yet exploiting opportunities, were key focuses of attendees at IMN’s annual US Real Estate Opportunity and Private Fund Investing Forum held in Newport, Rhode Island, on June 25-27. "
Implied rate hike probability on July 26th ~2.5%, September 20th ~12.8%; 0% probability of rate cut through June 13th, 2018.
VIX ~11.18. 10-yr treasury vol (TYVIX) ~4.87.
"US Equities End Mixed To Book Weekly Losses
Wall Street closed mixed on Friday, as industrials and consumer discretionary stocks led gains, oil prices jumped nearly 3 percent, and technology shares continued to underperform. The Dow Jones ended up 63 points or 0.3 percent to 21350. The S&P 500 inched up 4 points or 0.2 percent to 2423. Contrastingly, the Nasdaq edged down 4 points or 0.1 percent to 6140. During the week, all three major indices booked losses, with the Dow Jones retreating 0.2 percent; the S&P 500 0.6 percent; and the Nasdaq 2.0 percent.
US PCE Price Index Unexpectedly Falls In May
The price index for personal consumption expenditures in the United States edged down 0.1 percent month-over-month in May 2017, following a 0.2 percent increase in April and missing market expectations of a 0.1 percent gain. Cost of goods fell 0.6 percent after showing no growth in the previous month, as prices fell for both nondurable goods (-0.8 percent from 0.1 percent in April) and durable goods (-0.2 percent from -0.3 percent). By contrast, cost of services rose by 0.2 percent after increasing by 0.3 percent in April.
US Personal Income Rises More Than Expected In May
Personal income in the United States increased by 0.4 percent month-over-month in May 2017, following a downwardly revised 0.3 percent gain in April and beating market expectations of 0.3 percent. The monthly advance was mainly due to increases in personal dividend income (4.8 percent from 0.4 percent in April), compensation of employees (0.1 percent from 0.5 percent), and nonfarm proprietors' income (0.6 percent from -0.2 percent). Meanwhile, contributions for government social insurance, a subtraction in the calculation of personal income, showed no growth after increasing by 0.4 percent in April.
Saudi Arabia Economy Contracts For 1st Time Since 2009
Saudi Arabia's GDP shrank 0.5 percent year-on-year in the first quarter of 2017, compared to an upwardly revised 2.1 percent growth in the previous period. It was the first contraction since 2009, as output shrank for mining & quarrying (-2.3 percent from 3.8 percent in Q4 of 2016); electricity, gas and water (-1.6 percent from 5.8 percent) and construction (-3.2 percent from -2.2 percent). Also, growth slowed for manufacturing (2.3 percent from 3.1 percent); transport (1 percent from 4.4 percent) and finance, insurance, real estate (1.1 percent from 3.8 percent). In contrast, output rebounded for wholesale & retail trade, restaurants & hotels (0.3 percent from -2 percent).
Canada Producer Prices Fall The Most In 9 Months
Producer prices in Canada declined 0.2 percent month-on-month in May of 2017, following a 0.6 percent rise in the previous month and compared with market expectations of a 0.3 percent gain. It is the first drop since August of 2016, mainly driven by prices of energy and petroleum products (-3.5 percent) and primary non-ferrous metal products (-0.7 percent). In contrast, cost increased for meat, fish and dairy products (1.7 percent), pulp and paper products (1.9 percent) and motorized and recreational vehicles (0.3 percent). Year-on-year, producer prices rose 4.9 percent.
South Korea Trade Surplus Widens 52% YoY In June
South Korea's trade surplus increased sharply to USD 11.40 billion in June of 2017 from USD 7.51 billion in the same month a year earlier, mainly supported by double-digit growth of exports, preliminary data showed. Year-on-year, sales rose 13.7 percent from a year earlier to USD 51.41 billion, following a marginally revised 13.3 percent rise in the prior month. It was the sixth straight month of double-digit rise in outbound shipments, the longest stretch of increase at such pace since 2011. Imports went up 18.0 percent to USD 40.01 billion, compared to an upwardly revised 19.1 percent gain in a month earlier. In May 2017, trade surplus was downwardly revised to USD 5.68 billion. For 2017, exports are expected to increase 2.9 percent, supported by improving global demand, while imports are projected to grow by 7.2 percent. The trade balance has been in consistent surpluses since February 2012.
Mexico Stocks Surge 1.3% On Friday
Mexico stocks rallied on the last trading day of the first half of 2017, as better economic data including double-digit exports growth in May, an appreciating peso, and lower political uncertainty nudged equities to their highest level since May 9th of 2017, with the benchmark IPC index advancing 659 points or 1.3 percent to 49857, led by materials. Among other stock markets in America, Argentina’s MERVAL surged 431 points or 2.0 percent to 21913, as the bourse continues to recover from its MSCI exclusion. Brazil’s iBovespa gained 661 points or 1.1 percent to 62900. Peru’s BVL jumped 116 points or 0.7 percent to 16133. Chile’s IPSA jumped 17 points or 0.4 percent to 4747, while Colombia’s COLCAP edged up 4 points or 0.3 percent to 1463. Contrastingly, Canada’s TSX decoupled from the rest and lost 31 points or 0.2 percent to 15182, as natural gas and gold prices retreated moderately on Friday June 30th of 2017.
Chile Unemployment Rate At Near 1-Year High Of 7%
The jobless rate in Chile rose to 7 percent in the three months to May of 2017 from 6.8 percent a year earlier and above market expectations of 6.9 percent. It is the highest jobless rate since the three months to July of 2016 as the number of unemployed went up by 5.5 percent to 620.5 thousand while employment rose at a slower 1.7 percent to 8.218 million. Jobs gains occurred mostly in health (10.7 percent), other services (12.2 percent) and manufacturing (2.9 percent). The labour force increased by 2 percent to 8.838 million and those detached from it also went up by 1.5 percent to 5.962 million.
Brazil Unemployment Rate Lower Than Expected At 13.3%
The jobless rate in Brazil came in at 13.3 percent in the quarter ended May of 2017, well below market expectations of 13.8 percent. The jobless rate declined for the second consecutive period after reaching a record high of 13.7 percent in the first quarter of the year.
India Infrastructure Output Rises 3.6% YoY In May
Infrastructure output in India went up 3.6 percent year-on-year in May of 2017 after an upwardly revised 2.8 percent rise in April. Production rose faster for refinery products (5.4 percent from 0.2 percent in April); electricity (6.4 percent from 5.4 percent); natural gas (4.5 percent from 2 percent) and rebounded for crude oil (0.7 percent from -0.6 percent) and cement (1.8 percent from -2.4 percent). On the other hand, production rose less for steel (3.7 percent from 9.3 percent) and declined for fertilizers (-6.5 percent from 6.2 percent) and coal (-3.3 percent, the same as in April). Infrastructure output accounts for around 40 percent of total industrial production.
Euro Area Inflation Rate Slows Less Than Expected
Consumer prices in the Euro Area increased 1.3 percent year-on-year in June of 2017, easing slightly from a 1.4 percent rise in May and above market expectations of 1.2 percent. However, it is the lowest inflation rate so far this year, due to a slowdown in energy prices, preliminary estimates showed.
UK Current Account Gap Widens In Q1
The United Kingdom current account deficit increased to GBP 16.9 billion in the first quarter of 2017 (3.4 percent of the GDP) from a GBP 12.1 billion in the previous period (2.4 percent of GDP) while below market expectations of a GBP 17.3 billion deficit. The goods deficit widened by GBP 2.6 billion to GBP 34.3 billion, due to a rise in imports of finished manufactured goods, machinery and transport equipment, oil and semi-manufactured goods. In addition, the services surplus narrowed by GBP 1.4 billion to GBP 25.4 billion, mostly driven by increase in imports of other business services and fall in exports of business services and insurance and pension services. Also, the primary income deficit widened by GBP 1.7 billion to GBP 2.7 billion."
"Cass Freight Index report data trends positive for shipment and expenditures gains.
May shipments, at 1.168, were up 4.3% compared to April and up 7.1% annually, continuing the streak of steady shipment growth that has remained intact going back to October 2016."
"The second largest port in Europe by container capacity is now running a pilot blockchain project focused on logistics automation.
Belgium-based Port of Antwerp has announced that it is looking to use the tech to automate and streamline the terminal's container logistics operations. The test is being conducted in conjunction with a blockchain startup called T-Mining.
The goal, port authorities said in a new release, is to speed up the interactions between port customers to prevent the malicious manipulation of data."
"Kerry Logistics has launched a weekly scheduled less than container load (LCL) rail freight service between Duisburg, Germany and Shanghai via the Yiwu terminal in the Yangtze River Delta, China, using its own consolidation containers.
This additional service option for eastbound and westbound shipments offers a transit time of 16 days for westbound cargo, and 21 days eastbound. Shipments have already been successfully moved using the new service, which offers weekly departures on Friday eastbound and Wednesday westbound."
"The Latest UPS Delivery Vehicle Isn’t a Drone—It’s a Golf Cart.
A Kentucky law allows delivery giant to use golf carts to complement fleet of trucks, rankling local union."
"The Canadian periodic table highlights 150 Canada-based startups, investors, and exits like that of Shopify and Real Matters."
"In the largest ever software deal in Europe, LSE-listed HgCapital has led a $5.3-billion buyout of Visma in a transaction that will see the investor group acquire 41 per cent of the tech company with Singapore’s sovereign wealth fund GIC picking 12 per cent. The deal is valued at EUR 4.7 billion ($5.36 billion).
Other investors that committed direct capital to the deal include Montagu and ICG."
"Auto Tech & Logistics Patent Watch: Drone Handoffs, Autonomous Routing, And More.
We use CB Insights' patent search engine to track recent publications from Google, Uber, Ford, Tesla, and more.
A patent secured by Uber outlines the company’s efforts to develop a backend system to route autonomous vehicles (AVs) to customer pick-up requests, optimize the route from pick-up to destination, and transmit this route data to the AV in question."
"Uber Technologies Inc launched its speedboat service in Croatia on Friday, connecting major tourist spots along the country's Adriatic coast.
UberBOAT, which offers speedboats for up to 12 people, has already been tested in Istanbul and Miami among other locations, and will operate in Croatia during the summer tourist season."
"Corpse of U.S. IPO market showed slight pulse in Q2.
To be clear, it’s not exactly going gangbusters. But according to the latest report from Renaissance, there’s no need to send the patient to the morgue.
The firm notes that the 54 IPOs in Q2 raised $11 billion, more capital over six months than companies raised in all of 2016. However, that is in part a reflection of what a catastrophe 2016 was for IPOs."
"Research Suggests Association Between Gut Bacteria, Emotion.
Researchers have identified gut microbiota that interact with brain regions associated with mood and behavior. This may be the first time that behavioral and neurobiological differences associated with microbial composition in healthy humans have been identified."
"Castle of the Teutonic Order in Malbork.
This 13th-century fortified monastery belonging to the Teutonic Order was substantially enlarged and embellished after 1309, when the seat of the Grand Master moved here from Venice. A particularly fine example of a medieval brick castle, it later fell into decay, but was meticulously restored in the 19th and early 20th centuries. Many of the conservation techniques now accepted as standard were evolved here. Following severe damage in the Second World War it was once again restored, using the detailed documentation prepared by earlier conservators."
JP: Tankan, 7:50 PM ET (7/2)
JP: PMI Manufacturing Index, 8:30 PM ET (7/2)
IN: PMI Manufacturing Index, 1:00 AM ET
CH: Adjusted real retail sales, 3:15 AM ET
FR: PMI Manufacturing Index, 3:50 AM ET
DE: PMI Manufacturing Index, 3:55 AM ET
EZ: PMI Manufacturing Index, 4:00 AM ET
GB: CIPS/PMI Manufacturing Index, 4:30 AM ET
EZ: Unemployment Rate, 5:00 AM ET
US: Gallup US Consumer Spending Measure, 8:30 AM ET
US: PMI Manufacturing Index, 9:45 AM ET
US: ISM Mfg Index, 10:00 AM ET
US: Construction Spending, 10:00 AM ET
AU: Retail Sales, 9:30 PM ET