Random Market News, 6 July
2017
"EU and Japanese officials have reached agreement "in
principle" on a free trade deal.
The 28-nation EU exports 86 billion euros in goods and services to Japan
every year, but faces high tariffs and other obstacles in reaching the market.
The EU imposes tariffs of 10 percent on cars and 14 percent on electronic
products, while Japan has tariffs of 29.8 percent on cheese and 38.5 percent on
beef.
The "agreement in principle" means that the two sides have yet to
work out the final details of the deal and remain divided over certain issues,
including a dispute settlement mechanism for investors."
http://www.dw.com/en/eu-and-japan-agree-trade-deal/a-39561536
"Atlanta Fed Revises US Growth Outlook, Clashing with IMF Views.
The Federal Reserve Bank of Atlanta revised its forecast for second quarter
US GDP growth to 3% on Monday, from an earlier June estimate of 2.7% growth.
The revision came on the heels of a positive manufacturing report from the
Institute of Supply Management.
The international agency last week revised down its expectation for US
growth in 2017 to 2.1%, from an April growth estimate of 2.3%."
https://www.ai-cio.com/news/atlanta-fed-revises-us-growth-outlook-clashing-imf-views/
"Fixed Income Q2’17 Wrap Up: Goldilocks vs. the Big Bad Wolf.
https://insight.factset.com/fixed-income-q217-wrap-up-goldilocks-vs.-the-big-bad-wolf
"Carry Investors: Beware of Bad Vibrations.
The combination of aggressive yield hunting and controversial regulatory
rules have created a dangerous mix for market stability. Here, we present three
rules for survival, which can help to weather storms."
"China’s debt surpasses 300 percent of GDP, IIF says, raising doubts
over Yellen’s crisis remarks.
Global debt has hit a record level in the first quarter of this year,
mainly driven by emerging markets, raising questions of whether there will be
another financial crisis in the near future.
Data from the Institute of International Finance showed that global debt
reached $217 trillion in the first quarter of this year, or 327 percent of
gross domestic product."
https://www.iif.com/publications/global-debt-monitor
"Does infrastructure investment lead to economic growth or economic
fragility? Evidence from China.
Far from being an engine of economic growth, the typical infrastructure
investment fails to deliver a positive risk-adjusted return.
Where investments are debt-financed, overinvesting in unproductive projects
results in the build-up of debt, monetary expansion, instability in financial
markets, and economic fragility, exactly as we see in China today."
"A Chinese-built bridge collapsed in Kenya two weeks after it was
inspected by the president."
'Fails to deliver a positive
risk-adjusted return'
"Russia, China Ink $11 Billion in Partnership Deals.
A Russian sovereign wealth fund announces the launch of a $10 billion
co-investment fund with China’s development bank and is pairing with China’s
sovereign wealth fund for another $1 billion investment."
"2017 Knowledge Brokers.
Each year, CIO builds a list of the industry’s top knowledge brokers. These
are the people tasked with identifying the best investment managers and
financial firms, as well as how to put them all together in a portfolio that
will perform well."
https://www.ai-cio.com/lists/2017-knowledge-brokers/
"AIMCo returns 5.8% in 2016, outperforming its benchmark.
Alberta Investment Management Corp., Edmonton, returned 5.8% on its
investments in 2016, helping raise its assets under management to C$95.7
billion ($71 billion) as of Dec. 31.
The return was above its 5.5% custom benchmark return for the year.
[I]ts combined money market/fixed-income allocation (27%) and
inflation-sensitive portfolio (24%), which includes infrastructure and real
estate, outperformed their respective benchmarks."
"Will Private Equity Eat Itself?
A slowdown is now returning to haunt the private equity industry — just as
the market is getting really hot.
For private equity managers, it is a tale of two markets. Fundraising is
going through the roof, but valuations are sky-high and exits are on the
decline — a sign, market observers say, that the private equity market is nearing
the end of its cycle, which could be bad news for managers looking to put new
capital to work.
A report published this week from data provider Preqin shows that private-equity
backed exits are on the decline. According to Preqin data released July 5,
there were 381 private-equity backed buyouts in the second quarter of 2017, the
fourth consecutive quarter of declines."
https://www.preqin.com/docs/reports/Buyout-Deals-and-Exits-Q2-2017.pdf
Data dump.
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
Implied rate hike probability on July 26th ~3.1%,
September 20th ~15.9%; 0% probability of rate cut through June 13th,
2018.
http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html/
VIX ~12.54. 10-yr treasury vol (TYVIX) ~4.68.
http://www.cboe.com/products/vix-index-volatility/volatility-on-interest-rates
News feed.
"US Stocks Stumble Amid Hawkish Central Banks
Wall Street closed deep into the red on Thursday, as
hawkish tone from developed-nation central banks as they seek to remove
accommodative monetary stimuli continued to roil markets. On the data front,
ADP payrolls disappointed and initial claims came slightly higher than
expected. The Dow Jones lost 158 points or 0.7 percent to 21320. The S&P
500 retreated 23 points or 0.9 percent to 2410. The Nasdaq plunged 61 points or
1.0 percent to 6089.
US Services Sector Growth Beats Forecasts: ISM
The ISM Non-Manufacturing PMI index for the United
States rose to 57.4 in June of 2017 from 56.9 in May, beating market
expectations of 56.5. Business activity and new orders went up while employment
slowed. The majority of respondents’ comments continue to be positive about
business conditions and the overall economy.
US Services PMI Revised Higher In June: Markit
The IHS Markit US Services PMI increased to 54.2 in
June of 2017 from a preliminary of 53 and 53.6 in May. It is the highest
reading in five months amid increased new orders and strong client demand.
Employment remained strong while input prices rose the most in two years. The
degree of optimism among firms in the US services sector increased, with
confidence hitting the second-strongest level since May 2015.
US Private Employment Rises Less Than Expected: ADP
Private businesses in the United States hired 158
thousand workers in June of 2017 compared to a downwardly revised 230 thousand
in May and below market expectations of 185 thousand. The service-providing
sector added 158 thousand jobs, boosted by professional and business (69
thousand); trade, transportation and utilities (30 thousand); education and
health (28 thousand); leisure and hospitality (11 thousand) and financial activities
(10 thousand). On the other hand, the goods-producing sector was flat as a 6
thousand rise in manufacturing payrolls was offset by a 4 thousand decline in
natural resources and mining and a 2 thousand drop in the construction sector.
Midsized companies were the ones hiring the highest number of workers (91
thousand), followed by large (50 thousand) and small firms (17 thousand).
Canada Exports Hit All-Time High In May
Total exports from Canada rose 1.3 percent to a record
high of C$48.7 billion in May, a third consecutive monthly gain. Metal and
non-metallic mineral products (11.1 percent) and motor vehicles and parts (3.6
percent) drove the increase in exports for the month. Exports excluding energy
products rose 3.6 percent. Year-over-year, total exports went up 17.8 percent.
Canada Imports Hit Fresh Record High In May
Total imports to Canada rose 2.4 percent to a record
high of C$49.8 billion in May, a sixth consecutive monthly increase. Higher
imports of aircraft and other transportation equipment and parts (45.9
percent), motor vehicles and parts (3.7 percent), and energy products (6.5
percent) were responsible for the increase. Year-over-year, total imports were
up 10.2 percent.
US Exports Hit 2-Year High In May
Total exports from the United States rose 0.4 percent
month-over-month to USD 192.0 billion in May 2017, the highest level since
April 2015, as sales of consumer goods and motor vehicles increased. In
contrast, exports of capital goods and civilian aircraft fell. On a non-seasonally
adjusted basis, exports of goods rose to China (3.6 percent), Mexico (5.4
percent), Canada (9.6 percent) and Germany (7.4 percent), while sales to Japan
dropped 13.4 percent.
US Trade Deficit Shrinks In May
The goods and services deficit in the United States
narrowed to USD 46.5 billion in May of 2017 from a USD 47.6 billion gap a month
earlier and compared to market expectations of a USD 46.2 billion shortfall.
Exports rose 0.4 percent to the highest value in nearly two years mainly
boosted by sales of consumer goods and cell phones.
ECB Opens Door To Removing Easing Bias: Minutes
ECB's policymakers discussed taking out the so called
"easing bias" with respect to the APP purchases from their policy
message, as the Euro Area economy is expanding at a somewhat faster pace than
previously expected and deflation risks had largely dissipated, minutes from
the ECB's June meeting showed.
Oil Prices Surge On US Inventories Drop
Oil prices jumped on Thursday, after the latest US
Energy Information Administration report showed crude inventories fell by 6.3
million barrels, compared with expectations of a 2.3 million barrels decline.
Crude oil prices went up 2.5% to $46.3 per barrel and Brent crude oil increased
2.2% to $48.9 per barrel around 11:50 AM New York time.
Ecuador Inflation Rate Lowest Since 1970
Consumer prices in Ecuador rose 0.17 percent
year-on-year in June of 2017, easing from 1.10 percent in the previous month.
It is the lowest inflation rate since April of 1970, as prices went up at a
slower pace for food and non-alcoholic beverages (0.13 percent vs 0.95 percent
in May), housing and utilities (2.03 percent vs 2.16 percent) and education
(4.64 percent vs 5.08 percent). In addition, cost decreased for clothing and
footwear (-5.23 percent vs -3.15 percent); furnishings (-1.77 percent vs -0.42
percent) and recreation and culture (-0.44 percent vs 4.88 percent). Meanwhile,
prices rose faster for transport (1.09 percent vs 0.79 percent); restaurants
and hotels (0.41 percent vs 0.01 percent) and health (2.40 percent vs 2.34
percent). On a monthly basis, consumer prices declined 0.58 percent compared to
a 0.05 percent rise in May.
Egypt Hikes Key Rate To 18.75%
The central bank of Egypt has unexpectedly lifted its
benchmark overnight deposit interest rate by 200 bps to 18.75 percent on July
6th. It is the second consecutive hike so far this year. Policymakers said
there are stronger risks to inflation derived from demand-side pressures and after
the government raised electricity prices by up to 42 percent. In May, the
inflation decreased slightly to 29.7 percent from 31.5 percent in the previous
month. The lending rate and the discount rate were also raised to 19.75 percent
and 19.25 percent, respectively.
Stocks in Greece Hit 25-month High
Athens General increased to a 25-month high of 843.62.
Germany 10Y Bond Yield Hits 17-month High
Germany 10 Year Government Bond Yield increased to a
17-month high of 0.501%."
https://tradingeconomics.com/stream
http://www.marketwatch.com/newsviewer#
"Amazon Japan challenged by glitches in delivery services.
Online retailer could face blowback if logistics partners falter.
Amazon Japan admitted Wednesday that some products bought online are
arriving late to customers and in some cases not at all.
Besides logistics giants like Yamato Transport, Amazon Japan also works
with smaller companies called delivery providers in certain zones, and it
appears these contractors are having the trouble with late deliveries."
http://asia.nikkei.com/Business/Companies/Amazon-Japan-challenged-by-glitches-in-delivery-services
"The State Council on Wednesday announced new measures to cut
logistics costs to lower the corporate burden and help economic upgrades."
http://news.xinhuanet.com/english/2017-07/05/c_136420435.htm
"Shippers' Law: U.S. government settles with Agility.
The settlement agreement, which resolves all legal issues related to
allegations the Kuwait-based 3PL overcharged the Department of Defense while
supplying food to U.S. military troops, will allow Agility to again pursue new
U.S. government contracts."
http://www.americanshipper.com/main/asd/shippers-law-us-government-settles-with-agility67968.aspx
"German logistics specialist the Rhenus Group signed an agreement to
purchase Australian freight forwarding company O’Brien Customs and Forwarding
Pty Ltd on 16 June, as part of its expansion strategy in the Asia-Pacific
region."
https://logisticsmagazine.com.au/german-logistics-group-to-enter-australian-market/
"Global ocean freight rates up one-third in first half of 2017.
Big increases across most trade lanes push average spot prices 36% above
the ‘exceptionally poor’ levels last year, Drewry analysis reveals."
"Peugeot turns to helicopters to deliver time-critical parts.
PSA Peugeot, a major customer of industrial logistics specialist, Gefco,
resorted to helicopters yesterday to transport urgent parts from a plant in
central France that was being blocked by around 150 protesting workers from
another automotive component firm that is threatened with liquidation."
"Asia Tech: The 12 Most Active Corporate
Investors.
Corporate players are fueling innovation in the Asia
tech ecosystem, participating in 40% of deal share in the space in Q1'17.
In Q1’17, corporates participated in 125 deals across
$6.6B in funding, more than any quarter in 2016."
https://www.cbinsights.com/blog/asia-tech-top-corporate-investors/
"Corporate Investment In Pharma Startups On The
Rebound.
This year has seen large >$60M deals to Ascletis,
Repare Therapeutics, SutroVax and Iterum Therapeutics.
In 2017 through 06/26/17, global corporate equity
funding to private pharmaceutical companies has reached $1.85B over 93
deals."
https://www.cbinsights.com/blog/pharma-corporate-investment/
"An ‘Uber for garbage’ picks up steam, and $11.7
million in Series A funding."
"FTC shuts down Blue Global for sharing
consumers’ loan-application data.
The Federal Trade Commission said it halted the
operations of Blue Global Media after the company earned millions of dollars by
falsely promising to match them with low-rate loans."
"Roomba Inventor Joe Jones on His New
Weed-Killing Robot, and What's So Hard About Consumer Robotics."
"Tool Reveals Mechanism Behind High-Temperature
Superconductivity."
"Why modern mortar crumbles, but Roman concrete
lasts millennia."
http://www.sciencemag.org/news/2017/07/why-modern-mortar-crumbles-roman-concrete-lasts-millennia
"Iona Abbey.
A small island abbey is the final resting place of
many medieval Scottish monarchs, including the real Macbeth."
http://www.atlasobscura.com/places/gunung-padang
"Minor Planets Discovered:
THIS MONTH: 58
THIS YEAR: 15,537
ALL TIME: 733,268"
http://www.minorplanetcenter.org/
Bonus: "Close Approaches" tally.
CH: Unemployment,
1:45 AM ET
DE: Industrial
Production, 2:00 AM ET
DE: Merchandise
Trade, 2:00 AM ET
FR: Merchandise
Trade, 2:45 AM ET
GB: Halifax HPI,
3:30 AM ET
IT: Retail
Sales, 4:00 AM ET
GB: Industrial
Production, 4:30 AM ET
GB: Merchandise
Trade, 4:30 AM ET
US: Employment
Situation, 8:30 AM ET
CA: Labour Force
Survey, 8:30 AM ET
CA: Ivey
Purchasing Managers' Index, 10:00 AM ET
US: EIA Natural
Gas Report, 10:30 AM ET
US: Baker-Hughes
Rig Count, 1:00 PM ET
http://online.wsj.com/mdc/public/page/2_3063-globalEconomicCalendar.html
https://tradingeconomics.com/calendar (More complete listing)