Random Market News, 6 July
"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."
"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%."
"Fixed Income Q2’17 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."
"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."
"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."
Implied rate hike probability on July 26th ~3.1%, September 20th ~15.9%; 0% probability of rate cut through June 13th, 2018.
VIX ~12.54. 10-yr treasury vol (TYVIX) ~4.68.
"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%."
"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."
"The State Council on Wednesday announced new measures to cut logistics costs to lower the corporate burden and help economic upgrades."
"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."
"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."
"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."
"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."
"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."
A small island abbey is the final resting place of many medieval Scottish monarchs, including the real Macbeth."
"Minor Planets Discovered:
THIS MONTH: 58
THIS YEAR: 15,537
ALL TIME: 733,268"
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
https://tradingeconomics.com/calendar (More complete listing)