Random Market News, 12 June
"Technology Shares Lead Global Declines."
Bitcoin also down ~10% today to ~US$2700.
"For the second quarter, 75 companies in the S&P 500 have issued negative EPS guidance and 37 companies in the S&P 500 have issued positive EPS guidance."
"In sum, this combination of an improving earnings outlook, weaker U.S. dollar, attractive valuations and a pickup in economic momentum all point to a world of opportunity outside of the U.S."
The economy may not be doing that great but plans are plans and the Fed is on a mission to raise rates or as they say in proper Fedspeak, to "withdraw stimulus". However you say it the effect is the same: rising costs for borrowing that will slow economic activity ahead. Yet the economy, if not already slowing, isn't really moving that fast. "Data dependent" is another Fedspeak gem, one that's supposed to tie rate moves to actual movement in economic data. Needing to fit reality to their schedule, the Fed will have to dance around this one, no doubt repeating the formulation in May's FOMC statement that economic softness is merely "transitory" and that the economy will doubtlessly shift higher. We're all hoping so."
Suspense built as the week began — three central banks met and the Reserve Banks of Australia and India and the European Central Bank decided to keep their respective interest rates unchanged. On Thursday, the UK held its snap election and the results shocked as the Conservative party was not able to attain its majority and will try to form a coalition with the DUP. Economic data were mixed.
Three more central banks are slated to announce their respective policy decisions next week — the Federal Reserve and the Banks of England and Japan. The Fed is expected to increase its fed funds rate by 25 basis points to 1.00 percent to 1.25 percent. The Banks of England and Japan are anticipated to maintain their current policy rates of 0.25 percent and minus 0.1 percent. Price data will be released in the UK, Eurozone and Japan. Both the UK and Australia report May labour market data. Needless to say, the ongoing developments following this week's snap election will be followed closely."
"Are Banks Panicking? - Weekly Loan Growth Update.
The decline in loan growth from domestic banks is very broad. It spans across all consumption sectors. This indicates that the lack of demand or lack of desire to lend is not sector-specific but due to some macro economic factor.
[L]oan loss provisions have been on the rise and if we see another sizable increase in the next quarter, this could be something that signals a very serious issue."
Different plotting options, such as "Percentage Change from Year Ago", with "Edit Graph" button.
Note, "US Corporate Bond Issuance" is comparable ($764bn in 2017 vs. $726bn in 2016 to May), so decline likely not driven by floating to fixed moves ahead of rate hikes.
"The kingmaker clan behind Xi Jinping.
Some 2,000km south of Beijing, the Ye family pulls the levers of power."
Very interesting article, though I have no idea about reliability.
Random trivia - Hakka led the largest war of the 19th century, the Taiping Rebellion.
"Returns tighten for private equity investors, Coller report finds.
The percentage of private equity investors with annual returns of 11% to 15% fell in the most recent annual period, a survey finds. Sixty-two percent of private equity investors earned net annual returns of 11% to 15% from inception to this year, down from 67% of investors with returns in the same range a year earlier, according to private equity firm Coller Capital's latest Global Private Equity Barometer."
"In search for growth, private equity firms go shopping.
Private equity firms' portfolio companies are increasingly growing by acquisition rather than increasing earnings organically."
Consistent with broader Asset Management consolidation.
"European Commission Proposes Pan-European Pension.
Personal pension plan would be transportable to any EU-member country."
"When Currencies Fall, Export Growth Is Supposed to Follow—Until Now.
The U.K. economy is providing a live test of whether globalization has blunted the textbook effect of currency depreciation."
Implied June 14th rate hike probability 99.6%, 2 rate hikes by September 20th ~28.6%.
VIX ~11.46. 10-yr treasury vol (TYVIX) ~4.25.
"US Stocks Dip As Tech Selloff Extends
Wall Street closed in the red on Monday, as the US-based selloff across technology stocks that started on Friday continued. The Nasdaq 100 booked its biggest 2-day decline since Brexit, with Netflix falling 4.2 percent and Apple 2.5 percent. The Dow Jones closed down 36 points or 0.2 percent to 21236. The S&P 500 edged down 2 points or 0.1 percent to 2429. The Nasdaq lost 32 points or 0.5 percent to 6175.
European Equities Finish Lower On Tech, Political Worries
The DAX 30 retreated 126 points, or 1%, to 12,690 on Monday. Also, other European indices closed in the negative territory, dragged down by tech shares following a major sell-off on Wall Street. Also, investors were cautious amid political instability in the UK after the general elections and awaited the US interest rate decision later in the week. The FTSE lost 15 points, or 0.2%, to 7,512, the CAC 40 decreased 59 points, or 1.1%, to 5,241, the IBEX 35 dropped 136 points, or 1.2%, to 10,842 and the FTSE MIB went down 212 points, or 1%, to 20,910.
Argentina Equities Tumble 2.2% On Monday
Argentina’s MERVAL lost 469 points or 2.2 percent to 21145, as economic growth remains weak and political concerns in Brazil have spilled to its key trading partner. Declines were broad, with Agro (-7.7 percent) and Tran (-4.5 percent) leading the way. Among other stock markets in America, Brazil’s iBovespa retreated 511 points or 0.8 percent to 61700. Canada’s TSX dipped 89 points or 0.6 percent to 15384. Colombia’s COLCAP inched down 4 points or 0.2 percent to 1447. Contrastingly, Mexico’s IPC gained 47 points or 0.1 percent to 49129, while Chile’s IPSA edged up 4 points or less than 0.1 percent to 4850.
Fitch Revises Bahrain's Credit Outlook to Negative
Fitch Ratings has downgraded its outlook for Bahrain's
sovereign credit rating to negative from stable and affirmed the country’s
long-term foreign credit rating at 'BB+', reflecting the slow progress towards
the new budget and a medium-term fiscal strategy to tackle high deficits and a
rapidly growing government debt ratio."
"The U.S. Transportation Department’s Federal Motor Carrier Safety Administration has announced two proposals that it said helps address the national shortage of qualified truck drivers."
"DP World Subsidiary Acquires Spanish Maritime-Services Operator.
P&O Maritime buys Reyser in a move that allows the company to consolidate its position in Spain."
"Fujairah eases restrictions on tankers going to/from Qatar."
E3 Livecast! June 10-15.
"SoftBank Acquires Boston Dynamics and Schaft.
SoftBank's massive robot collection now includes Pepper, Boston Dynamics' BigDog and Handle, Schaft's S-One, and many more."
A party favorite.
"Massive data sets are not a commodity for AI."
"Canyon Bridge Capital Partners LLC, the China–backed buyout fund that agreed to acquire Lattice Semiconductor Corp in November for $1.3 billion, will submit the deal for U.S. review for the third time, people familiar with the matter said on Sunday.
The move comes as Canyon Bridge seeks to get the deal approved by the Committee on Foreign Investment in the United States (CFIUS), a government panel which reviews corporate acquisitions for potential national security risks."
"232 Startup Failure Post-Mortems.
No survivorship bias here. A compilation of startup failure post-mortems by founders and investors."
Random Place of the day
"St. Pauli Elbtunnel. Hamburgers are intensely proud of their tunnel beneath the river."
"DeepMind Shows AI Has Trouble Seeing Homer Simpson's Actions."
Great Britain GB: CPI, 4:30 AM ET (down, 0.2% M/M, flat, 2.7% Y/Y)
Great Britain GB: Producer Price Index, 4:30 AM ET (down, 0.1% M/M Output, down -0.5% M/M Input)
Germany DE: ZEW Survey, 5:00 AM ET (up, 85.0 Current Conditions, up, 21.5 Bus. Expectations)
USA US: NFIB Small Business Optimism Index, 6:00 AM ET (down, 104)
USA US: PPI-FD, 8:30 AM ET (down, 0.1% M/M)
USA US: Redbook, 8:55 AM ET
China CN: Fixed Asset Investment, 10:00 PM ET (flat, 8.9% Y/Y)
China CN: Industrial Production, 10:00 PM ET (down, 6.3% Y/Y)
China CN: Retail Sales, 10:00 PM ET (down, 10.6% Y/Y)