Random Market News, 29 June
"Wall Street fell sharply on Thursday, with the S&P 500 and the Dow industrials suffering their worst daily percentage drops in about six weeks, as a recent decline in technology shares deepened and outweighed strength in bank shares."
"The sell-off in the European government bond market was reversed yesterday as the ECB did some been ‘backtracking’ on the statements from Mario Draghi on Tuesday. We have seen this before when tapering is being discussed in the ‘open air’ by members of the ECB. The initial reaction has been a significant sell-off in the European government bond markets as well as a strengthening of the euro. However, this is disinflationary and thus the ECB has been quick to alter its statements."
"Are free private equity co-investments really free?
Co-investments typically offered on a no-fee no-carry basis have become an incredibly sought after private equity investment opportunity, with an entire cottage industry built around them.
Most LPs will never get to see the best co-investment deals. LPs typically only get to co-invest if a deal is so big that a private equity fund decides not to fund the entire deal itself.
Even though an LP doesn't have to pay for the co-investment in a particular deal, there are many fees along the way that dim the appeal of these opportunities.
In addition to these costs, many LPs simply don't have the infrastructure to take advantage of co-investment opportunities because they lack the in-house capacity or expertise to screen the opportunities, perform the due diligence, negotiate term sheets, etc."
Co-investments are also used to avoid pension liability in portfolio company bankruptcy. Many PE co-investors are pension funds.
"NY Comptrollers, CalSTRS Retaliate Against Mylan Board.
Now that Mylan’s June 22 shareholder vote totals are public —revealing the EpiPen maker’s decision to ignore majority shareowner votes—New York’s city and state comptrollers, as well as the California State Teachers Retirement System (CalSTRS) are calling for an immediate board reform."
"Moody's first podcast series."
NPL securitization. Probably need to work extra hard for this.
"Global Fixed Income Views 3Q 2017.
Everything's a Proxy for QE.
Given the strength of synchronized global expansion, Above Trend Growth remains our base case scenario (with a probability of 65%, down from 70% in Q2). However, continued low inflation would support a Sub Trend Growth scenario (with a probability of 25%, up from 20%).
The biggest risks to this base case—a slowdown in China’s growth, an oil market collapse or an overly hawkish Federal Reserve (Fed) do not appear imminent. Both our Recession and our Crisis scenario probabilities are unchanged at 5%."
"Goldman's Commodity Analysts Ask: How Did We Get It So Wrong?
Goldman says an under-appreciation of some rules of commodity investing contributed to its misjudging of the market.
In a separate note on Wednesday, Goldman cut its WTI forecast for the next three months by $7.50 a barrel to $47.50.
The contract for August delivery settled at $44.93 on Thursday in New York."
Implied rate hike probability on July 26th ~2.5%, September 20th ~12.8%; 0% probability of rate cut through June 13th, 2018.
VIX ~11.44. 10-yr treasury vol (TYVIX) ~4.63.
"US Stocks Decline As Tech Rout Deepens
Wall Street closed deep in the red on Thursday, as equities fell the most in seven weeks triggered by a rout in technology shares. Banks shares outperformed after the US Fed cleared stock repurchases. The Dow Jones retreated 168 points or 0.8 percent to 21287. The S&P 500 lost 21 points or 0.9 percent to 2420. The Nasdaq plunged 90 points or 1.4 percent to 6144.
US Corporate Profits Fall 2.7% In Q1
Corporate profits in the United States fell by USD 44.0 billion, or 2.7 percent, to USD 1,567.4 billion in the first quarter of 2017, following a 2.3 percent rise in the previous period and worse than a preliminary reading of a 2.5 percent drop, final figures showed. The undistributed profits shrank by USD 53.8 billion, or 8.5 percent, to USD 575.6 billion while net dividends rose USD 9.8 billion, or 1 percent, to USD 991.8 billion. Also, net cash flow with inventory valuation adjustment, the internal funds available to corporations for investment, went down by USD 48.2 billion, or 2.2 percent, to USD 2,143.9 billion.
US Jobless Claims Above Expectations
The number of Americans filing for unemployment benefits increased by 2 thousand to 244 thousand in the week ended June 24th from the previous week's revised level of 242 thousand and above market expectations of 240 thousand. Claims have now been below 300,000 for 121 straight weeks, the longest such stretch since 1970. Meanwhile, the 4-week moving average, which removes week-to-week volatility, declined 2.75 thousand to 242.25 thousand last week.
Argentina Industrial Production Breaks Contraction Streak
Industrial Production in Argentina expanded 2.7 percent in May of 2017 over the same month in the previous year from an upwardly revised 2.6 percent decline in the previous month. Consensus expected a 3.5 percent expansion. Industrial production grew for the first time since January of 2016. Expansion was mainly explained by car manufacturing, which advanced 17.4 percent in May after declining 7.5 percent in April.
Stocks in Vietnam Hit 9-year High
VN increased to a 9-year high of 774.49.
Singapore Bank Loans Increased to Record High In May
Bank loans in Singapore increased to a record high of SGD 633.2 billion in May of 2017 from SGD 631.2 billion in April, as consumer loans went up further to SGD 252.2 billion (from SGD 251.8 billion in the previous month) and lending to businesses rose to SGD 381 billion (from SGD 379.4 billion). Loans increased for financial institutions (SGD 90.3 billion from SGD 90.1 billion in April); and business services (SGD 8.7 billion from SGD 8.69 billion). Compared to May 2016, bank loans rose by 6.8 percent from SGD 592.8 billion.
China Factory Activity Expands For 11th Straight Month
The official NBS Manufacturing PMI in China stood at 51.7 in June of 2017, above April's 51.2 and above the market consensus of 51. Faster growth was reported for production and new orders which expanded for the eight consecutive month, while raw material inventories declined at a slower rate and both employment and supplier delivery times worsened. Also, input prices rebounded from a contraction and factory prices declined for a third straight month albeit at a slower pace.
Japan Industrial Production Falls The Most In 6 Years
Industrial production in Japan shrank 3.3 percent month-on-month in May of 2017, compared to a 4 percent rise in April and below market estimates, preliminary data showed. It was the steepest decline in industrial output since April 2011, as production contracted for most categories: iron & steel (-3.2% vs +3.2%), non-ferrous metals (-2.8% vs +1.4%), fabricated metals (-6.3% vs +1.4%); general purpose & business oriented machinery (-2.6% vs +8.7%), electronic parts (-1.1% vs +5.2%), electrical machinery (-2.7%vs +0.6%), transport equipment (-11.7% from +10.8%); ceramics, stone & clay products (-1.6% vs +0.6%); chemicals (-2.2% vs +1.7%); plastic products (-0.6% from +0.9%); textiles (-1.8% vs 1.4%); construction goods (-4.8% vs 2%); and durable consumer goods (-11% vs +8.1%). In contrast, output rose for petroleum & coal (+2.3% vs -1.1%). On a yearly basis, output gained 6.8%, faster than a 5.7% rise in April.
Japan 10Y Bond Yield Hits 15-week High
Japan 10 Year Government Bond Yield increased to a 15-week high of 0.076%.
UK Consumer Confidence At 11-Month Low
Consumer confidence in the United Kingdom fell to -10 in June of 2017 from -5 in May, worse than market expectations of -7. It is the lowest value since July of 2016 as personal finances were assessed less positive (0 from 4); the index for the economic situation in the next 12 months fell (-23 from -21) and the major purchase index worsened to 1 to 9.
German Inflation Rate Unexpectedly Rises To 1.6% In June
German consumer prices are expected to increase by 1.6 percent year-on-year in June 2017, following a 1.5 percent rise in the previous month and beating market consensus of a 1.4 percent gain. Cost of services rose at a faster pace while goods inflation slowed, as energy prices showed no growth from a year earlier. On a monthly basis, consumer prices are expected to increase by 0.2 percent, also above market expectations of a flat reading.
Swiss Franc Hits 33-week High
USDCHF decreased to a 33-week low of 0.95605.
Wheat Hits 54-week High
Wheat increased to a 54-week high of 482.5 USD/Bu."
"Logistics companies lack focus when it comes to pricing.
They have too little focus and not enough guidance when it comes to pricing, a recent study by global strategy and marketing consultancy, Simon-Kucher & Partners, concludes."
"New wave of freight technology unveiled.
Second set of 10 startups showcase ‘out of the box’ logistics innovations as part of the Logistics Tech Accelerator programme."
Some more firms from 3PL & Supply Chain Summit 2017.
"California leads the way in addressing transport infrastructure
The bill would establish the Freight Transportation Infrastructure Trust Fund, funded through a national 1 percent waybill fee on the transportation cost of goods."
"WWL execs indicted in ro-ro shipping collusion case.
One current and two former executives of Wallenius Wilhelmsen Logistics have been charged with bid rigging and price fixing in the roll-on/roll-off shipping market, according to the U.S. Justice Department’s federal court in Baltimore."
"D-FW warehouse construction slips 40 percent from last year, and labor shortage is one factor.
At midyear, 14.6 million square feet of industrial buildings were under construction in Dallas-Fort Worth. That's a 40 percent reduction from the second quarter of 2016, according to preliminary estimates from Cushman & Wakefield of Texas."
"Amazon.com Inc. will go forward with plans to build a Romulus warehouse that would create a promised 1,600 jobs after the Michigan Strategic Fund board approved Tuesday a $5 million grant for the online company."
"Smart Transformers Will Make the Grid Cleaner and More Flexible.
The solid-state transformer is poised to remake the electrical distribution grid."
"New Technique Enables Safer Gene-editing Therapy.
Scientists from The University of Texas at Austin took an important step toward safer gene-editing cures for life-threatening disorders, from cancer to HIV to Huntington's disease, by developing a technique that can spot editing mistakes a popular tool known as CRISPR makes to an individual's genome. The research appears today in the journal Cell."
"Visualizing Where Major US Banks Have Invested in Fintech.
Since 2012, the top ten US banks by assets under management have participated in 72 rounds totaling $3.6B to 56 fintech companies."
"Aerospace leader Lockheed Martin has invested in U.S. nanosatellite company Terran Orbital, the latest example of how legacy and novel players alike are looking at smallsats and the industry of cheap, lightweight satellites in general as a key area of opportunity for the growing commercial space sector."
"More than half of major malware attack’s victims are industrial targets.
A new report from cybersecurity firm Kaspersky Labs examining the targets — and intended effects — of this week’s massive malware attack comes up with some significant insights."
"China will launch a series of artificial intelligence (AI) projects and increase efforts to cultivate tech talent as part of a soon to announced national AI plan, the China Daily said on Friday, citing a senior official."
"Uber’s Advanced Technologies Group has a new version of its testing transport truck for autonomous tech. The new model features an updated technology stack, including a 64-channel spinning LiDAR array, which is something never used previously on any of the former Otto’s test trucks."
"Ford CTO Ken Washington today announced that the automaker will create a robotics and AI research team to explore AI beyond autonomous cars.
“This is the next step in Ford’s automation story,” Washington said. “Ford is poised to drive into the future by expanding automation of mobility products and services.”"
"Sacred City of Caral-Supe.
The 5000-year-old 626-hectare archaeological site of The Sacred City of Caral-Supe is situated on a dry desert terrace overlooking the green valley of the Supe river. It dates back to the Late Archaic Period of the Central Andes and is the oldest centre of civilization in the Americas. Exceptionally well-preserved, the site is impressive in terms of its design and the complexity of its architectural, especially its monumental stone and earthen platform mounts and sunken circular courts. One of 18 urban settlements situated in the same area, Caral features complex and monumental architecture, including six large pyramidal structures. A quipu (the knot system used in Andean civilizations to record information) found on the site testifies to the development and complexity of Caral society. The city’s plan and some of its components, including pyramidal structures and residence of the elite, show clear evidence of ceremonial functions, signifying a powerful religious ideology."
"Forget birds and trains, spotters are haunting storage yards seeking rare versions of the ubiquitous metal boxes.
A small group of connoisseurs has taken up “container spotting,” hanging around shipping yards to identify the globe-trotting metal boxes by color, size, vintage, origin country and other details.
Rare finds are what “makes it all worth it,” said Mr. Fox, an Indianapolis-based logistics-company salesman. “Blue Gateway container!”"
Probably quite useful for secured financers.
And travel with the containers!
DE: Retail Sales, 2:00 AM ET
FR: Consumer Mfgd Goods Consumption, 2:45 AM ET
FR: PPI, 2:45 AM ET
CH: KOF Swiss Leading Indicator, 3:00 AM ET
DE: Unemployment Rate, 3:55 AM ET
GB: GDP, 4:30 AM ET
EZ: HICP Flash, 5:00 AM ET
US: Personal Income and Outlays, 8:30 AM ET
CA: IPPI, 8:30 AM ET
CA: Monthly GDP, 8:30 AM ET
US: Chicago PMI, 9:45 AM ET
US: Consumer Sentiment, 10:00 AM ET
CA: BOC Business Outlook Survey, 10:30 AM ET
US: Baker-Hughes Rig Count, 1:00 PM ET