Random Market News, 3 August
"Saudi Oil Minister Met With Top Commodity Hedge Funds.
Khalid Al-Falih, Saudi Arabia’s energy minister, met in private with some of the world’s top commodity hedge funds in July, taking the unusual step of personally canvassing investor views on the state of the market.
In the past, Saudi Arabian officials have disparaged hedge funds as unhelpful speculators that undermined OPEC’s quest for market stability. Last month’s meetings, described by people familiar with the encounters, signal the world’s largest exporter has reassessed the role of financial investors in the global oil market.
Al-Falih met the oil investors and traders in London days before traveling to St. Petersburg where OPEC and non-OPEC ministers discussed the market, the same people said, asking not to be identified because the talks were private. Although Saudi officials have met in the past with hedge funds representatives, it’s the first time meetings involving the minister have been reported."
"Oil trader Andy Hall, known as ‘God,’ said to close main hedge fund.
The capitulation of one of the best-known figures in the commodities industry comes after muted oil prices wrong-footed traders from Goldman Sachs Group (GS) to BP's in-house trading unit. Mr. Hall's flagship Astenbeck Master Commodities Fund II lost almost 30% through June, a separate person with knowledge of the matter said, asking not to be identified because the details are private.
Mr. Hall consistently pushed against the bearish tide on oil this year, using investor letters to cast doubt on data showing rising crude supplies and arguing that a sustained rally was on its way.
The fund closure shows "how the world of forecasting the oil market changed after the shale revolution," said Anas Alhajji, an independent analyst and former chief economist at private-equity group NGP Energy Capital Management."
"PBGC: Multiemployer insolvency still targeted for 2025.
The PBGC's multiemployer pension plan program is likely to face insolvency by the end of 2025, while the single-employer program could eliminate its deficit by 2022, said the agency's fiscal 2016 projections report released Thursday.
The annual projections report provides a range of estimates of the future status of insured pension plans and their effect on the Pension Benefit Guaranty Corp.'s financial condition, based on hundreds of different economic scenarios."
"Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 5,921 residential transactions through TREB’s MLS® System in July 2017. This result was down by 40.4 per cent on a year-over-year basis, led by the detached market segment – both in the City of Toronto and surrounding regions."
"Brazilian Disillusionment Stimulates Explosion in Money Transfers to the United States.
The amount of monetary resources sent by individuals in Brazil to individuals in the United States increased 227% in the first semester, to US$ 408 million, according to the Central Bank.
Part of the increase can be explained by a change in the composition of Brazilian migrants to the United States: with a more elitist profile, who rely on Brazilian economic activities to sustain their American livelihood."
"Half of Middle-Market Dealmakers See No Impact From Trump on Private Equity Fundraising.
ACG New York survey shows most expect private-equity investments will outpace hedge-fund and venture-capital investments in 2H."
"FTSE 100 CEO pay drops - but hold the cheers, say pension funds.
UK chief executives’ average pay fell 17% in the past 12 months but shareholders should not become complacent in the push for fairer remuneration, according to the UK’s pension fund trade association.
The fall in FTSE 100 CEO pay was revealed in analysis published today by the CIPD, the professional body for human resources, and the High Pay Centre, a think tank.
The annual survey found that the average FTSE 100 CEO received an annual pay package of £4.5m last year, compared with £5.4m in 2015.
Luke Hildyard, policy lead on stewardship and corporate governance at the Pensions and Lifetime Savings Association (PLSA), said the reduction was “small but significant” and viewed positively by the association."
Implied rate hike probability for September 20th is ~1.4%, November 1st is ~5.4%; 0% probability of rate cut through June 13th, 2018.
VIX ~10.44. 10-yr treasury vol (TYVIX) ~3.86.
"Stocks in United States Hit All-time High
Dow Jones increased to an all-time high of 22037.
US ISM Non Manufacturing PMI at Near 1-Year Low
The ISM Non-Manufacturing PMI index for the United States fell to 53.9 in July of 2017, well below 57.4 in June and market expectations of 57. It is the lowest reading since August of 2016 as production, new orders and employment expansion eased and price pressures increased. However, the majority of respondents’ comments were mostly positive about business conditions and the state of the economy.
US Factory Orders Grew the Most in 8 Months
New orders for manufactured goods in the United States jumped 3 percent month-over-month in June 2017, following a downwardly revised 0.3 percent drop in May and beating market expectations of 2.9 percent. It was the sharpest increase in new orders for US-made goods since October last year, as orders for transportation equipment rose 19 percent, the biggest rise since July 2014. Also, orders rose for machinery (0.4 percent), furniture and related products (1.9 percent), primary metals (0.2 percent) and fabricated metal products (0.1 percent).
US Planned Layoffs at 8-Month Low: Challenger
US based employers announced plans to shed 28,307 workers from payrolls in July of 2017, a 9 percent decline from 31,105 in June and the lowest since November. Retail lead all sectors with 3,862 announced cuts, followed by health care (3,634); services (2,607); aerospace/defense (2,295); consumer products (1,918); energy (1,614); food (1,601); industrial goods (1,531); financial (1,474); computer (1,448) and automotive (951). Year-on-year, planned layoffs fell 37.6 percent. So far this year, employers announced 255,307 cuts, down 28.9 percent from the 359,100 plans announced through the first seven months of 2016.
Mexico Consumer Confidence at 1-Year High in July
Consumer confidence in Mexico increased to 86.6 in July 2017 from an upwardly revised 85.1 in June. It is the highest reading since July last year. Household's current assessment was more positive relating to: the country's economic situation (77.5 from 76.1 in June); purchases of durable goods (84.6 from 81.4) and personal financial position ( 98.4 from 97.5). Also, expectations improved regarding the country's economic situation (77.3 from 75.8); personal financial position (98.5 from 97.2) and saving probability rose (101.1 from 99.9). In contrast, expectations about inflation deteriorated (69.9 from 70.7) and remained unchanged for employment (96).
Eurozone Retail Sales Rise More Than Expected
Eurozone's retail sales increased 0.5 percent month-over-month in May 2017, following a 0.4 percent gain in May and beating market expectations of 0.1 percent. Trade of fuel jumped 1 percent (0.6 percent in May) and that of food, drinks and tobacco rebounded 0.7 percent (-0.2 percent in May). Meanwhile, sales of non-food products rose at a slower 0.3 percent after growing 0.8 percent in May, dragged by a fall in trade of pharmaceutical and medical goods (-0.2 percent from 1.1 percent); while sales rose for textiles, clothing and footwear (1.4 percent from 1.3 percent) and electrical goods and furniture (1.3 percent from -0.7 percent). Year-on-year, retail sales increased 3.1 percent.
Irish Services Activity Expands At Faster Pace
Investec Services PMI in Ireland rose to 58.3 in July of 2017 from 57.6 in June. New export orders went up the most in four months, employment grew at the stronger rate in five months and new orders increased at a faster pace. At the same time, backlogs of work rose further, the fiftieth in as many months. On the margin side, despite easing for the third month running, the rate of input cost inflation remained sharp. However, with output price inflation being recorded for the 40th consecutive month, it was clear that services firms were able to pass at least some of these higher costs on to end-customers. Meantime, business sentiment dipped to the lowest since November 2016.
BoE Cuts UK Growth Forecasts for 2017, 2018
The Bank of England lowered its UK growth forecast for 2017 to 1.7 percent from an earlier estimate of 1.9 percent, due to weaker expansion in household spending. Next year, the economy is expected to grow 1.6 percent compared to previous 1.7 percent estimate. Also, the BoE expects consumer prices to rise 2.7 percent in 2017, more than earlier estimate of 2.6 percent.
Pound Falls After BoE Slashes UK GDP Growth Forecast
The pound dropped 0.5% to $1.3162 on Thursday, after the Bank of England held interest rates at 0.25% and cut its UK growth forecast for 2017 and 2018.
Turkey Producer Inflation Rises to 15.45% in July
Domestic producer prices in Turkey increased 15.45 percent year-on-year in July of 2017, higher than a 14.87 percent rise in June. Cost went up faster for manufacturing (17.37 percent compared to 16.49 percent in June) and water supply (11.6 percent compared to 10.66 percent). In contrast, inflation slowed for mining and quarrying (8.68 percent compared to 9.7 percent) and electricity and gas cost fell further (-3.54 percent compared to 1.53 percent). On a monthly basis, domestic producer prices increased 0.72 percent, well above a 0.07 percent rise in June, mainly due to cost of coal and lignite (4.03 percent); coke and refined petroleum products (2.32 percent) and machinery and equipment (2.13 percent).
India Services PMI Lowest In Near 4 Years
The Nikkei Services PMI in India plunged to 45.9 in July of 2017 from 53.1 in June. It was the first contraction in services activity since January and the sharpest since September 2013 following the implementation of the goods and services tax (GST). Output and new orders declined for the first time since January, with rates of reduction the fastest since September 2013. This had an adverse effect on the labour market, with employment contracting over the month. Meantime, outstanding business increased at the fastest rate in five months. On the price front, input cost inflation eased while charges were raised the most since early-2013. As the new tax regime becomes clearer, firms seem convinced that prospect will brighten, with confidence for the year ahead climbing to an 11-month high.
KOSPI Leads Asian Selloff
South Korea's KOSPI finished down 41 points, or 1.7 percent, to 2387 on Thursday 3rd of August, leading an equity selloff in the Asia-Pacific markets. It was the lowest close in almost a month and the sharpest drop since November 2016, following investor fears that a planned corporate tax hike announced on Wednesday would hurt profits for 129 companies. The new reforms would also affect wealthy individuals, consistent with President Moon Jae-In's policy that "wealth distribution" can benefit income and jobs. Also fueling the decline was heavy profit taking as a result of renewed geopolitical uncertainty after US President Trump signed a bill that imposes sanctions on North Korea, Russia and Iran. Electronics giants Samsung and SK Hynix were down 2.5 percent and 3.7 percent respectively.
Rice Hits 21-month High
Rice increased to a 21-month high of 12.5 USD/cwt.
The next generation of internal combustion engines will be the last, said CFO of tire maker Continental. (Reuters)
All the key measures of inflation in the US show a substantial slowdown in consumer price increases.
The Goldman Sachs wage tracker, which takes into account various earnings indicators, shows a meaningful slowdown as well. (Daily Shot)
The Chicago Fed US financial conditions index is at the lowest (easiest) level in recent history. (Daily Shot)"
"Danish global transport and logistics provider DSV A/S recorded profits of 742 million Danish krone (U.S. $118.2 million) for the second quarter of 2017, skyrocketing 122.8 percent from the corresponding 2016 period, according to the company’s latest financial statements.
Looking ahead, DSV wants to expand its e-commerce services where it sees great potential due to rapid growth in internet sales, DSV CEO Bjorn Andersen said in an interview, according to a report from Reuters. Expansion would include hosting web pages, supplying storerooms and handling returns for companies that want to sell their goods online."
"Rising US freight volumes propel LTL building boom."
"New Dawn of Battery Managment.
As fleet managers strive to optimize the usage and lifetime of batteries and chargers, they are embracing new approaches to battery and power management.
For many, the practice of managing lift truck batteries and chargers hasn’t changed in decades. Typically, batteries still receive weekly maintenance, watering and equalizing, and scheduled periodic maintenance events, perhaps on a quarterly or semi-annual basis.
“However, battery management systems can eliminate the guesswork involved with managing battery fleets, while also saving money,” says Joe Posusney, director of marketing communications and field operations for Philadelphia Scientific. “By enabling a lean approach to battery management, the systems can help multi-shift distribution centers and warehouses effectively operate with a ratio of two batteries per forklift or less.”"
"Ocean Alliance closing the gap with 2M as market share battle heats up.
CMA CGM will shortly order up to nine record breaking 22,000 teu ships. Jensen noted that once confirmed these new orders will see the Ocean Alliance – made up of CMA CGM, Cosco, Evergreen and OOCL – increase their combined fleet capacity by 21%. By contrast, 2M stands to grow capacity by less than 7% and THE Alliance by less than 10%.
2M is made up of Maersk and MSC with Hyundai Merchant Marine as a junior partner, while THE Alliance has K Line, MOL, NYK, Yang Ming and Hapag-Lloyd as its founding members.
Jensen said the competitive dynamics in the coming 18 months is going to become dominated by the need of the Ocean Alliance to grow market share significantly in order to utilise their new deliveries.
Looking at the part of the global fleet controlled solely by the alliance carriers, their respective capacity market shares right now, according to data from Seaintelligence Consulting, sees 2M on 44%, the Ocean Alliance on 35% and THE Alliance on 21%."
If the existing orderbook and the new orders from CMA CGM are added, this stands to change to 2M on 42%, Ocean Alliance up to 38% and the THE Alliance on 20%. "
"Another one bites the dust.
The path towards oligopolisation in container shipping took another step forwards with the proposed $6.3 billion sale of Hong Kong-based Orient Overseas International Ltd. (OOIL) to Chinese state-owned Cosco Shipping Holdings Ltd. (Cosco) and Shanghai International Port Group Co. (SIPG), announced a couple of weeks ago.
This was reflected in the substantial price-to-book premium of 1.4x, which is a fair bit above OOIL’s historical average P/B of 0.8x.
As things stand, upon completion of the latest M&A (the Ocean Network Express, or ONE, merging of the Japanese companies’ container units is expected to become operational in April 2018) and taking into account future newbuild deliveries, there will only be 10 carriers with a minimum 2% share of global capacity by start of 2021, which between them will control approximately 82% of the world fleet. As recently as 2015 there were 17 carriers with at least a 2% share."
"CRISPR skin grafts could replace insulin injections for diabetes.
Genetically modified skin grafts have protected mice from developing diabetes, suggesting the technique may help people with the condition.
They then inserted this gene into mouse skin cells in a dish, and developed them into skin grafts that could be transplanted onto mice, letting the modified hormone get into their blood."
"Micro satellite launcher Vector flies first rocket from Spaceport Camden.
The goal of the company is to be able to launch rockets for as low as $3 million, which is a fraction of the cost of SpaceX’s $60 million Falcon 9 launches (though with much lower payload capacity). It hopes to vastly increase access to space with this rock-bottom pricing, and it most recently raised a $21 million Series A round led by Sequoia to help make that vision a reality."
"Big Tech Is Slowing Down Acquisition Activity.
Through the first half of 2017, these top tech companies have only made 35 acquisitions. At the current rate, this group would be on track to make approximately 61 acquisitions through the end of the year, a 25% drop from 2016 numbers. The rate of acquisitions has slowed steadily every year since a peak of 119 in 2013."
"LinkedIn is rolling out a free Tinder-style service to pair users with mentors."
"Automation Is Engineering the Jobs Out of Power Plants.
In late June, Louisiana regulators approved a plan by New Orleans-based Entergy Corp. to build a 994-MW gas-fired combined cycle power plant. The $872 million plant and associated transmission assets are slated to enter service in 2020. Job openings when it comes on line? No more than 31 people to manage, operate, and maintain the plant.
The lower headcount required at new gas-fired power plants like those in Michigan and Louisiana is the result of automation and advances in control system technology."
"Natural compound coupled with specific gut microbes may prevent severe flu.
Microbes that live in the gut don't just digest food. They also have far-reaching effects on the immune system. Now, a new study shows that a particular gut microbe can prevent severe flu infections in mice, likely by breaking down naturally occurring compounds—called flavonoids—commonly found in foods such as black tea, red wine and blueberries.
The research, conducted in mice by scientists at Washington University School of Medicine in St. Louis, also indicates that this strategy is effective in staving off severe damage from flu when the interaction occurs prior to infection with the influenza virus. This work also could help explain the wide variation in human responses to influenza infection."
Startup/SME of the Day.
"Flont is pioneering fine "Jewelry as a Service" or JaaS. Jewelry is perfect as a service — it's expensive to own, you need different pieces for different events or outfits, and variety is preferable. Our service also provides fair trade for designers, generating monthly revenue to fund creativity. Flont has exclusive partnerships with leading artisan designers, and we constantly acquire exceptional Vintage and Signed pieces from the world’s best brands. Our expertly curated selection is available to our Members on a monthly basis, and anyone can borrow a jewel for an event or just for fun."
This model didn't work well with art, e.g., Artify It, but seems more viable in this niche.
About 50 miles north of New York City, and only a thousand feet from the Hudson River’s eastern shore, there is a small, rocky island named Pollepel. On it stands what appears to be a crumbling Scottish castle. It is indeed the remains of an empire."
DE: Manufacturers' Orders, 2:00 AM ET
IT: Retail Sales, 4:00 AM ET
US: Employment Situation, 8:30 AM ET
US: International Trade, 8:30 AM ET
CA: Labour Force Survey, 8:30 AM ET
CA: Merchandise Trade, 8:30 AM ET
CA: Ivey Purchasing Managers' Index, 10:00 AM ET
US: Baker-Hughes Rig Count, 1:00 PM ET
https://tradingeconomics.com/calendar (More complete listing, including consensus)