Random Market News, 8 September 2017
"Should Germany Step Up to Lead the West?
Germans face momentous decisions about the future of their country, of Europe, and perhaps the world. Here's what the election campaign should really be about."
"S&P 500 slips as Hurricane Irma nears Florida; tech falls.
The S&P 500 ended slightly lower on Friday as investors braced for potential damage from Hurricane Irma as it drove toward Florida, while a decline in big tech names like Apple and Facebook pushed the Nasdaq down more sharply.
The Dow eked out a gain, helped by a 4.0-percent rise in shares of insurer Travelers (TRV.N).
Insurer shares rose broadly, with the Dow Jones U.S. Insurance Index .DJUSIR up 2.1 percent, recouping some losses after being under pressure recently as the southern United States braced for another powerful storm closely on the heels of Hurricane Harvey."
"Hurricane Irma Tests Risk-Reward of Catastrophe-Bond Market.
Yield-chasing investors have taken on more risk for less potential return in cat bonds; now those investments are at risk.
Roughly $14 billion of cat bonds face some exposure to Atlantic hurricanes, according to Artemis. That is about half of all cat bonds, one corner of alternative reinsurance markets. Investors also put money into private and far less liquid collateralized reinsurance contracts and special vehicles known as sidecars, a bigger, but more opaque market.
As Irma has torn through the Caribbean, cat-bond trading has remained subdued. Part of a series of bonds called Citrus Re, which are linked to Heritage Insurance, one of several Florida-focused insurance companies, traded at 50 cents on the dollar this week, but recovered to 68 cents, according to several market participants."
"Mexico M8.1 earthquake puts Fonden 2017 catastrophe bond at risk.
A magnitude 8.1 earthquake has struck off the coast of Mexico this morning, a tremor strong enough and close enough to the coastline of the country that it puts the recently issued World Bank supported IBRD / FONDEN 2017 catastrophe bond at risk of being triggered.
Update – sources suggest this cat bond could be a 100% loss."
"Sunspot Fires Off 6th Powerful Flare This Week.
The latest flare, which peaked at 3:49 a.m. EDT (0749 GMT), registered as an M8.1 on scientists' three-tiered classification scale. ("C" flares are the weakest of the three, "M" flares are 10 times stronger than C's, and "X" events are 10 times more intense than M's. There is gradation within each category, too: An M8 flare is eight times stronger than an M1, for example.)
Two of the six recent flares from AR 2673 were X-class — including Wednesday's (Sept. 6) monster X9.3, which was the most powerful solar flare since 2005.
Unfortunately for skywatchers, that storm seems to be tapering off, and supercharged auroras probably aren't in the cards tonight or beyond, experts said."
"No report is likely to show bigger storm effects than initial jobless claims which are already spiking, up 62,000 in the Sept. 2 week to 298,000. This took forecasters by surprise who expected filings to be delayed by the storm. But Texas got its numbers in and the state accounted for roughly 50,000 of the jump. Claims peaked 100,000 higher after Katrina in 2005 with the effect lingering for 6 weeks. As far as the September jobs report goes, the size of Harvey's and Irma's impact is any one's guess."
"Then there were also several central bank meetings — the Reserve Bank of Australia, Bank of Canada and the European Central Bank. The RBA and ECB maintained the status quo while the BoC increased its policy interest rate by 25 basis points for a second meeting in a row.
The dollar remained near its lowest levels since early 2015 reflecting suggestions that the ECB may begin tapering before the end of the year and expectations that the Federal Reserve will increase the fed funds rate have subsided because inflation stubbornly refuses to increase. Sterling meanwhile has risen roughly 1.8 percent against the dollar this week."
VIX ~12.12. 10-yr treasury volatility (TYVIX) ~4.62.
Implied Fed rate hike/cut probability for September 20th is ~0.0%/4.1%, November 1st is ~0.0%/4.1%.
In the US, the most important events will be inflation rate, retail trade, industrial production and the preliminary reading of Michigan consumer sentiment. Elsewhere, the BoE will announce its interest rate decision; the UK will release inflation, unemployment and wage growth; the Eurozone industrial production; China industrial output, retail trade, fixed asset investment; and India inflation rate and industrial production.
US Stocks Close Mixed on Friday to Book Weekly Loss
Wall Street closed mixed on Friday September 8th of 2017, as investors sentiment was affected by North Korean tensions, resignation of Fed vice-chairman Stanley Fischer and expected damage from Hurricane Irma. The Dow Jones edged up 13 points or 0.1% to 21798. In contrast, the S&P 500 closed down 3 points or 0.1% to 2462, while the Nasdaq retreated 38 points or 0.6% to 6360. During the week all major indices booked losses, with the Dow Jones dropping 0.9%; the S&P 500 0.6%; and the Nasdaq 1.2%.
Canada Capacity Utilization Highest Since 2007
Canadian industries operated at 85 percent of their production capacity in the second quarter of 2017, up from a downwardly revised 83.2 percent in the previous period and in line with market expectations. It was the highest rate since the third quarter of 2007, mainly due to a rise in capacity utilization in mining and quarrying (3.7 pp to 82.8 percent) an oil and gas extraction (3.3 pp to 84 percent). Also, capacity utilization increased for construction (1.3 pp to 87.7 percent); electric power generation, transmission and distribution (1.9 pp to 85.2 percent) and manufacturing (0.7 to 84.2 percent). Meanwhile, a decline was reported for forestry and logging (-1.1 pp to 85.7 percent).
Canada Jobless Rate Drops to New 2008 Low of 6.2%
The unemployment rate in Canada fell to 6.2 percent in August of 2017 from 6.3 percent in July, beating market expectations of 6.3 percent. It reached a new low since October of 2008, the month prior to the 2008-2009 labour-market downturn. The economy added 22 thousand jobs, as more people were working in finance, insurance, real estate, rental and leasing as well as in transportation and warehousing.
Mexico 10Y Bond Yield Hits 10-week Low
Mexico 10 Year Government Bond Yield decreased to a 10-week low of 6.76%.
Stocks in Brazil Hit 9-year High
iBovespa increased to a 9-year high of 73626.
Euro Hits 32-month High
EURUSD increased to a 32-month high of 1.209.
UK Industrial Production Edges Up 0.2% in July
Industrial output in the United Kingdom increased 0.2 percent month-over-month in July of 2017, following a 0.5 percent rise in the previous month and in line with market expectations. Manufacturing made the largest upward contribution, up by 0.5 percent after being flat in June, mainly due to a 7.6 percent jump in transport equipment. The output of motor vehicles, trailers and semi-trailers surged 13.7 percent, the strongest growth since March 2009 amid the production of new models. The output for electricity, gas, steam and air conditioning rebounded (0.7 percent compared to -0.9 percent in June) while declines were seen for mining and quarrying (-1.2 percent compared to +4.1 percent), namely oil and gas extraction (-1.4 percent compared to +5 percent); water supply, sewerage and waste management (-0.6 percent compared to +0.8 percent). Year-on-year, industrial production increased 0.4 percent.
Swiss Franc Hits 24-month High
USDCHF decreased to a 24-month low of 0.9428.
Turkey Industrial Output Rises the Most Since 2011
Industrial production in Turkey jumped 14.5 percent year-on-year in July of 2017, following an upwardly revised 3.5 percent rise in June. It is the biggest gain in industrial output since January of 2011, boosted by a 16 percent surge in manufacturing (3.9 percent in June). Electricity, gas, steam and air conditioning also increased faster (11.7 percent compared to 2.7 percent in June) and mining rebounded (0.8 percent compared to -0.5 percent). On a monthly basis, industrial output increased 2.3 percent.
S&P Revises Kazakhstan’s Credit Rating Outlook to Stable
S&P Global Ratings assigned on Friday September 8th of 2017 a stable outlook to Kazakhstan’s credit rating outlook from negative and affirmed the sovereign rating at ‘BBB-‘, citing the country’s contained balance of payments pressures and monetary policy flexibility as the level of deposit dollarization declines as the main drivers behind the outlook upgrade.
China Trade Surplus Smallest in 3 Months in August
China's trade surplus fell to USD 41.99 billion in August of 2017 from USD 50.23 billion in the same month a year earlier and below market consensus of USD 48.60 billion. It was the smallest trade surplus since May, as exports rose less than imports. In August, sales grew by 5.5 percent year-on-year to USD 199.22 billion, slowing from a 7.2 percent rise in the prior month while market expected a 6.0 percent gain. It was the weakest increase in outbound shipments since a 2 percent fall in February, due to softening global demand. Imports increased by 13.3 percent, following an 11 percent increase in a month earlier to USD 157.19 billion and above estimates of a 10.0 percent growth. It marked the tenth straight month of growth in inbound shipments. China's trade picture continues to be clouded by worries of further trade tension with the US, China's largest export market.
Chinese Yuan Hits 17-month High
USDCNY decreased to a 17-month low of 6.4618.
Japanese Yen Hits 42-week High
USDJPY decreased to a 42-week low of 108.04.
Stocks in Japan Hit 19-week Low
NIKKEI 225 decreased to a 19-week low of 19264.
Brent Hits 20-week High
Brent increased to a 20-week high of 54.75 USD/Bbl.
Gold Hits 55-week High
Gold increased to a 55-week high of 1353 USD/t oz."
"26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed.
While a majority of companies strongly agree that transportation is a strategically important function, a significant percentage of them have not organizationally aligned transportation in a manner that supports their goals."
"7-Eleven builds logistics business with store, warehouse network.
The operator of 7-Eleven in the Philippines said it would leverage its convenience store and warehouse network to build a logistics business.
Stores of 7-Eleven will serve as pick-up points for items ordered online, in the same way some Walmart outlets function in the US, said Philippine Seven Corp president and CEO Jose Victor Paterno.
The convenience store chain also handles financial transactions such as bills payment and reloading of prepaid phone and data accounts. Paterno said 7-Eleven handles 1,000 transactions daily."
"Panalpina completes acquisition of Air Connection.
International freight forwarding and logistics company Panalpina yesterday announced the completion of its acquisition of Air Connection, a Kenya-based specialised freight forwarder of flowers and vegetables, following the approval by the Competition Authority of Kenya."
"HOS Suspended for Truckers Carrying Hurricane Irma Aid.
The Federal Motor Carrier Safety Administration has suspended several trucking regulations, including hours-of-service requirements, to facilitate the movement of aid that carriers deliver to states and territories in the path of oncoming Hurricane Irma."
"Knight-Swift merger approved by Swift shareholders, deal expected to be made official.
The merger of two Phoenix, Az.-based truckload giants, Swift Transportation and Knight Transportation, was approved late yesterday by Swift stockholders, Swift officials announced yesterday. Swift said it expects to the merger to close today.
The merger creates a new entity with $6 billion enterprise value. Swift already had been the largest TL carrier with close to $4 billion in revenue. On a combined basis last year, Knight and Swift generated approximately $5.1 billion in total revenue, $416 million in adjusted operating income and $806 million in adjusted earnings before interest, taxes and debt for 2016. The new company will have about $1.1 billion on debt."
"Bitcoin price drops following report that China is going to shut down local exchanges."
"We seem to be getting stupider and population ageing may be why.
We’re getting stupider – and our ageing population may be to blame. Since around 1975, average IQ scores seem to have been falling. Some have attributed this to the evolutionary effect of smarter women tending to have fewer children. But new evidence suggests population-wide intelligence could in fact be sinking because people now live longer, and certain types of intelligence falter with advanced age.
For about a century, average IQ scores in wealthy nations rose in a steady and predictable way – by about three points a decade. This is thought to be thanks to improvements in social conditions like public health, nutrition and education. Since this trend – called the Flynn effect – was first noticed in the 1940s, it has been seen in many countries, from the Netherlands to Japan.
But by 2004, researchers had begun to notice what appears to be a reversal in this trend, with average IQ scores going into decline. “The drop is around 7 to 10 IQ points per century,” says Michael Woodley of the Free University of Brussels in Belgium."
"Ship Exhaust Makes Oceanic Thunderstorms More Intense.
Thunderstorms directly above two of the world’s busiest shipping lanes are significantly more powerful than storms in areas of the ocean where ships don’t travel, according to new University of Washington research.
A new study mapping lightning around the globe finds lightning strokes occur nearly twice as often directly above heavily-trafficked shipping lanes in the Indian Ocean and the South China Sea than they do in areas of the ocean adjacent to shipping lanes that have similar climates.
The difference in lightning activity can’t be explained by changes in the weather, according to the study’s authors, who conclude that aerosol particles emitted in ship exhaust are changing how storm clouds form over the ocean."
"Virginia just decertified its most hackable voting machines.
Following a vote on Friday by the Virginia State Board of Elections, the state will take decisive action to ensure the integrity of its voting machines. Virginia’s election supervisors have instructed 22 localities to abandon their existing machines immediately, citing risks inherent in the way they record votes."
"Weibo users given one-week warning to provide real names.
The 340 million users of Sina Weibo, China’s popular microblogging service, have been given one week to link their accounts to a real name. The crackdown is being conducted in order to comply with new government rules restricting anonymous online conversation."
"Startups focus on the microbiome as an organic solution to increase crop yields.
The company’s first magic microbe is an additive to soybean seeds called rhizobia, and their second is a treatment for peanuts. Both are designed to make the seeds more resistant to disease and better able to withstand certain environmental conditions."
"A Stanford professor’s advice on surviving the a**hole at your startup."
"Zillow acquires New Home Feed to help builders market new properties."
"Video Friday: Agility Robotics, Pancake Robots, and Metallica's Drone Show."
Startup/SME of the Day.
Our vehicle fleets are built to suit your needs and provide top performance while maintaining a safe and reliable experience."
Autonomous buses for smaller, defined routes.
"Wallabies of Inchconnachan.
An eccentric aristocrat brought these Australian natives to their current Scottish home.
A small island in Scotland’s Loch Lomond has a population of unusual residents: feral wallabies. The troupe of marsupials was introduced to Inchconnachan in the 1940s, where they’ve roamed freely since."
JP: Machine Orders, 7:50 PM ET (9/10)
JP: Tertiary Index, 1:30 AM ET
IT: Industrial Production, 4:00 AM ET
https://tradingeconomics.com/calendar (More complete listing, including consensus)