Random Market News, 16 June
"It's Been a Rough Year for Wall Street's Conventional Wisdom.
Dollar, inflation, Treasuries, credit upend projections.
Wall Street revamps estimates amid lack of fiscal filip."
"Nearly Half of S&P 500 Earnings Growth in Q2 Due to Energy.
For Q2 2017, the estimated earnings growth rate for the S&P 500 is 6.5%. At the sector level, nine sectors are projected to report year-over-year growth in earnings for the quarter. However, the Energy sector is projected to report the highest earnings growth of all 11 sectors at 401%."
"Hedge Fund Launches Back on the Rise.
Managers are raising new funds again as improved fee arrangements bring investors back into the fold."
"80% of German institutions 'have no exposure to alternatives'.
Regulations, costs, and illiquidity are proving to be barriers for German institutions’ allocations to alternative asset classes, a survey has shown."
"On the Record: How do you approach alternative credit?"
"Japan's GPIF calls on external managers to disclose proxy shareholder votes.
Japan's Government Pension Investment Fund is calling on its external managers to disclose the details of the proxy shareholder votes they exercise on behalf of the ¥144 trillion ($1.3 trillion) Tokyo-based pension fund.
"Wal-Mart in the Crosshairs of Amazon’s Takeover of Whole Foods.
Retail giant continues to bulk up e-commerce offerings as it battles for customers."
Many said the first quarter's 1.2 percent annualized GDP pace was understated by bad seasonal adjustments and would, in any case, make for an easy comparison and a burst higher in the second quarter. But the pieces for the second quarter are not falling into place, on the contrary. And the outlook for the third and fourth quarters? Well, tax cuts and fiscal stimulus are still nowhere in sight and worker pay, like inflation in general, is moribund. Federal Reserve policy makers see one more rate hike coming this year and they expect, sometime around year-end, to begin tapering down their $4.5 trillion balance sheet, that is reduce their support for Treasuries and mortgage-backed securities. If the economy doesn't pick up soon, don't be surprised if these expectations start getting pushed back into next year.
Week of June 19 to June 23
Steep declines in housing starts and permits were among the prior week's biggest disappointments and point to moderation for this week's heavy run of housing statistics. Existing home sales are not expected to improve in Wednesday's report for May with new home sales on Friday expected to show only a moderate bounce back from severe contraction in April. Growth in the FHFA house price index is expected to slow though still remain healthy. The current account deficit will be Tuesday's focus with jobless claims Thursday's focus."
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."
Implied rate hike probability on July 26th ~100%, September 20th ~16.4%; 0% probability of rate cut through June 13th, 2018.
VIX ~10.38. 10-yr treasury vol (TYVIX) ~3.98.
"US Stocks End Mixed On Friday
Wall Street closed the week mixed, as Amazon’s bid for Whole Foods roiled food retailers’ stocks. Energy shares advanced in response to an advance in oil prices. The Dow Jones gained 25 points or 0.1 percent to 21384. Contrastingly, the S&P 500 closed flattish and the Nasdaq lost 14 points or 0.2 percent to 6152. During the week, the Dow Jones advanced 0.5 percent and the S&P 500 0.1 percent. The Nasdaq retreated 0.9 percent amid an extended selloff in technology stocks.
US Consumer Sentiment Falls To 7-Month Low
The University of Michigan's consumer sentiment for the United States went down to 94.5 in June of 2017 from 97.1 in May and well below market expectations of 97. It is the lowest reading in seven months as both present and future expectations declined, preliminary estimates showed. The recent erosion of confidence was due to more negative perceptions of the proposed economic policies among Democrats and the reduced likelihood of passage of these policies among Republicans.
US Building Permits Fall To 13-Month Low In May
Building permits in the United States dropped 4.9 percent to a seasonally adjusted annualized rate of 1,168 thousand in May 2017 from 1,228 thousand in April and way below market expectations of 1,247 thousand. It was the lowest figure since April last year, as authorizations of units in buildings with five units or more fell 10.1 percent to 358 thousand in May and single-family authorizations declined 1.9 percent to 779 thousand. Among regions, building permits decreased in the West (-13.1 percent), in the Midwest (-9.4 percent) and in the South (-0.3 percent), but rose in the Northeast (3.3 percent).
Russia Industrial Output Rises The Most Since 2012
Russia's industrial production increased by 5.6 percent year-on-year in May 2017, following a 2.3 percent rise in the previous month and above market expectations of 2 percent gain. It was the sharpest increase in industrial production since February 2012, as output grew further for both manufacturing (5.7 percent from 0.6 percent in April) and mining (5.6 percent from 4.2 percent). Meanwhile, output rose at a slower pace for electricity and gas (4.7 percent from 5.5 percent in April) and distribution of water, sewage (1.1 percent from 2.1 percent). On a monthly basis, industrial production rose 1.2 percent, recovering from a 2.3 percent drop in April.
Mexico 10Y Bond Yield Hits 31-week Low
Mexico 10 Year Government Bond Yield decreased to a 31-week low of 6.953%
Senegal GDP Advances 5.1% YoY In Q1
The economy of Senegal expanded 5.1 percent year-on-year in the first quarter of 2017, following a 4 percent growth in the previous period. Output increased faster in services (6 percent vs 4.6 percent in Q4), namely transport (6.4 percent vs 4.1 percent in Q4) and financial services (22.2 percent vs 18 percent in Q4) and agriculture (7.6 percent vs 6.9 percent in Q4) and rebounded for manufacturing (2.1 percent vs -1.7 percent in Q4). In contrast, production shrank for fishing (-22.4 percent vs 3.4 percent in Q4) and mining (-6.2 percent vs 1.3 percent).On a quarterly basis, the GDP contracted 10.3 percent, after growing 19.8 percent in the previous quarter.
European Stocks Trade Higher On Friday
The FTSE 100 rose 23 points, or 0.3%, to 7,443 around 8:45 AM London time on Friday. Also, other European major indices traded in the green after Eurozone finance ministers reached an agreement to release €8.5 billion in bail-out funds for Greece last night. The DAX 30 added 44 points, or 0.4%, to 12,737; the CAC 40 jumped 42 points, or 0.8%, to 5,259; the IBEX 35 advanced 36 points, or 0.3%, to 10,736; and the FTSE MIB gained 111 points, or 0.5%, to 20,960.
Eurozone Labour Costs Rise 1.5% In Q1
Hourly labour costs in the Euro Area went up 1.5 percent year-on-year in the first quarter of 2017, the same pace as in the previous period. Wages and salaries per hour worked increased 1.4 percent, after rising by 1.6 percent in the fourth quarter, and the non-wage component advanced 1.6 percent, faster than a 1.4 percent gain in the precedent period. By sector, hourly labour costs went up 1.3 percent in industry, 1.9 percent in construction, 1.3 percent in services and 1.8 percent in the non-business economy. Labour costs increased in Greece (6.2 percent), Germany (2.5 percent), Austria (1.7 percent), France (1.2 percent), Ireland (1.1 percent) and Italy (0.8 percent).
Nikkei 225 Finishes Week With Gains
Tokyo's Nikkei 225 closed up 111 points, or 0.6 percent, to 19,943 on Friday June 16th. The rally broke a streak of declines in the previous four sessions as the BoJ upgraded its outlook as expected due to healthy momentum in the nation's economic recovery. The BoJ also hinted that major policy changes were unlikely in the near future with inflation expectations stuck in a "weakening phase". The broader Topix closed up 7.5 points, or 0.5 percent, to 1596.
Oat Hits 21-month High
Oat increased to a 21-month high of 275 USd/Bu"
"Once-optimistic truckers struggle with “somewhat choppy” freight demand."
"XPO Logistics Looking at Merger Targets Again.
CEO says company is kicking the tires on potential targets in Europe and North America."
"Ascendas-Singbridge forms logistics, warehousing platform in India.
Singapore-based Ascendas-Singbridge Group on Thursday said it has formed a joint venture with real estate firm Firstspace Realty to enter India’s industrial logistics and warehousing market. The two partners will jointly invest up to $600 million over the next 5-6 years."
"LNG Pacific freight rates rise 30% in week as buyers scramble for vessels.
Spot day rates to charter LNG carriers in the Pacific have risen 30% over the past week, a second hike in rates in just over a week amid a tightening of availability east of Suez.
S&P Global Platts Friday assessed Pacific day rates for LNG vessels at $35,000, up from $27,000 a week ago, marking a sharp spike in rates for a market that had been static since early April."
"L.A. and Long Beach port truck drivers and warehouse workers plan to strike Monday."
"2017 Top 50 3PLs: Investment and Consolidation Maintain Traction."
"Trucking Tech Deal Pace Slows, While Dollars Tick Up.
Trucking tech startups have secured nearly $500M in 2017 to date."
"The Amazon-Whole Foods Acquisition: Tech Execs, VCs, And Analysts Sound Off."
"Google open-sources object detection tech that powers Nest Cam, Image Search, and Street View."
Random Place of the day.
The world's tallest building features an Armani hotel, offices above the cloud line, and perfumed lounges."
"The Usefulness of Useless Knowledge."
Harpers article from 1939.
Japan JP: Merchandise Trade, 6/18, 7:50 PM ET
China CN: House Price Index, 6/18, 9:30 PM ET
Australia AU: RBA Meeting Minutes, 6/19, 9:30 PM ET
Australia AU: Residential Property Prices, 6/19, 9:30 PM ET