Random Market News, 1 August
"A record value of corporate bonds reached investment grade status over the last 12 months, led by commodity companies pulling out of a market rout.
Corporate bonds valued at $91.7 billion transitioned to Bank of America Merrill Lynch’s investment grade index from its high-yield bond index, over the 12 months ending June 30. These benchmark bond indexes track dollar-denominated debt sold in the U.S. by companies globally.
Energy and basic materials businesses accounted for 85% of the bonds transitioning between the indexes. Some of the largest debt issuers include natural gas exporter Cheniere Energy Partners L.P., Brazilian iron ore miner Vale S.A. and oil refiner Tesoro.
Finance chiefs across the industry responded by slashing costs, selling assets and buckling down on operational improvements to revive profit margins and reduce debt. At the same time, a rebound in resource prices and a stronger global economy bolstered company balance sheets and helped propel the broader wave of credit upgrades."
"Dollar extends modest bounce from 15-month lows.
The dollar extended its modest bounce from 15-month lows on Wednesday, benefiting from a pause in selling of the battered currency as investors begin positioning for key events this week, notably Friday's U.S. employment report.
The dollar index against a basket of major currencies shook off a decline in Treasury yields and was a shade higher at 93.090 after bouncing from 92.777, its lowest since May 2016.
The euro was unchanged at $1.1806 after being nudged away from a 2-1/2-year peak of $1.1846 set the previous day.
The greenback has been weighed down by political turmoil gripping Washington and largely uninspiring U.S. economic data, particularly sluggish inflation, which is adding to uncertainty about the pace of future Federal Reserve policy tightening."
"U.S. spending, factory data point to moderate economic growth.
A gauge of U.S. factory activity slid from a near three-year high in July amid a slowdown in new orders and consumer spending barely rose in the prior month, setting the stage for a moderate economic expansion in the third quarter.
That was reinforced by other reports on Tuesday showing motor vehicle sales in July recorded their biggest year-on-year drop in nearly seven years. A plunge in construction spending in June suggested the government could cut its second-quarter GDP growth estimate.
The Commerce Department reported last week that the economy grew at a 2.6 percent annual rate in the April-June period, accelerating from the first-quarter's tepid 1.2 percent pace."
"Should Investors Be Worried About Low Volatility?
Researchers at the Swiss Finance Institute reviewed 40 historical bubbles to see whether volatility can be used to predict a market crash. The upshot: perhaps, but not in the way you might think.
Of these cases, which included the stock market bubbles preceding the Great Depression and Japan’s “Lost Decade,” 65 percent crashed when volatility was low, found authors Didier Sornette, Peter Cauwels, and Georgi Smilyanov.
Still, the authors concluded that volatility is “neither a reliable indicator of the maturation of a bubble nor of its impending ending in a crash,” according to the paper."
"Fitch: Green bond fund sector prospects 'far from certain'.
The credit rating agency highlighted the challenges ahead of what it said could be a pivotal year for the green bond sector in 2018. Next year will see a number of funds launched in 2015 reach a three-year track record, an important milestone for many fund selectors.
Fitch counted 17 dedicated green bond funds to date in Europe and estimated sector-wide assets under management of around €1.4bn as at the end of June, up more than 400% since 2015."
"EC consults on mediation of investor, public authority disputes.
The European Commission has launched a consultation to help it decide whether there is a need for an EU framework for the amicable prevention and resolution of disputes between public authorities and investors.
The main focus of the consultation is on mediation, which the Commission said could help ensure a cost-effective and quick resolution of disputes between investors and public authorities, and even prevent such problems.
However, mediation did not appear to be used very much, it said."
Implied rate hike probability for September 20th is ~1.4%, November 1st is ~7.3%; 0% probability of rate cut through June 13th, 2018.
VIX ~10.09. 10-yr treasury vol (TYVIX) ~4.05.
"Dow Jones Hits New Record Amid Mixed Economic Data
Wall Street closed mixed on Tuesday August 1st of 2017, as construction spending in the US dropped 1.3% month-on-month to USD 1.21 trillion in June 2017, the lowest level since September 2016. Also, the US Manufacturing PMI rose to 53.3 in July of 2017 from a preliminary of 53.2 and 52 in June. The Dow Jones gained 73 points or 0.3% to a fresh record of 21964. The S&P 500 edged up 6 points or 0.2% to 2476. The Nasdaq advanced 15 points or 0.2% to 6363.
Brazil Factory Growth Stalls in July
The IHS Markit Brazil Manufacturing PMI edged down to 50 in July of 2017 from 50.5 in June, matching market expectations. It is the lowest figure in four months, pointing to a stagnation in factory activity. Output and new orders slowed despite the first decline in selling prices since September of 2014. In addition, buying levels and employment fell further. On the other hand, manufacturers expressed optimism regarding growth prospects, with expectations of better economic conditions, new product lines and projects in the pipeline underpinning confidence.
Brazil Trade Surplus at Record High for July Month
Brazil trade surplus increased to USD 6.3 billion in July 2017 from USD 4.6 billion in the corresponding month a year earlier, but below market expectations of USD 6.4 billion. Still, it was the biggest surplus posted for a July month since the series began, as exports jumped 14.9 percent from the previous year to USD 18.8 billion while imports rose at a slower 6.1 percent to USD 12.5 billion. In the first seven months of the year, the trade surplus widened to USD 42.5 billion from USD 28.2 billion in the same period of 2016.
Mexico Manufacturing Growth Slows in July
The seasonally adjusted IHS Markit Mexico Manufacturing PMI fell to 51.2 in July 2017 from a 13-month high of 52.3 in June and missing market expectations of 52.5. Output and new work expanded at slower rates while export sales fell for the first time since July 2016. Still, employment rose the most since February 2016, as manufacturers remained upbeat about their growth prospects for the next 12 months. On the price front, input cost pressures were the least marked since December 2014 while factory gate charges increased the least for 11 months.
Eurozone Economy Grows 0.6% in Q2
The Eurozone economy advanced 0.6 percent on quarter in the three months to June of 2017, in line with market expectations and following a downwardly revised 0.5 percent growth in the previous period, the preliminary flash estimate showed. Among countries for which data is already available, GDP growth picked up in Spain; was unchanged in France and Austria; and slowed in Belgium, Latvia and Lithuania.
Beijing blocked two foreign acquisitions by Chinese conglomerate HNA, Deutsche Bank’s largest shareholder, amid concern acquisitive companies are taking on too much risk and leverage. (Reuters)
Qatar Trade Surplus Widens Sharply in June
Qatar trade surplus jumped 63.6 percent to QAR 12.5 billion in June 2017 from QAR 7.6 billion in the corresponding month of the previous year. Exports increased 5.4 percent from a year ago to QAR 18.4 billion, boosted by higher sales of petroleum gases and other gaseous hydrocarbons (15.8 percent) and petroleum oils and oils obtained from bituminous minerals (2 percent). Among major trading partners, sales went up to South Korea (17.7 percent); Japan (6.5 percent); China (131.8 percent); and Singapore (9.8 percent). Meanwhile, imports shrank 40 percent to QAR 5.9 billion as purchases fell for motor cars and other motor vehicles (-40.4 percent); other groups of commodities (-41.4 percent); electrical apparatus for line telephony/telegraphy, telephone sets (-29.8 percent); and parts of aircraft and helicopters (-4.5 percent). Imports declined from the US (-66.6 percent); China (-41.5 percent); and the UAE (-44.3 percent).
Australia Building Approvals Rise The Most In 11 Months
Building permits in Australia jumped 10.9 percent from a month earlier to 18,453 units in June of 2017, following a downwardly revised 5.4 percent fall in a month earlier. It was the fastest increase in building approvals since July 2016, due to a surge in private sector dwellings excluding houses (20.0 percent from -12.4 percent in April) and a stronger increase in private sector houses (3.4 percent from 1.3 percent). Through the year to June 2017, total dwelling approvals dropped by 2.3 percent.
Stocks in Austria Hit 8-year High
ATX increased to a 8-year high of 3259.
Stocks in New Zealand Hit All-time High
NZX 50 increased to an all-time high of 7739.
Canada 10Y Bond Yield Hits 32-month High
Canada 10 Year Government Bond Yield increased to a 32-month high of 2.059%.
Stocks in China Hit 35-week High
SHANGHAI increased to a 35-week high of 3295.
Hong Kong Dollar Hits 18-month Low
USDHKD increased to a 18-month high of 7.8141.
Dollar Index Hits 14-month Low
US Dollar decreased to a 14-month low of 92.78."
"Truckload: Masters of the Long Haul.
It would be hard to find a freight transportation mode that has faced more challenges over the past 15 years.
While it never seems to get any easier for the TL market, the readers of LM say that these long-haul companies continue to go above and beyond in world-class service and are well deserving of a 2017 Quest for Quality Award."
"FTR Shippers Conditions Index shows a slight gain but challenges remain.
FTR described the May reading as “benign” and a reflection of only moderately favorable truck freight growth and ongoing weak contract pricing."
"3PLs prepare to see off digital start-ups.
The major recent investments in innovation and technology by a number of large third-party logistics providers (3PLs) may limit the opportunities of digital start-ups in the sector, some of whom may decide their future lies in niche sectors or partnering with ‘bricks and mortar’ rivals rather than remaining independent."
"DHL targets semiconductor market with ‘suite of logistics services’.
Group will connect more than 3,000 dedicated technology specialists to provide a ‘holistic view’ of customers’ supply chains."
"Revenue soars for Japanese lines in Q1 as they eye new alliance.
Ahead of their integration into the Ocean Network Express (ONE) next April, the container liner businesses of Japan’s NYK, MOL and K Line all produced improved results in the three months to 30 June – their financial first quarter."
"Baltic Exchange to close Baltex trading platform.
Decision follows that of London Clearing House, which will cease its freight clearing service by the end of the year."
"2016 Saw More Than 100 Down Exits.
While there’s been a general up and down in the number of down exits over time, 2016 broke 100 down exits. This happened previously in 2013, but slowed down in the few years after. 2017 has seen 49 down exits through the first half of the year, putting it on pace to be just under the previous year’s total. Some notable downrounds this year have been Nasty Gal (dropped by 94% in value from a high of $397M+) and RadiumOne (dropped by 89% in value from $200M)."
"Feeding The Future: Game-Changing Startups Launch Alternative Proteins.
Startups like Impossible Foods, Ripple, and Memphis Meats are engineering new protein sources that take the animal out of the supply chain.
VC firms and global food leaders alike have begun pouring money into new protein sources over the last several years, as startups are using new ingredients to design high-protein, animal-free foods and drinks. Impossible Foods, a leader in the space founded by Stanford biochemistry professor Pat Brown, recently raised an additional $75M to expand production of its animal-free burgers."
"Germany’s Volocopter raises $30 million from Daimler for its flying autonomous taxi.
"KeyBank hopes to help create more than 4,500 jobs in Ohio with a new partnership between its foundation and JumpStart Inc., which invests in startup and young businesses.
KeyBank Foundation today announced a $24 million commitment to JumpStart over four years. The vast majority of the focus will be in Ohio, while some will be in upstate New York."
"Carmakers Take to the (Self-Driving) Test Track.
Researchers from academia and industry took rides in experimental cars at a public test-track event in Teesdorf, Austria, last week, but the main draw may have been the other attendees.
The event gave smaller companies a chance to try out driverless technology on a shared large-scale test track. Formal vehicle testing on closed tracks can cost up to £1000 (US $1320) a day. “We thought we could do something that was a bit different: combine the opportunity for small companies and university teams,” says event organizer Alex Lawrence-Berkeley, of Sense Media Group in London, England."
"Big data points humanity to new minerals, new deposits.
Applying big data analysis to mineralogy offers a way to predict minerals missing from those known to science, where to find them, and where to find new deposits of valuable minerals such as gold and copper, according to a groundbreaking study.
In a paper published by American Mineralogist, scientists report the first application to mineralogy of network theory (best known for analysis of e.g. the spread of disease, terrorist networks, or Facebook connections).
The results, they say, pioneer a way to reveal mineral diversity and distribution worldwide, mineral evolution through deep time, new trends, and new deposits."
Startup/SME of the Day.
Your behavior is your fingerprint.
TwoSense is a B2B mobile SaaS product that invisibly authenticates users by their behavior. Our machine learning technology models the unique behavior of each user, such as the way they walk, interact with their phone, commute to work, and how and where they spend their time. We improve the mobile user experience by removing authentication challenges, while actively and continuously preventing fraudulent activity."
"Palace and Gardens of Schönbrunn.
From the 18th century to 1918, Schönbrunn was the residence of the Habsburg emperors. It was designed by the architects Johann Bernhard Fischer von Erlach and Nicolaus Pacassi and is full of outstanding examples of decorative art. Together with its gardens, the site of the world’s first zoo in 1752, it is a remarkable Baroque ensemble and a perfect example of Gesamtkunstwerk."
CH: SECO Consumer Climate, 1:45 AM ET
CH: Adjusted real retail sales, 3:15 AM ET
CH: SVME Purchasing Managers' Index, 3:30 AM ET
GB: PMI Construction, 4:30 AM ET
EZ: PPI, 5:00 AM ET
IN: Reserve Bank of India, 5:00 AM ET
US: MBA Mortgage Applications, 7:00 AM ET
US: ADP Employment Report, 8:15 AM ET
US: Gallup U.S. Job Creation Index, 8:30 AM ET
US: EIA Petroleum Status Report, 10:30 AM ET
HK: PMI, 8:30 PM ET
JP: PMI Composite, 8:30 PM ET
SG: PMI, 8:30 PM ET
AU: Merchandise Trade, 9:30 PM ET
CN: General Services PMI, 9:45 PM ET
https://tradingeconomics.com/calendar (More complete listing, including consensus)