Random Market News, 24 July 2017

 

Market Info. 1

Logistics. 4

Tech. 5

Random.. 6

Events on 7/25 (ET) 7

 

 

Market Info

 

"EU ready to retaliate against US sanctions on Russia.

According to a note prepared for a commission meeting on Wednesday, and seen by the Financial Times, Brussels “should stand ready to act within days” if the US measures were “adopted without EU concerns being taken into account”.

Under the new sanctions bill, Mr Trump would no longer be allowed to lift sanctions against Russia, Iran or North Korea unilaterally. Instead, he would need to provide a written letter to Congress explaining why he wanted to lift sanctions, after which Congress would have 30 days to consider whether it wants to honour the president’s request.

Until now, the decision to lift sanctions levelled by the executive branch has resided solely with the White House."

https://www.ft.com/content/211de800-6fbc-11e7-aca6-c6bd07df1a3c

http://www.reuters.com/article/us-usa-russia-sanctions-eu-idUSKBN1A70R3?il=0

 

"EU court reinstates Gazprom's extra access to German Opal natural gas link."

https://www.platts.com/latest-news/natural-gas/brussels/eu-court-reinstates-gazproms-extra-access-to-26777535

 

"AP Explains: India and China face off in border standoff.

It was the tiny Himalayan kingdom of Bhutan that sounded the alarm: Chinese soldiers had arrived with bulldozers and excavators, and were building a high-mountain road near India's border — in an area the two nuclear-armed Asian giants have disputed for decades."

http://www.startribune.com/ap-explains-india-and-china-face-off-in-border-standoff/436246533/

 

"Alarming Escalation in the South China Sea: China Threatens Force if Vietnam Continues Oil Exploration in Spratlys."

http://thediplomat.com/2017/07/alarming-escalation-in-the-south-china-sea-china-threatens-force-if-vietnam-continues-oil-exploration-in-spratlys/

 

"Japan inks defense deal with Germany amid China threat.

Japan is seeking to diversify and expand security partnerships as it faces dual threats posed by an expansionist China and an unpredictable North Korea. Julian Ryall reports from Tokyo."

http://www.dw.com/en/japan-inks-defense-deal-with-germany-amid-china-threat/a-39811584

Smoothbore cannons for pretty much every tank in the world (including US and Japan) are made by Rheinmetall of Germany (and Rostec/Uralvagonzavod of Russia), for instance.

 

"Xi’s Sign-Off Deals Blow to China Inc.’s Global Spending Spree.

Measure is a warning to China’s other big private businesses that loaded up on debt to buy assets overseas.

Chinese firms completed $187 billion in outbound deals last year, according to Dealogic, as private companies snapped up trophy properties, soccer clubs and hotels, while Chinese with means bought homes and pushed up real-estate prices from Texas to Sydney."

https://www.wsj.com/articles/chinas-latest-clampdown-on-overseas-investing-has-president-xis-approval-1500802203

https://www.bloomberg.com/news/articles/2017-07-17/china-is-said-to-punish-wanda-for-breaching-investment-rules-j57r4vzy

China's current account surplus was ~USD 200bn in 2016 (largest was Germany at ~USD 300bn).

 

"U.S. toughens stance on foreign deals in blow to China's buying spree.

The objections indicate that the Committee on Foreign Investment in the United States (CFIUS), which reviews acquisitions by foreign entities for potential national security risks, is becoming more risk-averse under U.S. President Donald Trump."

http://www.reuters.com/article/us-usa-china-companies-idUSKBN1A532M

 

"Collapse of 'safe-haven asset' bubble looms.

Lower government bond prices could trigger a chain reaction."

http://asia.nikkei.com/Markets/Equities/Collapse-of-safe-haven-asset-bubble-looms

 

"The International Monetary Fund maintained its world economic growth forecast at 3.5% this year and 3.6% next year, with upward revisions for Japan, China and other Asian emerging markets offsetting a downward projection for the United States."

http://www.bangkokpost.com/business/world/1293026/imf-keeps-world-growth-forecast-at-3-5-

https://www.ai-cio.com/news/imf-downgrades-us-uk-growth-upgrades-eurozone/

 

"[L]ofty expectations were met with robust earnings growth in the first quarter, but as the year has progressed, investors have begun to fear that the tide may be turning – recent economic numbers have been mixed, oil has been falling and the hopes of any policy reform have begun to dwindle. Despite this, earnings expectations have still held up remarkably well in 2017, especially when compared to the average path of earnings estimates over the past 20 years."

https://am.jpmorgan.com/gi/getdoc/1383391730106

 

"The Netherlands is world’s biggest conduit to offshore tax havens: research.

The two biggest conduits by far are the Netherlands (23%) and the United Kingdom (14%), followed by Switzerland (6%), Singapore (2%) and Ireland (1%).

‘Our results show that offshore finance is not the exclusive business of exotic small islands far away. Countries such as the Netherlands and the United Kingdom play a crucial yet previously hidden role as conduits of offshore finance on its way to tax havens,’ the researchers said."

http://www.dutchnews.nl/news/archives/2017/07/the-netherlands-is-worlds-biggest-conduit-to-offshore-tax-havens-research/

 

Data dump.

 

Implied rate hike probability on July 26th ~3.1%, September 20th ~8.2%; 0% probability of rate cut through June 13th, 2018.

http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html/

 

VIX ~9.43. 10-yr treasury vol (TYVIX) ~3.88.

http://www.cboe.com/products/vix-index-volatility/volatility-on-interest-rates

 

10yr Sovereigns.

https://www.investing.com/rates-bonds/government-bond-spreads

https://tradingeconomics.com/bonds

 

FX.

https://www.investing.com/currencies/streaming-forex-rates-majors

https://tradingeconomics.com/currencies

 

Equity.

https://www.investing.com/indices/major-indices

https://tradingeconomics.com/stocks

 

Commodities.

https://www.investing.com/commodities/real-time-futures

https://tradingeconomics.com/commodities

 

News feed.

 

"US Equities End Mixed On Monday

Wall Street closed mixed on Monday July 24th of 2017, as oil stabilized and the US dollar rebounded from a 15-month low ahead of the Fed’s rate decision and more corporate earnings. Banks and tech stocks outperformed on Monday, with the Nasdaq advancing 25 points or 0.4% to reach a fresh record of 6411. Contrastingly, the Dow Jones lost 57 points or 0.3% to 21523 and the S&P 500 edged down 2 points or 0.1% to 2470.

 

US Private Sector Output Grows The Most In Six Months

The seasonally adjusted IHS Markit Flash US Composite PMI Output Index rose to 54.2 in July 2017 from 53.9 in June. The reading pointed to the strongest pace of expansion in the private sector since January, driven by a steeper increase in manufacturing production (PMI at 53.2 from 52 in June) while service providers activity growth was unchanged from June's five-month high (PMI at 54.2).

 

Mexico Economic Activity Rises More Than Expected In May

Economic activity in Mexico grew by 3.1 percent year-on-year in May 2017, recovering from a downwardly revised 0.6 percent contraction in April and beating than market expectations of 2.6 percent. Industrial production rebounded 1 percent after a 4.2 percent fall in the previous month; and service sector output grew at a faster 4.4 percent following a 1.4 percent gain in April. In contrast, agriculture shrank 0.3 percent (0.5 percent in April). On a seasonally adjusted monthly basis, economic activity increased 0.2 percent.

 

Eurozone Private Sector Growth Slows To 6-Month Low

The Flash Eurozone PMI Composite Output Index fell to 55.8 in July 2017 from 56.3 in June and below market expectations of 56.2. The reading pointed to the weakest rate of expansion in the private sector since January, as output slowed in manufacturing (PMI at 56.8 from 57.4 in June) and was unchanged in the services sector (PMI at 55.4). Growth of new orders, backlogs of work and employment all edged lower in July but remained solid and sentiment about prospects for the year eased to the lowest since January. On the price front, the rate of input inflation cooled further, driven lower by slower growth of manufacturing costs, and average prices charged for goods and services rose at the weakest pace since January.

 

Japan Factory Activity Growth Slows To 8-Month Low

The Nikkei Japan Flash Manufacturing PMI fell to 52.2 in July of 2017 from a final 52.4 in June. It was the lowest reading since November 2016, as export orders stagnated, output and new orders both rose at a slower pace and suppliers' delivery times lengthened. In addition, output prices, input prices and quantity of purchases increased less than in a month earlier. Only employment went up at a sharper rate while optimism hit its highest level in five years of data collection.

 

Taiwan Industrial Output Rises Faster In June

Industrial production in Taiwan increased 3.14 percent year-on-year in June of 2017, following an upwardly revised 0.85 percent rise in May. It is the biggest gain in industrial output in three months boosted by a rebound in building construction (12.4 percent from -1.4 percent in May) and faster growth in manufacturing (3.6 percent from 2 percent) and mining (3.2 percent from 3.1 percent). On the other hand, slower growth was recorded for water supply (2.7 percent from 4.8 percent) and production continued to fall for electricity and gas (-10.5 percent from -26.1 percent). On a monthly basis, industrial output went up 1.5 percent. Considering the first six months of the year, production rose 3.2 percent over a year earlier.

 

Stocks in Euro Area Hit 13-week Low

Euro Stoxx 50 decreased to a 13-week low of 3434.

 

Stocks in Nigeria Hit 26-month High

NSE-All Share increased to a 26-month high of 34644.

 

Euro Hits 23-month High

EURUSD increased to a 23-month high of 1.1682.

 

Canadian Dollar Hits 2-Year High

The Canadian dollar has strengthened to a 2-year high of $1.25 on Monday, pushed by strong data on manufacturing sales. The currency has already gained 3.5% against the greenback since the Bank of Canada hiked its key interest rate on July 12th.

 

Rice Hits 19-month High

Rice increased to a 19-month high of 12.11 USD/cwt."

 

https://tradingeconomics.com/stream

http://www.marketwatch.com/newsviewer#

 

Logistics

 

"A crewless ship to be christened the Yara Birkeland is expected to start sailing in 2018, initially delivering fertilizer along a 37-mile route in southern Norway.

The ship, according to the Wall Street Journal, will cost $25 million, about three times as much as a conventional ship of similar size, but will save up to 90% in annual operating costs by eliminating both fuel and crew."

https://venturebeat.com/2017/07/24/a-25-million-autonomous-ship-will-launch-in-2018/

 

"Once considered the “Uber of shipping,” logistics company Shyp has announced that it’s downsizing its operations in Chicago, Los Angeles, and New York, and will no longer accept new orders in those cities. The company will instead focus on achieving profitability in the single market of the San Francisco Bay Area."

https://www.theverge.com/2017/7/21/16007770/shyp-downsizes-san-francisco-bay-area

 

"Next Leap for Robots: Picking Out and Boxing Your Online Order.

Developers close in on systems to move products off shelves and into boxes, as retailers aim to automate labor-intensive process."

https://www.wsj.com/articles/next-leap-for-robots-picking-out-and-boxing-your-online-order-1500807601

 

"JB Hunt Buys Special Logistics Dedicated LLC for $136M.

In a news release, the company said the move will expand its e-commerce delivery platform."

http://www.arkansasbusiness.com/article/117984/jb-hunt-buys-special-logistics-dedicated-llc-for-136m

 

"Asia-Europe spot prices fall ‘unexpectedly’ last week.

Asia-Europe spot prices fell “unexpectedly” last week by around 9% despite peak season demand and transpacific prices also fell for the third successive week, although rates overall remain 15% higher than a year ago, according to the World Container Index assessed by Drewry."

http://www.lloydsloadinglist.com/freight-directory/news/Asia-Europe-spot-prices-fall-%E2%80%98unexpectedly%E2%80%99-last-week/69823.htm

 

Tech

 

"As California’s labor shortage grows, farmers race to replace workers with robots."

http://www.latimes.com/projects/la-fi-farm-mechanization/

Crops have also been selectively bred for decades to better withstand automation (e.g., toughness, size).

 

"Uber rival Grab to raise $2.5b from Didi, Softbank in largest SE Asia deal.

Grab is one of the most frequently used mobile platforms in the region with nearly 3 million daily rides. Its mobile app has been downloaded on over 50 million mobile devices, giving passengers access to a fleet comprising over 1.1 million drivers.

Grab offers private car, motorbike, taxi, and carpooling services across seven countries and 65 cities."

https://www.dealstreetasia.com/stories/grab-ubers-seasia-rival-raise-2-5b-didi-softbank-78484/

 

"The Race For AI: Google, Baidu, Intel, Apple In A Rush To Grab Artificial Intelligence Startups.

Corporate giants like Google, IBM, Yahoo, Intel, Apple, and Salesforce are competing in the race to acquire private AI companies, with Ford, Samsung, GE, and Uber emerging as new entrants. Over 250 private companies using AI algorithms across different verticals have been acquired since 2012, with 37 acquisitions taking place in Q1’17 alone. That quarter also saw one of the largest M&A deals: Ford’s acquisition of Argo AI for $1B."

https://www.cbinsights.com/research/top-acquirers-ai-startups-ma-timeline/

 

"What AI-enhanced health care could look like in 5 years.

1. Physicians will practice with AI virtual assistants (using, for example, software tools similar to Apple’s Siri, but specialized to the specific healthcare application).

2. Physicians with AI virtual assistants will be able to treat 5X – 10X as many patients with chronic illnesses as they do today.

3. AI virtual assistants will support both patients and healthy individuals in health maintenance with ongoing and real-time intelligent advice.

4. Medical devices previously only available in hospitals will be available in the home.

5. Affordable new tools for diagnosis and treatment of illnesses will emerge based on data collected from extant and widely adopted digital devices such as smartphones.

6. Robotics and in-home AI systems will assist patients with independent living."

https://venturebeat.com/2017/07/23/what-ai-enhanced-healthcare-could-look-like-in-5-years/

 

"EverlyWell rolls out three new DNA-based products for food sensitivity, metabolism and breast milk.

There’s a lot going on in commercial DNA testing these days beyond what eye color you have or where your mitochondria comes from, and at-home lab testing startup EverlyWell hopes to cash in. The startup launched three new products today, based on your DNA to help get it there, including a food sensitivity test, DNA factors for your metabolism and breast milk DHA."

https://techcrunch.com/2017/07/24/everlywell-rolls-out-three-new-dna-based-products-for-food-sensitivity-metabolism-and-breast-milk/

 

"SnapTravel raises $8 million for a hotel booking service that works over chat.

Chatbots – automated bots that let you interact with a service or brand via messaging apps or SMS – haven’t yet become breakout hits, as a group. But that hasn’t stopped investors from pouring in $8 million into a hotel booking startup called SnapTravel, which lets users find and book rooms via SMS texts and Facebook Messenger."

https://techcrunch.com/2017/07/24/snaptravel-raises-8-million-for-a-hotel-booking-service-that-works-over-chat/

 

"Roomba vacuum maker iRobot could sell spatial mapping data to smart home companies."

https://venturebeat.com/2017/07/24/roomba-vacuum-maker-irobot-could-sell-spatial-mapping-data-to-smart-home-companies/

 

"Fake duck test shows drones and AI beat humans at bird census."

https://www.newscientist.com/article/2141651-fake-duck-test-shows-drones-and-ai-beat-humans-at-bird-census/

 

"DNA Logic Gets Much Faster.

Now Microsoft is turning its attention to the other half of DNA computing, the processor. Researchers at Microsoft have teamed up with scientists at the University of Washington to find a way toward creating super fast computations using DNA molecules."

http://spectrum.ieee.org/nanoclast/semiconductors/devices/dna-chips-get-much-faster-processing

 

"Bespoke Processors: A New Path to Cheap Chips.

Engineers can cut size and power in half by stripping away unused logic gates from general-purpose microcontrollers.

Research engineers at ARM, in Cambridge, England, are hoping it is that simple. They’ve been working hard on a project called Plastic ARM—an attempt to construct 1-cent disposable microcontrollers on plastic using printed electronics."

http://spectrum.ieee.org/semiconductors/design/bespoke-processors-a-new-path-to-cheap-chips

 

Random

 

"Timbuktu.

Home of the prestigious Koranic Sankore University and other madrasas, Timbuktu was an intellectual and spiritual capital and a centre for the propagation of Islam throughout Africa in the 15th and 16th centuries. Its three great mosques, Djingareyber, Sankore and Sidi Yahia, recall Timbuktu's golden age. Although continuously restored, these monuments are today under threat from desertification."

http://www.atlasobscura.com/places/ilha-fiscal

 

"Non-transitive Dice.

This is rather like the game of “rock, paper, scissors” in which scissors beats paper, and rock beats scissors, but paper beats rock.

Warren Buffett once challenged Bill Gates to a game of dice. “Buffett suggested that each of them choose one of the dice, then discard the other two. They would bet on who would roll the higher number most often. Buffett offered to let Gates pick his die first. This suggestion instantly aroused Gates’ curiosity. He asked to examine the dice, after which he demanded that Buffett choose first.” Buffett was using a set of non-transitive dice!"

https://www.microsoft.com/en-us/research/project/non-transitive-dice/

 

Events on 7/25 (ET)


USA  US: FOMC Meeting Begins 

France  FR: Business Climate Indicator, 2:45 AM ET

France  FR: PPI, 2:45 AM ET

Germany  DE: Ifo Survey, 4:00 AM ET

Great Britain  GB: CBI Industrial Trends Survey, 6:00 AM ET

USA  US: Redbook, 8:55 AM ET

USA  US: FHFA House Price Index, 9:00 AM ET

USA  US: S&P Corelogic Case-Shiller HPI, 9:00 AM ET

USA  US: Consumer Confidence, 10:00 AM ET

USA  US: Richmond Fed Manufacturing Index, 10:00 AM ET

USA  US: State Street Investor Confidence Index, 10:00 AM ET

New Zealand  NZ: Merchandise trade, 6:45 PM ET

Australia  AU: CPI, 9:30 PM ET

 

http://online.wsj.com/mdc/public/page/2_3063-globalEconomicCalendar.html

https://tradingeconomics.com/calendar (More complete listing, including consensus)