Monday May 2 Daily Market Primer
Happy May Day. Stocks were down in the US Friday for the second day, and were mostly down in Asia Monday, and are slightly positive in Europe right now. Stocks were down about 1% for the week, but were positive for the month of April. Several Asian markets are closed for Labour Day and the UK is closed for May Day. Oil had a good month…unless you drive an SUV, it was up about 22% in April. US markets are opening slightly positive.
Friday
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Monday
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US
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Asia
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Japan
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Europe
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Oil
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China
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Australia
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Eurozone
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UK
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Germany
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France
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WTI
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Brent
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S&P
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Dow
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Nasdaq
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Shanghai
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HK
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ASX200
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Stoxx 600
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FTSE
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DAX
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CAC
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$
45.88
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$
47.05
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-0.51%
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-0.32%
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-0.62%
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Closed
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Closed
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0.73%
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-3.61%
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0.23%
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Closed
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1.14%
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0.61%
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-0.1%
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-0.7%
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VIX:
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Futures:
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0.35%
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0.22%
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US 10 Yr:
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1.485%
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The $28 billion merger
of the second- and third-largest oil-service companies is not going ahead,
both companies announced yesterday. Dave Lesar, Halliburton Co.’s
chairman blamed "regulatory approvals and general industry
conditions." Halliburton will have to pay Baker Hughes Inc. a $3.5 billion
termination fee by May 4. Since the deal was originally announced in November
2014, the price of a barrel of oil has dropped from almost $80 to $45.
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The commonwealth of Puerto
Rico will default on a $422
million bond payment for its Government Development Bank
after Governor Alejandro Garcia Padilla invoked a debt moratorium law
and said that he decided "that essential services for the 3.5 million
American citizens in Puerto Rico came first” in a televised address yesterday.
The debt that will be defaulted on last traded at 32 cents on the dollar,
with an effective yield of
about 1,600 percent.
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The continuing strength of the
Japanese yen, which was trading at 106.38 to the dollar at
5:43 a.m. ET, is putting pressure on
Japanese stocks with the Topix index adding to last week's 4.8
decline with an overnight drop of 3 percent. The wider MSCI Asia Pacific
Index lost 1.3 percent.
In Europe, the Stoxx 600 Index was virtually
unchanged at 5:27 a.m. ET with Markit Economics
describing growth in the euro-area as 'anemic'
while Italian bank shares were tumbling after investors snubbed an initial public
offering by Banca Popolare di Vicenza SpA with Atlante, the
country's recently established bank-rescue fund having to buy almost all the
shares. S&P 500 futures were close to
unchanged.
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Gold futures for June delivery
traded at $1,301.80 an ounce at 5:35
a.m. ET on the Comex in New York, climbing above $1300 for the first time
since January 2015. The precious metal has gained 23 percent this year, a
rally that hedge funds seem to have mostly missed out on.
Oil, meanwhile is slipping for a second day following data showing Iraqi
exports are approaching a record
high.
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The annual Berkshire
Hathaway Inc. shareholder meeting was held in Omaha, Nebraska on
Saturday and as usual, Chairman Warren Buffett had plenty to say.
He said that hedge funds get 'unbelievable'
fees for bad results, warned on the potential 'time bomb'
in banks derivatives holdings and described the business model
of Valeant Pharmaceuticals International Inc. as 'enormously flawed.' Berkshire
Hathaway announced an increase in profits
of 8.2 percent in the first quarter on gains at manufacturing
units and in the investment portfolio Buffett oversees.
A
guy claiming to be the creator of bitcoin has come forward, again. Australian IT executive
Craig Wright says he is the inventor of bitcoin. According to the BBC, Wright
proved he was the creator of the digital currency by signing "messages
using cryptographic keys created during the early days of bitcoin's
development." The BBC continued: "The keys are inextricably linked
to blocks of bitcoins known to have been created or 'mined' by Satoshi
Nakamoto," the alias used by bitcoin's creator. Wright has previously
claimed to be the digital currency's creator.Another oil name files for bankruptcy. Ultra Petroleum has filed for Chapter 11 bankruptcy. Ultra is the latest energy company to fall victim to the crash in oil prices. In a court filing, the oil and gas producer listed both assets and liabilities of $1 billion to $10 billion. Reuters reports that the consulting firm Deloitte says up to one-third of all oil producers could end up filing for bankruptcy this year if oil prices are unable to stage a meaningful rebound. AIG sold a big portion of its stake in Chinese insurer PICC. AIG sold 740 million shares of China's PICC Property and Casualty, raising a total of 9.68 billion Hong Kong dollars ($1.25 billion). The sale occurred at the lower end of the company's marketing range, with most of the interest coming from institutional investors, reports Reuters reports, citing IFR. AIG had given a range of 13.06 to 13.35 Hong Kong dollars per share, and the block deal went down at about 13.08 Hong Kong dollars a share. Berkshire Hathaway profit probably fell. A preliminary look at Berkshire Hathaway's first-quarter results showed that net profit most likely fell 12% to $3.73 billion. According to Reuters, Berkshire cited weaker performance in its railroad and insurance business as reasons for the decline. The final results will be reported May 6.
Rhyme
Without Reason
With U.S. stocks near record highs and memories of last summer’s volatility still in mind, investors could be forgiven for wondering whether this is the year to “sell in May and go away.” There are many interpretations of the long-running trading adage, but the underlying recommendation remains the same: Stock investors should avoid a summer slump. It worked last year, but some investors ridicule the strategy as no better than predictors tying stock-market behavior to the length of hemlines or which NFL conference wins the Super Bowl. Since 1970, the S&P 500 has gained 1% on average in the period between Memorial Day and Labor Day. From the Fed’s June meeting to another batch of quarterly corporate earnings that are likely to disappoint, this coming summer will start off with some potentially market-moving events. |
The world's longest negative
rate experiment shows trouble ahead...
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...While JPMorgan predicts a global bond shortage.
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May is the best month, historically, to be long the dollar.
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The good, the bad and the €500 note.
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Green Zone breach exposes Iraq's growing political
paralysis.
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Bernie Sanders still thinks he can win.
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Australian academic outs himself as creator of bitcoin.
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Over the weekend we got the
latest PMI data out of China. There wasn't
that much for bulls to get excited about. The official Manufacturing PMI
dipped from 50.2 to 50.1 in April, falling short of the 50.3 consensus
estimate (remember, anything above 50 is still in expansion territory).
Meanwhile the Non-Manufacturing PMI (which for awhile has been the stronger
of the two readings) fell to 53.5 from 53.8. In addition to the slippage, the
internals confirmed concerns about the unbalanced nature of Chinese growth
right now. As Bloomberg Intelligence economists Tom Orlik and Fielding Chen
note, it was the real estate component of the Non-Manufacturing PMI that
really boomed, with a rock solid reading of 59.4. Services came in at a less
robust 52.5. Finally it's worth noting that Fresh Korean exports data came
out this weekend. Korean exports are often seen as a "canary in the
coalmine" for world trade, given the country's significant role in
manufacturing. They were down 11.2 percent year-over-year. To China
specifically, Korean exports fell 18.4 percent year-over-year. So bottom line
what we learned this weekend was that Chinese growth is just so-so, that it's
still significantly dependent on real estate, and that a key measure of world
trade remains underwhelming. Happy May!
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Labels: DailyMarketPrimer, Investments, Markets, Oil
posted by Rich Barnett @ 7:38 AM
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