Friday June 17 Daily Market Primer
Stocks….wait
for it….rose yesterday, breaking a five day loosing streak, and recovering from a
169 point drop in the Dow earlier in the day. Dividend payers, namely
telecoms and utilities, led the market up. European stocks did not follow
suit on Thursday as Brexit fears continue to rattle investors and member of
Britain’s main opposition Labour party was murdered. Both Brexit
campaigns were temporarily suspended. Asia and Europe both followed
the US market up on Friday. The VIX has surged over the last week,
indicating the market expects volatility in the near term http://bit.ly/VIXsurge. Oil is moving
back up following big drop from $52 after supply concerns in Nigeria and Canada
were no longer in the news every day. US equity futures are flat so far
this morning.
|
|
|
|
Friday
Factoid: MSCI Indices
With
MSCI’s decision not to include Chinese A shares in their Emerging Markets index
this week,
I thought it might be interesting to take a look at the MSCI family of
indices. First, have you ever wondered what MSCI stands for?
The original indices covered non-US stock markets and were started in the 1968
by Los Angeles based mega mutual fund manager Capital Group, and the division
that kept the indices was called Capital International. Later Morgan
Stanley licensed and rebranded them “Morgan Stanley Capital
International”. Over time MSCI became a joint venture between the two
firms. In 2004, MSCI acquired Berkeley based analytics firm BARRA, to
form MSCI Barra. In 2007 the parent company decided to spin off the
original index group as a public company. The company now trades on the
NYSE (Ticker: MSCI – of course!).
MSCI
now covers the spectrum of global stock markets, including developed,
emerging and frontier markets. Its family includes traditional
capitalization and float weighted indices, factor based, ESG, and Real Estate,
and newer “strategy” indices (currency hedged, leveraged, etc.). The
MSCI ACWI (All Country World Index) is one of the most widely used equity benchmark for globally diversified portfolios.
We
will look more at the world of market indices in future Friday Factoids.
Here’s
the news:
Murder of British lawmaker
Some days markets can seem particularly cold-blooded.
Today, tragically, is one of those days, as we see the pound rally and equities
rise across the world as investors reassess the odds of Britain voting to leave
the European Union following the murder of 41-year old British lawmaker Jo Cox. News of her death
led to the immediate, and continuing, cessation of the rancorous campaign for
the June 23 referendum.
Markets rise
The MSCI Asia Pacific Index rose 0.7 percent overnight as markets
reassessed the risk of a Brexit vote, and the yen halted its rally. In Europe, the Stoxx
600 Index was 1.3 percent higher at 5:55 a.m. ET, with
waning Brexit risks again viewed as the primary driver of sentiment. S&P
500 futures were 0.1 percent lower.
Oil rises
Crude is rising this morning after suffering its biggest weekly drop in more than two months.
West Texas Intermediate futures were 1.5 percent higher at $46.90 a barrel at
6:10 a.m. ET. Russia’s Energy Minister Alexander Novak said in an
interview on Bloomberg TV yesterday that low oil prices could last for 10 to 15 years.
Yen intervention coming?
Japan's Finance Minister Taro Aso warned overnight that he'd
"like to take firm action in line with G-7 and G-20 agreements"
following the Japanese currency's 5 percent rally this month. Traders were not
convinced by the politician's statements as the weakness in the yen following
his comments had reversed within hours. The yen was trading
virtually unchanged at 104.30 to the dollar at 6:20 a.m. ET.
Sanders not stepping back, yet
Vermont Senator Bernie Sanders is still refusing to publicly accept defeat in the
race for the Democratic presidential nomination, despite acknowledging he will
only have "a role" in the process of defeating
Republican Donald Trump. For the GOP, sponsorship difficulties for the party's
national convention are starting to emerge as a growing number of prominent
U.S. corporations opt to drop or scale-back their support of the
event.
Revlon
is buying Elizabeth Arden. Revlon is buying Elizabeth Arden for $870 million, or $14 a
share. The deal represents a 50% premium to Thursday's closing price. In a
joint statement, the companies said, "Revlon will benefit from greater
scale, an expanded global footprint, and a significant presence across all
major beauty channels and categories, including the addition of Elizabeth
Arden's growing prestige skin care, color cosmetics, and fragrances."Smith & Wesson crushed estimates. The gunmaker earned an adjusted $0.63 a share, easily surpassing the $0.54 that analysts were expecting. Revenue surged 22.2% to $221 million, beating the $214.6 million Bloomberg consensus. Smith & Wesson sees full-year adjusted earnings per share of $1.83 to $1.93 and full-year revenue of $740 million to $760 million, both above analyst estimates.
Oracle posted a mixed quarter. The company announced adjusted EPS of $0.81, missing the $0.82 Bloomberg estimate. Revenue slipped 1.1% to $10.6 billion, but that was better than the $10.47 billion that analysts were anticipating. Oracle's cloud revenue totaled $859 million, up 49% in dollar terms. "We expect that the SaaS and PaaS hyper-growth we experienced in FY16 will continue on for the next few years," CEO Larry Ellison said in the earnings release.
UBS' hedge fund unit is hiring. UBS Asset Management's multistrategy fund unit "has hired seven portfolio managers for new roles in New York, Chicago, and London," Reuters reported after seeing an internal UBS memo. The firm successfully poached talent from Point72 Asset Management, the Citadel unit Surveyor Capital, and GLG Partners. The new hires come under the leadership of chief investment officer Kevin Russell, who joined the firm in November.
Pimco is trimming its workforce. The investment firm is eliminating 68 jobs, or 3% of its workforce. In a memo to employees obtained by Business Insider, Pimco said it was letting go its dividend team as it converts its "dividend" strategy to a "research affiliates equity income" strategy. The company has seen assets under management fall to about $1.5 trillion after peaking at about $2 trillion in 2013. Cofounder Bill Gross left the firm in September 2014.
|
The Heat
of Sumner
Media mogul Sumner Redstone on Thursday moved to carry out a dramatic overhaul of Viacom’s board, setting up a high-stakes legal battle over corporate governance in a spectacular escalation of the fight for control of the $40 billion empire he spent three decades building. National Amusements, the holding company through which Mr. Redstone controls Viacom, said it is seeking to oust five Viacom directors, including his former confidant, Chairman and Chief Executive Philippe Dauman. The move is the culmination of a drama over several months involving Mr. Redstone’s daughter, his longtime associates and even his past romantic companions. The next phase of the fight will present corporate-governance questions that legal experts say are rarely considered in the upper echelons of American business—with a board and its controlling shareholder effectively in a legal war.
Nearly
Perished Radio
With both its stars and audience aging, public radio is facing an existential crisis. Some of the biggest radio stars of a generation—Garrison Keillor of “A Prairie Home Companion” and Washington talk-show queen Diane Rehm, to name two—are exiting the scene, while public-radio executives attempt to stem the loss of younger listeners on traditional radio. At the same time, the business model of NPR is under threat: It relies primarily on funding from hundreds of local radio stations, but it faces rising competition from small and nimble podcasting companies using aggressive commercial strategies to create Netflix-style on-demand content. All this has amplified tensions between veteran radio executives, who continue to cling to popular broadcast shows like “Car Talk”—even though one of its hosts is actually dead—and those who believe podcasting, with its innovative storytelling and younger audiences, is the future. |
US economic data is light. Housing
starts and building permits will be released at 8:30 a.m. ET. The US 10-year
yield is up 3 basis points at 1.61%.
The only certainty for world's central banks is uncertainty.
The world economy looks a bit like it's the 1930s.
Negative German yields are evidence of ECB exhaustion.
Earth's heat extends unprecedented streak of shattered records.
No, negative rates are not a "calamitous misadventure,"
say ECB economists.
It was not the best week for the world's major central banks. For the most part,
policy rates remain stuck at historically low levels, leaving them little
leeway in the event of another downturn. At the Fed, Janet Yellen acknowledged that
secular, structural forces may keep rates depressed for longer. It's become
popular to say that the Fed has utterly failed at generating any of the
inflation it wants to see. Except... That's not totally true. Yes, inflation
isn't at the target level - but there's a clear trend, and that trend is up.
Yesterday we got the latest CPI report, and there are a bunch of different
ways to show that pricing pressures are continuing to build. Core CPI is up
2.2 percent year-on-year, which is one of its highest post-crisis readings.
The Cleveland Fed's Trimmed Mean measure is back over 2 percent. A measure of
CPI for services excluding energy is up 3.16 percent from a year ago, its
highest reading since the crisis. This week we also got the latest reading of
the Atlanta Fed's Wage Growth Tracker, which
says that wages are up 3.5 percent from a year ago, the fastest pace of
growth since January 2009. There's no question that the crisis has been a
disappointment in all kinds of ways. But this popular meme of utter futility
on the inflation front is belied by the most straightforward data.
|
|
|
|
|
Source:
Bloomberg, BI, WSJ, CFAI Fin. Newsbrief
posted by Rich Barnett @ 7:49 AM
0 Comments:
Post a Comment
<< Home