Wednesday August 31 Daily Market Primer
Happy
last day of August. Stocks fell .2% n the US yesterday, in quiet late
August pre-labor day trading ahead of the Friday jobs number. The
dollar strengthened on expectations for higher rates from and crude oil fell
another 1.3%. Returns were mixed and mostly flat around the
world. The ADP payroll survey is out with 177K jobs created in
August, slightly better than expected.
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LAST
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CHANGE
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% CHG
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18454.3
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-48.69
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-0.26%
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5222.99
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-9.34
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-0.18%
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|
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2176.12
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-4.26
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-0.20%
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1246.03
|
1.09
|
0.09%
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|
|
2451.63
|
0.15
|
0.01%
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|
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16887.4
|
162.04
|
0.97%
|
|
|
345.79
|
1.04
|
0.30%
|
|
|
6819.59
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-1.2
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-0.02%
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|
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13.12
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0
|
0.00%
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5433
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-45.3
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-0.83%
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|
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3085.49
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10.81
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0.35%
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22976.88
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-39.23
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-0.17%
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28452.17
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109.16
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0.39%
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2820.59
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-7.8
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-0.28%
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4484.08
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26.59
|
0.60%
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|
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10645.8
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-11.84
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-0.11%
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17022.5
|
131.08
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0.78%
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|
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8772.2
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86.8
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1.00%
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0.332
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0/32
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0.801
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0
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1.185
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-1/32
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1.578
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-3/32
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2.246
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-10/32
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-0.617
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0/32
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||
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-0.081
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-3/32
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45.85
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-0.5
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-1.08%
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47.67
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-0.72
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-1.49%
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2.855
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0.028
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0.99%
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|
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352.98
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-2.75
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-0.77%
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2173.25
|
-2
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-0.09%
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The
debate over the European Commission decision on Apple’s back taxes is heating
up, with
lots of back and forth in the press, highlighting the difficulty and complexity
of international tax reform. The international banking SWIFT system is
continuing to be hacked, according to a new report by Reuters. Bangladesh
had $81 million stolen through SWIFT in February, and the hackers almost
got $1 billion. S&P and MSCI are getting ready to break out REITS
into a separate sector under GICS (Global Industry Classification
Standards). They are currently included with financial stocks. I’m
sure this has kept many coders in the finance industry busy for months. This
will create an 11th GICS sector.
Here’s
the news:
Euro-area inflation, unemployment
Inflation in the euro-area was stable at 0.2 percent in August from a year
earlier, below analyst estimates for an increase to 0.3 percent. The European
Central Bank, which is due to make its next monetary policy decision on Sept.
8, says its current financial stimulus is justified but
other actors must play their part. Unemployment in the common-currency area
remained unchanged at 10.1 percent, with falls reported in Germany for August and an
unexpected drop in Italy in July. In the the U.K., the
Nationwide Building Society said house prices rose at their fastest pace in five months in August
as short supply outweighed weaker demand.
Bonuses hit
The rout in financial stocks this year has wiped more than $2.5 billion from the value
of deferred share bonuses for investment bankers at Europe's biggest financial
firms, data compiled by Bloomberg show. Deutsche Bank AG Chief Executive
Officer John Cryan, responding to market rumours that the bank had considered a
merger with rival Commerzbank AG, said that
he is looking to shrink and simplify the bank. Shares in Deutsche Bank have
lost about 42 percent in market value this year.
Spanish vote, judgment day in Brazil
Spain, without a government since last December, sees a vote in parliament today in which caretaker
Prime Minister Mariano Rajoy will try to win support to form a government.
He currently has 170 of the 350-seat legislature backing him,
but needs a majority to form a stable government. If he fails today, a
plurality of votes on Friday will allow him to continue. But without an overall
majority, Spain may face a third election in a year. Meanwhile, in Brazil, the
final impeachment vote of former president Dilma Rousseff is scheduled
for midday local time, with senators expected to
vote in favor of her removal.
Markets mixed
Overnight, the MSCI Asia Pacific Index climbed 0.1 percent, to bring its gain for
August to 1.2 percent. Japan's Topix index added 1.3 percent to wipe out losses for the
month. In Europe, the Stoxx 600 Index was 0.2 percent higher at 6:11 a.m. ET, with
banks leading the gains. S&P 500 futures were flat.
Consumer
confidence is slowing down in China. The latest Westpac-MNI
China consumer-sentiment index fell 2.2% to 111.5 and showed notable weakness
in the labor market as the employment outlook indicator sank to a six-month low
of 92.2.Eurozone inflation disappointed. Data from Eurostat showed that consumer prices in the eurozone rose 0.2% year-over-year in August, missing the 0.3% print that economists had forecast. The euro is little changed near 1.1145.
UK home prices jumped after Brexit. Nationwide home prices climbed 0.6% month-over-month in August, and they have yet to show any impact from the UK's June 23 vote to exit the European Union. The British pound is stronger by 0.5% at 1.3140.
Africa's largest economy is in recession. Still reeling from the oil crash and a decision to unpeg its currency from the dollar, Nigeria's economy contracted by 2.1% in the second quarter, and it is now in a recession for the first time in more than 20 years.
Canada has applied to join the Asia Infrastructure Investment Bank. Reuters reports that Canada seeks to join other US allies such as Britain, Germany, Australia, and South Korea in becoming a member of the China-led bank, which rivals the World Bank and the Asian Development Bank.
America's stock markets are slowing down. The New York Stock Exchange, the Nasdaq, and the Chicago Stock Exchange have all announced measures to take away some of the edge from high-frequency traders.
SWIFT discloses more cyberattacks. The global financial messaging system announced new hacking attacks on its member banks and said some victims lost money, but it declined to give a specific dollar amount, Reuters reports.
Apple Picking
The European Commission’s ruling that Apple must pay $14.5 billion in back taxes to Ireland intensifies a feud between the EU and the U.S. over the bloc’s tax probes into American companies and further complicates efforts to forge a bipartisan deal on U.S. tax policy. To the Treasury and members of Congress, EU regulators represent a threat, partly because companies could get U.S. tax credits if they pay more abroad, reducing future U.S. tax collections. The widely unpopular ruling highlights the difficulty inherent in international tax reform, and suggests that Brexit might make the U.K. more attractive to multinationals. The new tax bill is the latest headache for Apple CEO Tim Cook, but even if Apple is forced to pay the full penalty, it would make only a small dent in the company’s cash hoard.
An Unstable Foundation
The Clinton family is being pressed by some party officials and donors to sever all ties to the Clinton Foundation should Hillary Clinton win the presidential election. Some Democrats want to see more definitive steps to prevent an appearance of undue influence by the charity’s donors. Current plans call for winding down programs on an uncertain timetable, but keeping daughter Chelsea Clinton on the board and continuing to accept donations from U.S. individuals. Meanwhile, the State Department said on Tuesday it has found approximately 30 emails from Mrs. Clinton’s account that could be related to the 2012 attacks on two U.S. government facilities in Benghazi, Libya. And late Tuesday, Donald Trump announced that he will make a quick trip to Mexico today to meet with President Enrique Peña Nieto, shortly before Mr. Trump is slated to give a speech on immigration in Phoenix. Meanwhile Rep. Debbie Wasserman Schultz, the Florida Democrat who was pressured into giving up her post as chair of the national party, survived a high-profile primary challenge for her House seat Tuesday. In Florida Republican Sen. Marco Rubio easily beat back a long-shot bid from his closest primary challenger Carlos Beruff. And in Arizona, Sen. John McCain, campaigning for his sixth Senate term, overcame a primary challenge from former state Sen. Kelli Ward.
Fund for Spies
Like the agency that founded it, the CIA-funded venture-capital firm In-Q-Tel operates largely in the shadows. The firm’s officials regard it as independent, yet it has extremely close ties to the CIA and runs almost all investment decisions by the spy agency. In-Q-Tel discloses little about how it picks companies to invest in, never says how much, and sometimes doesn’t reveal the investments at all. Even less well-known are potential conflicts of interest the arrangements entail. We report that nearly half of In-Q-Tel’s trustees have a financial connection of one kind or another with a company the firm has funded. And unlike other venture-capital firms, In-Q-Tel is a nonprofit that uses public money, to which strict conflict-of-interest rules apply.
When Group of 20 leaders meet at
their summit next week in Hangzhou, China, they will look for ways to prevent
competitive currency devaluation and work on policies to manage the effect of
Britain's withdrawal from the EU, said Lou Jiwei, China's finance minister.
G-20 finance ministers and central bank governors are strengthening their
cooperation in an effort to maintain financial-market stability and encourage
economic growth, he said.
Reuters (30 Aug.),
The Society for Worldwide Interbank
Financial Telecommunication said in a letter to clients that since June, when
it informed them of a series of attacks, there have been additional efforts by
cybercriminals directed at banks, and some have been successful. "The
threat is persistent, adaptive and sophisticated -- and it is here to
stay," the letter said.
Reuters (30 Aug.)
Real estate investment trusts will
be broken out into a group in the Standard & Poor's 500 index under the
Global Industry Classification Standard. The change allows a better gauge of
sector performance and is expected to draw more investors to REITs.
Stock
markets around the world are mixed. Japan's Nikkei (+1.0%) booked solid overnight
gains, and Britain's FTSE (-0.3%) lags in Europe. S&P 500 futures are down
1.25 points at 2,174.00.Earnings reporting is light. Salesforce.com is set to report its quarterly results after the closing bell.
US economic data picks up. ADP
Employment will be released at 8:15 a.m. ET, and Chicago PMI will cross the
wires at 9:45 a.m. ET. Then, at 10 a.m. ET, pending home sales are due out. The
US 10-year yield is higher by 2 basis points at 1.58%.
The world's top performing fund is running out of stocks to buy.
Goldman Sachs is said to have lost a $1.8 billion U.S. property deal.
This quant fund gives robots 364 days off and still beats rivals.
Mystery of oil held on Chinese islands is puzzling
crude markets.
Cult of Corbyn exposes new political order.
Trump plans to go to Mexico.
Whistleblower gets $22 million from the SEC.
And the Anthropocene is
here.
It's been a while since Greece has been front and center, but
early this week, Greek Finance Minister Euclid Tsakalotos warned that the
next tranche of bailout money could be in jeopardy due to the country
backsliding on its reforms. These don't appear to be new issues, but rather a
continuation of challenges that have plagued Greece from the beginning of
this crisis. Meanwhile, today, we got Greek retail sales for the month of
June, and by any objective measure they were dismal. Retail sales were down
5.2 percent from a year earlier. Supermarket sales were down 2.4 percent,
while furniture sales fell 2.3 percent, and pharmaceutical and cosmetic sales
dropped 6 percent. Between ongoing political issues and a bad economy, it's
easy imagine Greece being back on the front pages eventually.
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Source:
Bloomberg, BI, WSJ, CFAI Fin. Newsbrief, Reuters
posted by Rich Barnett @ 7:24 AM
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