Friday August 19 Daily Market Primer
Happy
Friday. US stocks rose modestly again on Thursday along with oil, which
is up a remarkable 20% this month. As I have commented on several times
here, Saudi Arabia has called an OPEC meeting in late September, to discuss
supply caps, and even though the last such attempt completely failed and even
though Saudi Arabia increased its oil output and export in June to near record
levels, and this seems to be bolstering the market. Global stocks
were mixed around the world overnight and this morning. The US stock
market is down ½% in early trading this morning, and the press is saying its
over renewed concern over when the Fed will raise interest rates.
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LAST
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CHANGE
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% CHG
|
|
18597.7
|
23.76
|
0.13%
|
|
|
5240.15
|
11.49
|
0.22%
|
|
|
2187.02
|
4.8
|
0.22%
|
|
|
1236.85
|
9.17
|
0.75%
|
|
|
2453.43
|
-8.13
|
-0.33%
|
|
|
16545.82
|
59.81
|
0.36%
|
|
|
340.42
|
-2.49
|
-0.73%
|
|
|
6860.94
|
-8.02
|
-0.12%
|
|
|
1464.53
|
-3.53
|
-0.24%
|
|
|
5526.7
|
18.9
|
0.34%
|
|
|
3108.1
|
3.99
|
0.13%
|
|
|
22937.22
|
-85.94
|
-0.37%
|
|
|
28077
|
-46.44
|
-0.17%
|
|
|
16545.82
|
59.81
|
0.36%
|
|
|
2844.02
|
7.04
|
0.25
|
|
|
4396.87
|
-40.19
|
-0.91%
|
|
|
10549.23
|
-53.8
|
-0.51%
|
|
|
16245.74
|
-427.84
|
-2.57%
|
|
|
8430.6
|
-119.5
|
-1.40%
|
|
|
0.297
|
0/32
|
||
|
0.742
|
-2/32
|
||
|
1.149
|
-6/32
|
||
|
1.57
|
-10/32
|
||
|
2.287
|
-18/32
|
||
|
-0.615
|
5/32
|
||
|
-0.057
|
-7/32
|
||
|
48.49
|
0.27
|
0.56%
|
|
|
50.9
|
0.01
|
0.02%
|
|
|
2.65
|
-0.062
|
-2.32%
|
|
|
2178.25
|
-5.25
|
-0.24%
|
The
UK’s Financial Stability Board, lead by BOE chief Mark Carney, thinks banks are
still to big to fail (FSB
Says, below). Farm equipment leader John Deere beat expectations and
reported a lower than expected revenue and net income decline, and the stock
jumped 4%. The messy battle for control of Viacom between
the Redstones and the board seems to be nearing resolution, with CEO
Phillipe Dauman, who gave the world SpongeBob SquarePants but basically missed
the digital media revolution and lost a power struggle with Shari
Redstone, and who has received over $400 million in comp since 2006, negotiating
a $72 million exit package to step down. Next week, the Fed’s annual
conclave in Jackson Hole Wyoming will start on Thursday, and Fed Chair Janet
Yellen will be the headline speaker on Friday. And, was that Donald Trump
using a teleprompter and sounding conciliatory yesterday in
Charlotte? No, couldn’t be.
Other
than all this, it’s a pretty slow news day. Here’s the news:
Oil rebounds
Buoyed by data that show U.S. crude and fuel stockpiles are
declining, oil has entered bull-market territory. Although
futures were little changed in New York, erasing an earlier gain of 1.1
percent, they were still poised for weekly increase of 8.5 percent,
as both WTI and Brent benchmarks extended their gains past 20 percent over
the past three weeks. While speculation OPEC is poised to agree a production
freeze has fueled the rally, divisions between major powers over output targets
remain ahead of next month's meeting in Algiers.
Saudi Arabia reported yesterday that it hiked its oil and refined-product
exports to the highest level for June ever
recorded, at 8.83 million barrels a day, as the
kingdom seeks to grow market share and address its budget deficit.
Dollar remains on course for a decline
The U.S. currency trimmed its losses this morning, rising
against all 16 of its major counterparts, but
that's unlikely to be enough to stem its second weekly decline
as markets continue to waver on whether the Federal Reserve will hike
rates this year. Its losing streak against this year's best-performing G10
currency, the yen, is even longer at a fourth consecutive week of losses: the
Japanese currency traded at 100.07 to the greenback by 5:21 a.m. ET, near
its strongest levels in almost three years. The next sturdy signal of the
Fed's intent is likely to arrive next week at the Jackson Hole
monetary symposium on August 26.
Asian markets
Asian stocks are on course for their biggest weekly drop in a month.
The MSCI Asia Pacific Index had fallen 0.3 percent to 140 as of 4:51 a.m. E.T.,
and is headed for a 0.7 percent decline this week, the biggest
such loss since July 8. The gauge rallied 23 percent from a February
low through Thursday, and touched a one-year high last week, as speculation
that central banks will maintain loose monetary policy is fueled
by lackluster data from the world’s biggest economies. Meanwhile signs of
weak growth from smaller economies are also making headlines: Poland's growth
is lagging expectations,
and ahead of tonight's Fitch review Turkey's deputy prime minister said the
country may not meet its expansion target this year.
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Bank of East Asia Ltd., the Hong Kong lender facing pressure
from Paul Singer’s Elliott Management, reported a 38 percent drop
in first-half profit amid a slowdown in China that caused loan impairments to
surge. In Italy, troubled lender Banca Monte dei Paschi di Siena S.p.A. said
Chief Executive Officer Fabrizio Viola acted “with complete propriety,” after
media reports said he is under investigation for allegedly falsifying accounts. Meanwhile
the rules that are meant to tackle 'too big to fail' may be having the
opposite effect in the U.S., pushing mergers to a seven-year high.
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Diamond in the rough
Bob Diamond's buyout firm Atlas Mara Ltd. is trading at an all-time low of
$3.10 in morning trading, extending the stock's year-to-date decline
past 40 percent. Fears are growing the slump in commodity prices could
crimp revenues generated in the seven African countries in which it
operates. Renaissance Capital cut its target price on the stock on
Thursday by almost one-third to $4.50, amid concerns Atlas Mara's full-year
profit could fall by almost a half. In Nigeria, where Atlas Mara has a 30
percent stake in Union Bank Nigeria PLC, the naira dropped to a record low of 350
to the dollar this morning, as the economy struggles to fight of recession
risks, dollar shortages and declining oil revenues.
The
dollar is about to see a 'major long-term trend change.' Nautilus Investment
Research's Tom Leveroni and Shourui Tian suggest that, with the US dollar index
having fallen below the 100-day moving average, a "major long-term trend
change" is about to take place. The duo's research found the index's
performance in the three months following a break below the 100-day moving
average is a loss of 3.29% on average during a three-month period,
compared with the typical loss of 0.02% over the same time frame.
Wall
Street is no longer New York's biggest jobs engine. William Dudley, the New
York Federal Reserve president, said in a Thursday speech that growth in the
city's tech sector was "picking up much of the slack created by the
softness of the securities industry." Dudley pointed specifically to jobs
in the internet publishing, online shopping, and scientific research and
development industries.
The
CEO of the world's oldest bank is reportedly under investigation. Monte Paschi CEO Fabrizio
Viola and former chairman Alessandro Profumo are suspected of market
manipulation and false accounting, a source with knowledge of the matter told
Reuters. The recent stress tests that were held in July found that the Italian
bank was the weakest in Europe.
A
Deutsche Bank whistleblower won't be accepting his award. Eric Ben-Artzi, a former
Deutsche Bank risk officer, said in a Financial Times op-ed article that he
would not accept his $8.25 million reward for blowing the whistle on Deutsche
Bank because the firm's executives should be the ones paying the award.
"Deutsche did not commit this wrongdoing. Deutsche was the victim,"
Ben-Artzi wrote.
SolarCity
is cutting costs. CEO Lyndon Rive and CTO Peter Rive will have their annual
salaries reduced from $250,000 to $1 as part of the company's cost-cutting
plan, Reuters reports. The announcement comes after earlier this month
SolarCity lowered its 2016 installation forecast for a second time, thanks to a
lower number of residential bookings.
Gap
eked out an earnings beat. The apparel retailer earned an adjusted $0.60 a share on revenue
of $3.85 billion. "While performance varied during the quarter, we made
progress on our streamlining initiatives and continued to see signs of
improvement in our larger brands," CFO Sabrina Simmons said in the
earnings release.
All in the Family
If Hillary Clinton is elected in November, the Clinton family plans to scale back the Clinton Foundation, turning over operations to independent parties. Former President Bill Clinton and his daughter, Chelsea, would stop raising money for the foundation and discontinue after this year one of the foundation’s signature events, the Clinton Global Initiative. The foundation would also no longer accept foreign and corporate donations if Mrs. Clinton were elected. The planned changes are an attempt to insulate Mrs. Clinton from perceptions that Clinton Foundation donors could benefit from her administration’s official actions. Even a scaled-down foundation would mark an unprecedented turn in politics, given what would be the organization’s close identification with the White House. Meanwhile, we report that the pace of fundraising is set to accelerate for both the Clinton and Trump campaigns.
If Hillary Clinton is elected in November, the Clinton family plans to scale back the Clinton Foundation, turning over operations to independent parties. Former President Bill Clinton and his daughter, Chelsea, would stop raising money for the foundation and discontinue after this year one of the foundation’s signature events, the Clinton Global Initiative. The foundation would also no longer accept foreign and corporate donations if Mrs. Clinton were elected. The planned changes are an attempt to insulate Mrs. Clinton from perceptions that Clinton Foundation donors could benefit from her administration’s official actions. Even a scaled-down foundation would mark an unprecedented turn in politics, given what would be the organization’s close identification with the White House. Meanwhile, we report that the pace of fundraising is set to accelerate for both the Clinton and Trump campaigns.
Redstone’s Revenge
The long and messy struggle for power in Sumner Redstone’s media empire is nearing a conclusion. Viacom Chief Executive Philippe Dauman would relinquish his position as part of a settlement the company is completing with Mr. Redstone’s National Amusements, a deal that would end a leadership crisis that has engulfed the media giant. Under terms of the deal being negotiated, the two sides would cease litigation over control of Viacom and National Amusements, through which the 93-year-old Mr. Redstone owns a nearly 80% voting stake in the media company. Viacom Chief Operating Officer Tom Dooley would be named interim CEO through September under the deal and is a top candidate for the permanent CEO job. A settlement would complete the ascent of Mr. Redstone’s daughter Shari Redstone, a Viacom director and National Amusements president.
The long and messy struggle for power in Sumner Redstone’s media empire is nearing a conclusion. Viacom Chief Executive Philippe Dauman would relinquish his position as part of a settlement the company is completing with Mr. Redstone’s National Amusements, a deal that would end a leadership crisis that has engulfed the media giant. Under terms of the deal being negotiated, the two sides would cease litigation over control of Viacom and National Amusements, through which the 93-year-old Mr. Redstone owns a nearly 80% voting stake in the media company. Viacom Chief Operating Officer Tom Dooley would be named interim CEO through September under the deal and is a top candidate for the permanent CEO job. A settlement would complete the ascent of Mr. Redstone’s daughter Shari Redstone, a Viacom director and National Amusements president.
The Guns of August
Russia is bolstering its military presence on its western border, sending tens of thousands of soldiers to newly built installations within easy striking distance of Ukraine. The moves, which come as Moscow ratchets up confrontation over the Black Sea peninsula of Crimea, are a centerpiece of a new military strategy the Kremlin says is meant to counter perceived threats from NATO. Military analysts say the deployments appear to be an effort to build a more permanent and robust military posture around Ukraine, where Russia has carried out covert military interventions aimed at maintaining influence in its West-leaning neighbor. U.S. military officials said they haven’t detected signs of an immediate threat, but the buildup on Ukraine’s frontier represents a significant shift. For years, it was viewed by Moscow as little more than an administrative boundary.
Russia is bolstering its military presence on its western border, sending tens of thousands of soldiers to newly built installations within easy striking distance of Ukraine. The moves, which come as Moscow ratchets up confrontation over the Black Sea peninsula of Crimea, are a centerpiece of a new military strategy the Kremlin says is meant to counter perceived threats from NATO. Military analysts say the deployments appear to be an effort to build a more permanent and robust military posture around Ukraine, where Russia has carried out covert military interventions aimed at maintaining influence in its West-leaning neighbor. U.S. military officials said they haven’t detected signs of an immediate threat, but the buildup on Ukraine’s frontier represents a significant shift. For years, it was viewed by Moscow as little more than an administrative boundary.
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Carney (Dylan Martinez/AFP/Getty Images)
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The Financial Stability Board, which
Bank of England Governor Mark Carney leads, is seeking to renew efforts to
mitigate risks posed by "too big to fail" financial firms. The FSB
noted concerns about major banks' ability to be wound down in an orderly
fashion, but also said that progress has been made.
tock markets around the world are mixed. Spain's IBEX (-0.9%) leads
the way down in Europe, and Japan's Nikkei (+0.4%) paced the gains in Asia.
S&P 500 futures are down 5.00 points at 2,178.50.
Earnings reports trickle out. Deere & Co., Estee
Lauder, and Foot Locker will report ahead of the opening bell.
US economic data is absent. However,
the Baker Hughes rig count will cross the wires at 1 p.m. ET.
To read the pulse of the dairy industry, you must travel to the end of the world.
Take more risks,
says hedge fund manager Paul Tudor Jones.
...Even while one economist says the future of investing is
in following the herd.
Trump strikes a conciliatory tone.
Goldman Sachs Group Inc. wants you to meet Marcus.
Bolt's going for the treble-treble in
the final weekend of the Olympic games.
How do you fight poverty in an era of rampant globalization?
The rally in emerging-market assets raises a question for
investors: when the capital tide turns, which economies will be left most
exposed?
After all there's been a jump in the foreign-currency indebtedness of
non-financial corporates in a slew of developing nations, through overseas
bond markets and cross-border banking flows. That's further exposed their
domestic credits cycles to monetary policy plot twists in their developed
coutnerparts. A report this week from the Bank for International Settlements
highlights the scale of the challenge for investors and policy makers seeking
to assess macro vulnerabilities: a clutch of emerging market corporates have
borrowed through offshore subsidiaries, something that's generally missing
from official debt statistics, the BIS notes. If such corporates unwind their
exposures, the extent to which financial conditions in their home country
will deteriorate is an open question. In other words as the Fed hums and haws
about raising rates, all bets are off on the stability of wholesale deposits
in local banks, lending spreads, and the behavior of households.
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Source:
Bloomberg, BI, WSJ, CFAI Fin. Newsbrief
posted by Rich Barnett @ 7:50 AM
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