Monday August 29 Daily Market Primer
Stocks
fell on Friday as Janet Yellen’s widely anticipated speech failed to enlighten
us about the timing of the next rate increase. Fed Vice Chair Stan Fisher
went on TV right Dr. Yellen, and seemed to indicate a strong possibility of two
rate hikes this year. After thinking about it the market decided the
combination of the speech and Fischer comments are hawkish, with the odds of
a Fed rate hike in September increasing over the weekend. The US
stock market was down about 1% last week. Markets were mixed overseas
Monday, with a very strong return in Japan as the BOJ appears to be
gearing up for another round of stimulus, based in comments by Governor
Kuroda. July consumer spending is out this morning, and was up .3%, highlighted
by a 1.6% increase in the durable goods component, in line with expectations.
The Fed’s preferred inflation measure, the core PCE, is running at 1.6%,
below the Fed target of 2%. US stock futures rose on the consumer
spending release and are pointing to a modestly up open.
LAST
|
CHANGE
|
% CHG
|
|
18395.4
|
-53.01
|
-0.29%
|
|
5218.92
|
6.71
|
0.13%
|
|
2169.04
|
-3.43
|
-0.16%
|
|
1238.03
|
-1.97
|
-0.16%
|
|
2440.29
|
-11.84
|
-0.48%
|
|
16737.49
|
376.78
|
2.30%
|
|
342.49
|
-1.23
|
-0.36%
|
|
6838.05
|
21.15
|
0.31%
|
|
14.19
|
0.54
|
3.96%
|
|
5469.2
|
-46.3
|
-0.84%
|
|
3070.03
|
-0.28
|
-0.01%
|
|
22821.34
|
-88.2
|
-0.38%
|
|
27902.66
|
120.41
|
0.43%
|
|
16737.49
|
376.78
|
2.30%
|
|
2829.43
|
-28.22
|
-0.99%
|
|
0.325
|
0/32
|
||
0.841
|
0/32
|
||
1.207
|
5/32
|
||
1.6
|
10/32
|
||
2.255
|
24/32
|
||
47
|
-0.64
|
-1.34%
|
|
49.24
|
-0.68
|
-1.36%
|
|
359.36
|
-3.71
|
-1.02%
|
|
2170
|
1.5
|
0.07%
|
It
looks like we can expect more IPOs after Labor Day, according to the WSJ (Rush
for Cash, below). It’s another pretty slow news day, so here’s the
news:
Fed rate hike odds increase
Futures implied probability of a Federal Reserve rate hike in
September are at 42 percent this morning, and have risen to 2-to-1 for an
increase by the end of the year following Chair Janet Yellen's speech at Jackson Hole on
Friday. The dollar rose to a two-week high, with the Bloomberg
Dollar Spot Index gaining 0.1 percent by 5:47 a.m. in New York. While Yellen's
speech was hawkish enough for Goldman Sachs Group Inc. to boost rate hike odds
for September, Pacific Investment Management Co. said her speech included nothing of note. One thing is certain:
investors will now turn to August jobs data on Friday for the next
indication of the likelihood of a change at the Fed.
Bank of Japan stimulus
While investors parse the Fed, Bank of Japan Governor Haruhiko
Kuroda was much more definitive at Jackson Hole, saying he won't hesitate to boost monetary stimulus if needed. UBS
Wealth Management's global chief investment officer Mark Haefele said the
Bank of Japan could announce a “massive stimulus program” in a Bloomberg
Television interview this morning. Meanwhile, Japan's government pension
fund has room to spend $52 billion on domestic shares after the
fall in equity values there means the fund is falling short of its target for
that asset-class.
Oil bears give up
Oil has been on something of a wild ride in recent months. After
rising as much as 20 percent in August, investors cut their bearish bets on the commodity for
the second week in a row. In the market this morning, a barrel of West Texas
Intermediate was trading at $46.93 at 6:03 a.m. ET with
concerns over Iran's production plans weighing on prices
ahead of next month's planned OPEC meeting.
Markets slip
Overnight, the MSCI Asia Pacific Excluding Japan Index dropped 0.9 percent, while Japan's Topix
index rose 2 percent as the yen declined following
Kuroda's comments at Jackson Hole. In Europe, where U.K. markets are closed for
a holiday, the Stoxx 600 Index was 0.5 percent lower at 6:08 a.m. ET in light
trading. S&P 500 futures were flat
Third party candidate?
“You know how crazy this election cycle is? I might be the next
president.” So said Libertarian candidate Gary Johnson to Chris Wallace on Fox
News Sunday. While this is still a very, very long shot, if Johnson manages to
secure 15 percent in national polls, he can be included in televised debates
starting September 26. For the two main-party candidates, the weekend saw
Clinton continue to try to embrace moderate Republicans, while Trump
maintained his hardline stance on immigration.
ISIS
appears to be in dire financial straits. Aside from reducing
salaries of its fighters by 50%, the terrorist group has raised taxes and
stopped paying benefits, Adam J. Szubin, the acting under secretary for
terrorism and financial intelligence at the US Treasury Department, told the
CTC Sentinel.Carl Icahn says Bill Ackman has an 'Herbalife obsession.' In a statement released late Friday, Icahn said that Ackman was unfamiliar with his thinking and that Icahn had in fact upped his Herbalife stake by 2.3 million shares — and had not been looking to reduce it.
Jim Rogers likes North Korea's currency. In one of his boldest calls yet, the famed investor told Real Vision TV that if we all bought North Korea's currency, "We'd all be rich someday."
Caesars must face $11 billion of bondholder lawsuits. Following the decision, a company spokesman said the ruling put its reorganization plan "at serious risk."
A Chinese automaker owned by Warren Buffett is having a big year. BYD Co. reported a profit of 2.3 billion yuan, a 384% increase compared with a year ago.
The SEC paid a BHP Billiton whistleblower $3.75 million. The award was granted for giving "detailed information in an investigation into alleged bribery of Asian and African officials," Reuters reports, citing the Australian Financial Review.
Unhealthy Monopoly
Nearly a third of U.S. counties look likely to have just a single insurer offering health plans on the Affordable Care Act’s exchanges next year, an industry retreat that adds to the manifold challenges facing the law. A new study, by the nonpartisan Kaiser Family Foundation, suggests there could be just one option for coverage in 31% of counties in 2017, and there might be only two in another 31%. Companies including UnitedHealth, Humana and Aetna have cited their losses in withdrawing from ACA marketplaces, as have smaller insurers. Those that remain are in some cases seeking sharp premium increases for next year, a demand made much easier when there is no competition. And at least one county is at risk of having no insurers offering marketplace plans next year, a problem especially for lower-income Americans who are generally required to buy ACA plans to qualify for federal subsidies.
Rush for Cash
A flood of share debuts is expected to invigorate the listless market for initial public offerings after the Labor Day holiday, but the revival might be short-lived. Companies in a wide variety of U.S. industries plan to go public after the long weekend, and the level of new issuance should resemble what would normally be expected given record stock prices and historically low volatility. But the window for offerings is expected to shut about six weeks later amid political uncertainty ahead of the presidential election. One of the largest expected IPOs is Valvoline, an engine and automotive-maintenance business that is being spun off from Ashland, and another closely watched deal is Nutanix, a Silicon Valley software company that would be one of the few billion-dollar startups to debut this year. Still, 2016 will likely go down as a brutal year for new issuance overall.
Power Surge
A startling energy bonanza has gone almost unnoticed in Texas: the rise of renewables. The Lone Star state has added more wind-based generating capacity than any other, with wind turbines accounting for 16% of electrical generating capacity as of April, and is anticipating a huge surge in solar power. We report that at a time when debate is raging between political parties over climate change, and critics charge that “green energy” is little more than a government creation, Texas has taken an approach that works within the state’s free-market-based electricity system. And state officials say wind and solar are almost certain to play a significant and growing role in the state’s energy future even when federal subsidies decline in coming years.
The Electric Age
Mass adoption of electric vehicles is coming, and much sooner than most people realize, writes our Personal Technology columnist Christopher Mims. Electric cars are gadgets, and technological change in gadgets is rapid. A typical electric vehicle today costs $30,000 and will go about 100 miles on a charge, if that. Within a year, you’ll be able to get double that range for just a little more money. Tesla, promising its $35,000 Model 3 vehicle, is the standard-bearer, but it is hardly alone. Competition among electric vehicles and plug-in hybrids will be intense, which will drive down prices. In the short run, many cars will be plug-in hybrids, with both electric motors and gasoline engines. Meanwhile, the proliferation of charging stations, especially at businesses and workplaces, will entice demand.
Talks to conclude the US-European
equivalent of the Trans-Pacific Partnership have broken down, said Sigmar
Gabriel, Germany's economy minister. European resistance to Washington's
demands were the main cause of a "de facto" failure, he said.
Reuters (28 Aug.)
|
Draghi (Daniel Roland/AFP/Getty Images)
|
European Central Bank President
Mario Draghi is letting expectations about the central bank's Sept. 8 meeting
be shaped by economic data. Inflation, business-confidence and unemployment
figures could signal whether the ECB needs to increase stimulus because of
Brexit.
Bloomberg (29 Aug.)
Stock
markets around the world are mixed. Japan's Nikkei (+2.3%) led the gains in Asia,
and France's CAC (-1.1%) paces the losses in Europe. S&P 500 futures are
down 1.00 point at 2,167.50.Earnings reports trickle out. Catalent and Phibro Animal Health will report after markets close.
US economic data flows. Personal income and
spending will be released at 8:30 a.m. ET, and Dallas Fed Manufacturing will
cross the wires at 10 a.m. ET. The US 10-year yield is down 2 basis points at
1.61%.
Blame headhunters for the increasing wage gap.
World's biggest wealth fund warns outflows are affecting risk strategy.
Hedge funds bail on copper as Goldman sees "supply
storm."
Traders can't lose in the global currency market
this year.
Why top investors are shunning 12 percent Nordic bank
return.
One chart shows what investors are dreaming about.
Iceland raise alarm after largest volcano starts to rumble.
By any measure,
it's been incredibly quiet. The S&P 500 has gone 34 straight days without
a move of 1 percent in either direction, the longest such streak since the
summer of 2014, per Goldman Sachs' latest weekly Kickstart note. That being
said, post-Jackson Hole, September is now clearly "in play" with markets
pricing in a 42 percent chance of a rate later next month. Of course that
means the data from now until then will be incredibly important. This week we
get scads of data for the U.S., including Personal Income & Spending
(today), Case-Shiller Home Prices (tomorrow), Chicago PMI (Wednesday), ISM
Manufacturing and Construction Spending (Thursday) and of course the Non-Farm
Payrolls Report on Friday. Economists are looking for 180,000 new jobs in
September and for the unemployment rate to fall to 4.8 percent in the month.
Given the outsize importance of labor data to markets and the Fed, that jobs
report will be the big event. The bottom line is that while things seem very
quiet now, you should hang in there: Important, market-moving data is on the
way! |
|
|
Source:
Bloomberg, BI, WSJ, CFAI Fin. Newsbrief, Reuters
0 Comments:
Post a Comment
<< Home