Wednesday August 3 Daily Market Primer
US
stocks dropped yesterday with the Dow and S&P down about ½% and the NASDAQ
down .9%.
Stocks were down about 1% in Asia, and dropped 1.8% in Hong Kong. but are in
the green in Europe on Wednesday.
|
|
LAST
|
CHANGE
|
% CHG
|
|
18313.77
|
-90.74
|
-0.49%
|
|
|
5137.73
|
-46.46
|
-0.90%
|
|
|
2157.03
|
-13.81
|
-0.64%
|
|
|
1202.35
|
-16.78
|
-1.38%
|
|
|
2388.35
|
-16.67
|
-0.69%
|
|
|
16391.45
|
-244.32
|
-1.47%
|
|
|
335.47
|
-4.39
|
-1.29%
|
|
|
6645.4
|
-48.55
|
-0.73
|
|
|
13.31
|
-0.06
|
-0.45%
|
|
|
5465.7
|
-74.8
|
-1.35%
|
|
|
2978.46
|
7.18
|
0.24%
|
|
|
21739.12
|
-390.02
|
-1.76%
|
|
|
27697.51
|
-284.2
|
-1.02%
|
|
|
2827.58
|
-29.09
|
-1.02%
|
|
|
4324.66
|
-3.33
|
-0.08%
|
|
|
10181.71
|
37.37
|
0.37%
|
|
|
16185.09
|
86.72
|
0.54%
|
|
|
8294.3
|
17
|
0.21%
|
|
|
0.292
|
0/32
|
||
|
0.691
|
0/32
|
||
|
1.102
|
-2/32
|
||
|
1.563
|
-2/32
|
||
|
2.312
|
-4/32
|
||
|
-0.589
|
0/32
|
||
|
-0.027
|
-2/32
|
||
|
39.78
|
0.27
|
0.68%
|
|
|
42.26
|
0.46
|
1.10%
|
|
|
2154
|
1.25
|
||
|
333.63
|
2.78
|
0.84%
|
Bond
Ex-King Bill Gross came out with a very negative note on sovereign bonds, the UK post Brexit
economy is shrinking according to the Markit PMI, and the leading Hong
Kong bitcoin exchange, Bitfinex, reported a theft of about $65 million.
Bitcoin dropped about 8% on the news but is already recovering. Biotech
giant Biogen may be in play, and the US may reduce or eliminate minority
interest discounts in estate taxes (US Aims to Clamp Down, below).
Here’s
the (very late!) news:
Markets take a tumble
Markets on Tuesday were hit with a familiar cocktail of concerns
over lower oil prices, the health of banks, central bank impotence, and a
weakening economy following the release of mediocre U.S. auto sales and
lukewarm consumer spending data. Tuesday's fall means
the S&P 500 has notched its first back-to-back declines since the aftermath
of the U.K.'s decision to quit the European Union and futures are pointing to a
0.23 percent decrease as of 4:55 a.m. New York time on Wednesday.
Asia stocks are heading for their steepest drop in more than a month with Japan’s
Topix index sinking more than 2 percent after the yen jumped 1.5 percent
in the last session. The Stoxx Europe 600 Index slipped 0.1
percent. On the plus side, oil seems to have halted its decline below $40 a barrel with
futures up 0.2 percent early Wednesday morning.
Bouncing bond yields
Bill Gross, erstwhile bond king, doesn't much like
sovereign debt, reiterating a previous warning
that record low yields on government bonds "aren't worth the
risk." His warning follows a growing chorus of caution on sovereign debt,
with the average yield on bonds in Bank of America Corp.’s G-7 Government Index
climbed to 0.58 percent, the highest level in five weeks. Japanese
government bond prices have taken their steepest tumble in more than three years as
investors fret over the Bank of Japan nearing the limits of unconventional
monetary policy. Meanwhile, analysts at JPMorgan Chase & Co. note that:
"At its core, market sentiment on developed market government bond
yields have shifted in recent days, driven by less dovish outcomes at central
bank policy meetings, but also by expectations of more fiscal stimulus."
British services shrink ahead of the BOE
Britain’s services sector - the largest part of its economy
- is shrinking at the fastest pace in seven years
following the Brexit referendum. Markit's Purchasing Managers Index plunged to
47.4 in July from 52.3 in June, below the 50 level that signals contraction.
The gauge hasn’t been this weak since March 2009 and will likely add weight to
arguments for the Bank of England to cut interest rates this week. The U.K.'s
central bank is widely expected to ease monetary policy further when it meets
on Thursday. Here's a look at the menu of stimulus measures that might be on
offer.
Bring in the bank results
HSBC Holdings Plc announced a $2.5 billion share buyback for
this year, seeking to soften the blow to investors as global economic
uncertainty led it to abandon a 2017 profitability target and step back from
its plans to boost dividends. Pretax earnings fell 45 percent to $3.61
billion from a year earlier, the bank said Wednesday, and it removed the target
of surpassing a 10 percent return on equity by the end of next year. Elsewhere
in banks, Societe Generale SA and Credit Agricole also released
second-quarter results. Profits at SocGen rose 8 percent, boosted by lower
provisions for bad loans and a gain on the sale of its stake in Visa Europe
Ltd. Credit Agricole profits jumped 26 percent, also boosted by
its Visa stake sale.
In any normal election year, the news that the Republican
party had nominated an unreconstructed Keynesian to be its standard bearer
would be a really big story. Of course, with all the stuff that Donald Trump
has been saying, it hasn't gotten that much attention that yesterday he
called for an infrastructure stimulus of over half a
trillion dollars. "We'll get a fund. We'll make a phenomenal deal with
the low interest rates,” Trump said yesterday on the Fox Business Network.
The comments come after he told the New York Times that "priming the
pump" with more government debt was necessary. Again, all these things
are being ignored under the mountain of all the other Trump news. But it
really is quite interesting! There's a growing chorus of mainstream
economists calling for more government spending and the inclination to do
debt-fueled stimulus at a time when the economy (appears to be) running at
close to full capacity would be a break from how leaders of both parties have
seen things in recent decades.
You’re Mired
Donald Trump is confronting the roughest patch of his presidential campaign so far, with even some of his strongest supporters urging him to shift gears and focus more on policy than personality. Republican defections began to multiply Tuesday, while Mr. Trump added to the internal party strife by refusing to endorse House Speaker Paul Ryan in his re-election contest next week. Many polls conducted after last week’s DNC show Mr. Trump losing ground, and in another setback, the federal judge who came under fire from the New York businessman refused to throw out a civil case alleging fraud at Trump University. Also Tuesday, President Obama urged GOP leaders to revoke their endorsements of Mr. Trump, and former President George W. Bush delivered an incisive critique of his policies, though he did not name the candidate directly. Meanwhile, the Democrats continue dealing with their own challenges as three more DNC officials were ousted as fallout from an email-hacking scandal further shakes the party’s leadership ranks.
Cash on the Barrelhead
The Obama administration secretly organized an airlift of $400 million worth of cash to Iran that coincided with the January release of four Americans detained in Tehran, according to U.S. and European officials and congressional staff briefed on the operation afterward. Wooden pallets stacked with euros, Swiss francs and other currencies were flown on an unmarked cargo plane because any transaction with Iran in U.S. dollars is illegal under U.S. law. The money represented the first installment of a $1.7 billion settlement the Obama administration reached with Iran to resolve a decades-old dispute over a failed arms deal signed just before the 1979 fall of Iran’s last monarch, Shah Mohammad Reza Pahlavi. The settlement also coincided with the formal implementation that same weekend of the Iran nuclear deal. Senior U.S. officials denied any link between the payment and the prisoner exchange.
Prescription: Growth
Biotechnology giant Biogen has drawn takeover interest from drug companies including Merck and Allergan, raising the potential of another huge deal in the health-care industry. Both companies have sounded out Biogen on the possibility of a takeover, but the communications were informal and preliminary. Whether there is a deal or not, the interest shows the hunger big pharmaceutical companies have for new sources of growth. Biogen, which had a market value of $68 billion on Tuesday afternoon, dominates the lucrative market for multiple-sclerosis drugs. Any deal for the biotechnology giant would provide a jolt for a mergers-and-acquisitions market that has been more subdued this year following a record surge in 2015. Meanwhile, we report that America’s biggest companies logged a fourth straight quarter of shrinking profits and tepid sales, as weakness from energy companies and lower business investment more than offset U.S. consumer strength.
Retail investors pulled £3.5 billion out of UK funds in June,
the month of the Brexit vote, a pace of withdrawals greater than in any
comparable period during the 2008 financial crisis. Most of the outflows were
from funds that invest in equities.
Bloomberg (02 Aug.)
The value of assets managed by registered investment advisers'
robo-advice platforms jumped 61% in the 12 months through March 31, according
to a study by InvestmentNews and BlackRock. Only 8% of advisory firms have
robo-advice platforms, but many firms see the platforms as a promising
opportunity, the study says.
InvestmentNews (02 Aug.)
China's in recession — and also
posting 10 percent growth.
Bitcoin's tumbling after a Hong Kong
hacking.
Vancouver is a playground for the (Chinese) rich. Take a look.
Whither strawberries and cream?
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Source:
Bloomberg, WSJ, CFAI Fin. Newsbrief, InvestmentNews
posted by Rich Barnett @ 8:24 AM
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