Monday September 19 Daily Market Primer
US
stocks dropped on Friday, ending and up and down week for the stock market which
finished just barely positive. I as I commented Friday, the return
would have been worse if not for the big run-up of Apple, which has the
largest influence on capitalization weighted indices. The Apple heavy
NASDAQ was up about 2.5% for the week. New Yorkers are on edge after
weekend bombings in NY and New Jersey, but it doesn’t seem to be affecting
global stock markets, which are mostly up on Monday. US futures are also
pointing to a positive .5% opening.
LAST
|
CHANGE
|
% CHG
|
|
18123.8
|
-88.68
|
-0.49%
|
|
5244.57
|
-5.12
|
-0.10%
|
|
2139.16
|
-8.1
|
-0.38%
|
|
1224.78
|
-2.24
|
-0.18%
|
|
2418.43
|
15.37
|
0.64%
|
|
16519.29
|
114.28
|
0.70%
|
|
341.32
|
3.5
|
1.04%
|
|
6806.51
|
96.23
|
1.43%
|
|
15.37
|
-0.93
|
-5.71%
|
|
5294.8
|
-1.9
|
-0.04%
|
|
3026.05
|
23.2
|
0.77%
|
|
23550.45
|
214.86
|
0.92%
|
|
28634.5
|
35.47
|
0.12%
|
|
2852.14
|
24.69
|
0.87%
|
|
4397.5
|
65.05
|
1.50%
|
|
10361.33
|
85.16
|
0.83%
|
|
16460.95
|
268.79
|
1.66%
|
|
8731.5
|
98.1
|
1.14%
|
|
0.284
|
0/32
|
||
0.766
|
0/32
|
||
1.194
|
1/32
|
||
1.687
|
1/32
|
||
2.433
|
7/32
|
||
-0.653
|
0/32
|
||
0.012
|
0/32
|
||
43.59
|
0.56
|
1.30%
|
|
46.34
|
0.57
|
1.25%
|
|
2.978
|
-0.043
|
-1.42%
|
|
350.28
|
3.07
|
0.88%
|
|
2142.5
|
10
|
0.47%
|
Chances
are you already know that the Fed meets this Wednesday, with a strong market
consensus for no action (we agree). Market odds of a rate hike are
down to about 20%. The Bank of Japan also meets, with much less
certainty around the outcome, as they are conducting a broad review of
monetary policy due to consternation about whether negative rates and Abenomics
are working. Boston
Fed President Eric Rosengren’s commented that a go slow Fed creating a
commercial real estate bubble (http://bit.ly/FedEffects).
There’s a lot of talk in the press about the
cost of both presidential candidates economic proposals, and as the WSJ points
out, they are expensive http://bit.ly/SpendingPlans.
Germany, Europe’s biggest
exporter, is pushing back against trade agreements (Demonstrations
Across Germany). And OPEC is talking about meeting again,
saying they are close to an agreement to stabilize oil prices ahead of their
meeting in Algiers next week, which moved prices up about 1.5%.
Have
a great week, here’s the news:
Central bank week
It's set to be a huge week for monetary policy with both the
Federal Reserve and the Bank of Japan due to meet. With expectations for an
interest rate hike from the FOMC on Wednesday remaining low, investors see the Bank
of Japan's committee meeting, billed as a comprehensive review of its
unconventional monetary policies, as the announcement most likely to drive
markets mid-week.
OPEC meeting
A barrel of West Texas Intermediate for October delivery remains
below $44 this morning, trading at $43.69 at 5:58 a.m. ET after
clashes in Libya delayed the first crude shipment from the country's Ras Lanuf
export terminal since 2014. Venezuelan President Nicolas Maduro said that
OPEC and non-OPEC countries are close to an agreement to stabilize markets ahead of an
informal meeting in Algiers next week. The uncertainty ahead of that meeting
has seen oil investors head for the sidelines, cutting wagers on
both falling and rising crude prices.
Yuan protection
The overnight interbank yuan rate surged 15.7 percentage points to 23.7
percent in Hong Kong amid speculation that China's central bank is intervening
to defend the 6.7-to-the-dollar level for the yuan. There were more signs of
froth in the Chinese property market as home prices rose
the most in more than six years last month, in spite of the introduction of
lending curbs. Meanwhile, the appetite for China's wealthy to diversify away
from yuan investments has seen them snapping up capital-boosting bonds
sold by European banks.
Markets
rise
With
Japanese markets closed, the MSCI Asia Pacific Excluding Japan Index gained 1.2 percent overnight, boosted by the
bounce in oil and the return of China and Hong Kong from holidays. In Europe,
the Stoxx 600 Index was 0.9 percent higher at 6:15 a.m. ET, with
Deutsche Bank AG shares struggling again. S&P 500 futures gained 0.4 percent.
BIS data
The latest Bank for International Settlements quarterly report
has a raft of data on the global economy, and also contains some warnings for
investors -not least that the post-Brexit recovery in markets could be masking underlying risks. The bank also
highlighted the growth in cross-border claims in the
aftermath of the start of the ECB's asset purchase facility in early 2015,
showing how policies can have unintended spillovers. There was also a warning
for China, with one indicator of banking stress standing at its highest level
since 1995.
Home prices in China were up again. Prices rose in 64 of 70 major cities compared with a year ago, with Shenzhen price growth slowing to up 36.8% year-over-year in August from up 40.9% in July, Reuters reports.
A Fed rate hike is looking unlikely at this week's meeting. Fed fund futures data compiled by Bloomberg shows just a 20% chance that the Federal Reserve will raise its benchmark interest rate at Wednesday's meeting. The data shows a 55.2% probability of at least one rate hike by the end of 2016.
It seems more likely that London will lose its "passporting rights" with a Brexit. Jens Weidmann, the president of Germany's central bank, says London-based banks will lose their right to operate in the European Union if Britain leaves the EU because they are "tied to the single market and would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area."
Venezuela's president says an OPEC deal is close. Nicolas Maduro thinks OPEC and non-OPEC members are close to reaching a deal that will stabilize the oil market. West Texas Intermediate crude oil is up 1.4% at $43.64 a barrel.
Putin's party scored a big win in the election. With 90% of the votes counted, Putin's United Russia party had secured 54.3% of the votes and at least 338 of the 450 seats in parliament, AFP reports. The Russian ruble is stronger by 0.7% at 64.8517 per dollar.
Australia's stock market opened 90 minutes late. It wasn't until about 1:30 p.m., or 3 1/2 hours after the usual market open, that all listings were available to trade as a technical glitch prevented them from opening.
The biggest hedge fund in the world is worried a Fed rate hike could mess everything up. In a note to clients, Ray Dalio's Bridgewater Associates said, "Cyclical conditions point modestly but not strongly toward tightening, and the secular backdrop screams that the risks of tightening prematurely outweigh the risks of falling behind."
Fox is suing Netflix, accusing it of poaching employees. "As our complaint explains, we filed this lawsuit because we believe Netflix is defiantly flouting the law by soliciting and inducing employees to break their contracts," Fox told Business Insider in a statement. "We intend to seek all available remedies to enforce our rights and hold Netflix accountable for its wrongful behavior."
A number of violent attacks on Saturday left unanswered questions, fueling fears about terror attacks by small groups or individuals. Police said a man injured nine people in knife attacks at a shopping mall in St. Cloud, Minn. He was shot and killed by an off-duty police officer. Authorities said they were investigating it as a possible terrorist incident. In New York, authorities hunted for a bomb maker who set off a blast that left 29 people injured. Authorities said they had identified a “person of interest.” In New Jersey, a suspicious device found in a trash can near a train station in Elizabeth exploded early Monday as a bomb squad was attempting to disarm it, officials said, according to the Associated Press. Earlier in New Jersey, officials said they didn’t yet know whether a pipe bomb that went off before a charity run at a seashore resort was linked to any terror group. The attacks raised concern that similar assaults could be mounted elsewhere, especially in public places with large crowds.
Easy Money
Boston Fed President Eric Rosengren, normally an advocate of easy-money policies aimed at spurring faster economic growth, recently articulated strong concerns that easy money could be letting markets get out of hand the way they did before the financial crisis. “It’s not costless to get the unemployment rate very low,“ he said. With the jobless rate hovering below 5%, most Federal Reserve officials agree the economy is at or getting very close to what economists consider full employment. They haven’t reached agreement on how much farther the Fed can let the employment rate decline without risking runaway inflation. On one side of the debate are officials who say allowing unemployment to fall further would give more Americans—especially minorities—a chance to rejoin the labor force. The counterargument: letting the jobless rate get too low could cause prices to surge, forcing the Fed to rapidly ratchet up short-term interest rates. That could trigger a downturn that would hurt minorities most.
hannel Hopping
In the past few years, it has become a genuine challenge to keep up with the volume of must-watch TV programming. Not only are we in a much-heralded golden age of television, there is more pressure to watch a lot of those shows. Social media requires you to keep up with the hottest shows if you want to be part of the conversation—and stay ahead of spoilers. Organizing your TV watching can help you stay current and ensure that you always have options at the ready. We offer five key questions to help you decide what to watch, along with recommendations for every occasion—and audience.
Protesters filled the streets of
seven big German cities Saturday opposing EU trade deals with the US and
Canada. According to a recent poll, 28% of Germans have reservations about the
trade agreements and 52% believe that by lowering standards, the treaties will
lead to defective imports. Deutsche Welle (Germany) (17 Sep.)
Global asset prices are too high
given their less-than-stable foundations, the Bank for International
Settlements warned in its quarterly review. "The apparent dissonance
between record low bond yields, on the one hand, and sharply higher stock
prices with subdued volatility, on the other, cast a pall over such
valuations," according to the report. The Wall Street Journal (tiered subscription model) (18
Sep.)
Hong Kong and Singapore have
concluded that the Brexit vote will undercut London's position as the leader in
financial technology innovation and are moving swiftly to take its place.
Western firms are responding by accelerating their expansion in Asia, where investment
in emerging digital technologies grew to $4.3 billion last year from $103
million in 2010. South China Morning Post (Hong Kong) (19 Sep.)
JPMorgan Chase has brought to Bats
Global Markets an exchange-traded fund investing in high-yield bonds. The
actively managed JPMorgan Disciplined High Yield ETF buys US dollar-denominated
debt issued by US and foreign companies. Bloomberg (16 Sep.),
Stock
markets around the world are up. France's CAC (+1.4%) leads the gains in Europe after Hong Kong's
Hang Seng (+0.9%) paced the advance in Asia. S&P 500 futures are higher by
9.00 points at 2,141.50.
US economic data is light. The NAHB
Housing Market Index will be released at 10 a.m. ET. The US 10-year yield is
unchanged at 1.69%.
No nation has the will or the way to be the locomotive for
global growth.
Big oil was never that big a money-maker, according to Goldman
Sachs.
Tim Duy on what might give the Fed's hawks more room to fly.
Stiglitz gives Trump an 'F' on economics.
The biggest winner from the U.K. heatwave was French.
Shadow lenders step in for banks facing U.S. property
warnings.
Odd Lots podcast: Space robots are helping
hedge funds invest.
In a way, this is the week that markets have been building up
to for awhile. With interest rates at the long end drifting higher - causing
pain across asset classes in recent weeks - everyone is waiting to see how
the world's central banks respond. On Wednesday we'll get fresh decisions
from both the Federal Reserve and the Bank of Japan. Markets aren't expecting
a hike from the Fed, but given that it's a "press conference"
meeting, we will get fresh dots and lots of commentary. As for Japan, that's
where this rate move started, with Japanese Government Bond yields bottoming this
summer. The question there is the extent to which the central bank may
attempt to steepen the yield curve by cutting further
into negative rates and leaning less heavily on bond purchases. All the
strategist notes this weekend were filled with commentary about what higher
rates would mean for various asset classes and popular strategies (such risk parity). Should be an
interesting couple of days!
|
|
|
Source:
Bloomberg, BI, WSJ, CFAI Fin. Newsbrief, SMCP, Deutsche Welle
0 Comments:
Post a Comment
<< Home