Tuesday September 6 Daily Market Primer
Welcome back from the long weekend, its time to take in some financial news. US stocks rose on Friday after several down sessions, with the S&P up .4% and the Russell 2000 small cap index up 1%. On Monday, while the US market was closed, stocks were up in Asia and flat in Europe. On Tuesday, its basically more of the same, with stocks up in Asia and Europe overnight/this morning and the US futures pointing to a slightly positive opening. As a reminder of how to read this returns table, the first few US indices at the top are as of the previous day’s close, so they show yesterday, and the others for the VIX, Asia, Europe, commodities and the US futures (E-Mini S&P500 at the bottom) are as of this morning, so they capture the markets in Asia which are done trading and in Europe which are still open. Non US oil and gas companies rose Monday after Saudi Arabia and Russia said at the G-20 summit over the weekend that they had agreed to work together to stabilize the oil market.
LAST
|
CHANGE
|
% CHG
| |
18491.96
|
72.66
|
0.39%
| |
5249.9
|
22.69
|
0.43%
| |
2179.98
|
9.12
|
0.42%
| |
1251.83
|
12.03
|
0.97%
| |
2478.1
|
5.19
|
0.21%
| |
17081.98
|
44.35
|
0.26%
| |
350.9
|
0.28
|
0.08%
| |
6855.31
|
-24.11
|
-0.35%
| |
12.5
|
0.52
|
4.34%
| |
5413.6
|
-16
|
-0.29%
| |
3090.71
|
18.62
|
0.61%
| |
23787.68
|
138.13
|
0.58%
| |
28978.02
|
445.91
|
1.56%
| |
17081.98
|
44.35
|
0.26%
| |
2896.55
|
44.81
|
1.57%
| |
4545.43
|
4.35
|
0.10%
| |
10702.11
|
29.89
|
0.28%
| |
17207.63
|
17.19
|
0.10%
| |
8975.2
|
21.9
|
0.24%
| |
0.327
|
0/32
| ||
0.79
|
0/32
| ||
1.193
|
0/32
| ||
1.601
|
1/32
| ||
2.272
|
1/32
| ||
-0.651
|
1/32
| ||
-0.077
|
10/32
| ||
44.67
|
0.23
|
.45%
| |
47.21
|
-0.42
|
-0.88%
| |
2.752
|
-0.04
|
-1.43%
| |
348.24
|
1.06
|
0.30%
| |
2179.75
|
1.75
|
0.08%
|
The Citi Economic Surprise data for the US has been soft since the end of July. Sanford Bernstein published a research note two weeks ago comparing indexing to Marxism, and on Friday, the founder and head of quant manager AQR (on our platform and in the SAF fund) Cliff Asness responded that, no, indexing is capitalism at its best, with an op-ed in Bloomberg http://bit.ly/AsnessOnIndexing. I have included a link to the Bernstein note if you want to get up to speed on the debate. Watch out, it’s 47 pages so you may just want to skim it PassiveWorseThanMarxism.
Malaysia’s 1MBD sovereign fund scandal is shaping up to be one of the biggest embezzlements in history (Money Trail, below). IPhone 7s are due out tomorrow, with most analysts yawning about the upgrade before Apple’s annual event even starts. The presidential race is entering the home stretch post labor day and should get very interesting, if it wasn’t already, with more of Hillary Clinton’s emails dripping out over the next few weeks and Donald Trump gaining ground in at least some of the polls (Email me and Trump leads).
This should catch up you, so here’s the news:
Central bank month
The Reserve Bank of Australia held rates unchanged overnight in what was Glenn Stevens' final meeting after 10 years as governor of the central bank. The Aussie dollar rose after the decision, which was in line with economist expectations, was announced. On Thursday the European Central Bank is due to make its latest monetary policy decision, and, while expectations are low for any meaningful change in policy, continuing weak inflation and sluggish growth in the single-currency area mean most economists surveyed by Bloomberg predict an extension of the current asset-purchase program. With August payrolls data out of the way, market futures now see a 32 percent probability of a Fed rate raise at its meeting later this month. September's most interesting central bank policy meeting may come from Japan, as the BOJ is engaged in a review of its monetary policy while investors are starting to sell the country's bonds.
Saudi-Russia deal
The pledge by the world's top two oil producers to cooperate to stabilize global crude markets has left the commodity shaken, but not stirred. The lack of an agreement to freeze production means that Brent crude oil is trading at $47.28 a barrel this morning, having risen as high as $49.32 yesterday.
Pound bears lick wounds
The pound was trading 0.25 percent higher at $1.3336 at 6:15 a.m. ET this morning, rising for a fifth straight day against the dollar. Deutsche Bank AG and UniCredit SpA have both wound back sterling short positions as data show the U.K. economy may be proving more resilient to the Brexit vote than was originally anticipated. Bank of England Governor Mark Carney will face a grilling from lawmakers tomorrow as some say he was too quick to cut rates following the vote.
Markets rise
Overnight, the MSCI Asia Pacific Index gained 0.7 percent, with the benchmark gauge headed for its highest level in more than a year. In Europe, the Stoxx 600 Index was flat at 6:19 a.m. ET in a session that has seen swings between gains and losses as investors await Thursday's ECB decision. S&P 500 futures were 0.1 percent higher.
Trump leads in CNN poll
The race for the White House is far from over, with a CNN/ORC poll this morning putting Republican nominee Donald Trump 2 points ahead of Democrat Hillary Clinton. The current U.S. President, meanwhile, has cancelled a meeting with Philippine President Rodrigo Duterte in Lima after Duterte launched an expletive-laden tirade against Obama.
Russia and Saudi Arabia have agreed to work together on oil. Russia and Saudi Arabia are "moving toward a strategic energy partnership" after productive talks on Monday between the two countries' energy ministers, Reuters reports. West Texas Intermediate crude oil is up 1.1% at $44.93 a barrel.The Reserve Bank of Australia kept policy on hold. Australia's central bank kept its benchmark interest rate at 1.50%, as expected, while suggesting that "holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time." The Australian dollar is up 0.7% at .7638 per dollar.
Euro-area GDP slowed. Second-quarter gross domestic product grew at 0.3%, down from the 0.5% that was recorded in the first quarter. The euro is stronger by 0.2% at 1.1167 versus the dollar.
China says it's making progress on corruption. The Chinese government's Central Commission for Discipline Inspection says it has brought back one-third of its 100 most wanted corruption suspects and in total has found 1,915 people in more than 70 countries — and 7.47 billion yuan ($1.12 billion) — Reuters reports.
Bayer upped its bid for Monsanto. The German drugmaker said it would pay $127.50 a share for Monsanto, up from its previous offer of $125.
Apple is reportedly increasing volumes for iPhone 7. The tech giant is said have increased its order of iPhone 7 components by 10%, according to a report from DigiTimes. The phone is expected to be revealed at an event on Wednesday.
Barclays has a new head of its Corporate and International division. Reuters reports that the investment bank has hired Tim Throsby, joining numerous former JPMorgan alumni who were recruited by Barclays CEO Jes Staley.
Email Me
On the heels of recently released FBI documents on Hillary Clinton’s use of a private email account at the State Department, thousands of pages of Mrs. Clinton’s official records are set to be released in the coming weeks. The coming disclosures are likely to provide fodder for Donald Trump and test Mrs. Clinton as she looks to maintain her slight advantage in the final two months of the campaign. Dozens of lawsuits, mostly brought by conservative groups and Republican operatives against the State Department, are being heard in federal courts. Many of the documents still to come are expected to involve correspondence between Mrs. Clinton, her aides and employees at her family’s charitable foundation. Meanwhile, calendar records obtained in a lawsuit show Mrs. Clinton meeting with foundation donors in 2011. Her candidacy is a study in paradoxes, writes our Washington bureau chief Gerald F. Seib.
Out of Bonds
Central banks have become some of the biggest investors in bond markets. Now some in the financial markets think stocks should benefit more from their largess. Some economists say the ECB, which meets Thursday to decide if it should expand its current bond-buying program, should invest in equities. The reason: It is running out of bonds to buy. Other central banks already invest in equities. Switzerland’s central bank has accumulated more than $100 billion worth of stocks, while another big stockholder is the Bank of Japan. A move by the ECB into equities would have big implications for Europe’s stock markets, which have been rocked by a series of shocks this year, from volatility in China to Britain’s vote to leave the EU. Stock purchases don’t appear to be on the near-term agenda, but ECB officials haven’t ruled them out.
Money Trail
The suspected ringleaders of Malaysia’s 1MDB scandal allegedly cultivated bank executives, pressed compliance officers and obsessed about secrecy. Between 2009 and 2013, financier Jho Low, a family friend of Prime Minister Najib Razak, and his associates helped embezzle at least $3.5 billion from the state investment fund created by Mr. Najib, the U.S. Justice Department alleged in a lawsuit filed in July. Mr. Low and his cohorts for years eluded detection or interference by at least eight banks, big accounting firms, a central bank and various government regulators. That the alleged fraud could roll on for so long without detection suggests weaknesses in a global system designed to clamp down on money laundering, a problem U.S. and other Western leaders have pledged to fix. We examine how banks missed clues and bowed to pressure along the way.
Germany's Bayer said it has raised the price it is willing to pay for seed company Monsanto from $125 to $127.50 per share, boosting its offer to more than $65 billion. Even before the increase, Bayer's offer was the biggest all-cash takeover bid ever. Reuters (06 Sep.),
In August, 41 exchange-traded funds were taken off the market, more than the total for the first six months of the year, when 40 ETFs closed. Based on announcements for September, the number of ETFs closing in the first nine months of this year will total at least 93.
ETF.com (02 Sep.)
Here's one reason why more quantitative easing probably won't work.
It's been another terrible year for anyone looking to beat the market.
Be careful what you buy, Blackrock warns emerging bond investors.
Quantum computers are coming. The world might not be ready.
How do mathematicians cut cake?
Stock markets around the world are up. China's Shanghai Composite (+0.6%) led the gains in Asia, and Germany's DAX (+0.3%) paces the advance in Europe. S&P 500 futures are up 1.50 points at 2,179.50.Earnings reporting is light. Marvell Technology will report ahead of the opening bell, and Dave & Busters will release its quarterly results after markets close.
US economic data trickles out. ISM nonmanufacturing will cross the wires at 10 a.m. ET.
 | |
Source: Bloomberg, BI, WSJ, CFAI Fin. Newsbrief, ETF.com
posted by Rich Barnett @ 7:51 AM
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