Friday December 8 Daily Market Primer
Happy
Friday.
US stocks continued their upward climb on Thursday, once again hitting
all time highs. The market seemed to like the ECB’s announcement
yesterday of “less for longer” QE. Bond yields in the Eurozone
fell slightly following the ECB action. You might think traders don’t have time
to read the South China Morning Post at work, but you would be wrong, as a
story that broke on SCMP yesterday afternoon tanked the casino operators and
gave the world an indication that China is worried about keeping money at home http://bit.ly/CasinoStocksFall.
China is restricting the amount of money that can be withdrawn from
UnionPay bank ATM Machines in gambling capital Macau as a way to stem
capital flight from the country. Hong Kong stocks fell .4%
overnight, but the rest of Asia was up, and European stocks are having another
good day this morning, except for Italy and Spain. US equity futures are
indicating a positive open.
LAST
|
CHANGE
|
% CHANGE
|
|
19,614.81
|
65.19
|
0.33%
|
|
5,417.36
|
23.59
|
0.44%
|
|
2,246.19
|
4.84
|
0.22%
|
|
1,386.37
|
21.86
|
1.60%
|
|
2,488.55
|
13.97
|
0.56%
|
|
Stoxx
Europe 600
|
353.72
|
1.76
|
0.06%
|
Nikkei
225
|
18,996.37
|
230.90
|
0.06%
|
UK:
FTSE 100
|
6,935.84
|
4.29
|
0.06%
|
CBOE
Volatility
|
12.52
|
0.30
|
2.45%
|
Australia:
S&P/ASX 200
|
5,560.60
|
17.00
|
0.31%
|
3,232.88
|
17.52
|
0.54%
|
|
22,760.98
|
-100.86
|
-0.44%
|
|
Europe
Dow
|
1,545.08
|
-3.50
|
0.20%
|
India:
S&P BSE Sensex
|
26,747.18
|
52.90
|
-0.23%
|
France:
CAC 40
|
4,749.92
|
14.44
|
0.30%
|
Germany:
DAX
|
11,181.05
|
1.63
|
0.01%
|
Italy:
FTSE MIB
|
18,286.33
|
-141.53
|
-0.77%
|
Spain:
IBEX 35
|
9,137.60
|
-7.80
|
-0.09%
|
0.51
|
0/32
|
||
1.125
|
-1/32
|
||
1.854
|
-3/32
|
||
2.433
|
-6/32
|
||
3.134
|
-15/32
|
||
-0.742
|
0/32
|
||
0.359
|
5/32
|
||
51.11
|
0.27
|
0.53%
|
|
54.02
|
0.13
|
0.24%
|
|
3.746
|
0.051
|
1.38%
|
|
387.11
|
1.42
|
0.37%
|
|
2243
|
0.5
|
0.02%
|
News
is breaking this morning that Banca Monte dei Paschi’s request for more time
for a recapitalization was rejected by the ECB, which greatly
increases the chance of a state bailout. You can bet Italian
banking officials will be working this weekend. Italian banks stocks are
down 5%, and Monte is down 9%. OPEC is also convening again in
Vienna this weekend, this time to focus on bringing in non-OPEC members
(read Russia) into the supply agreement and cut another 600,000 barrels a day
on top of the 1.2 million in the prior agreement. If they are successful
and can enforce the deal you can look forward to higher gas prices this spring.
South
Korea’s president Park Geun-hye was impeached by parliament today as widely expected,
following a long running influence peddling scandal involving Park, her friend
Choi Son-sil, and the countries powerful chaebol business conglomerates.
She had offered to resign following an orderly handover of power but it wasn’t
enough. There’s more news about fake news, which is
spreading line wildfire on the Internet. I’ll try to keep it out of this
news summary. See Fake News, Real Money, and the last story,
below.
Weekly
unemployment claims came in at 258K yesterday, down 10k from the
previous week and in line with expectations. Resistance is building to
some of President Elect Trumps appointments for top administration jobs,
particularly by Senate democrats, though they will need some help from a few
republicans to block any nominations. One of the most controversial is
putting the Environmental Protection Agency in the hands of Oklahoma
attorney general Scott Pruitt, who is widely expected to roll back Obama
era environmental programs, especially the Clean Power Plan http://bit.ly/EPAPruitt. Also see The
New Rule Makers, below.
Here’s
the news:
|
|
Just don't call it a taper. Yesterday, European
Central Bank President Mario Draghi revealed that he'll extend monetary
stimulus for an extra nine months, at a reduced pace of 60 billion euros per
month — a package of asset-purchases that will essentially be lower, for
longer. While these mixed messages sparked a volatile trading day, equity investors
seem to have interpreted the decision as a buy signal, and the euro was today
little changed. Next week, attention shifts to the U.S. Federal Reserve,
with anything less than a rate hike constituting a major upset.
|
|
|
Another day, another world leader toppled. This time, it's
South Korean President Park Geun-hye, who's been impeached with an overwhelming
majority of votes in parliament. That means she's been suspended from
power until the constitutional court rules on the lawmakers' decision. It must
do so within six months, which would then start the clock for an election
within 60 days. The won snapped three days of gains on the news, to
trade 0.6 percent lower by 4:20 a.m. New York time. Meanwhile in Italy,
Matteo Renzi, who formally resigned as prime minister earlier this week, is back in the running for the position.
|
|
|
The Organization of Petroleum Exporting Countries’ surprise
Nov. 30 production deal aimed at stabilizing oil prices will return to
focus this weekend, as members convene with other major producers in Vienna.
Ahead of the meeting, a barrel of West Texas Intermediate
for January delivery extended gains above $51 dollars by 4:17 a.m.
ET. A hedge-fund manager who correctly called the first-quarter oil
slump expects the combined output cut agreed to by OPEC and Russia to boost oil to $70 a barrel in the first
half of next year, while others are saying a deal won't do enough to drain stockpiles.
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While ECB projections released yesterday show inflation in the
euro area will fall short of its targets, new data
suggest that China may be poised to export inflationary pressures. In
November, the country's factory-gate prices rose 3.3 percent versus the same month of
last year, the fastest pace of gains since late 2011. Chinese consumer prices
picked up on rising food costs, but it was the first time in five years that
producer prices increased at a faster rate.
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European markets are taking stock after yesterday's ECB-driven
volatility that saw the euro tumble the most since June. The Stoxx 600 Index
was up 0.12 percent at 5:21 a.m. ET, on course for its biggest weekly rally since February, as global
bourses ride record highs this week. European banks are on course for their
best weekly gain in five years, while Turkey's lira pipped the won to lead
declines in emerging-market currencies. The MSCI Asia Pacific Index
gained 0.15 percent, as of 05:19 a.m. ET, while the yen was the biggest loser
among G-10 currencies.
South
Korea's president has been impeached. President Park Geun-hye
has been stripped of her power and prime minister Hwang Kyo-ahn will take
over until South Korea's highest court makes a final ruling, Reuters reports.
The Korean won ended weaker by 0.6% at 1165.93 per dollar.
The
UK's trade deficit narrowed. The deficit narrowed to 3.8 billion pounds
($4.7 billion) in October as exports increased by 2 billion pounds and
imports decreased by 1.8 billion pounds, according to data from the Office
for National Statistics. The British pound is up 0.2% at 1.2609 versus the
dollar.
Here
comes the 3rd biggest US IPO of the year. Annuity provider Athene
will raise $1.08 billion as shares price at $40, or the midpoint of the $38
to $42 range. Shares will trade under the ticker 'ATH.'
Time
is reportedly trying to sell itself. The publisher of People,
Fortune, and Sports Illustrated magazines has hired Morgan Stanley and Bank
of America to field takeover offers, the Wall Street Journal reports.
Goldman
Sachs is up about 30% since the election. Shares of the investment
bank hit a post-financial crisis high on Thursday as traders continue to
price in the impact of a Trump presidency. Goldman is about 2.5% below its
record high set in 2007.
Restoration
Hardware slashes its outlook. The high-end furniture retailer expects
full-year adjusted EPS of $1.19 to $1.29, down from $1.60 to $1.80 as slow
holiday sales weigh. Shares were down as much as 19% in after-hours trade.
Samsung
is going to supply semiconductor chips to Tesla. A report from South
Korea's Electronic Times says Samsung will make the chips for the
self-driving features in Tesla vehicles.
Stock markets around the world are higher. Japan's Nikkei (+1.2%)
hit its best level in a year as it paced the advance in Asia and Spain's IBEX
(+2.1%) leads the gains in Europe. The S&P 500 is set to open little
changed near 2.245.
US economic data flows. University of Michigan
consumer confidence will be released at 10 a.m. ET and the Baker Hughes rig
count will cross the wires at 1 p.m. ET. The US 10-year yield is up 3 basis
points at 2.44%.
The New Rule Makers
U.S. business leaders are predicting a dramatic unraveling of regulations on everything from overtime pay to power-plant emission rules as Donald Trump seeks to fill his cabinet with determined adversaries of the agencies they will lead. The president-elect’s pick Thursday to head the Labor Department, fast-food executive Andrew Puzder, is an outspoken critic of the worker-pay policies advanced by the Obama administration. That choice and others, including Oklahoma Attorney General Scott Pruitt to lead the EPA and financier Wilbur Ross Jr. at the Commerce Department, suggest that the Trump administration is determined to advance labor, environmental and financial regulatory policies that are more favorable to many American corporations, though not all will back his proposals. Meanwhile, we report how Mr. Trump’s web of LLCs makes it impossible to gauge the full extent of potential conflicts he may face as president.
Less for Longer
The European Central Bank prolonged its extraordinary lifeline to weak eurozone economies on Thursday, just days before the U.S. Federal Reserve is expected to move in the opposite direction and raise interest rates. That divergence caused investors to initially boost the euro before sending it lower as U.S. equity markets hit record highs. The ECB surprised markets by saying it would slow the pace of its asset purchases, sparking a debate over whether the ECB had started down the path toward ending its monetary stimulus. Such a move—swiftly denied by the ECB—might be welcomed by some of the bank’s top officials, who are eager to signal an eventual exit. Instead, the ECB’s decision was mostly taken as a sign the eurozone badly needs the type of support that the Fed next week could begin removing from the U.S.
Fake News, Real Money
Big brands, often inadvertently, are helping fund websites at the center of a growing controversy over misinformation on the internet. We report that ads from companies such as Choice Hotels, SoundCloud and Bose appear on sites with false or misleading news. Those companies are among thousands of brands that could appear on such sites based on a user’s browsing history or demographics. Industry executives say some fake-news sites can generate tens of thousands of dollars in monthly revenue from ads. The appearance of well-known brands on the sites reflects the complexity of online advertising. Multiple middlemen are often involved, leaving both publishers and advertisers uncertain about which ads will appear where. Google said it would stop placing ads on sites with “deceptive or misrepresentative” content. But so far, enforcement appears spotty.
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posted by Rich Barnett @ 6:27 AM
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