Tuesday March 7 Daily Market Primer
- Stocks fell
- Euro GDP as expected
- Exxon expands
- Saudi cuts
US
stocks fell by about .3% yesterday as the markets digested the expected March rate
hike and probably from fatigue from the fast rise over the last few
weeks. Expect political events to influence the market more as
North Korean missiles, French, German, and Dutch elections are all on deck for
2017. International stock markets are mixed and equity futures are
weak this morning.
LAST
|
CHANGE
|
% CHANGE
|
|
20,954.34
|
-51.37
|
-0.24%
|
|
5,849.17
|
-21.58
|
-0.37%
|
|
2,375.31
|
-7.81
|
-0.33%
|
|
1,384.25
|
-9.88
|
-0.71%
|
|
2,673.55
|
-4.18
|
-0.16%
|
|
373.71
|
-1.52
|
-0.41%
|
|
Nikkei
225
|
19,344.15
|
-34.99
|
-0.18%
|
UK:
FTSE 100
|
7,354.71
|
4.59
|
0.06%
|
CBOE
Volatility
|
11.29
|
0.33
|
3.01%
|
Australia:
S&P/ASX 200
|
5,761.40
|
14.90
|
0.26%
|
3,242.41
|
8.54
|
0.26%
|
|
23,681.07
|
84.79
|
0.36%
|
|
Europe
Dow
|
1,610.95
|
-10.11
|
-0.17%
|
India:
S&P BSE Sensex
|
28,999.56
|
-48.63
|
-0.62%
|
France:
CAC 40
|
4,956.53
|
-15.66
|
-0.31%
|
Germany:
DAX
|
11,964.57
|
6.17
|
0.05%
|
Italy:
FTSE MIB
|
19,390.94
|
-58.91
|
-0.30%
|
Spain:
IBEX 35
|
9,782.50
|
-21.60
|
-0.22%
|
0.729
|
0/32
|
||
1.318
|
-0/32
|
||
2.022
|
-0/32
|
||
2.497
|
1/32
|
||
3.096
|
6/32
|
||
-0.877
|
3/32
|
||
0.307
|
10/32
|
||
53.33
|
0.13
|
0.24%
|
|
56.1
|
0.09
|
0.16%
|
|
2.844
|
-0.057
|
-1.96%
|
|
398.64
|
-0.14
|
-0.04%
|
|
2371.75
|
-3.75
|
-0.16%
|
The
Trump administration reintroduced the travel ban and more opening moves to
dismantle Obamacare in
a much lower key fashion than before. Here is a quick summary on healthcare:
Exxon
announced plans to expand chemical plants and oil refineries in the Gulf,
creating 35,000 temporary construction jobs and 12,000 permanent jobs. Some of
these plans were already announced in 2013, but it does appear they are
expanding the expansion. The US is installing an a Lockheed Martin
missile defense system in South Korea, and China is not pleased. While this
might appear to be a reaction to yesterday’s multiple missile launch by North
Korea, it was actually announced last July. Euro area Q4 GDP was
.4%, in line with estimates and with no change from the previous
quarter. Saudi Arabia surprised the oil market by cutting the price of
Arab Light crude yesterday, reportedly to gain market share against US
producers, which is a good sign of competition in the market.
Here’s
the news:
|
|
President Donald Trump issued a revised travel ban
that will restrict entry to the U.S. from six predominantly Muslim countries,
after his initial efforts ran into a backlash in the courts. The enactment of
the new order has been delayed until March 16
to avoid the airport chaos that accompanied the first iteration of the ban.
Meanwhile, in Congress, Republicans released a draft bill as
part of their efforts to repeal Obamacare. Elsewhere in Trump-related news,
Exxon Mobil Corp. announced a $20 billion building spree that will
create 45,000 U.S. jobs, earning a supportive tweet from the president.
|
|
|
Gross domestic product in the euro area rose 0.4 percent in the fourth
quarter, data released at 5:00 a.m. Eastern Time showed.
Household consumption added 0.2 percentage point to growth, the European
Union's statistics office said, and with imports outpacing exports, trade
constituted a drag. Meanwhile, German industrial orders released this morning
are at their worst since 2009
on a monthly basis. The data is volatile, but the 7.4 percent decline was
more than twice as steep as analysts had expected.
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|
|
Oil traded near $53 a barrel as Iraq and Angola
signaled their willingness to extend the Organization of Petroleum
Exporting Countries' production cuts into the second half of the year. Saudi
Arabia, the world’s biggest crude exporter, surprised markets overnight
by cutting the official selling price for its Arab Light crude to Asia,
when analysts had been expecting a price increase.
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|
|
Overnight, the MSCI Asia Pacific Index rose 0.3 percent
while Japan's Topix Index was little changed at the close of a fairly
quiet session. By 4:50 a.m., Europe's Stoxx 600 Index was edging
lower for a fourth day, while U.S. stock futures
pointed to a slightly lower open.
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The U.S. has begun the deployment of its Thaad missile-defense system in South
Korea, a day after its neighbor to the north fired four ballistic
missiles into the sea. Its launch prompted Trump to reaffirm the
U.S.-Japanese military alliance in a phone call with Prime Minister Shinzo
Abe, yet the installation risks ruffling feathers in the region, with China
previously expressing its disgruntlement.
House
Republicans unveiled their Obamacare repeal. The bill, called the
American Healthcare Act, would eliminate Obamacare's individual mandate
requiring all Americans to buy insurance or face a fine, and it would instead
allow for steep premium increases for failing to have continuous coverage.China's FX reserves grew for the first time since June. China's foreign-exchange reserves grew by $6.92 billion to $3.005 trillion during February, according to data released by the People's Bank of China. Eurozone GDP was in line. GDP expanded at a 0.4% rate in the fourth quarter, data released Tuesday by Eurostat showed. Annual growth came in at 1.7%. UK data disappoints. Both home prices and retail sales missed expectations, pushing the British pound below 1.2200 for the first time in six weeks. Australia holds rates. The Reserve Bank of Australia held its key interest rate at 1.50%, as expected, and noted that the "Australian economy is continuing its transition following the end of the mining investment boom, expanding by around 2.5% in 2016." The Australian dollar is stronger by 0.2% at .7595 versus the US dollar. Snap tumbles below its IPO opening price. Heavy selling on Monday pushed Snapchat's parent company, Snap Inc., down by more than 12% to $23.79 a share. The stock is set to open Tuesday's session lower by more than 2% near $23.25. The Nintendo Switch is Nintendo's fastest-selling console ever. Nintendo has sold more Switch consoles in its first two days than any other of its gaming systems, according to Nick Wingfield of The New York Times. Stock markets around the world are mixed. Australia's ASX (+1.2%) led overnight, while France's CAC (-0.3%) lags in Europe. The S&P 500 is set to open down 0.1% near 2,373. Earnings reports trickle out. Dick's Sporting Goods reports ahead of the opening bell, and Urban Outfitters releases its quarterly results after markets close.
US economic data is light. The trade balance will be
released at 8:30 a.m. ET, and consumer credit will cross the wires at 3 p.m.
ET. The US 10-year yield is unchanged at 2.50%.
Bill of
Health
House Republicans on Monday released a detailed proposal that marks their first attempt in the new Congress to unite fractious GOP members behind a plan to replace the Affordable Care Act. The proposed legislation would dismantle much of the 2010 health law and create a tax credit tied to an individual’s age and income. It is unclear how much the plan would cost or how many people could lose health insurance under the changes, as the proposal doesn’t provide an estimate. The proposed plan would end the requirement that most Americans have health coverage or pay a penalty and a mandate that larger employers provide health insurance to workers. It would also repeal most of the health law’s taxes starting in 2018 and freeze funding in 2020 for the 31 states that expanded Medicaid under the law.
Second Time’s a Charm
President Trump signed a scaled-back travel ban on Monday that addresses some of the legal challenges to his original executive order, while blocking new visas for people living in six Muslim-majority nations and suspending admission of refugees to the U.S. The revised order doesn’t take effect for 10 days, with officials hopeful that the delay and other changes will prevent the sort of chaos and confusion that unfolded at airports the first time around. But some opponents promised to file fresh court challenges. Meanwhile, we report that the Senate confirmation hearing today for Mr. Trump’s pick for the No. 2 position at the Justice Department, Rod Rosenstein, is likely to turn into a battle over the investigation into Russia’s ties to Mr. Trump’s associates and the president’s new wiretap claim.
Caught on Film
Mark Zuckerberg had employees work around the clock to roll out Facebook Live, which took just two months. The Facebook CEO also budgeted more than $100 million to pay media organizations and celebrities to post live videos. But a year later, the platform is wrestling with how to censor violence and has lackluster viewership, some video partners say. According to our analysis, people have used Facebook Live to broadcast at least 50 acts of violence, including murder, suicides and the beating in January of a mentally disabled teenager in Chicago. The bad and good consequences reflect the inherent tension in Mr. Zuckerberg’s vision of Facebook as a crucial part of the world’s “social infrastructure,” a term he used in a nearly 6,000-word manifesto last month. Facebook is plowing ahead with efforts to encourage users to try Live, though it continues to generate the kind of attention the social-media giant doesn’t want.
Politics have begun to weigh more
heavily in investment decisions than central bank guidance, indicating a
shift away from post-crisis central bank dependence, according to the Bank
for International Settlements. "Politics tightened its grip over financial
markets in the past quarter, reasserting its supremacy over economics,"
said Claudio Borio, the bank's monetary and economic chief. Reuters (06 Mar.),
Global investment in
exchange-traded funds and products outstripped that in hedge funds by $530
billion last year, according to ETFGI. More than $3.5 trillion was invested
in ETFs and ETPs, while hedge funds had about $3 trillion in assets under
management. Financial Times (tiered subscription model) (04 Mar.)
Investment banks stand to earn an
estimated $332 million in advisory fees from several deals in Europe,
including the merger of Aberdeen Asset Management and Standard Life and
Deutsche Bank's €8 billion share offering. Goldman Sachs is assisting in
three of the biggest deals, giving it the top spot for the first two months
of 2017. Reuters (06 Mar.)
Bloomberg is striving to keep
PIMCO's business on its trading platform for US Treasurys and away from
competitor Tradeweb Markets, as automated-trading advancement reshapes the
market. Financial Times (tiered subscription model) (06 Mar.)
Government-backed Saudi Aramco is
on track to go public in the second half of 2018, and "everything is
going very smoothly," said CEO Amin Nasser. Shares will be listed on one
or two international exchanges and on Saudi Arabia's Tadawul exchange, he
said. Reuters (06 Mar.)
The assumed inverse relationship
between the strength of the US dollar and the price of commodities is no
longer the case after both saw sizable gains during the fourth quarter,
Citigroup analysts say. "Commodity prices have traded in a strong
inverse relationship with the US dollar over the past decade or so, but this
relationship broke down in late 2016 and the breakdown looks here to
stay," the analysts wrote. CNBC (06 Mar.)
Revised fourth-quarter figures
show that the Greek economy contracted 1.2%, a much larger drop than the
government's initial estimate. The International Monetary Fund stated in a
report last month that the numerous, large changes in Greece's GDP data was
making it difficult for the fund to analyze the country's economy. Bloomberg (06 Mar.)
VanEck has brought to NYSE Arca an
exchange-traded fund that buys fixed-income securities used to finance
projects supporting environmental sustainability, commonly called green
bonds. The VanEck Vectors Green Bond ETF is designed to replicate the
performance of the S&P Green Bond Select Index. ETF.com (06 Mar.)
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Source:
Bloomberg, BI, WSJ, CFAI Fin. Newsbrief, CNBC, Reuters, FT, ETF.com
posted by Rich Barnett @ 7:03 AM
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