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24 January 2019

24/01/2019

Morning Chat & Market Data

Morning Chat

One usurpation leads to another:  On January 10th Nicolas Maduro had himself sworn in for a second term as President of Venezuela. The problem is, the election was seen as a sham by most foreign powers.  So opposition leader Juan Guaido declared himself President yesterday declaring Maduro a usurper, erm, yeah. Still, never one to miss an opportunity to leap in, US President Donald Trump took only minutes to recognise Guaido as the legitimate President.  Maduro has given US diplomats 72 hours to leave the country, and Russia has sent aid in the form of warplanes. This could get messy.

Stable, for now: Oil though has been fairly stable for a couple of weeks around $52 / barrel for West Texas and $61 / barrel for Brent.  Even the surprising 6.55 million barrel US inventory build – analyst expected an insignificant draw – reported by the American Petroleum Institute didn’t move the price as much as it would have only a few months ago.  Moreover, news US production had risen to 11.9 million barrels per day, a new record, didn’t move the dial significantly.  But with Venezuela events and demand thought to be down in China, it’s unusual the move wasn’t bigger.

Texas two-step: Last quarter the weak guidance from Texas Instruments set the markets on the second step down. After a 0.22% rally yesterday in the S&P before Texas Instruments reported, hopefully today the S&P will continue up.  Texas Instruments itself, although down 1.17% before earnings, rallied 1.39% in extended trading after results. Earnings per share were $1.27 versus expectations at $1.23 – a beat – but revenue fell 0.8% year-on-year against forecasts. Moreover, guidance was again weak, but only just and expectations were in the company’s range. So – based on that aftermarket trading – investors appeared to be expecting worse but it wasn’t.

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +0.17 (+0.01%) at 1,137 (YTD: 4.95%; 5YR: 47.5%)
MSCI AC World Equities (USD) up +5.67 (+0.07%) at 8,176 (YTD: 5.20%; 5YR: 38.7%)
Barclays Global Aggregate Bonds up +0.29 (+0.06%) at 481 (YTD: 0.37%; 5YR: 4.7%)
 
Selected Equity Indices (Capital returns)
S&P 500 up +5.80 (+0.22%) at 2,639 (YTD: 5.26%; 5YR: 47.4%)
NASDAQ up +5.41 (+0.08%) at 7,026 (YTD: 5.89%; 5YR: 70.2%)
Euro STOXX 50 down -0.67 (-0.02%) at 3,112 (YTD: 3.69%; 5YR: 2.8%)
FTSE 100 down -58.51 (-0.85%) at 6,843 (YTD: 1.71%; 5YR: 2.7%)
CAC 40 down -7.15 (-0.15%) at 4,840 (YTD: 2.32%; 5YR: 16.3%)
DAX down -18.57 (-0.17%) at 11,072 (YTD: 4.85%; 5YR: 17.9%)
Nikkei 225  down -19.09 (-0.09%) at 20,575 (YTD: 2.80%; 5YR: 33.7%)
Hang Seng up +80.77 (+0.30%) at 27,089 (YTD: 4.81%; 5YR: 20.7%)
MSCI Emerging Markets up +0.93 (+0.09%) at 1,012 (YTD: 4.75%; 5YR: 6.5%)
 
Selected Government Bond Yields
US 10 Year down 0.00 at 2.74 (began the year at 2.68; 5 years ago it was 2.72)
US 2 Year down 0.00 at 2.58 (began the year at 2.49; 5 years ago it was 0.34)
UK 10 Year up +0.00 at 1.33 (began the year at 1.28; 5 years ago it was 2.77)
Germany 10 Year down -0.19 at 0.22 (began the year at 0.24; 5 years ago it was 1.66)
France 10 Year down -0.15 at 0.62 (began the year at 0.70; 5 years ago it was 2.38)
Italy 10 Year down -0.80 at 2.74 (began the year at 2.74; 5 years ago it was 3.91)
Japan 10 Year down -0.12 at 0.01 (began the year at -0.01; 5 years ago it was 0.63)
Barclays EM Basket down -0.01 at 6.12 (began the year at 6.22; 5 years ago it was 5.79)
 
Selected Currencies
€/$ down -0.002 (-0.17%) at 1.137 (YTD: -0.68%; 5YR: -16.9%)
£/€ up -0.001 (+0.10%) at 1.148 (YTD: 3.05%; 5YR: -5.1%)
£/$ up -0.001 (-0.05%) at 1.306 (YTD: 2.46%; 5YR: -20.9%)
$/¥ down -0.22 (+0.20%) at 109.68 (YTD: 0.02%; 5YR: 6.7%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.19 (-0.31%) at 60.38 (YTD: 13.56%; 5YR: -44.7%)
WTI Crude ($/bbl) down -0.15 (-0.29%) at 52.42 (YTD: 15.44%; 5YR: -46.2%)
Gold ($/ozt) up -1.94 (-0.15%) at 1280.73 (YTD: -0.13%; 5YR: 0.8%)
Copper ($/mt) up +16.50 (+0.28%) at 5951.50 (YTD: -0.23%; 5YR: -17.4%)
 
Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five year return
 
SOURCES: BBC; The New York Times; FactSet; Al Jazeera; Financial Times; The Economist; Reuters; CNN; Wall Street Journal; CNBC; Google Finance; Seeking Alpha; The Idea Farm; Bloomberg, Twitter; Wikipedia; Investopedia; The Guardian; The Times of London; Google News; Numerous academic sources and journals; Trade bodies; Government institutions (e.g The Bank of England, The Federal Reserve).

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros