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14 December 2018

14/12/2018

Morning Chat & Market Data

Morning Chat


Let’s go fly a kite: The pound put on a bit of weight, adding 0.3% versus the dollar, as Brexit news flow continued. Prime Minister May vowed to stand down before the next regularly scheduled election (she may contest any sudden election) but still intends to see Brexit through. She was off to Brussels to try to drum up some variation or addendum to the backstop to make it acceptable.  Meanwhile, one report today suggested Pro-European ministers are planning test votes of various Brexit variants to show no plan can get majority support thus making May’s plan more palatable.

A quantity of easing: The Euro showed a limited flicker of recognition today as European Central Bank President Mario Draghi announced the end of the ECB’s quantitative easing (QE) program. By the market close the Euro was running 1.1358 to the dollar, down 0.0014. After expanding the Bank’s balance sheet by €2.6 trillion over 4 years – twice as much as a percentage of GDP as the US Federal Reserve’s QE program – Draghi commented it was time to stop even as the ECB trimmed 0.1% from GDP growth estimates for this year and next. Seems EU inflation is a bigger concern.

Starbucks delivers disappointment: The day started out ok as Starbucks rallied 1.18% - notably more than the S&P’s 0.20% drop – but investors woke up and smelt the coffee following the company’s biennial investor day and pared the price back 3.12% in the aftermarket.  The company outlined plans to grow share and presence in China increasing store count to 6000 from 2400 today, a delivery partnership with Uber Eats at a quarter of US stores and efforts to introduce new menu items.  Moreover, their growth is better than peers, but their cut to long-term forecasts left investors with a bitter aftertaste.


Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +1.10 (+0.10%) at 1,134 (YTD: -2.83%; 5YR: 49.7%)
MSCI AC World Equities (USD) down -4.93 (-0.06%) at 8,137 (YTD: -3.89%; 5YR: 40.9%)
Barclays Global Aggregate Bonds down -0.52 (-0.11%) at 472 (YTD: -2.62%; 5YR: 3.7%
 
Selected Equity Indices (Capital returns)
S&P 500 down -0.53 (-0.02%) at 2,651 (YTD: -0.86%; 5YR: 49.3%)
NASDAQ down -27.98 (-0.39%) at 7,070 (YTD: 2.42%; 5YR: 76.7%)
Euro STOXX 50 up +4.20 (+0.14%) at 3,112 (YTD: -11.18%; 5YR: 6.5%)
FTSE 100 down -2.69 (-0.04%) at 6,878 (YTD: -10.54%; 5YR: 6.8%)
CAC 40 down -12.53 (-0.26%) at 4,897 (YTD: -7.82%; 5YR: 20.6%)
DAX down -4.73 (-0.04%) at 10,925 (YTD: -15.43%; 5YR: 21.3%)
Nikkei 225  down -441.36 (-2.02%) at 21,375 (YTD: -6.11%; 5YR: 38.8%)
Hang Seng down -429.19 (-1.62%) at 26,095 (YTD: -12.78%; 5YR: 12.3%)
MSCI Emerging Markets up +6.62 (+0.68%) at 986 (YTD: -14.93%; 5YR: -0.5%) 
 
Selected Government Bond Yields
US 10 Year down -0.03 at 2.88 (began the year at 2.41; 5 years ago it was 2.86)
US 2 Year down -0.02 at 2.74 (began the year at 1.88; 5 years ago it was 0.32)
UK 10 Year up +0.01 at 1.29 (began the year at 1.19; 5 years ago it was 2.90)
Germany 10 Year down -0.14 at 0.26 (began the year at 0.42; 5 years ago it was 1.83)
France 10 Year down -0.05 at 0.72 (began the year at 0.78; 5 years ago it was 2.43)
Italy 10 Year down -0.43 at 3.11 (began the year at 2.01; 5 years ago it was 4.09)
Japan 10 Year down -0.08 at 0.04 (began the year at 0.04; 5 years ago it was 0.69)
Barclays EM Basket down -0.02 at 6.35 (began the year at 5.49; 5 years ago it was 5.77)
 
Selected Currencies
€/$ down -0.001 (-0.11%) at 1.135 (YTD: -5.63%; 5YR: -17.3%)
£/€ down +0.000 (-0.02%) at 1.112 (YTD: -1.19%; 5YR: -6.8%)
£/$ down -0.002 (-0.13%) at 1.261 (YTD: -6.74%; 5YR: -22.6%)
$/¥ up +0.04 (-0.04%) at 113.59 (YTD: 0.89%; 5YR: 9.1%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.72 (-1.19%) at 59.94 (YTD: -10.30%; 5YR: -44.7%)
WTI Crude ($/bbl) down +1.43 (+2.80%) at 52.58 (YTD: -12.98%; 5YR: -45.6%)
Gold ($/ozt) up -4.20 (-0.34%) at 1237.79 (YTD: -5.01%; 5YR: -0.1%)
Copper ($/mt) up +15.00 (+0.24%) at 6155.00 (YTD: -15.07%; 5YR: -15.2%)
 
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