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17 December 2018

17/12/2018

Morning Chat & Market Data

Morning Chat


EU blue plus Gilets Jaunes equals equity green: Most European markets were green with gains last week, with the big exchanges all positive. The FTSE 100 rallied 0.99%, the Frankfurt DAX +0.72%, Paris CAC +0.84% and Milan MIB +0.90%.  It stemmed from French President Macron responding to the Yellow Vest movement by a deficit target busting tax giveaway.  That allowed the Italians to issue a budget with a 2.04% deficit that Brussels sadly had to swallow or thwart Macron. Chuck in tweeting by President Trump over trading a Huawei executive for a China trade deal and many problems seem slightly better. 

… Unless you’re American: Those tweets by Trump cross a diplomatic boundary that may haunt US foreign affairs for a while.  More, they highlight an issue – the arrest of Huawei CFO Wanzhou Meng made China lose face … if the Americans did it.  China rounded up two lesser Canadian ex-diplomats to shift the blame – lightly – to Canada meaning they could negotiate with the US (and China seems eager to). Trump’s tweets tacitly shifted blame back on US shoulders – making talks harder. That dampened trade expectations leaving the S&P down 1.26% on the week and the more tech-heavy Nasdaq down 3.86%.

Beyond averages: The final US Q3 real GDP number is released Friday; expect about 2.3%, but remember it’s an average. Since the last peak 10 years ago, US real GDP averaged 1.5% per annum according to the Bureau of Economic Analysis. Yet the GDPs of Connecticut, Mississippi, Louisiana and Wyoming have shrunk.  North Dakota, thanks to fracking, has grown 4.4% growth annually; fracking helped Texas to number 3 too (+2.4%). Take out those two fracking beneficiaries and Clinton-voting states outgrew Trump-voting states by an average 0.2% per annum, over an extra year’s growth! United, but not Similar States of America.  

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -16.57 (-1.46%) at 1,118 (YTD: -4.25%; 5YR: 47.1%)
MSCI AC World Equities (USD) down -130.69 (-1.61%) at 8,006 (YTD: -5.43%; 5YR: 38.1%)
Barclays Global Aggregate Bonds down -0.02 (0.00%) at 472 (YTD: -2.62%; 5YR: 3.5%) 
 
Selected Equity Indices (Capital returns)
S&P 500 down -50.59 (-1.91%) at 2,600 (YTD: -2.76%; 5YR: 46.0%)
NASDAQ down -159.67 (-2.26%) at 6,911 (YTD: 0.11%; 5YR: 71.7%)
Euro STOXX 50 down -19.57 (-0.63%) at 3,093 (YTD: -11.74%; 5YR: 5.1%)
FTSE 100 down -32.33 (-0.47%) at 6,845 (YTD: -10.96%; 5YR: 5.5%)
CAC 40 down -43.22 (-0.88%) at 4,854 (YTD: -8.64%; 5YR: 19.3%)
DAX down -58.93 (-0.54%) at 10,866 (YTD: -15.88%; 5YR: 19.6%)
Nikkei 225  up +132.05 (+0.62%) at 21,507 (YTD: -5.53%; 5YR: 40.8%)
Hang Seng up +21.48 (+0.08%) at 26,116 (YTD: -12.71%; 5YR: 13.2%)
MSCI Emerging Markets down -13.62 (-1.38%) at 972 (YTD: -16.10%; 5YR: -1.9%)
 
Selected Government Bond Yields
US 10 Year down 0.00 at 2.89 (began the year at 2.41; 5 years ago it was 2.84)
US 2 Year down 0.00 at 2.73 (began the year at 1.88; 5 years ago it was 0.32)
UK 10 Year down -0.05 at 1.24 (began the year at 1.19; 5 years ago it was 2.87)
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 4.04)
Japan 10 Year down -0.08 at 0.04 (began the year at 0.04; 5 years ago it was 0.66)
Barclays EM Basket down -0.02 at 6.32 (began the year at 5.49; 5 years ago it was 5.76)
 
Selected Currencies
€/$ down +0.001 (+0.12%) at 1.132 (YTD: -5.88%; 5YR: -17.7%)
£/€ up 0.000 (+0.01%) at 1.112 (YTD: -1.17%; 5YR: -6.3%)
£/$ down +0.002 (+0.12%) at 1.258 (YTD: -6.97%; 5YR: -22.6%)
$/¥ up -0.08 (+0.07%) at 113.41 (YTD: 0.73%; 5YR: 9.4%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.03 (+0.05%) at 59.35 (YTD: -11.18%; 5YR: -45.2%)
WTI Crude ($/bbl) down -1.38 (-2.62%) at 51.20 (YTD: -15.26%; 5YR: -47.0%)
Gold ($/ozt) up +0.15 (+0.01%) at 1238.60 (YTD: -4.95%; 5YR: 0.6%)
Copper ($/mt) down -23.50 (-0.38%) at 6131.50 (YTD: -15.39%; 5YR: -15.5%) 
 
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