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3 December 2018

03/12/2018

Morning Chat & Market Data

Morning Chat

Chicago-go-go: The Chicago Purchasing Manager Index (PMI) was a winner Friday and a big contributor to the S&P rallying 0.82% and the dollar strengthening too.  The PMI, where a number above 50 is expansionary, is an index of both the Chicago region manufacturing and non-manufacturing sectors and reasonably mirrors the US economy as a whole.  Driven by orders at a 4-year high and solid output numbers, the November PMI came in at 66.4, the highest level for a year, way higher than the 58.6 expected, way higher than the 58.4 last month and the second highest level this economic cycle.

Chinese takeaway: US President Trump and Chinese President Xi dined together Saturday – vegetable salad, sirloin for main, and caramel pancakes for dessert washed down with an Argentine Chardonnay and 2014 Malbec – and managed to come to a short-term armistice.  China agreed to buy a “very substantial” amount of US goods, including agricultural produce, industrial and other goods to reduce the trade imbalance.  China gets a reprieve on the January 1st tariff increase from 10% to 25%, albeit for only 90 days as negotiations over a more formal arrangement continue. Trump called the meeting “amazing and productive” – markets probably will too.

What might Santa bring you: Now you’re three chocolates into your advent calendar, holidays thoughts might be on your mind.  For equities, investors hope for a Santa Claus rally, and over 38 years Santa has visited between two-thirds to three-quarter of the time depending on the market, with the Americans being the best boys and girls, the Japanese the naughtiest and the Germans getting the best presents. The S&P garnered an average 1.26% to Christmas eve, the All share 1.38%, Topix 0.65% and the Dax 1.76%.  By New Year’s eve the numbers rise to 1.47%, 2.03%, 1.68% and 2.34% respectively.

Note, the MSCI changes creating a new communications sector are now in effect

Market Data 


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +4.43 (+0.38%) at 1,168 (YTD: 0.03%; 5YR: 51.8%)
MSCI AC World Equities (USD) up +27.72 (+0.33%) at 8,408 (YTD: -0.69%; 5YR: 43.3%)
Barclays Global Aggregate Bonds down -0.87 (-0.18%) at 469 (YTD: -3.16%; 5YR: 3.0%)
 
Selected Equity Indices
S&P 500 up +22.41 (+0.82%) at 2,760 (YTD: 3.24%; 5YR: 53.8%)
NASDAQ up +57.45 (+0.79%) at 7,331 (YTD: 6.19%; 5YR: 81.6%)
Euro STOXX 50 down -1.03 (-0.03%) at 3,173 (YTD: -9.44%; 5YR: 5.3%)
FTSE 100 down -58.71 (-0.83%) at 6,980 (YTD: -9.20%; 5YR: 6.9%)
CAC 40 down -2.33 (-0.05%) at 5,004 (YTD: -5.81%; 5YR: 19.9%)
DAX down -40.99 (-0.36%) at 11,257 (YTD: -12.85%; 5YR: 22.1%)
Nikkei 225  up +223.70 (+1.00%) at 22,575 (YTD: -0.84%; 5YR: 43.3%)
Hang Seng up +642.50 (+2.42%) at 27,149 (YTD: -9.26%; 5YR: 13.5%)
MSCI Emerging Markets down -3.33 (-0.33%) at 995 (YTD: -14.13%; 5YR: -0.8%)
 
Selected Government Bond Yields
US 10 Year up +0.05 at 3.04 (began the year at 2.41; 5 years ago it was 2.78)
US 2 Year up +0.05 at 2.84 (began the year at 1.88; 5 years ago it was 0.29)
UK 10 Year down 0.00 at 1.36 (began the year at 1.19; 5 years ago it was 2.82)
Germany 10 Year down -0.07 at 0.34 (began the year at 0.42; 5 years ago it was 1.72)
France 10 Year down -0.07 at 0.71 (began the year at 0.78; 5 years ago it was 2.34)
Italy 10 Year down -0.37 at 3.17 (began the year at 2.01; 5 years ago it was 4.09)
Japan 10 Year down -0.05 at 0.08 (began the year at 0.04; 5 years ago it was 0.63)
Barclays EM Basket down -0.01 at 6.13 (began the year at 5.49; 5 years ago it was 5.80)
  
Selected Currencies
€/$ down +0.006 (+0.50%) at 1.137 (YTD: -5.41%; 5YR: -16.4%)
£/€ unchanged 0.000 (0.00%) at 1.127 (YTD: 0.20%; 5YR: -7.0%) 
£/$ down +0.007 (+0.52%) at 1.282 (YTD: -5.21%; 5YR: -21.9%)
$/¥ up +0.18 (-0.16%) at 113.46 (YTD: 0.78%; 5YR: 9.8%)
 
Selected Commodities
Brent Crude ($/bbl) down +3.11 (+5.32%) at 61.55 (YTD: -7.89%; 5YR: -45.4%)
WTI Crude ($/bbl) down -0.52 (-1.01%) at 50.93 (YTD: -15.71%; 5YR: -45.1%)
Gold ($/ozt) up +9.41 (+0.77%) at 1231.92 (YTD: -5.46%; 5YR: 0.7%)
Copper ($/mt) down -14.00 (-0.23%) at 6198.00 (YTD: -14.47%; 5YR: -12.1%)
 
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