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16 January 2019

16/01/2019

Morning Chat & Market Data

Morning Chat


One for the History books: Well, it wasn’t as bad as John Baron’s amendment defeat (24 to 600), but the 202 to 432 defeat of Theresa May’s Brexit deal was historic; the biggest margin of defeat for a government in modern times. Jeremy Corbyn finally plucked up the confidence to plump for a no confidence vote (due tomorrow). Donald Tusk and Jean-Claude Juncker both commented that now they know what Parliament doesn’t want – what do they want? The Irish are preparing for no-deal. Oh, and the pound rallied to $1.287 / €1.128. Rallied? The defeat was so resounding that no-Brexit now seems more possible.

2600and counting: Various factors influenced the S&P yesterday; the good news won as the index closed up 1.07% at 2610.30, breaking above 2600 for the first time in a month.  The positives? Producer price inflation was lower than expected. Edwards Lifesciences shares rallied 8.43% pushing healthcare names after curing a long-standing patents dispute for $180 million. Investors watched a 6.52% gain after Netflix hiked prices 13-18% boosting the communication sector and, lastly, tech stocks also rallied. The downers? Empire manufacturing data fell to a 20-month low while the PG&E utility bankruptcy over California wildfire costs hit the utility sector.

Moregainand go further, please: S&P futures faded as JP Morgan reported.  Like Citi, they reported plummeting fixed income trading – down 18% - and a marginal revenue miss (down 2%).  Unlike Citi, costs cuts were not enough to boost the bottom line as earnings per share missed at $1.98 versus $2.21 expected. But shares rallied closing up 0.73%.  Meanwhile, Wells Fargo results highlighted the ongoing reputational hit of the cross-selling problems.  Unlike Citi and JP Morgan, loans and deposits declined, but so too provisions, and earnings beat at $1.21 versus $1.19 forecast on cost controls. The shares? Down 1.59%.

Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +10.53 (+0.94%) at 1,126 (YTD: 3.92%; 5YR: 42.2%)
MSCI AC World Equities (USD) up +64.05 (+0.80%) at 8,106 (YTD: 4.30%; 5YR: 34.1%)
Barclays Global Aggregate Bonds down -0.48 (-0.10%) at 481 (YTD: 0.53%; 5YR: 5.7%) 
 
Selected Equity Indices (Capital returns)
S&P 500 up +27.69 (+1.07%) at 2,610 (YTD: 4.13%; 5YR: 41.4%)
NASDAQ up +117.92 (+1.71%) at 7,024 (YTD: 5.86%; 5YR: 66.5%)
Euro STOXX 50 up +12.87 (+0.42%) at 3,068 (YTD: 2.22%; 5YR: -2.6%)
FTSE 100 up +40.00 (+0.58%) at 6,895 (YTD: 2.48%; 5YR: 1.2%)
CAC 40 up +23.42 (+0.49%) at 4,786 (YTD: 1.17%; 5YR: 10.8%)
DAX up +35.88 (+0.33%) at 10,892 (YTD: 3.15%; 5YR: 12.1%)
Nikkei 225  down -112.54 (-0.55%) at 20,443 (YTD: 2.14%; 5YR: 29.8%)
Hang Seng up +63.25 (+0.24%) at 26,894 (YTD: 4.05%; 5YR: 17.0%)
MSCI Emerging Markets up +12.41 (+1.25%) at 1,005 (YTD: 4.08%; 5YR: 3.1%) 
 
Selected Government Bond Yields 
US 10 Year up +0.01 at 2.72 (began the year at 2.68; 5 years ago it was 2.84)
US 2 Year up +0.00 at 2.54 (began the year at 2.49; 5 years ago it was 0.38)
UK 10 Year down -0.04 at 1.26 (began the year at 1.28; 5 years ago it was 2.81) 
Germany 10 Year down -0.19 at 0.21 (began the year at 0.24; 5 years ago it was 1.78)
France 10 Year down -0.15 at 0.62 (began the year at 0.70; 5 years ago it was 2.45)
Italy 10 Year down -0.71 at 2.83 (began the year at 2.74; 5 years ago it was 3.84)
Japan 10 Year down -0.12 at 0.01 (began the year at -0.01; 5 years ago it was 0.67)
Barclays EM Basket up +0.00 at 6.10 (began the year at 6.22; 5 years ago it was 5.77)
 
Selected Currencies
€/$ down +0.002 (+0.17%) at 1.141 (YTD: -0.38%; 5YR: -16.1%)
£/€ up -0.010 (+0.90%) at 1.128 (YTD: 1.31%; 5YR: -6.6%)
£/$ down +0.015 (+1.08%) at 1.286 (YTD: 0.96%; 5YR: -21.3%)
$/¥ down +0.05 (-0.05%) at 108.57 (YTD: -1.00%; 5YR: 3.8%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.23 (+0.39%) at 59.95 (YTD: 12.75%; 5YR: -43.4%)
WTI Crude ($/bbl) down +1.60 (+3.17%) at 52.11 (YTD: 14.75%; 5YR: -44.7%)
Gold ($/ozt) up +2.53 (+0.20%) at 1292.02 (YTD: 0.75%; 5YR: 4.0%)
Copper ($/mt) up +23.00 (+0.39%) at 5920.00 (YTD: -0.75%; 5YR: -19.5%)
 
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