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15 January 2019

15/01/2019

Morning Chat & Market Data

Morning Chat


Markets stirred, trade fried: The Chinese CSI 300 fell 0.87% yesterday as the Chinese trade balance spiked up to $57.06 billion – only $4.3 billion off 2015’s all-time high. You’d think that was a good thing, but the trade balance improvement came on unexpected slowdowns in imports and exports highlighting that the tariff war is biting.  Imports fell 7.6% instead of an expected 5.0% rise as soybean (-40.1%) and coal (-55.0%) imports plummeted.  Exports were 4.4% instead of the forecast +3.0% with tech exports dropping 10.3% from a year ago.  However, it might help foster the green shoots of a deal.

… And they’re off: At 8am Eastern, Citigroup was effectively first out of the gates for 2018 Q4 earnings season run.  Sentiment left a muddy track, and Citi appeared to stumble at the crucial fixed income trading turn, down 21% on the quarter leaving shares 2% off the pace in the premarket. But the overall form looked good with earnings of $1.61 versus $1.547 estimated, the efficiency ratio 0.86% better at 57.4%, M&A activity up 47% and lower expense costs.  Thus, Citi made up for the early slow-going to close at $58.93, up 4.06% with the banking sector up 0.27%.

Cash cache: The Investment Company Institute provides data on US money market funds – an indication of the spare cash out there.  The trends are interesting.  Until August 2000, fund values rose with the S&P (to c$1.6 trillion) with the S&P level approximating fund levels in billions.  Between 2000 and 2012, they moved in opposition - cash levels increased on index declines. For the last seven years though cash levels have, unusually, kept steadily around $2.58 trillion (inflation adjusted to 2012 dollars) unfazed by market moves. But cash levels spiked significantly in December – their reinvestment should help boost any equity recovery.

Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -5.80 (-0.52%) at 1,115 (YTD: 2.95%; 5YR: 40.8%)
MSCI AC World Equities (USD) down -36.51 (-0.45%) at 8,042 (YTD: 3.48%; 5YR: 33.0%)
Barclays Global Aggregate Bonds up +0.19 (+0.04%) at 482 (YTD: 0.62%; 5YR: 6.0%) 
 
Selected Equity Indices (Capital returns)
S&P 500 down -13.65 (-0.53%) at 2,583 (YTD: 3.02%; 5YR: 39.7%)
NASDAQ down -65.56 (-0.94%) at 6,906 (YTD: 4.08%; 5YR: 63.8%)
Euro STOXX 50 down -14.86 (-0.48%) at 3,055 (YTD: 1.79%; 5YR: -3.6%)
FTSE 100 down -63.16 (-0.91%) at 6,855 (YTD: 1.89%; 5YR: 0.5%)
CAC 40 down -18.59 (-0.39%) at 4,763 (YTD: 0.68%; 5YR: 9.9%)
DAX down -31.55 (-0.29%) at 10,856 (YTD: 2.81%; 5YR: 11.5%)
Nikkei 225  up +195.59 (+0.96%) at 20,555 (YTD: 2.70%; 5YR: 33.3%)
Hang Seng up +480.03 (+1.83%) at 26,778 (YTD: 3.61%; 5YR: 16.9%)
MSCI Emerging Markets down -8.40 (-0.84%) at 993 (YTD: 2.80%; 5YR: 1.5%) 
 
Selected Government Bond Yields
US 10 Year up +0.01 at 2.71 (began the year at 2.68; 5 years ago it was 2.89)
US 2 Year up +0.00 at 2.54 (began the year at 2.49; 5 years ago it was 0.39)
UK 10 Year up +0.01 at 1.30 (began the year at 1.28; 5 years ago it was 2.86)
Germany 10 Year down -0.18 at 0.23 (began the year at 0.24; 5 years ago it was 1.82)
France 10 Year down -0.15 at 0.63 (began the year at 0.70; 5 years ago it was 2.48)
Italy 10 Year down -0.71 at 2.83 (began the year at 2.74; 5 years ago it was 3.86)
Japan 10 Year down -0.12 at 0.01 (began the year at -0.01; 5 years ago it was 0.66)
Barclays EM Basket down -0.03 at 6.10 (began the year at 6.22; 5 years ago it was 5.77)
 
Selected Currencies
€/$ down 0.000 (-0.01%) at 1.148 (YTD: 0.21%; 5YR: -15.6%)
£/€ down +0.000 (-0.03%) at 1.123 (YTD: 0.87%; 5YR: -7.2%)
£/$ down -0.001 (-0.04%) at 1.289 (YTD: 1.09%; 5YR: -21.2%)
$/¥ down -0.42 (+0.39%) at 108.61 (YTD: -0.97%; 5YR: 3.7%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.36 (+0.62%) at 58.83 (YTD: 10.65%; 5YR: -44.7%)
WTI Crude ($/bbl) down -1.08 (-2.09%) at 50.51 (YTD: 11.23%; 5YR: -45.5%)
Gold ($/ozt) up -1.01 (-0.08%) at 1290.69 (YTD: 0.64%; 5YR: 3.9%)
Copper ($/mt) down -45.00 (-0.76%) at 5897.00 (YTD: -1.14%; 5YR: -19.0%)
 
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