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18 January 2019

18/01/2019

Morning Chat & Market Data

Morning Chat


A wild bunch: The pound rallied a further 0.8% against the dollar and Euro following Prime Minister May’s no-confidence victory and increased expectation of a second referendum. Bonds saw a slight yield pick-up too, but equities? Not so much. The FTSE 100 fell 0.40% - ok, not so bad. Oil stocks lost ground over a slight slide in crude prices, and ITV dialled down 5.9% on a Merrill Lynch downgrade. The index would have been lower, but rallied with the US following a Wall Street Journal report that Treasury Secretary Steven Mnuchin suggested cutting tariffs during the trade negotiations.

More Unforgiven than The Good, the Bad and the Ugly: Morgan Stanleykicked off today’s earnings reports and their fixed income trading numbers – this quarter’s bugbear for banks – were down 30%. Ugly. Shares fell 4.41% (4.08% net aftermarket). KeyCorp followed with a mild revenue beat ($1.65 billion versus $1.64 expected), better eps and lower provisions. Ok. But net income missed leaving shares down 2.51%. Bad. Netflix, though, shares rallying 0.51% in anticipation after gaining 51% since Xmas.  Subscriber numbers trouncing expectations and an earnings beat. Good. Ah, revenue was $4.19 billion versus $4.21 expected trimming shares 4.25% in aftermarket trading.

Once upon a time in the west: in a land called America there lived a President named Trump who forced the longest US government shutdown while battling the Democrats for a magical wall to keep out undesirables.  This angered the Democrats and their Speaker Nancy Pelosi. After unsuccessful negotiations with Trump, Nancy tried to undermine Trump’s State of The Union Address saying the shutdown meant safety could not be ensured. This angered the President and his very indignant secret service, so he postponed Nancy’s seven-day foreign congressional trip – for safety reasons – just before she left! And no happily ever after yet.

Market Data

 
Selected Global Aggregates (Total returns, unhedged) 
MSCI AC World Equities (Local) up +5.28 (+0.47%) at 1,134 (YTD: 4.66%; 5YR: 43.4%)
MSCI AC World Equities (USD) up +38.31 (+0.47%) at 8,156 (YTD: 4.95%; 5YR: 35.1%)
Barclays Global Aggregate Bonds down -0.48 (-0.10%) at 480 (YTD: 0.29%; 5YR: 5.4%)

Selected Equity Indices (Capital returns)
S&P 500 up +19.86 (+0.76%) at 2,636 (YTD: 5.15%; 5YR: 43.4%)
NASDAQ up +49.77 (+0.71%) at 7,084 (YTD: 6.77%; 5YR: 68.8%)
Euro STOXX 50 down -7.87 (-0.26%) at 3,069 (YTD: 2.26%; 5YR: -2.7%)
FTSE 100 down -27.76 (-0.40%) at 6,835 (YTD: 1.59%; 5YR: 0.1%)
CAC 40 down -16.37 (-0.34%) at 4,794 (YTD: 1.35%; 5YR: 10.8%)
DAX down -12.62 (-0.12%) at 10,919 (YTD: 3.41%; 5YR: 12.1%)
Nikkei 225  up +263.80 (+1.29%) at 20,666 (YTD: 3.25%; 5YR: 31.3%)
Hang Seng up +311.41 (+1.16%) at 27,067 (YTD: 4.73%; 5YR: 17.0%)
MSCI Emerging Markets down -0.40 (-0.04%) at 1,009 (YTD: 4.49%; 5YR: 3.8%)
 
Selected Government Bond Yields
US 10 Year up +0.00 at 2.75 (began the year at 2.68; 5 years ago it was 2.82)
US 2 Year up +0.00 at 2.57 (began the year at 2.49; 5 years ago it was 0.37)
UK 10 Year up +0.03 at 1.34 (began the year at 1.28; 5 years ago it was 2.83)
Germany 10 Year down -0.15 at 0.25 (began the year at 0.24; 5 years ago it was 1.75)
France 10 Year down -0.13 at 0.65 (began the year at 0.70; 5 years ago it was 2.41)
Italy 10 Year down -0.80 at 2.74 (began the year at 2.74; 5 years ago it was 3.82) 
Japan 10 Year down -0.12 at 0.00 (began the year at -0.01; 5 years ago it was 0.67)
Barclays EM Basket up +0.01 at 6.12 (began the year at 6.22; 5 years ago it was 5.74)
 
Selected Currencies
€/$ down +0.001 (+0.07%) at 1.140 (YTD: -0.50%; 5YR: -15.8%)
£/€ unchanged 0.000 (0.00%) at 1.138 (YTD: 2.22%; 5YR: -6.5%)
£/$ down +0.001 (+0.06%) at 1.297 (YTD: 1.76%; 5YR: -21.0%)
$/¥ down -0.47 (+0.43%) at 109.45 (YTD: -0.19%; 5YR: 4.7%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.52 (+0.86%) at 61.04 (YTD: 14.80%; 5YR: -42.9%)
WTI Crude ($/bbl) down -0.24 (-0.46%) at 52.07 (YTD: 14.67%; 5YR: -44.8%)
Gold ($/ozt) up -0.61 (-0.05%) at 1291.43 (YTD: 0.70%; 5YR: 3.0%)
Copper ($/mt) up +22.00 (+0.37%) at 5992.00 (YTD: 0.45%; 5YR: -18.4%)
 
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