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29 January 2019

29/01/2019

Morning Chat and Market Data


Morning Chat


Chipping a big chunk away from the market
: Two months ago, graphic chipmaker Nvidia fell 18.5% (including aftermarket) after an earnings report where they guided for about 20% lower revenues over the next quarter.  Shares had fallen a further 2.15% since then until yesterday, when Nvidia took a knife to their Q4 sales outlook again because of “deteriorating macroeconomic conditions, particularly in China”.  Instead of $2.7 billion in sales, they now expect only $2.2 billion.  That’s a lot of chips, and it knocked shares a further 13.82% down and took some wind out of the broader US market too.

… while lashed by the Cat: European indices also started the week on a sour note with the DAX  down 0.63%, the CAC 0.76% and FTSE 100 off 0.91% (now only just positive for 2019).  Certainly, Nvidia’s outlook statement didn’t help, but Caterpillar’s results were another serious sentiment dampener.  After 10 solid quarters of earnings, Caterpillar reported its worst quarterly miss in over a decade. Yes, sales were up 11% year-on-year per consensus, but higher manufacturing costs, a tariffs bite and declines in Asia-Pacific sales on lower Chinese demand chewed deeply into the bottom line as the shares fell 9.13%.

Are you Brady for this: Prime Minister Theresa May had taken former Prime Minister Margaret Thatcher’s “the lady’s not for turning” mantra to an extreme as she pushed forward with her deal.  Last night she appeared to be backing a proposal which is, in effect, her deal but without the backstop.  Graham Brady’s amendment is due, along with others, to be voted on by Parliament today.  Calling for replacing the backstop with “alternative arrangements”, it might, if it passes, give May leverage to say to the EU that the deal can pass. If it doesn’t, then her deal is done for.

The US Department of Justice filed 13 charges of bank fraud, obstruction of justice and theft (of technology) against Huawei and their CFO Meng Wanzhou

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -7.68 (-0.67%) at 1,142 (YTD: 5.36%; 5YR: 49.4%)
MSCI AC World Equities (USD) down -52.34 (-0.63%) at 8,214 (YTD: 5.68%; 5YR: 40.5%)
Barclays Global Aggregate Bonds up +0.89 (+0.19%) at 483 (YTD: 0.84%; 5YR: 5.1%) 
 
Selected Equity Indices (Capital returns)
S&P 500 down -20.91 (-0.78%) at 2,644 (YTD: 5.47%; 5YR: 49.0%)
NASDAQ down -79.18 (-1.11%) at 7,086 (YTD: 6.79%; 5YR: 74.9%)
Euro STOXX 50 down -25.97 (-0.82%) at 3,137 (YTD: 4.53%; 5YR: 4.2%)
FTSE 100 down -62.12 (-0.91%) at 6,747 (YTD: 0.28%; 5YR: 3.1%)
CAC 40 down -37.24 (-0.76%) at 4,889 (YTD: 3.34%; 5YR: 17.6%)
DAX down -71.48 (-0.63%) at 11,210 (YTD: 6.17%; 5YR: 20.1%)
Nikkei 225  up +15.64 (+0.08%) at 20,665 (YTD: 3.25%; 5YR: 34.3%) 
Hang Seng down -79.20 (-0.29%) at 27,498 (YTD: 6.39%; 5YR: 24.2%)
MSCI Emerging Markets down -4.28 (-0.41%) at 1,028 (YTD: 6.45%; 5YR: 9.8%)

Selected Government Bond Yields
US 10 Year down -0.01 at 2.73 (began the year at 2.68; 5 years ago it was 2.68)
US 2 Year down -0.01 at 2.58 (began the year at 2.49; 5 years ago it was 0.35) 
UK 10 Year down -0.04 at 1.27 (began the year at 1.28; 5 years ago it was 2.76)
Germany 10 Year down -0.20 at 0.20 (began the year at 0.24; 5 years ago it was 1.74)
France 10 Year down -0.17 at 0.60 (began the year at 0.70; 5 years ago it was 2.34)
Italy 10 Year down -0.88 at 2.66 (began the year at 2.74; 5 years ago it was 3.85)
Japan 10 Year down -0.13 at -0.01 (began the year at -0.01; 5 years ago it was 0.63)
Barclays EM Basket down -0.01 at 6.08 (began the year at 6.22; 5 years ago it was 5.86)
 
Selected Currencies
€/$ down +0.001 (+0.06%) at 1.144 (YTD: -0.09%; 5YR: -16.2%)
£/€ down +0.002 (-0.15%) at 1.150 (YTD: 3.22%; 5YR: -5.5%)
£/$ up -0.001 (-0.08%) at 1.316 (YTD: 3.24%; 5YR: -20.6%)
$/¥ down 0.00 (0.00%) at 109.26 (YTD: -0.37%; 5YR: 6.5%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.13 (+0.22%) at 59.60 (YTD: 12.09%; 5YR: -45.0%)
WTI Crude ($/bbl) down -1.50 (-2.80%) at 51.99 (YTD: 14.49%; 5YR: -46.6%)
Gold ($/ozt) up +3.46 (+0.27%) at 1306.85 (YTD: 1.90%; 5YR: 3.1%)
Copper ($/mt) down -54.00 (-0.89%) at 6002.00 (YTD: 0.62%; 5YR: -15.9%)
 
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