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8 January 2019

08/01/2019

Morning Chat and Market Data

Morning Chat


Filtering out the reasons: European markets lost puff Monday; the FTSE closed down 0.39%, the DAX down 0.18% and CAC down 0.38%.  Analyst downgrades of British American Tobacco and Imperial Brands over e-cig disruption of the industry was the smoking gun for the FTSE decline.  For Germany, a surprising 11.6% decline in November’s Euro-zone orders – plus a loss of lift from Airbus after October’s above average orders – knocked factory orders down 1.0% versus the 0.1% drop expected. Moreover, EU retail sales (+0.6% as expected), while bolstered by Germany, were down in France on yellow vest disruption, were only window dressing.

Trading Places: At least the S&P 500 did well, though faded a little at the end.  Still, a 0.7% gain is good, especially considering the US Institute for Supply Management (ISM) Non-Manufacturing PMI fell to 57.6 in December – a five month low – from November’s 60.7 and below the 59 estimated. The gain was led by retailers – not bad considering we might see the demise of Sears today if the present bid falls through – automakers, and tech companies. Amazon was at the forefront of those gains rising 3.4%. Oh, one more thing, Amazon passed Microsoft for the most valuable company globally.

It’s only words, and words are all I have to steel the wall away: Democrats and Republicans are still at loggerheads over the shutdown. Hits are looming: Federal employees will miss their first pay check on the 11th, and by the 12th it’ll be the longest shutdown ever.  US President Trump is resolute, telling reporters to call it whatever, “Doesn’t make any difference to me. Just words”.  Trump has offered a small compromise; a steel barrier rather than a concrete wall, but Nancy Pelosi still calls it “immoral”. Could make for an electric State of the Union on the 21st.

A shutdown effect: US Factory orders data has been postponed by the shutdown

Market Data


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +8.25 (+0.76%) at 1,100 (YTD: 1.49%; 5YR: 39.8%)
MSCI AC World Equities (USD) up +64.29 (+0.82%) at 7,921 (YTD: 1.92%; 5YR: 31.8%)
Barclays Global Aggregate Bonds up +0.34 (+0.07%) at 481 (YTD: 0.49%; 5YR: 6.3%) 
 
Selected Equity Indices (Capital returns)
S&P 500 up +17.75 (+0.70%) at 2,550 (YTD: 1.71%; 5YR: 38.8%)
NASDAQ up +84.61 (+1.26%) at 6,823 (YTD: 2.84%; 5YR: 63.8%)
Euro STOXX 50 down -8.21 (-0.27%) at 3,034 (YTD: 1.07%; 5YR: -2.5%)
FTSE 100 down -26.54 (-0.39%) at 6,811 (YTD: 1.23%; 5YR: 1.3%)
CAC 40 down -17.95 (-0.38%) at 4,719 (YTD: -0.24%; 5YR: 10.8%)
DAX down -19.88 (-0.18%) at 10,748 (YTD: 1.79%; 5YR: 13.2%)
Nikkei 225  up +165.07 (+0.82%) at 20,204 (YTD: 0.95%; 5YR: 25.3%)
Hang Seng up +36.47 (+0.14%) at 25,872 (YTD: 0.10%; 5YR: 12.5%)
MSCI Emerging Markets up +13.00 (+1.35%) at 978 (YTD: 1.27%; 5YR: 0.5%) 
 
Selected Government Bond Yields
US 10 Year down 0.00 at 2.69 (began the year at 2.68; 5 years ago it was 2.99)
US 2 Year down 0.00 at 2.54 (began the year at 2.49; 5 years ago it was 0.43)
UK 10 Year down -0.02 at 1.25 (began the year at 1.28; 5 years ago it was 2.97)
Germany 10 Year down -0.18 at 0.23 (began the year at 0.24; 5 years ago it was 1.90)
France 10 Year down -0.04 at 0.73 (began the year at 0.70; 5 years ago it was 2.51)
Italy 10 Year down -0.64 at 2.90 (began the year at 2.74; 5 years ago it was 3.88)
Japan 10 Year down -0.13 at 0.00 (began the year at -0.01; 5 years ago it was 0.70)
Barclays EM Basket up +0.03 at 6.18 (began the year at 6.22; 5 years ago it was 5.83)
 
Selected Currencies
€/$ down -0.003 (-0.25%) at 1.144 (YTD: -0.10%; 5YR: -15.7%)
£/€ up -0.003 (+0.24%) at 1.117 (YTD: 0.33%; 5YR: -8.5%)
£/$ down +0.000 (+0.01%) at 1.278 (YTD: 0.23%; 5YR: -22.3%)
$/¥ down -0.41 (+0.38%) at 109.02 (YTD: -0.59%; 5YR: 3.8%)
 
Selected Commodities
Brent Crude ($/bbl) down -0.16 (-0.28%) at 56.77 (YTD: 6.77%; 5YR: -46.9%)
WTI Crude ($/bbl) down +0.56 (+1.17%) at 48.52 (YTD: 6.85%; 5YR: -48.2%)
Gold ($/ozt) up -6.87 (-0.53%) at 1282.34 (YTD: -0.01%; 5YR: 4.6%)
Copper ($/mt) up +5.00 (+0.08%) at 5923.00 (YTD: -0.70%; 5YR: -19.4%)
 
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