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27 June 2019

27/06/2019

Market Data and Morning Chat

Morning Chat

Durable goods just plane disappointing: The ongoing grounding of Boeing’s 737Max has put sales in a holding pattern – indeed, only in the last days of the Paris airshow did the aircraft manufacturer score any orders. How important is that? Well, May’s US durable goods orders fell 1.3% – the second drop in a row – and it was only forecast down 0.1%. The headwind? Transport equipment numbers declined 4.6% with civilian aircraft orders stalling by 28.2%. Moreover, the 39.3% downdraft in April shows it’s not a short-term air pocket. One key take-away, it’s very company-specific; orders ex-transport rose 0.3% and non-defence 0.4%.

Not so elementary: Boeing’s woes triggered the durable goods decline, otherwise, with non-defence orders up (a modest indicator of private sector capital expenditure), the economy looked ok (yay!). The markets liked the numbers initially, but the looming Saturday meeting between Presidents Trump and Xi at the June 28/9 Osaka summit is the real focus. Now, it helps when you get comments like Treasury Secretary Steven Mnuchin saying the deal is “about 90% of the way there”, but remember Sherlock Holmes only needed a 3% solution, the markets need 10%. So, we won’t really know the game’s afoot until probably Sunday.

Uh, Oh! Yep, the focus is on the Trump-Xi meeting. However, President Trump was speaking on Fox yesterday and he may be finding a new focus. He stated Europe “treats us worse than China” and that they have “worse trade barriers than China”. He even used the U-word; “it’s unfair to us”. Given the tough environment for the German auto sector, the somewhat lame-duck status of Angela Merkel and Margrethe Vestager’s continual fining of US tech companies, the last thing Europe needs is for Trump, fresh from any China deal (assuming he gets one), to shift his spotlight to Brussels.

Adding dividends & buybacks, US bank shares yield over 9% - more than emerging market debt!
TDR Capital Notbuyingjustanycompany, but offering £1.9billion for online car-seller Webuyanycar
Pizza Express loses £55.8million dough over UK property & labour costs and competition in China
Stagecoach has gone off the rails ruling out bids for future rail franchises lifting shares 2.9%

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -1.39 (-0.11%) at 1,249 (YTD: 15.28%; 5YR: 49.6%)
MSCI AC World Equities (USD) down -21.14 (-0.23%) at 9,036 (YTD: 16.26%; 5YR: 40.5%)
Barclays Global Aggregate Bonds down -1.57 (-0.31%) at 504 (YTD: 5.32%; 5YR: 6.1%)

Selected Equity Indices (Capital returns)
S&P 500 down -3.60 (-0.12%) at 2,914 (YTD: 16.23%; 5YR: 48.6%)
NASDAQ up +25.25 (+0.32%) at 7,910 (YTD: 19.21%; 5YR: 79.9%)
Euro STOXX 50 down -1.41 (-0.04%) at 3,443 (YTD: 14.71%; 5YR: 6.7%)
FTSE 100 down -6.04 (-0.08%) at 7,416 (YTD: 10.23%; 5YR: 9.7%)
CAC 40 down -13.85 (-0.25%) at 5,501 (YTD: 16.28%; 5YR: 24.0%)
DAX up +16.88 (+0.14%) at 12,245 (YTD: 15.97%; 5YR: 24.8%)
Nikkei 225 up +251.58 (+1.19%) at 21,338 (YTD: 6.61%; 5YR: 41.4%)
Hang Seng up +294.00 (+1.04%) at 28,516 (YTD: 10.33%; 5YR: 22.8%)
MSCI Emerging Markets up +2.61 (+0.25%) at 1,048 (YTD: 8.50%; 5YR: 0.2%)

Selected Government Bond Yields
US 10 Year up +0.02 at 2.06 (began the year at 2.68; 5 years ago it was 2.53)
US 2 Year up +0.02 at 1.79 (began the year at 2.49; 5 years ago it was 0.46)
UK 10 Year up +0.04 at 0.83 (began the year at 1.28; 5 years ago it was 2.64)
Germany 10 Year down -0.01 at -0.31 (began the year at 0.24; 5 years ago it was 1.26)
France 10 Year down 0.00 at 0.02 (began the year at 0.70; 5 years ago it was 1.71)
Italy 10 Year down -0.12 at 2.02 (began the year at 2.74; 5 years ago it was 2.83)
Japan 10 Year down -0.03 at -0.17 (began the year at -0.01; 5 years ago it was 0.56)
Barclays EM Basket unchanged at 5.90 (began the year at 6.22; 5 years ago it was 5.26)

Selected Currencies
$ strengthened +0.0028 versus € (+0.25%) at 1.1355 ($: YTD: 0.85%; 5YR: 16.8%)
€ weakened -0.0013 versus £ (+0.12%) at 1.1168 (€: YTD: -0.34%; 5YR: 11.7%)
$ strengthened +0.0018 versus £ (+0.14%) at 1.2680 ($: YTD: 0.52%; 5YR: 25.5%)
¥ weakened -0.4300 versus $ (-0.40%) at 108.1000 (¥: YTD: -1.44%; 5YR: -6.2%)

Selected Commodities
Brent Crude ($/bbl) down -0.05 (-0.08%) at 65.57 (YTD: 23.32%; 5YR: -41.9%)
WTI Crude ($/bbl) up +1.79 (+3.11%) at 59.38 (YTD: 30.76%; 5YR: -43.9%)
Gold ($/ozt) down -4.30 (-0.31%) at 1404.77 (YTD: 9.54%; 5YR: 6.7%)
Copper ($/mt) down -54.00 (-0.89%) at 5988.00 (YTD: 0.39%; 5YR: -13.9%)

Data sourced from Bloomberg as of the close of last trading day.
YTD = Year-to-date return; 5YR = five year return

Nicholas Lowson Senior Portfolio Manager Kleinwort Hambros