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11 March 2019

11/03/2019

Morning Chat and Market Data

Morning Chat

Lies, damn lies and statistical abnormalities: One should not forget the non-farm payrolls number is a mean, a sample survey average of total US non-farm jobs, and might mis-state the real average. The survey’s statistical variance is 65,280, in other words, the US Bureau of Labor Statistics can be pretty certain (about 95%) the actual average is +/-130,560 of the announced number, and 99.7% certain its +/-195,840. Friday’s 20,000 was well off the 180,000 expected, but the range of possibilities, so we’re getting a lot of statistical head-scratching and many excuses. The S&P’s 0.21% decline implies investors were significantly concerned.

Three out of four ain’t bad: Friday saw industrial production and factory output data from the big European economies. For France, Italy and Spain the industrial production data was surprisingly positive coming in +1.3% (month-on-month), 1.7% (month-on-month) and 2.4% (year-on-year) respectively and well ahead of the expected 0.1%, 0.1% and -1.4% respectively - great news. For Italy and Spain, it was a recovery in energy and consumer goods while for France it was machinery & equipment goods. German factory orders however faltered, with the steepest decline in six months on weak foreign demand and a slowdown in capital goods orders.

Not great last week, so look forward: Equity markets fell last week, the FTSE100 by a minimal 0.03%, the DAX 1.24%, CAC 0.65% and S&P by 2.16%. The declines driven mainly by the renewed European Central Bank stimulus plans. Next week though we get US inflation data which hopefully will remain at the 19-month low keeping pressure off rates. Then German industrial output, which hopefully will offset the factory orders. Chinese industrial output and retail sales will give more insight to the strength of the economy. The UK? A Brexit vote or three that should, hopefully, be very enlightening.

Donald Trump’s budget today is expected to ask for $8.6billion for the wall – talk about inflation.
Deutsche Bank and Commerzbank won’t comment, but they’re reported to be in merger talks.

Market Data 

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -6.66 (-0.56%) at 1,184 (YTD: 9.32%; 5YR: 49.3%)
MSCI AC World Equities (USD) down -42.03 (-0.49%) at 8,500 (YTD: 9.37%; 5YR: 39.0%)
Barclays Global Aggregate Bonds up +0.29 (+0.06%) at 483 (YTD: 0.94%; 5YR: 4.3%)

Selected Equity Indices (Capital returns)
S&P 500 down -5.86 (-0.21%) at 2,743 (YTD: 9.42%; 5YR: 46.9%)
NASDAQ down -13.32 (-0.18%) at 7,408 (YTD: 11.65%; 5YR: 72.0%)
Euro STOXX 50 down -25.25 (-0.76%) at 3,284 (YTD: 9.40%; 5YR: 6.2%)
FTSE 100 down -53.24 (-0.74%) at 7,104 (YTD: 5.59%; 5YR: 6.3%)
CAC 40 down -36.70 (-0.70%) at 5,231 (YTD: 10.58%; 5YR: 20.3%)
DAX down -59.96 (-0.52%) at 11,458 (YTD: 8.51%; 5YR: 23.1%)
Nikkei 225 up +99.53 (+0.47%) at 21,125 (YTD: 5.55%; 5YR: 38.8%)
Hang Seng up +218.44 (+0.77%) at 28,447 (YTD: 10.06%; 5YR: 27.7%)
MSCI Emerging Markets down -13.44 (-1.29%) at 1,030 (YTD: 6.66%; 5YR: 7.8%)

Selected Government Bond Yields
US 10 Year up +0.01 at 2.64 (began the year at 2.68; 5 years ago it was 2.77)
US 2 Year up +0.01 at 2.47 (began the year at 2.49; 5 years ago it was 0.37)
UK 10 Year up +0.02 at 1.19 (began the year at 1.28; 5 years ago it was 2.78)
Germany 10 Year down 0.00 at 0.07 (began the year at 0.24; 5 years ago it was 1.64)
France 10 Year up +0.00 at 0.41 (began the year at 0.70; 5 years ago it was 2.22)
Italy 10 Year down -0.01 at 2.49 (began the year at 2.74; 5 years ago it was 3.40)
Japan 10 Year down 0.00 at -0.04 (began the year at -0.01; 5 years ago it was 0.63)
Barclays EM Basket up +0.01 at 6.02 (began the year at 6.22; 5 years ago it was 5.82)

Selected Currencies
$ strengthened +0.0001 versus € (+0.01%) at 1.1239 ($: YTD: 1.86%; 5YR: 18.9%)
€ strengthened +0.0018 versus £ (-0.16%) at 1.1557 (€: YTD: -3.69%; 5YR: 3.7%)
$ strengthened +0.0020 versus £ (+0.15%) at 1.2990 ($: YTD: -1.91%; 5YR: 21.8%)
¥ weakened -0.1700 versus $ (-0.15%) at 111.2100 (¥: YTD: 1.39%; 5YR: -7.4%)

Selected Commodities
Brent Crude ($/bbl) up +0.24 (+0.37%) at 65.40 (YTD: 23.00%; 5YR: -39.5%)
WTI Crude ($/bbl) down -0.59 (-1.04%) at 56.07 (YTD: 23.48%; 5YR: -45.3%)
Gold ($/ozt) down -1.94 (-0.15%) at 1296.46 (YTD: 1.09%; 5YR: -3.9%)
Copper ($/mt) down -28.50 (-0.44%) at 6395.00 (YTD: 7.21%; 5YR: -5.7%)

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