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29 November 2018

29/11/2018

Morning Chat & Market Data

Morning Chat


Brexchequer warning: Yesterday the UK Treasury published their 83-page “EU Exit” report illuminating the economic hit of various Brexit scenarios – except, surprisingly, the Chequers deal.  Maybe nobody read it as the pound, UK bond yields and the equity market barely moved.  David Davis called it “Project Fear 2.0” and everyone knows sequels rarely do as well at the box office.  In fairness, the Treasury note the uncertainties in such forecasts, caveat they have not modelled any policy responses and advise caution. Their worst of worst no deal outcomes? GDP while higher, misses out on 10.7% of growth over 15 years

...and some optimistic news: At midday Eastern Standard Time, Federal Reserve Chairman Jerome Powell gave a televised speech at the Economic Club of New York. His words rallied the markets and by the close the S&P was +2.29% and Nasdaq +2.95% - their best day in about 6 months. Indeed, significant gains came within just 10 minutes.  While he noted the solid outlook with rapid job growth and non-accelerating inflation, the key words were that rates were “just below” neutral.  Hopefully the Federal Open Market Committee meeting minutes later today will reinforce the more dovish outlook. The Powell Call anyone?

By Presidential decree? The US Energy Information Administration published its weekly crude oil inventories data yesterday reporting a 3.6 million build – much as expected.  West Texas oil still fell ¢50 on the news.  That puts the oil price just below the 25-year average of $51.60, and – if you inflation adjust – below the 35 year average.  June 25th, when oil was $75 a barrel, President Donald Trump demanded that the oil price fall.  It started to, recovered, but from October 4th it’s tumbled by a third even with Iran sanctions. Luckily increased US shale oil supply caused the fall, not Donald.

Market Data 


Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) up +17.10 (+1.49%) at 1,163 (YTD: -0.38%; 5YR: 49.8%)
MSCI AC World Equities (USD) up +122.74 (+1.49%) at 8,358 (YTD: -1.28%; 5YR: 41.2%)
Barclays Global Aggregate Bonds down -0.34 (-0.07%) at 468 (YTD: -3.49%; 5YR: 2.5%)

Selected Equity Indices
S&P 500 up +61.62 (+2.30%) at 2,744 (YTD: 2.62%; 5YR: 51.9%)
NASDAQ up +208.89 (+2.95%) at 7,292 (YTD: 5.62%; 5YR: 79.6%)
Euro STOXX 50 up +1.87 (+0.06%) at 3,168 (YTD: -9.58%; 5YR: 2.6%)
FTSE 100 down -12.33 (-0.18%) at 7,005 (YTD: -8.89%; 5YR: 5.3%)
CAC 40 up +0.09 (+0.00%) at 4,983 (YTD: -6.20%; 5YR: 16.0%)
DAX down -10.23 (-0.09%) at 11,299 (YTD: -12.53%; 5YR: 20.1%)
Nikkei 225  up +85.58 (+0.39%) at 22,263 (YTD: -2.21%; 5YR: 42.1%)
Hang Seng down -243.32 (-0.91%) at 26,439 (YTD: -11.63%; 5YR: 10.7%)
MSCI Emerging Markets up +11.51 (+1.17%) at 992 (YTD: -14.40%; 5YR: -2.6%)
 
Selected Government Bond Yields
US 10 Year down -0.04 at 3.02 (began the year at 2.41; 5 years ago it was 2.74)
US 2 Year down -0.02 at 2.78 (began the year at 1.88; 5 years ago it was 0.28)
UK 10 Year down -0.02 at 1.38 (began the year at 1.19; 5 years ago it was 2.77)
Germany 10 Year down -0.07 at 0.33 (began the year at 0.42; 5 years ago it was 1.69)
France 10 Year down -0.06 at 0.72 (began the year at 0.78; 5 years ago it was 2.15)
Italy 10 Year down -0.29 at 3.25 (began the year at 2.01; 5 years ago it was 4.06)
Japan 10 Year down -0.05 at 0.08 (began the year at 0.04; 5 years ago it was 0.60)
Barclays EM Basket up +0.01 at 6.18 (began the year at 5.49; 5 years ago it was 5.66)

Selected Currencies
€/$ down +0.005 (+0.41%) at 1.139 (YTD: -5.26%; 5YR: -16.2%)
£/€ down +0.002 (-0.17%) at 1.127 (YTD: 0.16%; 5YR: -6.9%)
£/$ down +0.003 (+0.23%) at 1.284 (YTD: -5.09%; 5YR: -21.6%)
$/¥ up +0.44 (-0.39%) at 113.26 (YTD: 0.60%; 5YR: 9.5%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.23 (+0.40%) at 58.28 (YTD: -12.78%; 5YR: -47.3%)
WTI Crude ($/bbl) down -1.27 (-2.46%) at 50.29 (YTD: -16.77%; 5YR: -45.5%)
Gold ($/ozt) down +5.45 (+0.45%) at 1226.67 (YTD: -5.86%; 5YR: -2.1%)
Copper ($/mt) up +78.50 (+1.28%) at 6200.00 (YTD: -14.45%; 5YR: -11.7%) 
 
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