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30 November 2018

30/11/2018

Morning Chat & Market Data

Morning Chat


Fairly Obscure Method of Communicating: That the S&P closed down 0.22% was mainly to do with the forthcoming G20 meeting between President Trump and President Xi of China.  That it wasn’t lower was likely due to the minutes of the Federal Open Market Committee (FOMC) meeting published yesterday.  Interpreting the minutes is like reading tea leaves, however it was fairly clear that with the robust labour market the much anticipated December rate hike is still on the cards.  But the committee also noted that the policy is not predetermined and global uncertainties (read tariffs and Brexit) could warrant a pause.

Cleaning House: Deutsche bank shares had a bad day – another one – closing down 3.4%.  The Deutsche Bank credit default swaps spread – a kind of bond insurance – also rose above 200, nearing the uncomfortable 2016 high. It’s never going to be a good day when vanloads of police, prosecutors and tax inspectors sweep through corporate headquarters to search for evidence of money laundering.  Moreover, this wasn’t over Danske Bank’s recent and ongoing Estonia scandal, but rather the 2016 Panama Papers incident and allegations that two bank employees had assisted laundering proceeds from criminal activities. Just don’t say it’s a fine day.

That was SaaS-isfactory: Salesforce – the developer of customer relationship management software – reported strong fiscal Q4 earnings and the shares popped 10.3% on Wednesday making it one of the best days in the last 10 years. Yesterday Workday – a developer of human resource management software – and Splunk who create big data mining software – also announced better than expected revenues, and – possibly more importantly – increased their guidance for the coming quarter.  Their shares were up 9.5% and 6.8% by the close of the aftermarket yesterday.  The strong results from the three Software-as-a-Service companies shows there’s still life in the tech sector yet.

… and Apple is bigger than Microsoft again!

Market Data 


Selected Global Aggregates (Total returns, unhedged)
 
MSCI AC World Equities (Local) up +0.28 (+0.02%) at 1,163 (YTD: -0.35%; 5YR: 49.8%)
MSCI AC World Equities (USD) up +22.50 (+0.27%) at 8,380 (YTD: -1.02%; 5YR: 41.5%)
Barclays Global Aggregate Bonds up +2.46 (+0.52%) at 470 (YTD: -2.98%; 5YR: 3.0%)
 
Selected Equity Indices
S&P 500 down -6.03 (-0.22%) at 2,738 (YTD: 2.40%; 5YR: 51.6%)
NASDAQ down -18.51 (-0.25%) at 7,273 (YTD: 5.36%; 5YR: 79.1%)
Euro STOXX 50 up +5.87 (+0.19%) at 3,174 (YTD: -9.41%; 5YR: 2.8%)
FTSE 100 up +34.43 (+0.49%) at 7,039 (YTD: -8.44%; 5YR: 5.8%)
CAC 40 up +23.01 (+0.46%) at 5,006 (YTD: -5.77%; 5YR: 16.6%)
DAX down -0.65 (-0.01%) at 11,298 (YTD: -12.54%; 5YR: 20.1%)
Nikkei 225  up +88.46 (+0.40%) at 22,351 (YTD: -1.82%; 5YR: 42.7%)
Hang Seng up +104.55 (+0.40%) at 26,556 (YTD: -11.24%; 5YR: 11.2%)
MSCI Emerging Markets up +6.38 (+0.64%) at 998 (YTD: -13.85%; 5YR: -2.0%)
 
Selected Government Bond Yields
US 10 Year down -0.01 at 3.02 (began the year at 2.41; 5 years ago it was 2.74)
US 2 Year down 0.00 at 2.81 (began the year at 1.88; 5 years ago it was 0.28)
UK 10 Year down -0.01 at 1.37 (began the year at 1.19; 5 years ago it was 2.77)
Germany 10 Year down -0.08 at 0.32 (began the year at 0.42; 5 years ago it was 1.69)
France 10 Year down -0.08 at 0.69 (began the year at 0.78; 5 years ago it was 2.15)
Italy 10 Year down -0.35 at 3.19 (began the year at 2.01; 5 years ago it was 4.06)
Japan 10 Year down -0.04 at 0.09 (began the year at 0.04; 5 years ago it was 0.60)
Barclays EM Basket down -0.03 at 6.14 (began the year at 5.49; 5 years ago it was 5.66)
 
Selected Currencies
€/$ down +0.001 (+0.11%) at 1.139 (YTD: -5.30%; 5YR: -16.2%)
£/€ down +0.002 (-0.13%) at 1.122 (YTD: -0.25%; 5YR: -7.3%)
£/$ down 0.000 (-0.02%) at 1.278 (YTD: -5.52%; 5YR: -21.9%)
$/¥ up +0.03 (-0.03%) at 113.44 (YTD: 0.76%; 5YR: 9.7%)
 
Selected Commodities
Brent Crude ($/bbl) down +0.30 (+0.51%) at 59.24 (YTD: -11.34%; 5YR: -46.4%)
WTI Crude ($/bbl) down +1.16 (+2.31%) at 51.45 (YTD: -14.85%; 5YR: -44.5%)
Gold ($/ozt) down +0.49 (+0.04%) at 1224.68 (YTD: -6.01%; 5YR: -2.3%)
Copper ($/mt) up +12.00 (+0.19%) at 6212.00 (YTD: -14.28%; 5YR: -11.9%)
 
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