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26 September 2019

26/09/2019

Market Data and Morning Chat

Morning Chat

Take a memo: Even Nixon had tapes, so it’s surprising Donald Trump’s transcript of his call with the Ukrainian President was not a verbatim copy, but a White House memorandum. It gives the flow of the call, and Trump doesn’t appear to pressure the Ukrainians, but one wonders – like an episode of Yes, Prime Minister - if purpose of the memorandum is not to record events, but to protect people.  Still, it weakens the leaked allegations.  Then add Trump’s remarks that the US-China deal could come sooner than expected and you can see why US markets rallied ½ to 1%.

Is that oil right then: Ok, oil takes a while to travel through the system from well-head to refinery to finished product, and the damage to the Abqaiq processing facility is still recent news, so relying on the current inventory numbers (which also have a lag) may be seen as a little too enthusiastic. Moreover, seasonal expectations call for the beginnings of an inventory build around now.  However, given expectations of a decline (which seems the bigger surprise), when American Petroleum Institute and Energy Information Administration numbers backed the trend up – inventories rose – oil prices slipped abut $1.50 to $2.00.

The technicality of German recessions: Manufacturing is important to Germany and seeing the Markit manufacturing PMI and IFO expectations surveys below forecasts has heightened calls for Angela Merkel’s government to loosen the purse strings to avoid a technical recession – Germany already has one negative quarter of growth racked up.  However, German recessions are not unusual. Since reunification, Germany’s had 7 (the US only 4) – one every 4 years  – and 31 of the 113 quarters have seen falling GDP. Indeed, the economy only grows in two-thirds of quarters.  What matters is the depth of decline and this one looks very mild.

BATS(+3.3%) and Imperial (2.3%) had a smoking time as Philip Morris & Altria stub out merger
Maybe its Oktoberfest anticipation, but German Gfk consumer sentiment rose to 9.9 from 9.7
Bonne Nouvelles, French consumer also beat expectations too, rising to 104 from 103
Market futures looking quite red and impeachment news weighs on sentiment

Market Data


Selected Global Aggregates (Total returns, unhedged)    
MSCI AC World Equities (Local) up +2.16 (+0.17%) at 1,275 (YTD: 17.70%; 5YR: 50.5%)
MSCI AC World Equities (USD) up +10.48 (+0.11%) at 9,191 (YTD: 18.26%; 5YR: 44.9%)
Barclays Global Aggregate Bonds down -2.28 (-0.45%) at 510 (YTD: 6.41%; 5YR: 10.3%)
    
Selected Equity Indices (Capital returns)    
S&P 500 up +18.27 (+0.62%) at 2,985 (YTD: 19.07%; 5YR: 50.5%)    
NASDAQ up +83.76 (+1.05%) at 8,077 (YTD: 21.73%; 5YR: 79.0%)    
Euro STOXX 50 down -19.02 (-0.54%) at 3,513 (YTD: 17.05%; 5YR: 9.1%)    
FTSE 100 down -1.44 (-0.02%) at 7,290 (YTD: 8.35%; 5YR: 9.6%)    
CAC down -44.53 (-0.79%) at 5,584 (YTD: 18.03%; 5YR: 27.1%)    
DAX down -72.97 (-0.59%) at 12,234 (YTD: 15.87%; 5YR: 28.9%)    
Nikkei 225  up +28.09 (+0.13%) at 22,048 (YTD: 10.16%; 5YR: 35.8%)    
Hang Seng up +32.81 (+0.13%) at 25,978 (YTD: 0.51%; 5YR: 9.7%)    
MSCI Emerging Markets down -5.79 (-0.57%) at 1,006 (YTD: 4.12%; 5YR: -1.8%)    
    
Selected Government Bond Yields    
US 2 Year down -0.02 at 1.66 (began the year at 2.49; 5 years ago it was 0.57)    
US 10 Year down -0.05 at 1.69 (began the year at 2.68; 5 years ago it was 2.53)    
UK 10 Year up +0.01 at 0.54 (began the year at 1.28; 5 years ago it was 2.47)    
Germany 10 Year down -0.01 at -0.58 (began the year at 0.24; 5 years ago it was 0.97)    
France 10 Year down 0.00 at -0.28 (began the year at 0.70; 5 years ago it was 1.31)    
Italy 10 Year down -0.01 at 0.83 (began the year at 2.74; 5 years ago it was 2.38)    
Japan 10 Year up +0.01 at -0.25 (began the year at -0.01; 5 years ago it was 0.52)    
Barclays EM Basket down -0.01 at 5.53 (began the year at 6.22; 5 years ago it was 5.35)
    
Selected Currencies    
$ weakened -0.0009 versus € (-0.08%) at 1.0952 ($: YTD: 4.37%; 5YR: 13.7%)    
€ strengthened +0.0004 versus £ (-0.04%) at 1.1286 (€: YTD: -1.38%; 5YR: 13.4%)    
$ weakened -0.0007 versus £ (-0.06%) at 1.2362 ($: YTD: 3.01%; 5YR: 23.9%)    
¥ strengthened +0.1800 versus $ (+0.17%) at 107.6200 (¥: YTD: -1.90%; 5YR: 1.6%)    
    
Selected Commodities    
Brent Crude ($/bbl) down -0.33 (-0.53%) at 61.74 (YTD: 16.12%; 5YR: -35.2%)    
WTI Crude ($/bbl) down -0.85 (-1.49%) at 56.32 (YTD: 24.03%; 5YR: -40.3%)    
Gold ($/ozt) up +5.85 (+0.39%) at 1509.79 (YTD: 17.73%; 5YR: 23.9%)    
Copper ($/mt) up +7.00 (+0.12%) at 5787.00 (YTD: -2.98%; 5YR: -13.6%)    
    
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