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17th July 2020

17/07/2020

Market Data and Morning Chat

Morning Chat

The Case of the Marginally-Down Markets: It was Thursday. The markets were seeing red. They were down, but the count only reached ½% or so, maybe a bit more for Nasdaq. They’d all been beaten back more than that in the morning, battered by the Chinese. The guys in Peking had announced June retail sales numbers were down and the investors weren’t happy.  But equities spent the day picking themselves of the mat thanks to a rotation into a more defensive stance. A rotation into utilities (+1.0%) and away from the big tech guys (-1.2%) while the cruise lines gave back some of their winnings too.
  
The Case of the Loggerhead Leaders: 
Her name’s Lagarde. Christiane Lagarde and she heads up the ECB. That’s the European Central Bank to you and me. It’s her job to talk to the press, and she handled it. She struck a tone of cautious optimism. The economy was playing out as predicted. Hit hard in the second quarter, rebounding swiftly in the third. So she was leaving rates unchanged. However, Lagarde did say she’d use the Bank’s full bond-buying firepower if needed.  She also told the members of the EU Commission they needed to agree the critical fiscal package. Today. An offer they hopefully can’t refuse.
  
The Case of the Tally-less Toilers: 
The numbers guys did the count. Twice. But the numbers didn’t agree. One, the Labour Force Survey said there were 180,000 less workers on the books, the other, the PAYE accounts said there were around 650 grand not making a dime. Nearly half a mill’s a big difference to explain, and it fell to Jonathan Athow, Deputy National Statistician, the numbers guy numbers guys turn to, to take a stab at it. He suspects they’re unpaid workers seeing themselves temporarily away from the job, but still with one to go to, like, say, informal bar staff. Let’s hope the jobs are there when they can return. Half a mill’s a lot to lose.
  
Equity market futures are signalling a recouping of about half of yesterday’s loss, up around ¼%
 … but China shares give ground on concern US may restrict American travel by party members
 Johnson & Johnson (+1.5%) plastered improved guidance on their better-than-hoped earnings
 Abbot Labs (+1.0%) tested positive for profits on healthy $615million Covid-19 tester kit sales
 Bank of America (-3.1%) merited a stronger showing after banking better earnings than forecast
 Morgan Stanley (+2.9%) saw bond trading income triple and overall profits hit all-time highs 
 Netflix (-8.2%) streamed lower after issuing weak new subscriber forecast and changing CEO
 Domino’s (-1.7%) slides on weak international showing despite spicy 16.1% sales gain in US
 Taiwan Semi (+0.5%) ups guidance while sales gain & 40% margins certainly not wafer thin
 Ericsson (-0.8%) rang up solid results today as telecoms companies kept up system spending
 After strong 15% Qinnepac poll lead, Biden looks to average 9% lead on Trump nationally

 … but Biden’s slidin’ in a couple key swing states – Arizona & Wisconsin - over the week
 

Market Data

Selected Global Aggregates (Total returns, unhedged)
MSCI AC World Equities (Local) down -7.87 (-0.58%) at 1,355 (YTD: -1.49%; 5YR: 44.8%)
MSCI AC World Equities (USD) down -42.57 (-0.43%) at 9,813 (YTD: -1.66%; 5YR: 45.5%)
Barclays Global Aggregate Bonds up +0.65 (+0.12%) at 533 (YTD: 4.21%; 5YR: 21.5%)
 
Selected Equity Indices (Capital returns)

S&P 500 down -10.99 (-0.34%) at 3,216 (YTD: -0.47%; 5YR: 51.2%)
NASDAQ down -76.66 (-0.73%) at 10,474 (YTD: 16.73%; 5YR: 101.0%)
Euro STOXX 50 down -12.86 (-0.38%) at 3,365 (YTD: -10.14%; 5YR: -8.3%)
FTSE 100 down -41.96 (-0.67%) at 6,251 (YTD: -17.13%; 5YR: -7.7%)
CAC down -23.70 (-0.46%) at 5,085 (YTD: -14.93%; 5YR: -0.8%)
DAX down -56.01 (-0.43%) at 12,875 (YTD: -2.82%; 5YR: 10.3%)
Nikkei 225  down -105.08 (-0.46%) at 22,665 (YTD: -4.19%; 5YR: 9.8%)
Hang Seng up +91.60 (+0.37%) at 25,062 (YTD: -11.09%; 5YR: -1.4%)
MSCI Emerging Markets down -20.26 (-1.90%) at 1,046 (YTD: -6.16%; 5YR: 11.1%)
 
Selected Government Bond Yields

US 2 Year unchanged at 0.15 (began the year at 1.57; 5 years ago it was 0.67)
US 10 Year down 0.00 at 0.61 (began the year at 1.92; 5 years ago it was 2.35)
UK 10 Year down -0.03 at 0.14 (began the year at 0.82; 5 years ago it was 2.08)
Germany 10 Year down 0.00 at -0.47 (began the year at -0.19; 5 years ago it was 0.79)
France 10 Year down 0.00 at -0.16 (began the year at 0.12; 5 years ago it was 1.07)
Italy 10 Year down 0.00 at 1.18 (began the year at 1.41; 5 years ago it was 1.92)
Japan 10 Year up +0.00 at 0.01 (began the year at -0.02; 5 years ago it was 0.42)
Barclays EM Basket down -0.02 at 3.71 (began the year at 4.27; 5 years ago it was 5.31)
 
Selected Currencies

$ strengthened +0.0022 versus € (+0.19%) at 1.1387 ($: YTD: -1.41%; 5YR: -4.9%)
€ strengthened +0.0001 versus £ (-0.01%) at 1.1032 (€: YTD: 7.08%; 5YR: 30.5%)
$ strengthened +0.0025 versus £ (+0.20%) at 1.2563 ($: YTD: 5.28%; 5YR: 19.6%)
¥ weakened -0.0100 versus $ (-0.01%) at 107.2000 (¥: YTD: -1.29%; 5YR: 15.7%)
 
Selected Commodities

Brent Crude ($/bbl) down -0.11 (-0.25%) at 43.36 (YTD: -34.72%; 5YR: -23.0%)
WTI Crude ($/bbl) down -0.45 (-1.09%) at 40.75 (YTD: -33.26%; 5YR: -20.0%)
Gold ($/ozt) down -2.07 (-0.11%) at 1799.21 (YTD: 18.15%; 5YR: 58.7%)
Copper ($/mt) up +50.50 (+0.79%) at 6436.50 (YTD: 4.25%; 5YR: 15.8%)
 
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