Good Morning from Ascot Securities
Happy Birthday Joe E. Brown (1891)
Joe was responsible for one of the most famous lines ever uttered in a movie.
Jack Lemon had been impersonating a woman called “Jerry” with whom Joe’s character (Osgood) had fallen in love.
Jerry tries to discourage Osgood…
Jerry: Oh no you don’t! Osgood, I’m gonna level with you. We can’t get married at all.
Osgood: Why not?
Jerry: Well, in the first place, I’m not a natural blonde.
Osgood: Doesn’t matter.
Jerry: I smoke! I smoke all the time!
Osgood: I don’t care.
Jerry: Well, I have a terrible past. For three years now, I’ve been living with a saxophone player.
Osgood: I forgive you.
Jerry: [tragically] I can never have children!
Osgood: We can adopt some.
Jerry: But you don’t understand, Osgood! Ohh…[Jerry finally gives up and pulls off his wig]
Jerry: [normal voice] I’m a man!
Osgood: [shrugs] Well, nobody’s perfect!
Chinese regulators seemed hell bent on discouraging investors yesterday. While the Japanese government tried to build some excitement.
Japanese Prime Minister Shinzo surprised markets when he hinted at a bigger than expected 28 trillion yen stimulus package ahead of tomorrow’s BoJ decision while the Chinese President Xi Jinping reportedly called for curbs to avoid asset bubbles.
The Nikkei gained as much as 2.7% intra-day before closing up 1.7% after Abe’s speech but question s remain as to the details of the package which is to be drawn up next week.
Ahead of the BoJ monetary policy decision, expectations for wild swings in the dollar/yen rose the most since 1995.
Fujifilm reminded investors about the impact of the stronger yen on earnings for exporters when it reported a 54% yoy fall in first quarter earnings.
Fujifilm shares still managed a 2% rise on the day.
Fears that regulators will clamp down on speculative trading and restrict trading in overseas markets through online brokers had the Shanghai Composite down as much as 3.6% yesterday before closing down 1.9%.
Additional concerns surrounded speculation the China Banking Regulatory Commission was considering curbs on wealth management products.
That sparked a sharp sell- off in small caps…
…and volatility doubled from what had been a two year low.
Compared to Asian trading, European markets were positively dull.
Gains were made across the continent with the CAC rising 1.2% on some good earnings numbers from LVMH Louis Vuitton and Peugeot.
UK GDP rose a better than expected 0.6% in the second quarter, up from 0.4% in the first quarter.
However retail sales fell at the fastest rate since early 2012.
The FTSE rose a more modest 0.4%, the DAX gained 0.7% and the Stoxx 600 rose 0.4%.
Given the positive lead from Japan and Europe, US markets had every right to rise overnight.
The 6.5% rise in Apple shares should have made it a certainty.
Apple’s quarterly surprised on the upside but despite the rise overnight the shares are still well down on the year.
However the FOMC decision kept markets on the back burner.
The Fed pointed to the strengthening labour market and diminished near-term risks to the economic outlook.
That puts December firmly back in play for a rate hike and increases the likelihood of a move as early as September.
Durable goods orders seemed to argue against the Fed’s case though.
The 4.0% decline in durable goods orders in June compared to expectations of a decline of just 1.3%.
Pending home sales rose just 0.2% compared forecasts for a 1.3% rise.
Would you like to upsize that?
The biggest drags on the Dow were Coca Cola and McDonalds
Coca Cola fell 3.3% after it missed on revenue and disappointed on guidance in its latest results.
Consumer staples were the weakest sector on the S&P, leading six sectors lower as the S&P lost 0.1%.
Ahead of local trade the SPI is up 11 points
Chart(s) of the Day
The price of iron ore into the port of Qingdao rose 2.2 % to US$58.08 a tonne.
BHP – Will Record Provision of US$1.1B-US$1.3B in Relation to Samarco Disaster.
MQG – the AGM release: MD & CEO Nicholas Moore, said performance from MQG’s operating groups was in line with expectations, with the Q1 2017 financial year’s contribution down on a strong 1Q16 and up on the 4Q16. MQG currently expects the FY17 combined net profit contribution from operating groups to be broadly in line with FY16.
SFR – Qtrly: Record annual copper production achieved for FY21016: above guidance. Strong mine production and milling rates maintained for the Quarter. FY2017 production guidance: 65-68kt Cu and 35-40koz gold at C1 ~US0.95-1.05/lb.
PGR – Announced it has signed an agreement for the sale of its Metalicus business to the General Pants Group. The divestment will positively impact EBITDA in FY2017, as although Metalicus sales in FY2016 were c.$25m the profitability has been disappointing.
GUD – Swings to FY16 Net Loss A$43M Vs A$33.2M Profit in FY15.
BOJ policy meeting kicks off today. Going to be a bit hard for Kuroda-san to keep kicking the can down the road after the government’s rather lumpy stimulus package announced yesterday. I guess we’ll see tomorrow when the meeting concludes.
Profits for China’s manufacturers grew faster in June as their production and sales accelerated, the National Bureau of Statistics said yesterday. Their combined net profit for the month rose 5.1% year on year to 616.3 billion yuan (US$92.4 billion), from a 3.7% growth in May, the bureau said. For the first six months, their profit grew 6.2% year on year to 3 trillion yuan…
…but Chinese consumers don’t appear to be feeling the joy with MNI with their confidence dipping in July as they grew more nervous about their personal finances and weakness in the labour market, which saw them not buying big-ticket items. The MNI China Consumer Sentiment Indicator fell 1.6 percent to 114 points in July from 115.9 a month ago.
The head of South Korea’s central bank on Wednesday stressed the importance of a fiscal and restructuring policy than a monetary one in tackling the country’s low growth. Given rates are at historical lows and they’ve seen the dismal failure of the BOJ’s interest rate policy it may not be surprising the pressure is being put back on the politicians.
Today The Market Will Be Watching:
– South Korea June:
* Industrial Output, no est. (prior 4.3% Y/Y)
* Service Sector Output, no est. (prior 0.1% Y/Y)
– Singapore Q2 Unemployment Rate, no est. (prior 1.9%)
– Macau June Hotel Occupancy Rate, no est. (prior 79.3%)
– Earnings Including AIA, SoftBank, Chunghwa Telecom, Kao Corp, OCBC Bank, Murata, Mitsubishi Electric, Yahoo Japan, CKI Holdings, UOB, Oriental Land, Power Assets
* Weekly Jobless Claims, est. 260K
* June Goods Trade Balance, no est. $-61B
* July Kansas Fed Manufacturing Activity, no est. (prior 12)
* EIA Natural Gas Storage Change, no est. (prior 34Bcf)
– UK July Gfk Consumer Confidence, est. -8
– Eurozone July:
* Consumer Confidence, est. -7.9
* Services Sentiment, est. 10.4
* Industrial Confidence, est. -3.4
* Business Climate, est. 0.17
* Economic Sentiment Indicator, est. 103.7
– Germany July Preliminary CPI:
* M/M, est. 0.2%
* Y/Y, est. 0.3%
– Earnings Including International Paper, Harley-Davidson, ConocoPhillips, Dow Chemical, Colgate-Palmolive, Bristol- Myers Squibb, American Tower, Hershey, Ford Motor, S&P, MasterCard, Alphabet, Amazon.com, Vale, Thomson Reuters, America Movil, Credit Suisse, BNP Paribas, Danone, Renault, Total, AstraZeneca, Royal Dutch, Diageo, Rolls-Royce, Carrefour, L’Oreal, Volkswagen, Areva, British American Tobacco, Enel