Today - Monday, November 30, 2015
- In early releases, China's manufacturing PMI has come in at 49.6 for November, slightly below an expected 49.8 and indicating that conditions are still slightly deteriorating as they have for months.
- The news puts Premier Li Keqiang's ambitious goal of 7% expansion for 2015 at risk.
- Nonmanufacturing PMI was at 53.6, suggesting some expansion in that area, and that was greater than October's 53.1.
- Previously: IMF approves addition of yuan to SDR basket (Nov. 30 2015)
- ETFs: FXI, ASHR, EWH, CAF, YINN, KWEB, PGJ, GXC, FXP, CYB, HAO, YANG, CNY, TAO, CHN, CHIX, PEK, CHIQ, CQQQ, MCHI, DSUM, TDF, QQQC, XPP, YAO, GCH, ASHS, YXI, CN, FXCH, CXSE, FCA, CHNA, CNXT, CHII, ECNS, CHIE, EWHS, CHIM, KBA, KFYP, FCHI, JFC, CBON, FHK, AFTY, CHNB, XINA, CHAD, ASHX, CHAU
- Stocks slipped in a quiet session, as consumer stocks fell and investors awaited more details on holiday shopping trends.
- Despite today's losses, the main indexes eked out small gains for the month, with the S&P +0.1%, the Dow +0.3% and Nasdaq +1.1% in November.
- The energy sector (+0.4%) settled at the top of the day's leaderboard even though crude oil gave up solid intraday gains to end lower by 0.2% at $41.63/bbl; for the month, WTI crude tumbled 10.7% while the energy sector lost 0.8%.
- The consumer discretionary sector (-0.8%) struggled today, as retailers (-2.2%) endured heavy selling amid reports of sluggish sales growth on Black Friday; even Target fell 1.3% despite upbeat comments about the start of its holiday shopping season.
- Today's investor participation was light until a late surge pushed the final NYSE floor volume above the 1.1B share mark.
- Treasury prices were little changed, while the benchmark 10-year note ended the day's high as the yield fell a basis point at 2.21%.
- The Chinese currency will join the greenback, the euro, cable, and the yen in the basket making up the IMF's Special Drawing Rights.
- The IMF's approval vote was expected and reported on earlier.
- The new basket will launch on Oct. 1, and the yuan will have a 10.92% weighting. The U.S. dollar's weighting will fall to 41.73% from 41.9%, the euro's weighting drops all the way to 30.93% from 37.4%, the pound to 8.09% from 11.3%, and the yen to 8.33% from 9.4%.
- ETFs: CYB, CNY, FXCH
- The New Orders subindex dove in November to 44.1 from 59.4 in October - putting that gauge at its lowest level since March. Production also fell sharply, but remained barely in expansion territory.
- The overall Chicago PMI fell to 48.7 from 56.2. Consensus had been for just a small decline to 54.0.
- Full report
- Noting it's been an erratic period of demand all through 2015, MNI Chief Economist Philip Uglow takes note of the global economic slowdown, the strong dollar, and weak oil as all impacting businesses to varying degrees.
- The 10-year Treasury yield is flat at 2.22%, but had been as high as 2.25% earlier in the session.
- ETFs: IEF, PST, IEI, TYO, DTYS, UST, VGIT, TBX, SCHR, GSY, TYD, ITE, DTYL, DFVL, FIVZ, TBZ, DFVS, TYNS
- Previously: Chicago PMI at 48.7, New Orders fall sharply to lower since March (Nov. 30)
- Among the rules which will be twisted to suit the purposes of whoever is running the Fed during the next crisis: The bank will be prohibited from making emergency loans to individual companies by a provision requiring any such facility be available to at least five firms.
- The new rules also require any emergency lending be made at a penalty rate and limit the length of such programs to just a year (this can be overwritten by the Fed board and Treasury Secretary).
- Had these rules been in place prior to 2008, the Fed would have been unable to bail out Bear Stearns and AIG (actually their counterparties) in 2008, says current Fed boss Janet Yellen.
- Stocks are set to start the holiday season marginally in the green. Asia was mixed to lower overnight, and Europe is adding to gains at midday - now higher by nearly 1%.
- The 10-year Treasury yield is up one basis point at 2.23%, gold is up $1 per ounce at $1,057, and oil is ahead $0.43 per barrel to $42.14.
- ETFs: SPY, QQQ, DIA, SH, SSO, SDS, VOO, IVV, UPRO, PSQ, SPXU, TQQQ, SPXL, RSP, SPXS, QID, SQQQ, QLD, DOG, DXD, RWL, UDOW, EPS, SDOW, DDM, VFINX, BXUB, QQEW, QQQE, SPLX, SFLA, BXUC, QQXT, SPUU, LLSP, UDPIX, OTPIX, RYARX
- The International Monetary Fund is expected to grant China's yuan reserve currency status at an executive board meeting today, in a decision that will elevate the renminbi and China's influence in the global economy.
- The group's benchmark currency basket, also known as special drawing rights, so far contains the U.S. dollar, euro, British pound and Japanese yen.
- While the decision is likely to be announced later today, the yuan will not officially become a reserve currency until September 2016.
- ETFs: CYB, CNY, FXCH
- Japan’s Government Pension Investment Fund (GPIF) is the world’s largest pension fund.
- GPIF was hit hard by this summer’s global stock rout, which wiped out $64B.
- The loss is GPIF’s first (see chart) since doubling its allocation to stocks and reducing debt last October. It highlights the risk of the fund’s more aggressive investment style.
- Fund managers have argued that holding more stocks and foreign assets is a better approach as Japanese Prime Minister Abe seeks to spur inflation that would erode the purchasing power of bonds.
- Source: Bloomberg
- ETFs: DXJ, EWJ, FXY, YCS, JGBS, DFJ, JGBD, DBJP, NKY, JYN, JOF, EZJ, JEQ, JPNL, DXJS, EWV, YCL, SCJ, HEWJ, JSC, JPXN, JGBL, JPP, JGBT, QJPN, FJP, JGBB, JPMV, DXJT, DXJC, DXJR, JHDG, DXJH, DXJF, HGJP, HEGJ, JDG, FXJP, JPN
- The euro is headed for a steep monthly decline as economists unanimously forecast the ECB will unveil additional stimulus this week.
- The currency has weakened 3.8% in November, its biggest loss since a 4.2% decline in March, when the central bank embarked on a €1.1T asset-purchase program.
- In contrast, the U.S. Federal Reserve is widely expected to hike interest rates at its mid-December policy meeting, sending up the dollar index to 100.23, its highest level since mid-March.
- Euro -0.1% to 1.0585.
- ETFs: FXE, UUP, EUO, UDN, ERO, DRR, FORX, USDU, EUFX, ULE, URR
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