Manufacturing is in retreat, threatening to take the global economy down with it

If the world’s factories are any measure, then the global economy is looking rather gloomy at the moment.

Key points:Global manufacturing output is at a three-year low, teetering on contractionAround 17 central banks are expected to cut rates this quarter to combat the global slowdownExpectations of a 50-basis-point cut from the US Federal Reserve this month have eased

In June, manufacturing output slipped to a three-year low. It is now teetering on contraction.

European output is already in reverse, and has been for some time, dragged down to a large extent by German factories which have been enduring recessionary conditions for much of the year.

As measures of economic health go, Purchasing Managers’ Indexes (PMI) are pretty dependable.

The global PMI, collated by the big investment bank JP Morgan, found the falling June output pointed to manufacturing stalling mid-year.

Currently, JP Morgan’s global composite PMI is holding just above 50 — the mark denoting economic expansion — while the forward-looking “new orders” PMI fell under 50 in May for the first time since 2012.

Part of it can be sheeted back to global trade hostilities, particularly between the US and China, and part of it is just a cyclical economic funk.

Slowdown driving rate cuts

Overall demand is sluggish and inventory stockpiles are not exactly flying off the shelves.

Drilling down into the data, the surveys suggest confidence is sliding and business investment is likely to stay weak for the foreseeable future.

All are regarded as harbingers of a downturn, not a rebound.

The advanced July PMIs start rolling out this week and are likely to have a big say in where interest rates are heading.

Well, they’re heading down — but where, and by how much, are the big questions.

Markets are pricing

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Is An Oil ETF Rally On Middle East Tensions Sustainable?

President Trump recently confirmed the destruction of an Iranian drone in the Strait of Hormuz by the U.S. Navy. This drove oil prices by 2%. The U.S. Navy claims that it acted in self-defense as the aircraft came alarmingly close to the vessel and ignored multiple warnings to stand down.

The incident followed U.S. Central Command chief General Kenneth McKenzie’s comments that the United States will take the required measures against the latest attacks on oil tankers in the Gulf. In June 2019, Iran had shot one U.S. Navy drone down. However, Tehran continues to deny any attack. In this regard, Iran’s Deputy Foreign Minister Abbas Araqchi had tweeted on Jul 19 that Tehran has “not lost any drone in the Strait of Hormuz nor anywhere else” (read: Iran Downs U.S. Drone: Sector ETFs & Stocks to Gain).

Other Factors Driving Oil

Here are certain developments that have been fueling the rally in oil prices:

Possible Rate Cuts by Fed

New York Fed President John Williams (NYSE:WMB)’ latest speech, hinting at a more aggressive approach to rate cuts, contributed to the rally in oil prices. However, the Fed had to later clarify that the market misinterpreted the speech as a rate cut signal. It is worth noting here that Federal Reserve’s Chairman Jerome Powell recently indicated Fed’s intention to cut interest rates, should the need be. Investors forecast a quarter-point slash in interest rates after a stronger jobs report curbed projections for a rate cut by 50 basis points.

OPEC’s Initiative to Cut Oil Output

OPEC has of late decided to extend the oil production cut through 2020 in a bid to boost oil prices. Russia is once again cooperating with OPEC on the same.

Tensions Brew Over Iran’s Nuclear Program

Iran recently increased its enrichment levels for uranium from

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Technical rebound expected

Daily FBM KLCI chart as at June 19, 2019

The market was bearish in the past one week on falling commodities prices especially crude oil and directionless markets performances in the region. However, the FBM KLCI staged a rebound last Friday and this indicates some support.

The FBM KLCI declined 0.8 per cent in a week to 1,669.45 points last Friday.

Trading volume increased significantly last week but more retail activity. The average daily trading volume has increased to 3.2 billion shares last week from 2.7 billion shares the week before. The average daily trading value fell to RM1.9 billion from RM2 billion. This indicates more lower-capped stocks, which are favoured by the retail market, were being traded.

The retail market was net buyer while both local and foreign institutions were net sellers. Net buy from local retail was RM57.9 million. Net sells from local and foreign institutions were RM51.0 million and RM6.9 million respectively.

In the FBM KLCI, decliners outpaced gainers two to one. The top three gainers were Press Metal Dialog Group Bhd (3.9 per cent in a week to RM3.51), Genting Malaysia Bhd (2.1 per cent to RM3.36) and Maxis Bhd (1.2 per cent to RM5.70).

The top three decliners were Petronas Chemicals Group Bhd (7.2 per cent to RM7.81), Axiata Group Bhd (1.9 per cent to RM5.08) and Malaysia Airports Holdings Bhd (1.8 per cent to RM8.60).

Market indices performances in Asia were mixed. In Europe, most major markets indices closed lower. The UK’s FTSE100 index was firm while the US Dow Jones Industrial Average pulled back to close marginally lower after climbing to historical highs.

The US dollar has slightly strengthened against major currencies. The US dollar Index slightly declined to 97.1 points from 96.7 points

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Earnings Outlook: Visa earnings: As Facebook seeks to change payments, Visa stays the course

As Facebook Inc. swims in criticism over its new efforts in cryptocurrency, one of the stalwarts of payments continue to thrive. Visa Inc. shares hit a new all-time high last week, and the card company will be looking to show that it remains on the cutting edge of digital payments when it reports earnings next Tuesday afternoon.

What to expect

Earnings: Analysts surveyed by FactSet expect Visa V, -0.71%  to report adjusted earnings per share of $1.32, up from $1.20 a year earlier. According to Estimize, which crowdsources projections from hedge funds, academics and others, the average estimate calls for $1.37 in EPS.

Visa has beaten the FactSet EPS consensus in the past 14 quarters.

Revenue: The FactSet consensus calls for $5.7 billion in revenue, while the Estimize consensus projects $5.8 billion. A year prior, Visa reported $5.2 billion in revenue.

Stock movement: Visa shares have risen following six of the company’s past 10 earnings reports. The stock has gained 36% so far this year, as the Dow Jones Industrial Average DJIA, -0.25%  has climbed 17%. Of the 39 analysts tracked by FactSet who cover Visa’s stock, 35 rate it a buy, three call it a hold, and one rates it a sell. The average price target is $186.92, 4.2% above current levels.

What else to watch for

Analysts see positive indications for the card companies coming out of recent bank earnings. Barclays’ Ramsey El-Assal points to JPMorgan Chase & Co.’s JPM, -0.99%  and Wells Fargo Corp.’s WFC, +0.46%  accelerating purchase-volume growth, which along with “other leading indicators similarly point to a broadly healthy spending environment in the U.S.”

El-Assal has an overweight rating and $170 target price on Visa shares.

Wedbush analyst Moshe Katri expects Visa to benefit from recently announced mega-mergers between merchant issuers and processors, which management

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Rate cut expectations, Iran tensions drag on S&P 500

US stocks on Friday pulled further back from their records to cap the weakest week for the S&P 500 since May.

Indices sloshed between small gains and losses for much of the day before turning lower in the afternoon after Iran said that it had seized a British oil tanker, the latest escalation of tensions between Tehran and the West.

Reined-in expectations for how deeply the US Federal Reserve will cut interest rates at its next meeting also weighed on stocks.

The S&P 500 on Friday fell 18.50 points, or 0.6 percent, to 2,976.61. After setting its record high on Monday, the index see-sawed mostly lower and lost 1.2 percent from a close of 3,013.77 on July 12. It was just the second down week for the index in the past seven.

The Dow Jones Industrial Average on Friday fell 68.77, or 0.3 percent, to 27,154.20, falling 0.7 percent from 27,332.03 a week earlier.

The NASDAQ Composite on Friday lost 60.75, or 0.7 percent, to 8,146.49, dropping 1.2 percent from a close of 8,244.14 on July 12.

The Russell 2000 index of smaller stocks on Friday fell 7.73 points, or 0.5 percent, to 1,547.90, a decrease of 1.4 percent from 1,570.00 a week earlier.

Momentum for stocks has slowed since early last month, when they began soaring on expectations that the Federal Reserve would cut interest rates for the first time in a decade to ensure the US economy does not succumb to weaknesses abroad.

The Fed’s next meeting is scheduled for the end of this month.

Late on Thursday, US Treasury yields sank after comments by Fed officials raised expectations that it might cut rates by half a percentage point, rather than the typical quarter point.

However, yields climbed on Friday as the market grew more convinced that the

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TAIEX rises on hopes of Fed rate cut

Local shares on Friday finished higher after getting a boost from rising hopes that the US Federal Reserve would cut interest rates in the near future, dealers said.

Buying focused on the bellwether electronics sector, led by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which gave a better-than-expected sales forecast for the third quarter, while old economy and financial stocks appeared mixed, they said.

The TAIEX on Friday ended up 73.91 points, or 0.68 percent, at 10,873.19, after moving between 10,861.99 and 10,919.96, on turnover of NT$122.57 billion (US$3.95 billion). That was a 0.5 percent increase from a close of 10,824.35 on July 12.

The market opened up 0.58 percent as investors rushed to buy large-cap electronics stocks in reaction to a strong recovery overnight on the Dow Jones Industrial Average, which ended up 3.12 points after rebounding from an earlier 151.06-point decline, dealers said.

The Dow bounced back after New York Federal Reserve President John Williams said that the Fed should “act quickly” at a time when the economy was slowing, a clear appeal to lower interest rates.

He pointed to studies suggesting that when there are few stimulus options available, officials should “move more quickly than you otherwise might” rather than waiting “for disaster to unfold.”

TSMC, the most heavily weighted stock in Taiwan, led the early gains and even pushed the weighted index above 10,900 points, before some investors pulled back, limiting the day’s gains, dealers said.

“Since Williams is one of the voting members on the Federal Open Market Committee, his comments have strengthened market hopes that the Fed will lower its key interest rates at the end of this month, say, by 0.5 percentage points,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said.

The Fed has scheduled a policymaking meeting for July

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Index Outlook: Near-term outlook is bearish

Last week, the benchmark indices breached key support levels and fell sharply. Tax-related Budget proposals that had spooked foreign portfolio investors (FPIs), continued to weigh on the market. Finance Minister Nirmala Sitharaman, standing firm on the proposals, despite pleas by FPIs, triggered a significant fall in indices on Friday.

Domestic corporate earnings, rupee action and progress of the monsoon are key factors to watch in the July month derivatives expiry week. On the global front, ECB rate action and US GDP data release are key events to note.

  Nifty 50 (11,419.2)

Following an initial rally, the Nifty index encountered a key resistance at 11,700 and declined 133 points or 1.2 per cent for the previous week. On Friday, the index had tumbled 1.5 per cent, breaching a key support at 11,500 . This fall has strengthened the downtrend that has been in place from the June high of 12,103. The index trades well below the 21- and 50-day moving averages. The daily relative strength index has entered the bearish zone from the neutral region and the weekly RSI features in the neutral region with a downward bias.

Also, the daily price rate of change indicator hovers in the negative territory, implying selling interest. Inability to move beyond the near-term resistance level of 11,700 has strengthened this barrier. Going forward, an emphatic break-out of this level is needed to bring back bullish momentum. Such a break can witness a corrective up-move to 11,800 and then to 11,850 levels in the short term. A further break above the vital resistance in the 11,850-11,900 band will reinforce the bullish momentum and push the index higher to 12,000, which is a key psychological resistance.

However, the index currently tests next crucial support at 11,426, the floor of the gap created in mid-May

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S&P 500, Dow Jones, Russell 2000 Technical Landscape is Getting Interesting

(MENAFN – DailyFX) S & P 500/Dow Jones Technical Outlook: S & P 500pulling back from 3000+, top-side t-lineDow Jonesalso coming off a top-side trend-line Continue to watch the Russell 2000 as it lags severely

See how the quarterly forecast has played out what it could mean for the big-picture –Q2 Equity Markets Forecast.

S & P 500 pulling back from 3000+, top-side t-line

The S & P 500 topped 3k last week, notching it for the first time ever. In the process of doing so a top-side trend-line dating back to the January 2018 high was tagged. An interesting confluence of a psychological level and form of resistance.

So far, the response has been relatively benign with only a shallow pullback developing. That could change of course, but as long as the market doesn’t fall apart, despite resistance, we will have to respect the generally strong trend.

If, however, we see the market start to turn lower with aggression, then it is possible it is the beginning of a decline out of a Reverse Symmetrical Triangle (RST), or known to some as a Megaphone pattern.

These patterns through their increasingly larger price swings indicate growing instability in a trend and can mark major tops; in this case it would be growing uncertainty in a bull market since 2009 that has been one of the most persistent in history. The time from Jan ’18 to now is a large span of time for such a topping pattern to develop, which is in good proportion to the extreme bull market run we’ve seen since the depths of the GFC. It’s implications could be quite sizable.

A top and drop could be arriving at an interesting point in time as well given we are heading through the summer towards the fall, a

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Hospital and Doctor Review sites in Canada

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US stocks down – 19-07-19

NEW YORK, JULY 20, ARMENPRESS. USA main indexes values for 19 July:“Armenpress” reports the value of Dow Jones is down by 0.25% to 27154.20 points, S&P 500 is down by 0.62% to 2976.61 points, Nasdaq is down by 0.74% to 8146.49 points.The Dow Jones Industrial Average is one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow. It measures the daily stock price movements of 30 large, publicly-owned U.S. companies.S&P 500 measures the performance of 500 widely held common stocks of large-cap U.S. companies.NASDAQ measures a number of indices reflecting the reaction of USA’s high tech markets and business environments on the country’s political and economic developments which have an impact on high tech markets.

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