- Global equities extend rally. Fifth straight month of gains for S&P 500 and Nasdaq.
- U.S. and Mexico agreed on new trade rules that could replace the North American Free Trade Agreement. U.S. and Canada still negotiating.
- AUD weakness turbocharges weekly returns.
|Local currency||AUD currency|
|Treasury (10 year)||2.86%||N/A|
Notable economic stats last week
U.S. consumer confidence
- Consumer confidence unexpectedly rose in August to the highest level since October 2000. Data showed a greater share of respondents plan to purchase big-ticket items including homes, cars and major appliances within six months, which bodes well for the outlook for consumer spending. Confidence index increased to 133.4 (est. 126.6) from 127.9 in July; exceeded all forecasts in a Bloomberg survey of economists.
- Present conditions measure rose to 172.2, the highest since December 2000, from 166.1.
- Consumer expectations gauge climbed to a six-month high of 107.6 from 102.4.
U.S. corporate Profits (broad measure)
- U.S. corporate profits boomed in the second quarter, boosted by large tax cuts and stronger economic growth than initially reported.
- The Commerce Department said its broadest measure of profits across the U.S. economy rose 16.1% from the second quarter a year earlier, the largest year-over-year gain in six years.
- Taxes were a big part of the boost to the bottom line. Taxes paid by U.S. companies were down 33% from a year earlier, according to the new government data, or more than $100 billion at an annual rate.
U.S. gross domestic product (GDP)
- U.S. GDP rose at a 4.2% annual rate in the second quarter, adjusted for seasonality and inflation.
- Economists had earlier estimated second-quarter growth at a 4.1% annual rate. The 4.2% rate still marked the strongest pace of growth in nearly four years.
- Personal consumption expenditures, which includes consumer spending on all goods and services, the price index for personal-consumption expenditures—the Fed’s preferred inflation measure—grew just 0.1% in July from a month earlier. Core prices, which exclude volatile food and energy components, only rose 0.2%. Inflation remains contained in a robust economy.
Tax cuts supercharge earnings expectations
Xilinx Inc. (NASDAQ: XLNX)
Broker RW Baird upgrades Xilinx from Neutral to Outperform and raises the price target from $71 to $90, a nearly 20% upside to yesterday’s close. Analyst Tristan Gerra cites field research suggesting “a very recent and significant acceleration in 5G-related orders for FPGAs scheduled for the later part of this year, suggesting recently finalised design wins.” Channel feedback shows China 5G infrastructure ramp starting next year with the major transition in 2020. Xilinx shares are up 5.4% for the week.
Xilinx Inc. is held in the Macrovue “5G” portfolio.
Amazon.com Inc (NASDAQ: AMZN)
Amazon hits US$2012.71 - a record high. The stock was up 5.6% for the week.
Ciena Corporation (NYSE: CIEN)Stock up 13.96% for the week on good earnings (see below).
Earnings review (Vue stocks)
Ciena Corporation (NYSE: CIEN)
Nice beat on earnings and revenues. Q3 Non-GAAP EPS of $0.48 beats by $0.12; F3Q18 Revenue US$819 million vs. consensus of $792 million (vs. management guidance of $775-$805 million). Revenue of $818.82 million (+12.4% year-on-year) beats by $27.88 million.
Ciena Corporation is held in the Macrovue “5G” portfolio.
China Construction Bank (Hong Kong: 939)
CCB reported 1H18 NPAT of RMB147b, +6.3% year-on-year, 2Q18 PPOP was up 9.9% year-on-year, mainly driven by strong fee income and trading gains, however NPAT only grew 7.1% y-y on higher credit costs. Fee income grew 6% year-on-year in 2Q18, likely thanks to strong bank card and e-banking fees.
China Construction Bank is held in the Macrovue “Bank on It” portfolio.
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