WEEKLY FAYRE – Monday 18th June 2018
“Fear no more the heat o’ the sun,
Nor the furious winter’s rages;
Thou thy worldly task hast done,
Home art gone, and ta’en thy wages:
Golden lads and girls all must,
As chimney-sweepers, come to dust.
Fear no more the frown o’ the great;
Thou art past the tyrant’s stroke;
Care no more to clothe and eat;
To thee the reed is as the oak:
The scepter, learning, physic, must
All follow this, and come to dust.
Fear no more the lightning flash,
Nor the all-dreaded thunder stone;
Fear not slander, censure rash;
Thou hast finished joy and moan:
All lovers young, all lovers must
Consign to thee, and come to dust.
No exorciser harm thee!
Nor no witchcraft charm thee!
Ghost unlaid forbear thee!
Nothing ill come near thee!
Quiet consummation have;
And renownèd be thy grave!”
William Shakespeare – playwright & poet – 1564-1616
So, the great World Cup Party finally got underway in Moscow with the host nation giving Saudi Arabia a 5-0 drubbing in front of its omnipotent President, Vladimir Putin and 82000 ecstatic fans in glorious sunshine. What a PR exercise Russian TV put on for its leader, including handshakes and smiles during the game with his guest of honour The Crown Prince of the Kingdom of Saudi Arabia. I suspect the two of them were far more interested in chatting about how they could keep the price of oil close to $80 a barrel for the benefit of their respective economies, than they were about the thrills and spills of the beautiful game! In terms of superficially improving his image, Putin will have thought that this occasion was ‘manna from Heaven!’
On Friday the BBC beamed the Portugal/Spain Match. This 3-3 draw was as exciting and as skilful a game as any neutral fan could ever wish to see, with Cristiano Renaldo providing millions of fans with a masterclass as to why he must be the most valuable footballing asset on the planet with his 52nd hattrick, despite being 33 years of age. He is the ultimate professional.
On Saturday, all football fans hoped that Lionel Messi would put on a similar display as Ronaldo had in Argentina’s 1-1 draw against Iceland. It was not to be, but there is still all to play for! On Sunday Mexico lowered Germany’s colours winning 1-0 in a desperately exciting game. Let’s hope England do us proud in their opening game against Tunisia on tonight, Expectations are at fever-pitch!
Global equity markets started the week promisingly, despite the inevitable 25 basis point hike in the Fed rate to 2%, which was confirmed by Fed Chairman Jay Powell on Wednesday, accompanied by a slightly more hawkish statement than many expected with. A further two increases are expected this year. Thursday’s ECB meeting had few fears for markets with Draghi suggesting that the tapering of QE would probably start at the end of the year as a final valedictory act of his tenure. Once it became clear that President Trump was going to impose tariffs of $50 billion on the import of Chinese goods, the mood on some global bourses changed, with investors in Shanghai and Hong Kong being underwhelmed at the prospect, knowing that China was likely to respond with equally chilling reprisal tariffs.
By the end of the week the losses incurred on the Street of Dreams were minimal with the Nasdaq continuing to blaze the trail. The confirmation that AT&T would be allowed to buy Time Warner could well prove to be a litmus Test for other large M&A deals to follow. It looks as if Comcast may well usurp Disney’s efforts to buy 21st Century Fox, once the Sky deal has been completed by the Murdoch empire. It may just be that 700 Sky employees could share as much as £350 million from this deal. At the end of the week there were strong performances by Procter & Gamble, Nike and Coca-Cola. Conversely Caterpillar, Chevron and GE surrendered some value. US retail sales rose sharply by 0.8% in May against expectations of 0.4%. In the U.K. Retail sales rebounded quite sharply – +1.3%; much of the euphoria being attributed to Harry’s & Meghan’s Wedding. This news may cause the MPC to twitch but any rise in rates may require a sustained improvement in the growth of the UK’S economy.
Here in Old Blighty there were quite a few nuggets of news to keep us on our toes. UK inflation remained benign at 2.4% in May, but the price of oil and petrol at current levels may trigger a symbolic increase by the end of the year. The rather tawdry Sorrell Saga seems to have plenty of legs on it. Chairman Quarta gave a rather pathetic explanation to justify Sir Martin’s severance package in suggesting he might ‘throw his toys out of his pram’ if he was not satisfied with the settlement. Many will admire Sir Martin’s courage or maybe arrogance, when he delivers a key note speech at a Cannes Advertising bunfight at the end of this coming week, with all his guns blazing!
The rumour that Rolls Royce would be making 4000 people redundant became a reality on Wednesday when CEO Warren East explained the realities of life, by announcing the loss of 4600 jobs. Cutting 5 divisions down to three does not require duplication of management. There may be more bad news for the folk in Derby. Canada’s Bombardier UK operation failed to land the tube’s new rolling stock contract, which could cost a few hundred jobs. Having returned £23 billion to shareholders in recent years, it appears that Allianz still has the appetite to pick up a large synergistic operation in the UK. It is thought that RSA or Aviva are under consideration according to the Sunday Times.
Though the recent retail sales numbers were a blessed relief, the ‘High Street’ is starting to look like a morgue; so, it was good to see Boohoo with a 53% increase in sales and Ted Baker continuing to buck the trend. Also, Tesco on Friday saw a 3.5% increase in like for like sales for the last quarter, thanks to a 14.3% increase in sales from its recent acquisition – Booker. House of Fraser is far from out of the woods despite closing half of its units.
With house prices starting to dip, resulting in demand for new houses falling, house builder share prices took a bit of a tumble last week with some, such as Bellway falling by an average of 3%. Many are amazed that TSB’S Peter Pester has kept his job after the damning evidence provided by IBM on its IT system. These issues may have cost TSB a £1 billion. Dixon Carphone seem to have avoided a£17 million fine for a data protection breach, which may have exposed 5.9 million customers. Finally, it was a surprise to see Nationwide’s management taking such a huge bonus of £6.4 million out of the pot with CEO Joe Garner, ‘trousering’ £2.3 million.
UK companies posting results this week – Monday – DS Smith, Tuesday – Telecom Plus, Ashtead Group, Flybe Wednesday – Berkeley Group, Thursday – Saga, Chemring, Dixon Carphone
US companies posting results this week – Tuesday -Oracle, La-Z-Boy, Wednesday – Micron Technology, Thursday – Barnes & Noble, Darden Restaurants, Kroger, Red Hat, Friday – Carmax
Economic data posted this week – Monday – US NAHB Housing, Tuesday – US Housing starts, Wednesday – US MBA Mortgage Applications, US Existing Home Sales, Thursday, UK PSBR, UK MPC meeting, US Initial Jobless Claims, US FED Bank Stress tests