TODAY’S FAYRE – Friday, 28th February 2014
“The sunlight on the garden
Hardens and grows cold,
We cannot cage the minute
Within its nets of gold,
When all is told
We cannot beg for pardon.
Our freedom as free lances
Advances towards its end;
The earth compels, upon it
Sonnets and birds descend;
And soon, my friend,
We shall have no time for dances.
The sky was good for flying
Defying the church bells
And every evil iron
Siren and what it tells:
The earth compels,
We are dying, Egypt, dying
And not expecting pardon,
Hardened in heart anew,
But glad to have sat under
Thunder and rain with you,
And grateful too
For sunlight on the garden.”
Louis MacNeice – poet – 1907-1963
I can only hope that you were rather more impressed with the content of Angela Merkel’s speech to Parliament yesterday than I was. To me it was just a beautiful compendium of platitudes about the UK’s need to be a player – a spear carrier for choice, I fear – in the affairs of the EU. The Chancellor promised us nothing and offered little hope for change. During her speech PM Cameron looked anxiously on as Messrs Miliband, Clegg and Alexander just smirked and nodded like puppets at her every word. I am sure we will get that referendum in 2017, but it will be far too late.
We have so neglected other parts of the world in expanding trade. I listened to a speech from Foreign Secretary William Hague. He told his audience that he was not aware that any Labour foreign secretary had visited Canada and Australia during that 13 year tenure – What neglect!
The Street of Dreams seemed to be soothed by Janet Yellen’s testament to the Senate Banking Committee yesterday by the fact that the dip in performance by the US economy may be down to the weather, but the FED Chairman needs more data in the months come before making a ruling. She was also concerned about the Labour market with wages not rising and employment data remaining sluggish – Too few jobs being created. The FED intends to carry on with tapering unless the economy starts to deteriorate. That being the case, the FED will be prepared to reverse policy. These slightly nebulous comments buoyed the Street of Dreams yesterday, resulting in the S&P 500 breaching to a new record of 1854. The DOW finished the session up 0.46%, the S&P 500 +0.49% and the NASDAQ 0.63% to the good. Interest centred mainly around retail activity. JC Penney was making up for lost time adding 25% on the day on the back of good sales and a positive outlook. Sears also enjoyed a fine session adding 6.6%. Jos A Bank rejected Men’s Wearhouse’s $63.50 a share bid. Banks were in good cheer as was Verizon, which added 2.5%. It is interesting to note that since the blip in January, the S&P 500 has added 6.5% since 3rd February 2014.
Asia was initially rather less upbeat about life than Wall Street had been. Shanghai, Hang Seng and NIKKEI were all down by 1%+. There had concern about the Chinese economy’s outlook, which triggered the sharpest fall in the Yuan against the Greenback seen for some time. However Abenomics came to the fore in the form of a 4.4% increase in Japanese retail sales in January. At its close the ASX was down 0.2%. However Chinese indices had swung towards positive territory towards lunch – Shanghai +0.05% and the Hang Seng +0.19%. The NIKKEI was down 0.55% 30 minutes from the close, despite factory output increasing by 4% last month.
Though most of Europe experienced sluggish trading yesterday the FTSE finished the session +11 points at 6810. The bile and hatred on RBS bonuses has taken up plenty of space, even though I thought Ross McEwan’s explanation was plausible. The £2.3 billion drop in SME lending was disappointing, though understandable when attempts are being made to cut the size of the balance sheet. Shares were down 7%+. You know what they say! You cannot keep a good man down. Enter stage left, dusted down the reincarnated Stephen Hester as CEO of the beleaguered RSA with his begging bowl to the fore after 3 profits warnings for balance sheet irregularities in Ireland and excessive storm damage. RSA is looking to have a £775 million rights issue. The shares were down 5% at 98p. There were positive numbers from Capita, after a great deal with o2, Whitbread, whose Premier Inns seem to go from strength to strength and Merlin Entertainment, whose profits were up 33% since its launch in November last year. WPP put in strong numbers yesterday. Sir Martin Sorrell is always an excellent barometer for business activity. The outlook was good with WPP sales up 6% in January. Shares were off 5% on very high expectations from results, which slightly disappointed.
Man Group saw it shares rally by 12% thanks to increases in fund under management. The same phenomenon happed to Old Mutual which reported numbers today – Funds grew by 19% in the last year and profits were up 15%, though there were currency headwinds with the South African Rand dropping sharply. Bayer, the German Chemical operator saw profits down again due to currency vagaries.
UK GDP was confirmed at 0.7% for the 4th quarter and was down a point on the year to 1.8%. House prices rose by 9.4% year on year. We understand that since December Mark Carney has had the drains up over allegations of currency malpractices at the BOE. Andrew Bailey takes these comments and the condoning of sub-standard be behaviour of his nature very seriously. UBM, Mondi and William Hill also posted results. Pearson saw sales up 2% to £5.2 billion for the year, though profits were down 6% due to charges incurred in the merger between Random House and Penguin and narrowing margins in US educational sales. Rightmove the online estate agent saw sales up 17% and profits 19% better to £104 million for the year. Sight traffic was up 27%.
These are David Buik personal views
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