TODAY’S FAYRE – Thursday, 9th October 2014
“The wind has swept from the wide atmosphere
Each vapour that obscured the sunset’s ray,
And pallid Evening twines its beaming hair
In duskier braids around the languid eyes of Day:
Silence and Twilight, unbeloved of men,
Creep hand in hand from yon obscurest glen.
They breathe their spells towards the departing day,
Encompassing the earth, air, stars, and sea;
Light, sound, and motion, own the potent sway,
Responding to the charm with its own mystery.
The winds are still, or the dry church-tower grass
Knows not their gentle motions as they pass.
Thou too, aerial pile, whose pinnacles
Point from one shrine like pyramids of fire,
Obey’st I in silence their sweet solemn spells,
Clothing in hues of heaven thy dim and distant spire,
Around whose lessening and invisible height
Gather among the stars the clouds of night.”
Percy Bysshe Shelley – poet – 1792-1822
The word ‘GREAT’ is often rather glibly used. However I saw a performance of the Royal Ballet’s production of ‘Manon’ last night that was truly great with unbelievably artistic dancing by Natalia Osipova and Carlos Acosta – a night to remember. Dowell & Sibley, Baryshnikov & Makarova and Kobborg & Cojocaru have all left their mark on the Jules Massenet scored ballet, choreographed nearly 40 years ago by Kenneth MacMillan. Last night’s effort was every bit as memorable. It was GREAT!
Mikhail Gorbachev has been a serious critic of Obama and Putin. In his new book Gorbachev writes in the epilogue of his just-completed book “Posslje Kremlja” (“After the Kremlin”) – “The world stands on the brink of a major disaster.” Gorbachev argues that the only way for peace in the Ukraine and in Europe to unfold requires a new dialogue between Russia and the United States.
Gorbachev has stated the obvious that the US press will not address. The former Soviet leader and Nobel Peace Prize winner has criticized the global leadership of the United States in no uncertain terms. He rejects the demonization of Russia by the United States.
Gorbachev has been a target of the Russian nationalists who want to put him on trial for allowing the Soviet Union to break apart. Yet Gorbachev has repeatedly also criticized Vladimir Putin. Nevertheless, he has stated that “We [Russia] are a strong nation and have something to say,”
The 3rd downgrade for growth this year by the IMF, coupled with ghastly German Industrial production number for August (-4%) aided and abetted by over-zealous reactions towards the arrival of the terrifying Ebola condition in Madrid (3 people), rocked equity markets back on the heels yesterday. Markets have been in denial that all has not been well in Europe for some time, with Germany’s own plight being exacerbated by reprisals from Russia in response to sanctions.
The IMF has lowered growth forecasts for the EU to 0.8% from 1.1% for 2014. I am surprised that it is that high. The forecast for Germany in 2014 is 1.4% and 1.5% for 2015. As for France it is embarrassingly low. Hollande has lost the plot – 0.4% in 2014 and 1% for 2015. The US has never really recovered from the negative first quarter through inclement weather – 2.2% for 2014 and 3.1% for 2015. The UK shines through like a beacon of hope – 3.2% for 2014 and 2.7% for 2015. Can this be sustained with the UK reliance on the EU for trade and business? I very much doubt it.
GDP for the World has been lowered from 3.4% to 3.3%, though the IMF thinks 3.8% is achievable in 2015. There is a 40% chance of a ‘double-dip’ recession taking place in the EU. ECB President Draghi should have his shackles unleashed by the Merkel Mafiosi allowing the ECB to introduce QE to counteract a generation of young unemployed people who have been sacrificed to the dole queue. They deserve better.
We await the start of the US 3rd quarter earnings season, which gets under way with Alcoa after hours today, supplemented by efforts from Costco. Investors are nervous as they also know that QE finishes in October – it will probably will be endorsed in today’s FOMC minutes. A modest hike in interest rates is expected early in 2015. So yesterday the Street of Dreams saw investors vent their spleens taking the DOW down by 1.6%, the S&P 500 by 1.5% and the NASDAQ by a similar amount. The Russell 200 for SMES has fallen by 11% since March. The transport index fell by 2.5% and autos by 3.4%.
As one can imagine life in Europe yesterday was hardly a ‘bowl of cherries.’ The DAX and CAC were larruped on the back of all this poor data and the concern for earnings – down 1.3% and 1.8% respectively. The FTSE 100 also suffered wheels of pain across its back. As we know airlines, holiday companies and hotel groups suffered indignities on the back of the Ebola tragedy – down 1.04%. Cairn found new oil in Senegal +5% and Spirent was trashed post a profits warning – -21%. The outlook for today is grim as well. Glencore’s Ivan Glasenberg was shown the door by Rio and will not be allowed to mount another bid for 6 months. Chinalco a large shareholder had already been approached and meetings were purported to have been set up with Qatar and Blackrock. One feels that Glasenberg has unfinished business.
Asia was mixed with China now back to work, the Shanghai Composite caught up and was up 0.3% at lunch, despite HSBC posting faltering PMI data. The NIKKEI was about to close easier by 0.9% on a temporarily stronger Yen. Yesterday Samsung gave the market an early view to progress or lack of it. Profits for the last quarter are expected to be down by 60%. The Galaxy is currently expensive and Samsung has lost market share from 33% last year to 25% this year. Contingency plans are in place to manufacture more financially competitive handsets. Shares rose 1.6% yesterday as the outlook was marginally less dispiriting. However Samsung’s shares have fallen 25% in the last 4 months.
Tesco suspended a fifth manger yesterday – Kevin Grace a commercial director, pending the outcome of Deloitte’s investigation. Tesco Shares were better – +2.7%. Some leading lights in HSBC have found the Prudential Banking Authority’s plans and blue-print for retribution on managers threatening prison and other penalties for malpractices too rich for their blood. Alan Thompson has resigned and deputy chairman John Trueman is expected to follow suit. The perception is managers are guilty until proven innocent is unacceptable. Oil has hit a 2-year low and gold looks very weak at $1212 an ounce.
These are David Buik personal views
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