TODAY’S FAYRE – Tuesday 31st March 2015
“I walk and wonder To hear the birds sing,
Without you my lady How can there be Spring?
I see the pink blossoms That slept for a year;
But who could have woke them,
While you were not near?
Birds sing to the blossoms;
Blind, dreaming your pink,
These blush to the songsters,
Your music they think.
So well had you taught them,
To look and to sing;
Your bloom and your music;
The ways of the Spring.”
Isaac Rosenberg – soldier & poet – 1890-1918
The cricket world cup was a momentous competition – just the most exhilarating cricket played except for the final, when sadly Australia out-gunned New Zealand in every department of the game. It was universally agreed that Mitchell Starc was the player of the tournament. What a transformation in three years from a ‘wild & woolly’ quick for Yorkshire and occasionally Australia to the main strike bowler for his country.
However my player of the tournament was unequivocally New Zealand’s Brendon McCullum. Not only was he an inspirational leader, but he was also the most effective swashbuckling bludgeoning batsmen, who could turn a game in five overs. It was amazing that a country of 4 million people was in a position to win both the cricket and Rugby world cup in one year – A phenomenal effort. And where was England with 50 million people? I thought we were playing a different game, we were that bad! The entire management of the ECB and the England coaching staff needs replacing. We need a ‘Jason Gillespie’ or a ‘Tom Moody’ that all the players can respect and look up to.
I disagree with Andrew Marr that Jeremy Paxman’s tortured and angry disposition spoilt the separate interviews of the PM and Ed Miliband. The public is heartily sick of bland interviews with the same old claptrap being trotted out day after day. JP gave us a break from the daily grind of political platitudes. It was terrific unexpected theatre which the two party leaders did not expect.
Yesterday was a strange. UK equities dealt well with end of year window dressing for the end of the tax year. The FTSE 100 embraced the vagaries of investors’ whims, taking them in their stride. The FTSE ended the day up 36 points at 6891. There was sufficient interest in a number of issues to keep punters on their toes. Was there really any chance of nailing down a deal with Iran on nuclear activity? Many thought so, but to me it looks far from nailed on. Over at Panmure it was media shares that captured our clients’ imagination with Pearson, WPP, ITV, Reed Elsevier and Sky all attracting buyers. Traders enjoyed the ASOS/Net-a-Porter M&A rumours. Patient investors got their just deserts from Quindell, who sold its service arm for £637 million to Salter & Gordon – share up 9.45% towards the end of the day, having initially been up 30%.
Mining stocks were better in the hope that China would introduce more stimulus packages, but the charge to higher ground was very limited! Kingfisher failed in its attempt to add M Bricolage to its portfolio in a £275 million abortive attempt. Kingfisher posted a 7.5% fall in profits to £675m for last year, which has been a torrid one for this DIY titan, thanks to the inertia surrounding the French economy. 60 B&Q stores will be closed (1/6th) plus several Casterama outlets in France. It was also interesting to note that Prada profits, posted yesterday, fell by 28% thanks to a fall in activity mainly in the Eurozone and China/Hong Kong. It just shows that these luxury brands are not immune from economic downturns. Antofagasta has denied it is in discussions with Teck Resources about a potential merger – a Canadian/Japanese joint venture. In this last quarter we have seen a 21% increase in M&A activity globally on last year’s effort. Deals to date total £550 billion in value.
The Street of Dreams suffered from indigestion last month, failing to put together two consecutive days of gains. However yesterday, despite consumer spending data being benign on Friday, encouraging news on Treasury spending and wage increases plus another wave of drug/healthcare M&A activity saw Wall Street select another gear! The DOW added 1.24%, the S&P 500 1.22% and the NASDAQ 1.15%. There was a general rally with oil, retail and drugs enjoying the spring sunshine in beautiful downtown Manhattan. UnitedHealth announced its intention of spending $12.8 billion buying Catamaran. Still there is that feeling that the next quarter’s earnings may not be great. Some think they could fall by 4%.
This morning the Shanghai Composite and the Hang Seng enjoyed a decent run on the rails adding about 0.5% at lunchtime thanks to China offering a window for easy mortgage lending. Conversely concern about Japan’s listless economy saw the NIKKEI surrender 1% by the close.
This morning Phillips confirmed that it had sold its lighting business for $2.8 billion. Thos Cook posted an encouraging trading statement and Mitie disappointed with its effort. Wonderful news from Honda this morning that an extra £200 million will be spent on expanding its business in Swindon. Well done to the workforce! At 9.30am this morning we expect the ONS to confirm that the UK’s economy is in good shape and that GDP on an annualised basis is running at 2.7%. There is also a wave of EU economic data, which I am happy to pass by. I find myself mesmerised by it.
However the Greek Tragedy still has plenty of mileage in it. Greece may run out of funds by 20th April 2015. Is Russia Greece’s last hope of survival, until it comes to some agreement with the EU can ever be agreed? Tsipras is struggling in his attempt to juggle his electorate’s requirements as well as the EU’s. Frankly he has no chance. Greece is broke. The EU, if they want Greece to stay must swallow and digest!
Here are the bold facts – Athens may not have enough cash to meet its immediate obligations. But even if it does, it needs to repay €450m to the IMF on April 9th. Two Greek Treasury bills totalling €2.4 billion mature on April 14 and April 17. Most of this debt is sitting in Greek banks, which have been rolling over these bills with emergency funding obtained from the ECB, rather than demanding repayment from the Greek government. But these two upcoming bills are different because at least €500 million is owed to investors outside Greece who are going to ask for their money back. There has to be an ending to this shenanigans; otherwise everyone loses whatever credibility it ever had. I still think Greece would eventually be better off outside the EU!
This week’s UK results – Wednesday – FIRST GROUP, EVRAZ, ASOS, Thursday – M&S (TS), DUNELM, BOOKER GROUP, TATE & LYLE
ECONOMIC DATA – Thursday – Non-Farm Payrolls
US companies posting interim results – Friday – RITE AID, MICRON TECHNOLOGIES
David Buik – market commentator
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