TODAY’S FAYRE – Sunday 19th April 2015
“Turn hearts to us as we go by,
Salute those about to die,
Plead for them, the deep bell toll:
Their sacrifice must soon be whole.
Entreat you for such hearts as break
With the premonitory ache
Of bodies, whose feet, hands, and side,
Must soon be torn, pierced, crucified.
Sue for them and all of us
Who the world over suffer thus,
Who have scarce time for prayer indeed,
Who only march and die and bleed.
The town is left, the road leads on,
Bluely glaring in the sun,
Toward where in the sunrise gate
Death, honour, and fierce battle wait.”
Robert Nichols – soldier & poet – 1893-1944
With both Oliver Sherwood and his wife Tanya having such personal attachments to the Grand National as amateur riders with it in years gone by, it was very befitting that they should win this year’s extravaganza with Trevor Hemmings’s ‘Many Clouds.’ The Sherwooods are hugely popular in NH racing, despite the thin pickings they have experienced until two years ago. Having run very disappointingly in the Gold Cup, I would not have backed ‘Many Clouds’ if it had started on Friday or with stolen money. I thought he was probably ‘over the top’, having enjoyed a long and successful campaign. Horses continue to make fools of us all.
Sir Kenneth Branagh’s film adaptation of ‘Cinderella’ should be seen by everyone from five to one hundred years old. It was an absolute delight and as a film, it made a real fist of restoring one’s faith in decency and human nature! If I had to single out a performance it would be Helena Bonham-Carter as the ‘fairy godmother!’ – Quite enchanting! I had forgotten that for some years Sir Kenneth and Helena had been an item. The cultural flame clearly continues to glow as the years roll by.
In some respects I was pleased to have left this turgid election behind for a week. It really seems to have been very repetitive, without any initiatives capturing the imagination. Ed Miliband’s election team are worthy of undeserved praise for the effectiveness of their performance, despite what looks to be an inevitable alignment with SNP, if the polls are right and regardless of the protestations of the Labour leader to the contrary. A Labour coalition would be so dangerous constitutionally, with the SNP having illogical influence on English affairs. I am amazed that many voters cannot see these fearful pitfalls.
On pure achievement, illustrated and endorsed by last week’s employment data – the best since 2008 – the Conservatives should be 10 points clear heading in to the last two weeks of the campaign. There is no doubt that an anti-business Labour administration would require little time to reverse these fantastic employment trends.
However to date the PM has failed to get his message across in terms of what he intends to do about social inequality and mobility, as well as convince the electorate on immigration and a binding referendum. If not addressed these issues could be David Cameron’s nemesis. If history is anything to go by, Mr Cameron always comes with a late rattle on the rails. At the moment he has not done enough to be certain of landing the spoils, even were it to mean another coalition with the Lib-Dems, which many Tories would abhor.
Call me simple, but I have felt for some time that many of these equity markets are beginning to look fully valued, taking in to account the less than spectacular quality of the US earning season to date, which ‘came under a wet sail’ last week, with many of the banks stepping up to the plate with their earnings plus the likes of Intel and a smattering of industrial and tech stocks. The results on the whole were just OK – far from spectacular. The mood on the Street of Dreams is mixed. Many investors and economists are still ‘hell-bent’ on a FED rate increase sooner rather than later, thanks to robust inflation data on Friday and despite a strong Dollar and mixed economic data in recent weeks. Consequently waves of uncertainty were created, in the same manner that the political uncertainty which prevails in the UK ahead of 7th May general election and the prevarication by the EU in dealing with Greece’s acute debt problem, have left their mark. These waves could become seismic, if a few questions are not answered rather more positively than they have been to date. For ECB President Draghi to make such a banal comment – ‘It is pointless to ‘short’ the Euro!’ – Really? Tell that to Chancellor Merkel and the other inept politicians running a rudderless EU! Deal with this Greek crisis with resolution!
Market protagonists dithered last week until Friday, when many nerves cracked for reasons mentioned above, resulting in some risk being removed from the table. Losses by bourses in Europe and on the Street of Dreams varied from -0.6% to 2.58% suffered by the DAX. Last week the net result was that the S&P 500 had lost 1%, the FTSE 100 1.3%, European stocks 2.3% and the NIKKEI 1.3%. In the bond market thanks to this ludicrous Greek charade there was a flight to quality with German Bund 10-year yield falling to 0.08% – madness!
Conversely Chinese stocks have rallied by 7% in the last week – bubble territory. So investors will be mindful of a possible corrections if the authorities implement some kind of crackdown on trading. Monday will be very interesting!
here were four strong stories to end the week. Firstly HSBC may not be so much of a ‘local’ bank in the future, with retail activity to be withdrawn from Brazil and Turkey and a further review of its support for other emerging markets. The plan is to become a simpler and smaller bank. Tesco’s interim results on Wednesday are likely to include a one off £5 billion loss, including write-offs on the closure of 43 stores and 49 projects plus no doubt a widening pension hole. £250 million will be contributed annually for the next few years. Many analysts expected a loss of £3 billion not £5 billion. However the shares only fell 2%, which may be testament to the fact that the market likes the cut of Dave Lewis’s jib – his honesty and forthrightness. The trading profit posted in December was £1.4 billion against £3.3 billion last year.
Last week the IMF’s Christine Lagarde was full of praise for George Osborne’s economic and financial probity, with the UK showing greater growth prospects than any of its European peers. Also disposable income in the UK could hit a 20 year high if there were a conclusive outcome to the UK GE according to EY’s Item Club. Germany’s Wolfgang Schoeble also endorsed the positive sentiments of the UK economy. It never takes very long before some European mogul has a pop at the UK’s concerns over its continued membership of the EU. Royal Phillips let it be known that investment in the UK would be curbed were intensions to withdraw crystallised in a referendum. Metro Bank may agree a £1 billion IPO next year if business and economic conditions look buoyant. Alliance Trust’s Katherine Garret-Cox has found a strong supporter in DC Thomson, publisher of ‘The Beano’ against the Elliott Advisors’ plan. I was amused to read in the Sunday Times that Sir Terence Conran ridiculed the terms of Sir Philip Green’s sale of BHS. Finally Mike Ashley widens his portfolio away from retail with a £900 million involvement in a Chelsea Homes deal. So despite stock market uncertainty there are still many deals in the making.
he main economic data is provided by Germany’s ZEW on Tuesday, the MPC minutes, EU Consumer Confidence and US house price index on Wednesday, UK retail sales and BOE lending trends on Thursday.
This week’s UK results – Monday – HSS HIRE, RIO (TS), Tuesday – AB FOODS, ARM HOLDINGS, SKY, PETS-AT-HOME, INFORMA, REDROW, BHP BILITON (TS), Wednesday – TESCO, LADBROKES, PUNCH TAVERNS, TRAVIS PERKINS, Thursday – ANGLO-AMERICAN (TS), WILLIAM HILL, TAYLOR WIMPEY (TS), MEGGITT (TS), Friday – ASTRA ZENECA, RECKITT BENCKISER.
US companies posting interim results – Monday – MORGAN STANLEY, HALLIBURTON, Tuesday – VERIZON, HARLEY-DAVIDON, BAKER HUGHES, LOCKHEED MARTIN, OMNICOM, KIMBERLEY CLARK, AMGEN, YAHOO!, YUM BRANDS!, Wednesday – CITIZENS BANK, COCA-COLA, MCDONALD’S, BOEING, TEXAS INSTRUMENTS, AT&T, FACEBOOK, Thursday GM, PROCTOR & GAMBLE, RAYTHEON, CATERPILLAR, HERSHEY, ABBVIE, NASDAQ, PULTE, PEPSICO, GOOGLE, CHUBB, AMAZON, MICROSOFT, NEWMONT MINING, FREEPORT MCMORAN, Friday – XEROX, AA,
David Buik – market commentator
Panmure Gordon & Co
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