TODAY’S FAYRE – BARCLAYS

TODAY’S FAYRE – Wednesday 29th April 2015


Rain, midnight rain, nothing but the wild rain

On this bleak hut, and solitude, and me

Remembering again that I shall die

And neither hear the rain nor give it thanks

For washing me cleaner than I have been

Since I was born into this solitude.

Blessed are the dead that the rain rains upon:

But here I pray that none whom once I

loved Is dying to-night or lying still awake

Solitary, listening to the rain,

Either in pain or thus in sympathy

Helpless among the living and the dead,

Like a cold water among broken reeds,

Myriads of broken reeds all still and stiff,

Like me who have no love which this wild rain

Has not dissolved except the love of death,

If love it be towards what is perfect and

Cannot, the tempest tells me, disappoint.”

 

Edward Thomas – soldier & poet – 1878-1917

 

We knew that the Q1 GDP data, posted yesterday, was not going to be particularly encouraging and the market was not disappointed – +0.3%, down from 0.6% in 4th Q of 2014 – annualised at 2.4% against government estimations of 2.5%. Not good but not as bad as Messrs Miliband and Balls, who cackled and guffawed like hyenas with mirth at the timing of this critical news. January was a dreadful month, as it so often is. During the quarter, even the service sector was depressed and construction fell by 1.6%. It was left to retail to fly the flag for the UK’s economy. Manufacturing did offer a glimmer of hope. However in March the economy was on the march again, with construction posting its best number since 2010.

 

There were some decent earning season postings yesterday, such as Merck, which rallied 5%, that gave the Street of Dreams some momentum with the exception of the NASDAQ, which saw some profit takers on Apple – down 1.6%, after great numbers on Monday. IBM added 1.9%. There were also decent efforts from Pfizer and Bristol Myers and all in all, ahead of the FOMC minutes this evening equities were on good terms with themselves. Ford just missed profit estimates. Whirlpool was one that did not please its acolytes – down 18%. Also after hours disappointed investors vented their spleens on Twitter – down 19% to $42.27, despite users rising by 18% to an average of 302 million per month. The loss widened to $162 million from circa $130 million and investors wanted answers as to where the profit was going to be generated from. Tonight’s FOMC result is expected to hear Janet Yellen push any rate increase forward towards the end of the year, rather than a July hike. Inflation needs to reach out towards 2% and the Labour market must be a little more robust than it has been in the past month or so. 1st Q US GDP is expected to come in at 1% today.

 

At 6.40am this morning Asian stocks were mixed. Australia was having a terrible session losing 1.7%. China saw profit takers, though the Shanghai Composite was flat heading in to lunch – Hang Seng -0.30%. The NIKKEI was up 0.38%, with export stocks enjoying a quiet run on the rails. Korea’s Samsung saw earnings fall by 40% – not unexpected – A profit for the quarter of $5.63 billion on revenues of $44 billion. Mobile phones, particularly Galaxy A made an operating profit of $2.5 billion on revenues of $24.1 billion. The second quarter is expected to show improvement with margins of hopefully 10% being maintained.

 

Post the Agius/Diamond dynasty, the BOE/Government saw the necessity of appointing safe pairs of hands at Barclays in the form of Sir David Walker as chairman – a pillar of society – former BOE economist and chairman of Morgan Stanley – acceptable to everyone in the political corridors of power and Antony Jenkins as CEO – a corporate and retail banker in the truest sense. Without being too rude or uncharitable both are as dull as dishwater. They are slowly achieving their objective – pulling out of the dangerous but lucrative game of investment banking, which for many years gleaned Barclays between 40-60%. Barclays’ shares have gone nowhere this year – 250p to 261p. However the existing management would tell us job is being done. Investment banking division has been savaged apart from New York. Huge redundancies and cost cutting exercises have been implemented, but where does the growth come from. With great respect Sir David, who hands over to John McFarlane and Antony Jenkins didn’t fill us with confidence. Could they could sell ice to the Eskimos? Not a chance!

 

This morning’s trading statement saw profits up by 9% to £1.85 billion. Tier One Capital came in at 10.6%. Barclaycard profits up 9%. Impairment charges were down 7% to £448 million. Another £150 million provision for PPI was made and £800 for FX manipulation. Superficially these figures are OK, but when John McFarlane takes over as chairman – ex ANZ and Aviva – he guy eats nails for breakfast and spits rust out! He will ‘kick but’ and heads will roll if the management does not perform. Mr J! You and others have been warned.

 

A slew of companies have posted results – set out below – TSB and Next posted satisfactory efforts.

 

The Financial Times amongst others inform us of changes in Saudi Arabia – The king’s son, Mohammed bin Salman, was named deputy crown prince, elevating the youthful defence minister and royal court chief to second in line to the throne.In a series of royal decrees, the king, who took power when his half-brother Abdulaziz died in January, also replaced ailing foreign minister Saud al-Faisal with Adel al-Jubair, the country’s ambassador to the US.Adel Faqih was promoted from the labour ministry, where he is credited with introducing important reforms aimed at boosting the employment of nationals, to the post of economy and planning minister. Khalid al-Falih, chief executive of state oil company Aramco, was named health Minster and Aramco chairman.

 

UK companies posting results this week – Wednesday – BARCLAYS, LSE, TSB, HOME RETAIL, PETROPAVLOVSK, STANDARD LIFE, SPIRIT PUB GROUP, NEXT, BATS, AER LINGUS, GREGGS, STAGECOACH, Thursday – RBS, IAG, SMITH & NEPHEW, GO-AHEAD, ROYAL DUTCH SHELL, SAGA, MONEYSUPERMARKET, SCHRODERS, Friday – LLOYDS BANKING GROUP, AON, VIRGIN MONEY

 

 

US companies posting interim results this week – Wednesday – MASTERCARD, NORTHROP GUMMAN, TIME WARNER, THOMSON REUTERS, BGC, GENERAL DYNAMICS, Thursday – VISA, CME, CONOCO-PHILLIPS, EXXON MOBIL, VIACOM, TIME WARNER, PITNEY BOWES, EXPEDIA, DREAMWORKS, PIXELWORKS, LINKEDIN, ZIMMER, Friday – CHEVRON

 

 

David Buik – market commentator

 

Panmure Gordon & Co

 

 

David Buik

Market Commentator

 

+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom  www.panmure.com

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