TODAY’S FAYRE – Tuesday 23rd June 2015
“When I go up through the mowing field,
The headless aftermath,
Smooth-laid like thatch with the heavy dew,
Half closes the garden path.
And when I come to the garden ground,
The whir of sober birds
Up from the tangle of withered weeds
Is sadder than any words
A tree beside the wall stands bare,
But a leaf that lingered brown,
Disturbed, I doubt not, by my thought,
Comes softly rattling down.
I end not far from my going forth
By picking the faded blue
Of the last remaining aster flower
To carry again to you.”
Robert Frost – poet – 1874-1963
Hats off to Taylor Swift, whose music, I have to confess, I am not over familiar with for taking only 48 hours to bring the world’s most influential company, Apple, to book! Apple’s Tim Cook obviously was not aware that Taylor Swift had withdrawn her support from Spotify for failing to acknowledge the value of musical content, when offering its new music service free of charge for three months. “You will not offer my recordings free!” was the cry. It had nothing to do with greed, it was a question of respect for cultural content and talent. Despite the adverse comments made by Miss Swift, Apple’s shares added 0.8% yesterday to $127.61!
Even though Greece seems to be a country mile away from agreeing its financial arrangements with the EU, ECB, European Commission and the IMF, ahead of E1.6 billion repayment due next Tuesday 30th June, the euphoria expressed that a fudged deal will almost certainly be agreed this coming Thursday with the European Commission, seemed to know no bounds, even though anyone with a brain bigger than a pea realises only too well that the manufacturers of ‘cellotape’ or ‘pollyfilla’ will be the only major beneficiaries of this accord. The Greek proposals, submitted to the geeks in Brussels, included higher taxes and welfare charges and steps to curtail early retirement. This is simply more deflationary pressure that will crack Greece apart. PM Tsipras will have one hell of a job selling this concept to Syriza, which elected him on a ‘no-more-austerity’ programme. Anyway it is not for a person of my humble origins to challenge the great leaders of Europe as to their political sanity. What is more to the point, equity punters were ecstatic with all European bourses rallying to the cause – FTSE 100 +1.7%, DAX and CAC both rose like a proverbial grilse in adding 3.81% each yesterday. Admittedly the DAX had fallen 11% from its high. Nonetheless it may be wise not to have the old tin hat to far away in case these negotiations do not come to fruition in the manner everyone expects. Apart from the FTSE European stocks are expected to bat on this morning.
In London the market makers were light on their feet, hoping not to get caught in the wave of irrational enthusiasm. Trading volumes in London were quite thin. Deals were always in the background in terms of gains made in media – Sky +3.5% on idle gossip in terms of a bid by 21st Century Fox for the remaining 69% and utilities based on the resurgence of interest in Severn Trent (+4%) by a Canadian backed consortium. Carnival, which posts results today, added 3% in anticipation of a good showing. After years of problems, Thornton’s chocolates finally gave up the unequal struggle and fell calmly in to the lap of Ferrero Rocher for £112 million. Ladbrokes’ CEO Jim Mullen confirmed that “The Magic Sign” was in talks with Coral over a merger. Lord Mandelson blocked a £363 million of Corals for competition concerns back in 1998. Corals has 1845 betting shops and about 20% of the market. After the HBOS debacle, it will be interesting to note if Andy Hornby, Coral’s CEO, will be viewed positively, in taking up a senior role in the new company.
On the Street of Dreams, investors were happy to go with the flow over optimism on Greece and also positive data on new homes sales. The three main indices added just over 0.5% during the session, with considerable strength behind healthcare. Anthem, having been rebuffed by Cigna seem confident that a deal will be struck but a bid nearer $50 billion may be necessary to land the spoils. Caterpillar made some cuts in its work force due to a drop in mining activity. Monsanto’s bid for Syngenta were again dismissed with contempt on valuation.
In Asia markets were on the whole positive, intent on hanging on to the US upbeat coattails. The NIKKEI was up 1.6% towards the close – its highest level for 15 years. The Hang Seng was 0.35% to the good heading for lunch, but the Shanghai Composite was down another 2.4% on top of last week’s 13% correction – the largest since 2008. China’s margin trades made the market buckle with some believing that $364 billion of securities may be at risk. HSBC’S PMI factory data for June came in at 49.6 – slightly better than expected, but not the sort of number that would electrify investors.
UK companies posting results – Tuesday – TELECOM PLUS, CARNIVAL, Wednesday – STAGECOACH, Thursday – PHOTO-ME, DS SMITH, COSTAIN (TS), DEBENHAMS, Friday – TESCO (TS), TRINITY MIRROR (TS)
US companies posting results – Tuesday – BLACKBERRY, Wednesday, BED, BATH & BEYOND, MONSANTO, Thursday – BARNES & NOBLE, NIKE, ACCENTURE
Economic data – Tuesday – CBI INDUSTRIAL TRENDS, US ISM MANUFACTURING, Wednesday 3rd Quarter US GDP estimates, GERMANY’S IFO, UK BBA MORTGAGE APPLICATIONS, Thursday – US JOBLESS CLAIMS
David Buik – market commentator
Panmure Gordon & Co