TODAY’S FAYRE – COULD IMF BE FLY IN THE OINTMENT?

TODAY’S FAYRE – Wednesday 15th July 2015

 

“I have been one acquainted with the night.

I have walked out in rain — and back in rain.

I have outwalked the furthest city light.

I have looked down the saddest city lane.

I have passed by the watchman on his beat

And dropped my eyes, unwilling to explain.

I have stood still and stopped the sound of feet

When far away an interrupted cry

Came over houses from another street,

But not to call me back or say good-bye;

And further still at an unearthly height,

A luminary clock against the sky

Proclaimed the time was neither wrong nor right.

I have been one acquainted with the night.”

 

Robert Frost – poet – 1874-1963

 

I should not bring myself to talk about football in July, especially not two days before the Lord’s test match, where I am positively levitating three inches above the carpet at the prospect of another great game, despite Australia looking a little depleted in losing Haddin and Watson. However £49 million paid by Manchester City for a 20-year old, Raheen Sterling – full of promise maybe – looks insanity personified. However with the likes of BT and ESPN upping the ante with Sky, prices, sadly are only going one way! I am all for free enterprise; so charge what the traffic will bear, but do deals of this nature make sense!

 

Most of us bad-tempered market observers had a chance yesterday to stop chuntering on about Greece or in my case metaphorically spitting blood at the crass stupidity of the EU’s leaders and the duplicity of PM Tsipras! There were, thank goodness, other matters to consider and talk about, though there are rumours that the IMF is demanding haircuts from the bail-out and Germany is adamant there won’t be any! This is not a helpful strategy or intervention by the IMF at this juncture, though many suspect it is a shallow attempt to restore its tarnished reputation. The whole deal certainly does not feel ‘done and dusted!’ Tsipras needs to get this deal through Parliament today even though rumour has it that he far from convinced that he should be recommending it. Too late I fear – Hobson’s choice. Greek banks are close to running on empty! We were all delighted to hear that Chancellor Osborne was adamant that the UK would not pick up any cost suggested at E800m for this absurd bail-out.

 

I have already apologised for failing to enter in to the spirit of the Iran accord, agreed by Secretary Kerry for the US and 5 other nations. Despite the prospect of Iran contributing between 250k and 500k barrels a day to world oil output, which saw oil prices ease back on the prospect, it only took a few hours to rumble that there were many headwinds to encounter before this agreement became meaningful– maybe a couple of years – and then we could have a Republican President and no agreement on controlling nuclear proliferation. Up went crude oil prices later in the day. In isolation preventing war is paramount, but it would be folly to attach too much credence and importance to the accord.

 

Yesterday in Europe equity geeks accepted that the relief rally had run its race until some good news passes under their nose. The Street of Dreams performed well considering Retail Sales fell by 0.3% in June, which was not what was required. However the quality of the early ‘movers & shakers’ to post 2nd quarter interim results were better than expected. JP Morgan Chase saw profits up by 5.2% despite legal litigation bills of $190 million down from $430m a year ago. However since the financial crash JPM has spent $35 billion in total on litigation since the start of the financial crash in 2008. The shares were up 1%. Despite a very modest dip in profits, Wells Fargo managed to lend $40bn in home loans in the three months to the end of June. Johnson & Johnson pleased their acolytes yesterday, though the strong Greenback may affect sales during this results season. The DOW ended the session up 0.42%, the S&P 500 was better by 0.36% and the NASDAQ bounced up by 0.66%. FED Chairman Janet Yellen starts her two-day Congressional testament today, hopefully throwing some bright light on her plans for hiking rates in the autumn, though there can be no guarantees.

 

London was relatively somnolent. The FTSE was up a fraction at the close – 16 points to 6753. Johnston Press had a shocker losing 18% to deficient advertising revenue. FirstGroup and Michael Page posted adequate numbers and Carillion buzzed over a housing deal with BP in the Middle East. However house builders lost about 1% thanks to veiled threats from Mark Carney, the BOE Governor that just because inflation remained at zero in June, it did not necessarily preclude a rate hike, which may be necessary in the autumn. With all the rubbish going on Europe and with faltering growth in China, despite a 7% GDP number being posted for the 2nd quarter (EST: 6.8%) and pockets of disappointing US data, many like me will be surprised if anything more than a symbolic rise in rates is implemented this year. Unemployment data will be posted at 9.30am this morning. Perhaps a further cut in the number of unemployed will encourage the MPC to give further consideration and credence to a forthcoming rise in rates.   Glaxo Smithkline announced a link up with the research body Francis Crick to collaborate on new drugs. Asian markets were mixed today. Despite GDP number Shanghai Composite was under siege and was down 4.38% at lunch. The Hang Seng was light by 1.01%, though the NIKKEI advanced on a weak Yen – up 0.38% at the close.

 

This morning Burberry, despite pressure from falling sales in HK, saw revenues up 8% in the last quarter. The shares have had a torrid time in recent months – down by 17% from 1950p 3 months ago. However they should rally by 2% at the opening. JD Wetherspoon posted a 2.9% increase in like for likes sales in the last quarter and Halford’s trading statement was satisfactory.

 

UK companies posting results next week – Wednesday – BURBERRY (TS), ICAP, HALFORDS, MONEYSUPERMARKET, SEVERN TRENT, JD WETHERSOON, RPC GROUP Thursday – DIXONS CARPHONE, SPORTS DIRECT INTERNATIONAL, POLYUS GOLD INTERNATIONAL and HILTON FOODS (TS).

U.S. companies posting interim results – Wednesday – BANK OF AMERICA, DELTA, U.S. BANCORP, BLACKROCK, INTEL, NETFLIX, Thursday – CITIGROUP, CHARLES SCHWAB, eBAY, MATTEL, GOOGLE, SCHLUMBERGER, Friday – COMERICA, GENERAL ELECTRIC

 

 

Economic data – Wednesday – UK EMPLOYMENT DATA , US INDUSTRIAL PRODUCTION, Thursday – EU CPI, ECB MEETING, US JOBLESS CLAIMS, Friday – US CPI & HOUSING STARTS

 

 

David Buik – market commentator

 

Panmure Gordon & Co

 

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