THIS MORNING’S FAYRE – Monday 20th July 2015
“A glimpse, through an interstice caught,
Of a crowd of workmen and drivers in a bar-room, around the stove, late of a winter night–
And I unremark’d seated in a corner;
Of a youth who loves me, and whom I love, silently approaching, and seating himself near, that he may hold me by the hand;
A long while, amid the noises of coming and going–of drinking and oath and smutty jest, There we two, content, happy in being together, speaking little, perhaps not a word.”
Walt Whitman – poet – 1819-1892
That effort by England yesterday at Lord’s – out in 37 overs for 103 – could only be described in any language, as gutless! The wicket was flat. The Australian bowlers are on the whole, taller than ours; therefore they get more natural bounce. However had our 6 front line batsmen been patient and applied themselves, they could have lost with a degree of dignity and true grit. Time has surely run out for Lythe, Bell and Ballance – au revoir, if not goodbye. Welcome Hales, Taylor and Bairstow! Folk will argue about Hales. However he puts bat to ball and could be a decent foil for Cook.
So Greek banks are open today and the market’s reaction suggests they think the problem is “done and dusted!” In my humble opinion nothing could be further from the truth. So customers are allowed to draw €420 a week out of their bank instead of €60 a day. It amounts to the same though any queues for money may dissipate. However once the ECB has paid over $7 billion temporary loan and Greece has returned €3.5 billion of it to the IMF today, can anyone put their hand on their heart and tell us that Greek banks are truly solvent and that from here on in, its onwards and upwards? If they do, I respectfully don’t believe them. Who is going to put money in to them apart from the ECB, IMF and some ‘gung-ho’ domestic depositors?
Then there is the question of the €7 billion Greece is due to repay next month. The situation can only get worse. Greece’s population of 11 million, without adequate input or contribution from business, industry and commerce, cannot service or hope to repay debt of gargantuan proportions – €326 billion, unless there is a haircut – ‘No way, Jose’ say Merkel & Schauble – or its debt should be rescheduled and extended for 25 years with a zero coupon. I suspect that in all honesty that is a very unlikely option, though easily the most sensible proposition, though personally I think the party is over! Finally on this irritating and crazy subject the fact that Greek 5-year bonds yield 16.7% and 10-year bonds circa 11%, suggest all in the garden is far from rosy!
Life was rather uneventful on the Street of Dreams on Friday and there was little gossip or events emanating from Asia this morning to digest, though more Chinese stocks can be traded than last week. Asian markets were slightly down. Tokyo was shut for Marine Day. The Dollar put in a very strong performance on the back of Yellen’s soothing warning about the possibility of higher rates starting in the autumn. This news spike the Dollar and took gold down to its lowest level for some time – down 4.2% in Asia to $1087 an ounce. Mark Carney also brought forward guidance in to play today, suggesting inflation may rise in early 2016 with stronger oil prices, slowly triggering rate rises to perhaps 2.25%, having been stagnant at 0.5% for 6 years. With the EU making a pig’s ear of their economy and China not guaranteed to deliver 7% GDP, I have my doubts.
This morning the FTSE got off to a sedentary start but by 11.00am it was up 34 points at 6809. With news that Barclays chairman John McFarlane was looking to hose out about 30k people in the next couple of years, we expected its share price to push on, with evidence of blood running down North Colonnade from Churchill Place – no such luck up 1p as was RBS. Randgold suffered from the falling gold price down 3%, but Anglo American was only down a penny. Rolls Royce announced two new contracts worth £1.4 billion – shares up 0.5%. Oil stocks were up 1% and pharmaceuticals an average of 0.9%. Aveva are going to be involved in a reverse takeover with Schneider Electric worth £1.3 billion. Aveva’s shares rose by 26%. The price of diesel has fallen below the price of petrol for the first time almost since Noah left the Ark. We heard that Morrison, under Dave Potts’s leadership might start a fuel war with its peers. Tesco, Morrison and Sainsbury were all but unchanged. Travel Lodge will be making a decision whether to apply for an IPO through Deutsche Bank valuing the operation at circa £1 billion or sell to another hotel group or private equity.
This week equity geeks will be concentrating on this quarter’s earnings season on both sides of the pond. Last week’s efforts in the US were good, with JPM, BOA, Wells Fargo, Netflix, Johnson & Johnson and Google blazing the trail. With a strong Dollar prevailing, there is concern that sales of some companies may drop. Conversely many UK companies, which are part of the FTSE 100 could benefit.
UK companies posting results this week – Monday – BRITISH LAND, Tuesday – C&W COMMS, SSP GROUP, IG GROUP, ROYAL MAIL, PENTAIR, PZ CUSSONS, QINETIQ Wednesday – FENNER, JOHNSON MATTHEY, MARSTON’S, PAYPOINT, SAGE, LAND SECURITIES, SHIRE PHARMACEUTICALS, EASYJET, ARM HOLDINGS, Thursday – DMGT, UNILEVER, DE LA RUE, PREMIER FOODS, BRITVIC, SAB MILLER, KINGFISHER, ABERDEEN ASSET MANAGEMENT, HALMA, Friday – ANGLO-AMERICAN, AG BARR, LONMIN, VOADFONE, CLOSE BROTHERS
US Companies posting interim results this week – Monday – MORGAN STANLEY, HALLIBURTON, IBM, RAMBUS, Tuesday – BANK OF NEW YORK MELLON, UNITED TECHNOLOGIES, LOCKHEED MARTIN, OMNICOM, HARLEY-DAVIDSON, BAKER HUGHES, APPLE, MICROSOFT, YAHOO!, Wednesday – WHIRLPOOL, COCA-COLA, BOEING, ABBOTT LABS, XILINX, AMERICAN EXPRESS, Thursday – GENERAL MOTORS, RAYTHEON, BOSTON SCIENTIFIC, BRISTOL MYERS SQUIBB, MCDONALD’S, PULTE, KKR, COMCAST, AT&T, BJ RESTAURANTS, CHUBB, AMAZON, VISA, STARBUCKS, Friday – ABBVIE, BIOGEN.
Economic data – Monday – UK bank lending, UK Public Sector Finances, Wednesday – BOE Minutes, Thursday – UK Retail Sales
David Buik – market commentator
Panmure Gordon & Co
David Buik – market commentator
Panmure Gordon & Co