TODAY’S FAYRE – Wednesday 29th July 2015
“Between us now and here –
Two thrown together
Who are not wont to wear
Life’s flushest feather –
Who see the scenes slide past,
The daytimes dimming fast,
Let there be truth at last,
Even if despair.
So thoroughly and long
Have you now known me,
So real in faith and strong
Have I now shown me,
That nothing needs disguise
Further in any wise,
Or asks or justifies
A guarded tongue.
Face unto face, then, say,
Eyes mine own meeting,
Is your heart far away,
Or with mine beating?
When false things are brought low,
And swift things have grown slow,
Feigning like froth shall go,
Faith be for aye.”
Thomas Hardy – author & poet – 1840 –1928
So England and Australia set down their stall at Edgbaston today for match three in this Ashes series. The series is excitingly and currently poised at 1-1, with Australia probably in the ascendancy. This will be very much a toss to win and bat first. If Bell, playing at home can show some real form to be supported by several of our front-line batsmen, England could stand tall. As promised Mark Wood is rested and this track may well suit Steve Finn’s extra height! All to play for!
So distressed to hear of the death of Clive Rice, the South African cricketer aged 66, from a brain tumour. He rejuvenated Nottinghamshire CCC – sadly never to play test cricket because of apartheid in his motherland.
There was a better feel about equity markets yesterday, though there was no thunderous or particularly thought provoking news to rattle any specific cages. Shanghai seemed to be sailing in slightly calmer waters. This morning the Composite was just below the Plimsoll line as I write – down 0.21% as we head to the lunch break. On the Street of Dreams ahead of this evenings FOMC comment, investors took advantage of a strong rally right across the spectrum. The DOW closed 1.09% to the good, the S&P 500 was up 1.24% and the NASDAQ by a healthy 0.98%. It was a particularly good day for the drug sector with both Pfizer and Merck beating earning expectations, which saw their respective stocks add circa 1%. These operations were usurped by Gilead, which posted blow-out numbers triggering a 3% rise in its share price. After hours Twitter disappointed with unsatisfactory revenues from advertising. Creator and temporary CEO Jack Dorsey has his work cut out rectifying such an indifferent perception. Shares are up 5% on the year, but dropped 11% after hours. Facebook steps up to the plate today and Mark Zuckerberg is expected to post a far more robust set of numbers. Facebook’s stock has added 20% so far this year.
This evening the market waits with trepidation for comments from Janet Yellen or at least nuances as there is no general meeting, as to when the FED plans to start putting rates up. The general consensus of opinion is September. However with negligible inflation, an OK labour market, average consumer confidence and economic turmoil around the world, does M/S Yellen have enough ammunition to bite the bullet? I have my doubts!
Yesterday was a decent day for equities in London with the FTSE 100 adding 50 points to 6555, with much of the zestful enthusiasm down to merger mania. There were four deals that captured the imagination, all of which seemed to receive market support. Zurich Financial Services’ £5.5 billion bid for RSA (+18.4%), the beleaguered insurer, which has in the past year come under the stewardship of Stephen Hester, was not at all surprising. The idea had been flagged up for some time, though Panmure’s Barrie Cornes believes Axa and a few US insurers could well still be interested. If a deal goes through, maybe Stephen Hester will be given the opportunity to deal with unfinished business in the banking sector? – Barclays?
GKN’s bid for Holland’s Fokker made great sense -+7% and Melrose (+9.6%) disposal of its Elster water, gas and electricity metering business for a very healthy £3.3 billion to Honeywell was gleefully recognised. Finally Hikma’s acquisition of Roxane Labs was seen as very synergistic and its stock rose by 10.5%. Many of these M&A deals may be quite heavily leveraged, thus triggering a rise in corporate bond yields – maybe additional fuel to Carney’s fire? We shall see.
There was a good speech a couple of days ago from BOE’S Andy Haldane – if a bit of a history lesson – 0n the implications for company law, remuneration clawback and dividend/buyback taxation, which could be profound. He feels that shareholders are too well looked after rather than employees. He has a great point but will anyone listen and implement?
This morning Barclays posted an 11% rise in pre-tax profits to £3.11 billion for the first half of the year. Double digit returns were achieved in investment banking. Retail banking was flat. The Tier One Capital was excellent – increased to 11.1%. A further provision of £800 million was being made for litigation and probes. The dividend of 2p was retained. Barclays will pursue a policy of reducing non-core businesses as it will with its long term redundancy plans, which could cost 30k jobs. The appointment of a CEO is still in abeyance – Many believe that John McFarlane relishes the prospect of laying the foundations of Barclay’ long term policy before anointing a successor to Antony Jenkins. The candidate with the best investment banking credentials is likely to get the nod!
Sky posted great numbers with revenues for the year up 5% at £11.28 billion. The profit was up 18% at £1.4 billion. 937k new customers were identified – up 45% on last year, with 4.6 million new paid-for subscription products. The dividend was increased by 3%.
UK companies posting results this week – Wednesday – BARCLAYS, MAN GROUP, GLAXO SMITHKLINE, TULLOW, SKY, M&B, 3iii GROUP, TATE & LYLE, ANTOFAGASTA, Thursday – ASTRA ZENECA, BAE SYSTEMS, BT GROUP, REXAM, SMITH & NEPHEW, INTERCONTINENTAL HOTEL GROUP, CENTRICA, THOS COOK, RBS, MERLIN ENTERTAINMENT, WEIR GROUP, MERLIN, ROLLS ROYCE, ROYAL DUTCH SHELL, Friday – BG GROUP, IAG, B&M, LLOYDS BANKING GROUP.
US Companies posting interim results this week – Wednesday – FACEBOOK, HOSPIRA, CARLYLE GROUP, NORTHROP GRUMMAN, ALTRIA, GOODYEAR, WYNN RESORTS, WHOLE FOODS, REVLON – Thursday – STARWOOD HOTELS, TIME WARNER CABLE, PITNEY-BOWES, PROCTOR & GAMBLE, LIKEDIN, AMGEN, Friday – CHEVRON, EXXON MOBIL
Economic data – Wednesday – FOMC Meeting, Consumer Credit, Thursday – US 2nd quarter GDP Friday – Consumer Confidence
David Buik – market commentator
Panmure Gordon & Co