TODAY’S FAYRE

 

TODAY’S FAYRE – Thursday 30th July 2015

 

“You did not come,

And marching Time drew on, and wore me numb.

Yet less for loss of your dear presence there

Than that I thus found lacking in your make

That high compassion which can overbear

Reluctance for pure lovingkindness’ sake

Grieved I, when, as the hope-hour stroked its sum,

You did not come. You love not me,

And love alone can lend you loyalty; -I know and knew it.

But, unto the store Of human deeds divine in all but name,

Was it not worth a little hour or more

To add yet this: Once you, a woman, came

To soothe a time-torn man; even though it be

You love not me.”

 

Thomas Hardy – author & poet – 1840 –1928

  

Who would have believed that England would be just 3 runs short of eclipsing Australia’s paltry total of 136 runs at the end of the first day’s play at Edgbaston? Give Jimmy Anderson the right pitch conditions and he can still deliver in spades – 6 for 47! With weather conditions likely to be more clement today, let’s hope England’s fragile batting line up can capitalise on a fantastic opportunity!

 

How sad it was to hear of the death of the voice of racing – Sir Peter O’Sullevan at the age of 97! – A sporting icon and a true gentleman who loved having a tilt at the ring.  When commentating, if the money was down and his selection was likely to be involved in the business end of the race, his voice always rose an octave or two! Loved his two great horses – ‘Be Friendly’ who won the King’s Stand at Royal Ascot and the Prix de L’Abbaye in 1967 and ‘Attivo’, which won the Triumph Hurdle in 1974 having won the Chester Cup and Northumberland Plate in 1970. In terms of work undertaken for racing charities, his quest for these great causes was relentless!

 

I am thoroughly enjoying the box-set ‘The Good Wife’ – yes, I know! I am years behind the curve – nonetheless for those who have not yet taken it in – terrific escapism about a fallen politician and the unlikely revival of his forlorn wife’s legal career – starring Julianna Margulies (ex ER), Josh Charles (‘Big’ in Sex in the City) and Christine Baranski!

 

European equities have enjoyed two very respectable days trading, despite some warning shots across the bows to Greece from the IMF’s Mme Lagarde to get their act together, as well as some more wide ranging comments on the damage caused by falling commodity prices on emerging markets and global growth in general. Though FED chairman loaded her ‘Smith & Wesson’ at last night’s FOMC comments to the press, she was still only firing blanks but warned us that real bullets could go in the chamber in the autumn, if the Labour market were to remain robust and wage inflation were to select another gear, but she was far from specific. 

 

The Street of Dreams was not spooked by these comments. It strikes me as the same old guff and rhetoric keeps coming out month after month, but one is left with the impression that she might just feel the US economy is not guaranteed to select another gear. The Street of Dreams cracked with the DOW adding 0.69%, the S&P 500 0.73% and the NASDAQ 0.44%.  The quality of earnings was acceptable and punters will be hoping that they are fed with a decent GDP 2nd quarter number today enabling them to keep the faith! After hours Facebook posted a 39% increase in revenues mainly due to mobile advertising.  However there was evidence of currency headwinds, which could affect growth resulting in profits falling by 9%.  The shares were down 3.3% after hours. 1.5 billion People have registered with Facebook and over 840 million use the facility on a daily basis.

 

In London yesterday the FTSE added 75 points to 6566. It was a grand day for drugs with GSK leading the charge up 3.5%.  Barclays were also popular up nearly 2%, with investors enjoying John McFarlane’s uncompromising approach. There was ‘trouble in River City’ for Compass Group – down 5.3% on news of crippling restructuring costs. Life in Asia was relatively uneventful with the Shanghai Composite closing down 2.9%, with the Hang Seng easier by 0.49% and the NIKKEI ploughing its own happy independent furrow – up 1.08%. Samsung disappointed this morning with disappointing sales of the Galaxy 6 resulting in shares dropping 1.6%.

As can be seen from the list below there has been a slew of earnings this morning.  Once the analysts have been all over them, their appraisal will bring more to the party than I ever could. Let me lock into Shell (+2.8%) and Centrica, because of the human angle of these stories – shedding 6,500 jobs and Centrica a net 4,000 – mainly in the UK. With oil at circa $50 a barrel, the cost of exploration and capital expenditure is punitive.  Both companies have vented their spleen on their employees. Centrica’s new CEO Ian Conn from BP has certainly entered the fray in an uncompromising frame of mind. BT’s shares were down 2.5%.  They have experienced a tremendous rally in recent years – up from 78p in 2010 to 461p today, thanks to innovative leadership from Lord Ian Livingstone and more recently from Gavin Patterson. BT needs to prove to shareholders that it has not spent too much on sport, taking on Sky in its back yard! BAE Systems (unch) and Rolls Royce (+0.7%) have had a pretty torrid time of it in recent months so it was good to see that both order books are beginning to look very healthy. Lloyds Banking Group ahead of tomorrow’s results announced the sale of Irish debt of £827 million.

 

Now to RBS!  Initially the market loved their news – shares up 4%.  However after closer scrutiny, it is still work in progress – up only 1.7%. There was a loss of £153m for the six months to the end of June, which is disappointing in comparison to a £1.43bn profit a year ago. However restructuring costs almost tripled to £1.5bn. RBS set aside £1.3bn for lawsuits and customer recompense. A further £459m was earmarked mainly for litigation costs in the second quarter. Most of those are likely to arise from sales of mortgage-backed securities in the US, said the bank.

 

There were two pleasing elements from these numbers – Tier One Capital coming in at 12.3% and the fact that lending to SMES and consumers lending is rising. Personally I don’t think RBS is fit for purpose to be sold back to the public for at least two years. Lord Howard Davies is expected to become chairman of RBS at the end of the summer, allowing Sir Philip Hampton to become chairman of GSK.

 

UK companies posting results this week – Thursday – ASTRA ZENECA, BAE SYSTEMS, DIAGEO, 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 – Thursday – STARWOOD HOTELS, TIME WARNER CABLE, PITNEY-BOWES, PROCTOR & GAMBLE, LIKEDIN, AMGEN, Friday – CHEVRON, EXXON MOBIL

 

Economic data – Thursday – US 2nd quarter GDP Friday – Consumer Confidence

 

 David Buik – market commentator

 

 Panmure Gordon & Co

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