TODAY’S FAYRE

 

TODAY’S FAYRE – Sunday 2nd August 2015

 

I need not go

Through sleet and snow

To where I know

She waits for me;

She will wait me there

Till I find it fair,

And have time to spare From company.

 

When I’ve overgot

The world somewhat,

When things cost not

Such stress and strain,

Is soon enough

By cypress sough

To tell my Love I am come again.

 

And if some day,

When none cries nay,

I still delay To seek her side,

(Though ample measure

Of fitting leisure

Await my pleasure)

She will not chide.

 

What–not upbraid me

That I delayed me,

Nor ask what stayed me

So long? Ah, no! –

New cares may claim me,

New loves inflame me,

She will not blame me,

But suffer it so.”

 

Thomas Hardy – author & poet – 1840 –1928

 

The excellent George Parker writing in the FT on Saturday tells us that prior to the recent migration horrors of Calais, which are bordering on in humane and despite the EU leadership’s virtually criminally inept and all-but-reckless handling of the Greek bail-out, IPSOS MORI posts a figure indicating that 61% of those polled want the UK to remain in the EU. I have my doubts. Though there is no natural correlation between the General Election and the EU in terms of poll accuracy, just talking to people there is a massive growing swell of NON-UKIP voters that are becoming increasingly disenchanted with membership of an undemocratic political juggernaut, whose fuel seems to be an insatiable appetite for frenzied power. The objectivity for remaining in the EU becomes more clouded by the day, even though everyone knows that the cost to the UK for extricating itself would be bordering on penury!

 

For sheer guts, determination and commitment no sporting deed could have given me more satisfaction than Steve Finn’s bowling at Edgbaston last week. Together with Jimmy Anderson’s effort, they spear-headed England victory in the hugely exciting Ashes series. Two years ago Finn was in a bad place and could hardly work out that the pitch was 22 yards long let alone pitch it! An outstanding recovery on his part! Huge praise due to him!

 

Last week was a massive one for earnings and on the whole the quality was acceptable if not outstanding.  There was certainly enough good news to take the Shanghai Composite, which lost 15% last week and Greece off the front of the financial pages. So far 354 companies from S&P 500 have posted results up to including 31st July 2015 – 73% have beaten profit expectations and 52% sales expectations. A strong Dollar may have blighted sales.

 

On Thursday, just like one of her predecessors, Alan Greenspan, FED chairman Janet Yellen spoke in indecipherable riddles. I think the gist of her comments was that the Labour data was sufficiently encouraging for a rate hike to be given due consideration in September, but she wasn’t certain. She may have been further encouraged by the fact that inflation had risen by 1.8% in the last 3 months to July. However, like me, she may have been dispirited by a far from blow-out 2nd quarter GDP number of 2.3% year on year, though Q1 was raised from -0.2% to +0.6%. She loaded up her Smith & Wesson – unfortunately only with blanks. Maybe in August there will be live rounds! Don’t count on it. Many think that Mark Carney and the MPC could move rates up before the U.S., as the Hawks mass their troops, based on a continuous flow of robust economic data.

 

Having been very strong at the beginning of the week, the Greenback sagged on Friday, as concern over the robustness of the U.S. Economy remained a tiny bit in doubt. So, as I said, equity acolytes backed the truck up for a few good-value-goodies!  Last week the S&P added 1.15%, the FTSE 100 1.77%, European stocks by an average of 0.53%, and the Nikkei 0.20%. There were two other elements that gave momentum to stocks – M&A activity on both sides of the pond – Allergan to bed down with Teva from Israel. This news will undoubtedly spark off a frenzy of activity in the drug sector before too long?  In the UK, it looks as though Zurich Financial Services will swallow up RSA. Melrose sold £3 billion of assets to Honeywell and GKN made a nice little purchase in the form of Fokker in Holland. The second facet, which really only affected Europe, was the state of UK and European banks, which enjoyed much better results. BNP Paribas, Deutsche Bank, Santander and BBV made great strides from a year ago. In the UK Barclays’ chairman set down his stall for the future.  It will be sometime, I suspect before he appoints a new CEO. Though up to 30,000 redundancies may well be made in the next few years, I think we can take it as read that investment banking will be far from dead. RBS’S balance sheet continues to shrink, but there are still far too many warts and all for a sale back to the public even with NMR’S and Goldman’s impeccable hallmarks over the deal. The government thinks otherwise and it is rumoured that £2.5 billion worth of shares will go on sale as early as possibly this week. Fund management and the public will decide! On Friday, Lloyds Banking Group’ shares fell by 3.28%. The market was dispirited by another provision of £1.4 billion for PPI and litigation leaving a pungent odour along the corridors of 25 Gresham Street. HSBC posts numbers at 5.00am on Monday morning and the market expects a pre-tax profit of $8.5 billion. Its Brazilian business may have been sold for $4 billion.

 

We must keep a beady eye on John Malone. His company Liberty Global, the owner of Virgin Media has increased its stake in ITV. Since Liberty’s initial stake ITV’S shares have risen 43%. Could this platform be a launch pad for a full-on takeover battle? The San Francisco based hedge fund manager Value-Act has increased its stake in Rolls Royce from 1.5% to 5.5%. Many believe that it will be looking to lead a break-up of the company. These West Coast mavericks will find Warren East a resilient opponent. However win or lose I suspect their investment will flourish as Mr East is a good leader – sales, administration and inter personal skills! Keep an eye on Intercontinental Hotel Group this week. Rumours abound that it may bid for Fairmont and Movenpick hotels, after abortive talks to merge with US’S Starwood Group.

 

Call me a cynic, but I am beginning to feel decidedly uncomfortable about Greece. Since the Troika has moved in, the silence has been deafening. I am starting to wonder, whether what is on the table in terms of bond and debt refinancing must just be unacceptable to the IMF. No doubt all will be revealed next week.

UK companies posting results this week – Monday – HSBC (5.00am), INTERTEK, TRINITY MIRROR, FIDESSA, Tuesday – DIRECT LINE, SDL, TRAVIS PERKINS, JUST EAT, MEGGITT, STANDARD LIFE, FRESNILLIO, Wednesday – LSE, UNITE, STANDARD CHARTERED BANK, L&G, Thursday – AGGREKO, OLD MUTUAL! AVIVA, MONDI, RANDGOLD, RSA, INMARSAT, SPIRENT COMMUNICATIONS, ENTERPRISE INNS, MYLAN, SAB MILLER (TS), Friday – WILLIAM HILL, BELLWAY.

U.S. Companies posting interim results this week – Monday – LOEW’S, BROADCOM, Tuesday – AETNA, SPRINT, BEAZER HOMES, KELLOGG, MGM RESORTS, LIBERTY GLOBAL, EASTMAN KODAK, Wednesday – TIME WARNER, RALPH LAUREN, MOTOROLA SOLUTIONS, TESLA, Thursday – FRED’S, ALLERGAN, VIACOM, ZYNGA, Friday – SOTHEBY’S, HERSHEY

Economic data – Monday – UK MANUFACTURING, Tuesday – UK PMI CONSTRUCTION, UK PMI SERVICES, Thursday – BOE MPC INFLATION REPORT – Friday – US NON- FARM PAYROLLS

 

 

 

David Buik – market commentator

 

 

Panmure Gordon & Co

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