TODAY’S FAYRE – Sunday, 27th September 2015
“When Beauty and Beauty meet
All naked, fair to fair,
The earth is crying-sweet,
And scattering-bright the air,
Eddying, dizzying, closing round,
With soft and drunken laughter;
Veiling all that may befall
After — after —
Where Beauty and Beauty met,
Earth’s still a-tremble there,
And winds are scented yet,
And memory-soft the air,
Bosoming, folding glints of light,
And shreds of shadowy laughter;
Not the tears that fill the years
After — after –“
Rupert Brooke – poet & soldier – 1887-1915
100th Anniversary of Battle of Loos – 25th Septeber-19th October 1915
“Financial struggle is often the direct result of people working all their lives for someone else” – Robert Kiyosaki- US businessman & commentator – 1947-
I must confess to being rather excited, if not too exuberant, at the prospect of Sepp Blatter being asked by the Swiss Authorities to account for his and FIFA’S unorthodox behaviour – allegedly criminal activities – over the past 18 years. Maybe the ‘Whitewashing’ of this skulduggery will soon be brought to a satisfactory conclusion, but I shall not be holding my breath.
The despicably ‘ill-conceived’ gutter exposure of some of the PM’s supposed student antics really highlights what is happening to politics around the world. Everyone understands the need for probity and exemplary behaviour to aspire for high office and to govern. However there is little doubt in my mind that the power of social media is such that only robots, zoids and clones will move in to the higher echelons of domestic and international politics. Social media will almost certainly expose every single aspirants’ warts, whelks and bubicles’ to the world at large from pre-puberty onwards. Few will want to lay themselves open to derision for the trivial actions of their innocent youth. Whatever will happen to those personalities and characters that have provided the leadership qualities so desperately needed to set them aside as leadership material? They will be mindful and
I have no idea whether to call last week’s seismic market movements erotic, neurotic or hysterical; perhaps it was a combination of all three. From the previous week markets were left in a state of hiatus with unanswered questions over US interest rates and growth in China. When you look at the closing losses on the week of a few of the international indices, without having detailed knowledge of the economic and financial background, you would be forgiven for thinking it was just a quiet week after the annual holiday period. The S&P 500 closed down 0.6% on the week with the FTSE easier by 0.08%, European stocks by an average down by 1,52% and the NIKKEI by 0.18%, though Tokyo was closed for three days for public holidays. In point of fact the FTSE was as ‘low’ as 5935 and as ‘high’ as 6175, which just goes to illustrate the level of uncertainty.
We are all bored to distraction by the level of prevarication by the FED, which was exacerbated by ‘off-piste’ comments made by Lockhart and Bullard, suggesting they were in favour of a rate hike sooner rather than later. Whether these comments galvanised FED Chairman Yellen to indicate a rate rise in December was on the cards regardless of external economic pressures, one can only speculate. Anyway her comments, made apparently when she was a little dehydrated, were initially taken positively in New York and Europe, though on the Street of Dreams some financial luminaries were having second thoughts, as two of the three main indices closed flat, with the NASDAQ shedding 1%. Since the May ‘Highs’ the FTSE has surrendered 15% thanks in the main to mining and energy stocks, whereas the S&P is down by 9.4%. Apart from equity gyrations yields on Treasuries rallied and Greenback flexed its muscles. Crude oil was a smidgen firmer and gold perked up to $1147 an ounce.
China remains an enigma. How wonderful it would be get the truth about growth, manufacturing etc. Many believe annual growth is no more than 2-3%. Manufacturing data in China for August is the worst it has been for over 6 years.
On the Street of Dreams the fact that Caterpillar’s sales were down 9.6% provided a sufficient litmus test that manufacturing and industrial production in China was slumping. The S&P industrial sector surrendered 2% in value last week. Also Democrat Presidential aspirant Hillary Clinton put the mockers on the biotech and drug sector last week. The Biotech sector was off 13% last week with health shares falling 5.8% thanks to comments she made about drug price gouging for prescription drugs and how she would take the pharmaceutical industry on in her Presidency. Fidelity’s Tom Stevenson, in the Telegraph pointed out that ‘companies operating in highly regulated and political sectors can be exposed. ‘There was also good news from operations such as Nike which shone strongly through the eatery autumn sunshine with strong sales.
However it was to the FED’s Janet Yellen that the market was looking for financial guidance rather than pastoral guidance, as she should readily admit she is a poor apostle for the ‘Almighty.’ The market desperately needs to know that the U.S. economy is off life support and a hike in interest rates would be a strong indicator that the show was back on the road.
Over here in Old Blighty it was the mining sector, drugs and energy stocks that put the FTSE 100 under serious duress. Glencore’s share price drifted down to 97p from an issue price of 300p four years ago. The recent capital injection has failed to do the trick as investors concerned themselves with the significant level of debt in a company that was on the back foot with demand for minerals appearing to drop like a stone. A graph of its credit default swaps does not look pretty; nor does the Petrobras’s.
Most of last week’s headlines were grabbed by VW and the fact that the company had been telling ‘porkies’ in regard to the level of emissions of one of its Diesel engines. It shares fell by more than 30% last week. Apparently the EU and UK’S had been warned of the possibility. The CEO Martin Winterkorn was quite rightly hosed – he clearly was not on top of his game. Restoring the company’s brand and credibility will take some doing particularly as the US’s litigious prowess will be seen at its most virulent in the months to come, with the UK, EU and Far East no doubt jumping on the bandwagon. VW appears to be an incestuous company with Porsche, the Worker’s Council and Lower Saxony being the main shareholders of this Wolfsburg dominated business. Therefore appointing Mattheas Meuller from Porsche as CEO, however brilliant he may be, strikes me as injudicious and frankly corporate insanity. The public is not being treated to the respect it deserves with an appointment that cannot be perceived as fully transparent. Two comments made to by friends seem very apt – ‘It’s like using sticking plaster to avoid surgery’ or ‘asking Michael Platini to clean up FIFA!’ In passing this VW scandal would appear to have cost the Qatar’s sovereign wealth fund the best part of £3.3 billion.
The Chinese billionaire Wang Jianli is rumoured to be interested in buying Odeon Cinema’s 2000 screen outlets from Guy Hands’s Terra Firma, who attempted to sell this disappointing investment for £1.2 billion 4 years ago. India’s Milestone Resources in conjunction with Schroders and Old Mutual are heading the shareholders rebellion against Debenhams, aided and abetted by Cenkos. The Sunday Times tells us that AB InBev could table a £70 billion bid for SAB Miller. There is still life in corporate finance!
UK EARNINGS – Monday – FITRONIC, MJ GLEESON, Tuesday, WOLSELEY, REVOLUTION BARS, MITIE, BOOHOO, Wednesday – J SAINSBURY (TS), SAGA, TOPPS TILES, COMPASS, Thursday – ITE, Friday – FIRSTGROUP
US EARNINGS – Monday – VAIL RESORTS, Tuesday – DIAMOND FOODS, Wednesday – COSTCO, Thursday – MICRON, FORD & GM SALES,
ECONOMIC DATA – Monday – US PERSONAL CONSUMPTION & PENDING HOME SALES, Tuesday – UK CREDIT & MORTGAFE APPROVALS, Wednesday – UK BALANCE OF PAYMENTS & GDP, Thursday – UK PMI MANUFACTURING, Friday – EU PPI & UK PMI CONSTRUCTION.
David Buik – market commentator
Panmure Gordon & Co