TODAY’S FAYRE

 

 

TODAY’S FAYRE – Wednesday, 7th October 2015

 

 

Darkness falls around me, swirling at my feet, the shadows ask me questions, their secrets I must keep.

The coldness that I feel inside, keeps my body numb, but for the thoughts of loneliness, nothing can be done.

In the fog surrounding me, all conscious thought is lost,  I cannot tell what’s real or not, my mind’s a tangled knot.

I’m full of thoughts I can’t retain, all I feel is guilt and shame,

I’ve begun to feel all hope is lost, someone stop the pain.

The wind blows on my tear stained face, calling out to me,  always it’s reminding me of what I cannot be.

I try so hard from day to day, but I can’t seem to find my way. I

can’t control these thoughts that rise, the torment comes from deep inside.

My broken heart is shattered, a pain that knows no end, the shards of glass they slice me through,

I’m bleeding from within.

Confused and fearful every day, no one deserves to live this way.

Forgive me if I want to go, the pain’s beyond all you know.”

 

Anonymous

 

Many like me were amused as well as delighted to see two key Prime Ministerial contenders set down their stall at the Conservative Party Conference yesterday – Theresa May and Boris Johnson. Some of the content of the Home Secretary’s barnstorming speech on immigration was a surprise, as we had to ask ourselves what on earth have both governments in the last 15 years been doing and why has there been no proper screening? Lord David Blunkett certainly opened the floodgates, but the Conservatives have done little to stop the flow. Was it 300k people came to the UK last year?

 

As I understand it when immigrants whose papers are not in order appear in court and are deported, many just walk out of the door and walk straight back in to the community. That cannot be right!

 

Boris was in fine fettle – everyone’s favorite as a personality, but on the question of Heathrow, I believe he is wrong. We need a ruling on a new runway/airport expansion yesterday. This current shortfall is damaging business.

 

Today PM Cameron will address the party faithful as the curtain comes down on this year’s conference with many imponderables left in abeyance – tax credits for the needy and the EU referendum. Yesterday’s EU findings in favour of UK government were not big deals in the grand scheme of things. I doubt they will persuade the electorate that the PM can persuade 26 countries they are wrong and he is right! We shall see!

 

Equity markets put in a sort of ‘run of the mill’ performance yesterday in comparison to last week’s manic activity. On the Street of Dreams the DOW ended the session just in positive territory – up 0.13%, but the S&P and NASDAQ saw profit takers come in to the ring in a logical and organised fashion and adjusted their positions accordingly – down 0.38% and 0.69% respectively. The juice had been squeezed out of the bear-squeeze rally and investors must again look at fundamentals rather than being compelled to react to indecisive guidance on US interest rates or the maze of intrigue surrounding the Chinese economy.

 

 

The earning season starts on Friday with Alcoa. However last night Yum Brands!, whose products include KFC and Pizza Huts, posted unsatisfactory results, with the focus being on dismal efforts in China, which triggered an 18% fall in its share price. Though US corporate profits are expected to fall about 5% this quarter, I wonder how many companies will be affected by a poor response to their operations from Chinese and emerging countries, over the last 3 months? Biotechs had a bad session, still reeling from Clinton proposed policies on drugs. Crude oil rallied 5% yesterday, which gave oil and resource stocks some respite. Dupont grabbed the yellow jersey, having seen its share price rise like a proverbial grilse by 7.7%.

 

 

Here in Old Blighty the FTSE seesawed within a 72 point range yesterday – far less than in some recent sessions – up 27 points at the close to 6326. BP was enjoying the watery autumn sunshine and the banking sector kept its poise and the response to the government’s £2 billion sale of Lloyds Banking Group shares to retail investors attracting 62500 applications, was very positive. As pointed out by Nick Goodway of the Evening Standard, Antonio Horta-Osorio, the 52 year old CEO deserves considerable praise for his achievements, despite Lloyds having to pay back £12 billion for PPI misdemeanours. Apparently there is more to come for all banks on this issue. SAB Miller rejected AB InBev’s overtures out of hand. However this morning InBev improved its offer for SABM to £42.15. Yesterday SAB Miller took the opportunity of posting an early trading statement, which saw sales up a modest 2%, but including foreign exchange vagaries, they were probably down 9%. A merger/takeover valued at £177 billion must surely be fraught with regulatory and competition minefields. A great idea, though I doubt it will come off! AB InBev knew that it must ‘put up or shut up’ by next Wednesday – hence the fresh assault.

 

Overnight there was good news from Samsung, which posted a 79% increase in profits for the last quarter – $6.29 billion. Needless to say this effort was helped by a weak Won – down 12% against the Greenback. This is Samsung’s best effort for 2 years. Semi-conductor/chip sales dis exceptionally well, though Smartphone sales were rather flat. Revenues were up 7.5% and its shares were up 7.65%. However Microsoft was breathing over its shoulder with new gizmos including a lap-top costing $1400 – quick as lightening with Windows 10. Windows 10 has already sold 8 million applications and we are told there will be a mobile that is compatible to the Microsoft equipment in the same manner as Apple’s array of toys!

 

Asian markets are still firing off 3 cylinders with Shanghai closed until tomorrow. However in the past hour indices have rallied on Samsung and expectations that BOJ will need to help markets before too long – ASX closed +0.59% and Tokyo closed 0.75%. The Hang Seng was up 1.5% at lunchtime.

 

 

Concern over emerging markets such as China and Brazil has caused the IMF’s Christine Lagarde to suggest that the world could be staring over the vortex of another recession. This may be tad melodramatic. The IMF has lowered world growth by two pips to 3.01% in 2015 and 3.6% in 2016. China 6.8% and 6.3%, US 2.6% and 2.8% and Eurozone 0.6% and 0.1%. Simon French of Panmure Gordon told City A.M.: “This is a good warning that governments could and should be doing more to stimulate growth.” While the IMF may not have the power to actually force governments into taking action, he added, the organisation certainly has a lot of influence in this regard.

 

 

Tesco’s first half year sales, posted this morning, were very much as expected – down 1.1% with international sales up 1%. £400 million of cost cuts have been implemented. At the start of 2nd half transactions are up1.5%. Tesco’s shares were up 3.5% yesterday – so no change is expected at the opening.

 

UK companies posting number – Wednesday – TESCO, Thursday – HAYS, DUNELM, TATE & LYLE, MONDO, CARILLION, CENTAMIN, DOMINO PIZZAS, Friday – XPOWER and VEDANTA RESOURCES.

U.S. Companies posting interim results – Wednesday – MONSANTO, CONSTELLATION BRANDS, Thursday – ALCOA, RUBY TUESDAY

 

ECONOMIC DATA – Wednesday – UK MANUFACTURING & INDUSTRIAL PRODUCTION, Thursday – MPC, Friday – UK BALANCE OF TRADE

 

 

David Buik – market commentator

 

 

Panmure Gordon & Co

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