TODAY’S FAYRE – Wednesday, 21st October 2015
“The boy stood on the burning deck
Whence all but he had fled;
The flame that lit the battle’s wreck
Shone round him o’er the dead.
Yet beautiful and bright he stood,
As born to rule the storm;
A creature of heroic blood,
A proud, though child-like form.
The flames rolled on – he would not go
Without his Father’s word;
That father, faint in death below, H
is voice no longer heard.
He called aloud – ‘say,
Father, say If yet my task is done?’
He knew not that the chieftain lay
Unconscious of his son.
‘Speak, father!’ once again he cried,
‘If I may yet be gone!’
And but the booming shots replied,
And fast the flames rolled on.
Upon his brow he felt their breath,
And in his waving hair,
And looked from that lone post of death
In still yet brave despair.
And shouted but once more aloud,
‘My father! must I stay?’
While o’er him fast, through sail and shroud,
The wreathing fires made way.
They wrapt the ship in splendour wild,
They caught the flag on high,
And streamed above the gallant child,
Like banners in the sky.
There came a burst of thunder sound –
The boy – oh! where was he?
Ask of the winds that far around
With fragments strewed the sea! –
With mast, and helm, and pennon fair,
That well had borne their part –
But the noblest thing which perished there
Was that young faithful heart.”
Felicia Hemans – poet – 1793 – 1835
210th Anniversary Battle of Trafalgar – 1805
Admiral, Lord Horatio Nelson RIP
I don’t think I have ever seen anyone look more uncomfortable and disorientated in a ‘monkey suit’ than Jeremy Corbyn did last night at HM The Queen’s state banquet at Buckingham Palace in honour of President Xi Jinping. At least he donned the evening suit, even if he did not look the part. After all, he’s not pear-shaped like your scribe and for a man of 69, he’s as slim and as fit as a butcher’s dog! So he should have felt quite at home.
By the end of the week the Chinese President’s visit to the UK will have reached saturation point with television and newspapers drowning in stories and angles on the visit. Hugely important though it may be, I don’t think I bring anything special to this party worthy of making special comment. Suffice to say that China is an easy target to blame for flooding the steel market when there is a 30% over-capacity problem with steel. What many must find so frustrating is that the writing has been on the wall for 30 years. After the British Steel Corporation under Sir Monty Finniston, various pioneers and Mavericks from Corus to Arcelor Mittal to Tata to Caparo Industries have attempted to capitalise on opportunities presented. However with labour and running costs so much cheaper in China, Russia and Eastern Europe, these sorties were always going to be paired down or end in tears. What I find irritating is that no contingency plans have ever been made by any UK government in the past 50 years to build other factories like car assembly plants on Teesside or in Lanarkshire, similar to Nissan hugely successful operation in Sunderland. Sadly the 5200 jobs that could be lost to the steel industry redundancies could end up totally 25k if one includes ancillary industries and services. This could be a community crisis in quite a few areas.
Though there have been no economic wireworks from China in the last 24 hours, expectations and aspirations about fresh stimulus packages still permeate around the major global financial centres. Today Japan’s export data left a little to be desired with any positive effects from Abenomics dissipating with monotonous regularity. It looks as though today’s Asian equity centre may finish the session just in positive territory, though Hong Kong remains closed for a holiday today. Yesterday the Street of Dreams did not feel particularly comfortable in its own skin. The quality of earnings continued in many cases to disappoint.
Yahoo! For example saw income fall by 8% in the last quarter to circa $1 billion. This is the 9th quarter in the last eleven that Yahoo has seen revenues drop. The shares fell 1.19% after hours and this company has been very reliant on the contribution made from its stake in Alibaba. It may just be that Marissa Meyer the CEO will consider teaming up with Google on search as well as continuing to use Microsoft’s Bing. Verizon was the pick of the positive earnings with net income up 9.3% to $4.04 billion with 1.3 million new subscribers. Tesla’s efforts did not pass muster with the reliability of these cars being challenged – shares were down 6%. Ferrari’s IPO looks like a hot ticket. The shares will be issued at the top end of the range at $52, valuing the company at just under $10 billion. This pricing puts Ferrari on a multiple of 35x earnings against GM at 6x and Ford at 8x!
The FTSE lost just 7 points yesterday in a really dull session, though Whitbread caught the eye in a positive manner ending the session up 2.6% with Genel falling by 5.6% having been down 8% at one time. Mark Price’s departure after 9 years as head of Waitrose surprised many. There were uncomplimentary remarks made about his move in the wake of Aldi and Lidl seeing their sales increase by 17% in the last quarter. Mark Price may have run his race but together with Sir Charlie Mayfield the chairman of John Lewis and Andy Street the CEO, they have been a brilliant team of this very unusual cooperative, where profits are shared transparently with all employees. Most people will wish Mr Price well in his quest to become chairman of Channel4.
Credit Suisse’s Tidjane Thiam posted near enough acceptable Q3 numbers – a profit of CHF779 million. Radical management changes will be implicated with the emphasis for expansion being focused on Asia with a global concentration on wealth management. We are expected that CS will need a cash injection of between CHF6 billion to CHF 8 billion. Redundancies are inevitable.
BOE Governor Mark Carney is expected to make a speech on the BOE’s prognosis on the EU referendum, goaded on by the PM. MC thinks the findings will be rather dull, but I suspect that the speech will tow the party line without party political influence but almost certainly recommending the UK remains in. No surprise that Sir Jon Cunliffe the former EU diplomat has put the dossier together. Barclays chairman John McFarlane may well be setting the cat amongst the pigeons. It is rumoured that the ‘Bald Eagle’ will recommend that its high street operations be placed on a temporary basis in the investment bank’s balance sheet to prevent the investment bank’s credit rating being slashed. I am very sympathetic with this proposal but I suspect ‘hell has a better chance of freezing over’ than BOE’S Andrew Bailey & Co accepting this idea. I never have seen the real value of ring fencing, though I understand the concept of protecting the consumer. Surely it is much better increase capital weightings for investment banking business?
Today ARM Holdings posted revenues up 17% with profits of $375.5 million. This is a welcome return to form. Shares are up 13% this year. Home Retail’s efforts will not pass muster having seen sales fall 2% in the last 6 months. Argos is struggling though on line business has improved. Reckitt Benckiser saw a 7% growth in its 3rd quarter with revenues up 5%. These shares have been stellar – shares up 19% this year. Finally SKY, which is hardly feeling the heat from BT’s kitchen. Q1 revenues were up 6% to £2.8 billion. Profits were up 10% to £375 million and what impressed me most was 134k new subscribers signed on.
UK companies posting number – Wednesday – SKY, RECKITT BENCKISER, HOME RETAIL, BHP BILLITON Thursday – LSE, DEBENHAM, GKN, PEARSON, LADBROKES, ANGLO-AMERICAN, TRAVIS PERKINS, FOXTONS, Friday – WILLIAM HILL, DECHRA PHARMACEUTICALS, SHIRE, TSB.
U.S. companies posting interim results – Wednesday – eBAY, GM, BAKER HUGHES, ABBOTT LABS, BOEING, EMC, BIOGEN, COCA-COLA, TEXAS INSTRUMENTS, DOLBY, Thursday – GOOGLE/ALPHABET, MCDONALD’S, RAYTHEON, NASDAQ, FREEPORT-McMORAN, BJ RESTAURANTS, AT&T, AMAZON.COM, PULTE, MICROSOFT, EASTMAN KODAC, Friday – WHIRLPOOL, THOMSON-REUTERS, PROCTER & GAMBLE,
ECONOMIC DATA – Wednesday – US OIL INVENTORIES, Thursday – ECB, US INITIAL JOBLESS CLAIMS, RETAIL SALE
David Buik – market commentator
Panmure Gordon & Co