TODAY’S FAYRE – Thursday, 21st April 2016
“HAPPY BIRTHDAY – Her Majesty, The Queen
21st April 1926 –
“Tyger! Tyger! burning bright
In the forests of the night,
What immortal hand or eye
Could frame thy fearful symmetry?
In what distant deeps or skies
Burnt the fire of thine eyes?
On what wings dare he aspire?
What the hand, dare sieze the fire?
And what shoulder, & what art,
Could twist the sinews of thy heart?
And when thy heart began to beat,
What dread hand? & what dread feet?
What the hammer? what the chain?
In what furnace was thy brain?
What the anvil? what dread grasp
Dare its deadly terrors clasp?
When the stars threw down their spears,
And water’d heaven with their tears,
Did he smile his work to see?
Did he who made the Lamb make thee?
Tyger! Tyger! burning bright
In the forests of the night,
What immortal hand or eye
Dare frame thy fearful symmetry?”
William Blake – poet & painter – 1757-1827
So yesterday Larry Summers, Tim Geithner, Hank Paulson, John Snow, Paul O’Neill, Robert Rubin, Michael Blumenthal, and George Shultz – all former US Treasury Secretaries – none with particularly distinguished track records – wrote officially to The Times in support of the UK remaining in the EU. Who put them up to this? President Obama? I suspect that this intervention won’t bring the slightest bit of influence to bear on voters’ decision making process. Thank Goodness HM The Queen’s 90th birthday celebrations will grab virtually every worthwhile headline. It is very tiresome when grandees make bold statements in isolation without considering so many of the differences in the respective economies. As Dr Liam Fox pointed out yesterday here in the UK unemployment is 5.1%, whereas the EU it is 8.9%! I could go on but I won’t as it has already been said to a point of distraction.
I suppose we should be grateful for small mercies that SO FAR former Treasury Secretary James Baker did not get involved and the irascible Alan Greenspan, the measured Ben Bernanke and the thoughtful Paul Volcker have kept their counsel to themselves.
Yesterday equity markets had a relatively solid look about them, after Asia had expressed its concern about China lowering its estimate for GDP this year to 6.3% from 6.7%, which sent modest distress waves across the bows of Shanghai Composite and Hang Seng indices. Europe kept a sense of proportion with most company results proving to be adequate. Crude oil prices rallied quite strongly yesterday with Nymex reaching $44 and change with Brent breaching through the $45 threshold. Rumours mounted that Russia may host another OPEC meeting in May, in the hope of an agreement being made to restrict the supply of oil. The FTSE added just 4 points to 6410 – 15% up since 11th February 2016. Much the same can be said about the performance of US markets, though not on fire yesterday, remained steady with the DOW adding 0.24%, the S&P 0.08% and the NASDAQ 0.16% – moving close to last year’s May record ‘high!’ Coca-Cola’s results did not really pass muster losing 4.4%. Results from Pulte (+2.8%) and DR Horton +0.5% yesterday endorsed the decent New Home sales data posted. Today Alphabet’s and Microsoft’s results will be eagerly awaited.
In attempting to analyse the robustness of US equity markets we must remember that Q2 earnings continue to beat a low consensus. Secondly the VIX (implied volatility in the S&P 500) is at the lowest level since October. Maybe too much complacency? US banks’ share prices are flying. The KBW banking (NASDAQ banking index) has gained 26% from the February low and 6% from a yearly high. Also Asian markets are breaking out. The bulls are in control at present. It all seems to be too good to be true!
Yesterday, it was good to see GKN +3% and Punch Taverns +11% please their acolytes, whereas N Brown -13%, did not. It was the employment data which captured everyone’s imagination. Unemployment went up 21k to 1.7 million, but the interesting figure was wage inflation or a lack of it. It was only 2.2%. With inflation now running at 0.5% that number is hardly a robust number. The BOE on that number alone is hardly likely to be on interest rate hike watch. The official living wage data will not be included until June. The vacancy number of 775k is at an all-time record with a huge shortage of skills, particularly in technology and construction. Surely the schools’ education curriculum needs adjusting.
This morning a weak yen saw the NIKKEI add another 2.4% just before the close and a commodity price rally helped the ASX add 0.81%. The Shanghai Composite was flat and the Hang Seng had added 1.57% at lunchtime. Mitsubishi Motors admitted falsifying fuel economy data which will affect 600k vehicles. Shares fell sharply. VW are also under the cosh again from the US regulatory authorities, which suggests a $5k per car levy to avoid litigation.
Sky’s numbers this morning looked decent though customer costs keep rising. Revenues for the 3rd quarter were up 5% to £8.72 billion. 177k subscribers were added. 6k broadband customers have been added. During the past 9 months the estimated profit was £1.14 billion. Shares have risen 11% in the last 6 weeks. SAB Miller ahead of the AB InBev takeover, saw producer volumes for beer up by 5%. SAB Miller’s shares have risen 40% since September 2015. In Passing Novartis saw revenues fall by 13% in the past quarter.
Google has been issued formal antitrust charges over claims that it abuses the dominant position of its Android operating system. Go away EU regulators – allow companies to charge what the traffic will bear!
UK companies posting results – Thursday – ANGLO-AMERICAN (TS), SEGRO (TS), GO-AHEAD (TS), SAB MILLER (TS), SKY, LADBROKES, COMPUTACENTER, PETS-AT-HOME, Friday – RECKITT BENCKISER (TS)
US companies posting interim results –Thursday – ALPHABET, CITIZENS FINANCIAL, MICROSOFT, GENERAL MOTORS, PULTE, DR HORTON, NANK OF NEW YORK MELLON, BIOGEN, VISA, BJ RESTAURANTS, SCHLUMBERGER, Friday – CATERPILLAR, KIMBERLEY-CLARK
Economic Data – Wednesday –Thursday – UK RETAIL SALES, ECB PRESS CONFRENCE, US CONSUMER CONFIDENCE, Friday – GERMANY IFO REPORT
Market Commentator – Panmure Gordon & Co
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