TODAY’S FAYRE – Tuesday, 31st May 2016
“The Frost performs its secret ministry,
Unhelped by any wind. The owlet’s cry
Came loud—and hark, again! loud as before.
The inmates of my cottage, all at rest,
Have left me to that solitude, which suits
Abstruser musings: save that at my side
My cradled infant slumbers peacefully.
‘Tis calm indeed! so calm, that it disturbs
And vexes meditation with its strange
And extreme silentness. Sea, hill, and wood,
This populous village! Sea, and hill, and wood,
With all the numberless goings-on of life,
Inaudible as dreams! the thin blue flame
Lies on my low-burnt fire, and quivers not;
Only that film, which fluttered on the grate,
Still flutters there, the sole unquiet thing.
Methinks, its motion in this hush of nature
Gives it dim sympathies with me who live,
Making it a companionable form,
Whose puny flaps and freaks the idling Spirit
By its own moods interprets, every where
Echo or mirror seeking of itself,
And makes a toy of Thought.”
Samuel Taylor Coleridge – author & poet – 1772-1834
Chester-Le-Street is Durham’s County ground. As discussed last week Durham has done brilliantly since being admitted to the County championship in 1992. However what a pity so few people bothered to rock up and salute Alistair Cook’s amazing achievement of being the youngest batsman (31) to reach 10,000 in test cricket. He joins an ‘august alumni’ to reach that goal, which include Sunil Gavaskar, Alan Border, Steve Waugh, Brian Lara, Sachin Tendulkar Rahul Dravid, Ricky Ponting, Jacques Kallis, Mahela Jayawardene, Shivnarine Chanderpaul and Kumar Sangakkara, who was the last man to join the club in December 2012. Cook probably has another 5 good year’s cricket in him!!
What is it with the North-East? When it comes to football they get their supporters out in droves, but other sports, the support for them seems very disappointing, considering it has an excellent catchment area. Apart from Northumberland Plate Day, which attracts a crowd of 25,000, the average race meeting at Newcastle attracts between 2,500 and 3000 people!
Superficially this week which includes the start of June, looks rather thin on the ground in terms of news but there are certainly a couple of issues, given the chance, would love to bubble over. Whilst we were enjoying Whit-Bank holiday fayre, Janet Yellen and James Bullard left the market in little doubt that a FED rate increase was very much on the cards – futures suggest a 30% chance in June and 60% in July. It is unlikely in June; to clash with the EU Referendum may not make sense, particularly as the current apocalyptical level of hysteria promulgated by the BOE, Treasury and other similar luminaries suggest there will be enough froth and volatility to contend with. Confirmation of another robust set of employment data on Friday (Non-farm-payrolls) with perhaps a really positive wage inflation number will give added capital for the FED to act. The Greenback rallied quite sharply; oil remained steady and gold continued to fall out of bed ($1213 an ounce).
The session in Europe yesterday was very quiet though positive – DAX ended the session up 0.46% and the CAC was 0.32% to the good. The outlook for the EU economy does not look quite as dire as perhaps it did in February. Thursday’s ECB Meeting is likely to record no change in inflation. However further QE or stimulus packages may be required by the ECB later in the summer. On the Street of Dreams the response to the FED’S ‘Bletchley Park Code Book’ was on the whole quite positive.
The DOW was up 0.25%, with the S&P 500 comfortable in adding 0.43% with the NASDAQ unchanged. Asian markets were cautious in their approach though China’s Yuan and the Yen welcomed the positive effect the strong Dollar could have on export business. At the time of writing the ASX closed down 0.54% and the NIKKEI closed +0.98%. Heading towards lunch time noodles the Shanghai was tripping the light fantastic +3.06% and the Hang Seng similarly +1.61%. Why such ebullience, I am none too sure part from currency gains and end of month adjustments. VW posted a 20% drop in profits – in line with expectations. It wasn’t a great day for the motor industry with Tata’s Jaguar Land Rover dropping a $1 billion, some of it due to a fire in their Chinese factory as well as a drop in demand. Talks are starting about a possible acquisition of Alliance Trust by Rothschild Investment Trust. HIKMA may make a quick return to the FTSE 100 tomorrow, having paid $2.65 billion for Roxane, at the expense of Inmarsat, which is likely to drop out.
GREECE – The fanfare and trumpeted deal announced last week to resume handing out bailout money to Greece sounded like old times: the International Monetary Fund working with European countries again as official lenders to Athens. In the end, the IMF and Dear Old Christine Lagarde replayed its brinkmanship role to perfection and have decided not to support Greece’s third rescue programme with its own financial contribution.
The IMF said it needs to see a concrete plan from the Greeks to substantially cut the country’s debt burden. Wednesday’s agreement by the Euro-Zone finance ministers failed to deliver that. But with the Greek economy still teetering with Athens owing the fund billions, can the IMF afford to stand back? Not a question of whether it can afford to or not, it has to. Ahead of the EU referendum vote if the IMF was to pull the plug, what cannon fodder that would give BREXIT! It will be another fudged deal increasing Greece’s debt to €85 billion. With a population of 11 million, as many have said so many times to a point of distraction – ‘Hell has a better chance of freezing over than Greece being able to service that debt let alone repay it and create growth at the same time.
RIO DE JANEIRO— The state of Rio de Janeiro missed an $8.4 million payment to an international creditor as a debt crisis in Brazil’s state governments deepened amid what the federal Finance Ministry has called “out-of-control personnel expenditures. 2016 will be the second year growth in Brazil will have dropped 4%
UK companies posting results this week – Tuesday – Alpha Bank, IG Group, APC Technology, Wednesday – Halfords, Wolseley, Fusionex International, LondonMetric, Thursday – EKF Diagnostics, Johnson Matthey, Friday – Verona Pharma
US companies posting results this week – Tuesday – Zoe’s Kitchen, Wednesday – Ford Motor Company (sales), Thursday – Costco, Fred’s, Ciena, Joy Global, Gap
Economic diary for the coming week –Tuesday – BRC shop prices, US Chicago PMI, US consumer Confidence, EU employment, Wednesday – UK mortgage approvals, UK PMI manufacturing, Thursday – UK PMI construction, ECB, US Initial Jobless Claims, Friday – US Non-Farm-payrolls & employment data, UK PMI services, EU Retail sales
Market Commentator – Panmure Gordon & Co
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