TODAY’S FAYRE – Friday, 15th July 2016
“Now entertain conjecture of a time
When creeping murmur and the poring dark
Fills the wide vessel of the universe.
From camp to camp, through the foul womb of night,
The hum of either army stilly sounds,
That the fixed sentinels almost receive
The secret whispers of each other’s watch.
Fire answers fire, and through their paly flames
Each battle sees the other’s umbered face.
Steed threatens steed, in high and boastful neighs
Piercing the night’s dull ear; and from the tents
The armorers, accomplishing the knights,
With busy hammers closing rivets up,
Give dreadful note of preparation.
The country cocks do crow, the clocks do toll,
And, the third hour of drowsy morning named,
Proud of their numbers and secure in soul,
The confident and overlusty French
Do the low-rated English play at dice
And chide the cripple, tardy-gaited night,
Who like a foul and ugly witch doth limp
So tediously away.”
William Shakespeare – poet & playwright – 1564-1616
After all the political machinations – the ‘blood-letting’ and the night of the long knives that go with a change in government, we felt like a belly laugh, so went to see the Lumley Saunders ‘Ab Fab’ film in style at the Electric Cinema in Notting Hill –You know the one with sofas, arm chairs, stools, blankets, drinks and food! Such a pity it was such an awful film. Regret the two glasses of Sauvignon Blanc did for me and the lids became too heavy. I used to love those two national treasures and I still think they are immensely talented but this film, respectfully, was absolute twaddle.
Yesterday I introduced myself to the sunshine at Lord’s – It was quite an ordeal. I did not quite know how to deal with it. However nothing that a glass of Pimm’s good company and some entertaining cricket would not put right. In terms of cricket this is palpably the worst weather the lovers of this very special game have experienced since AH Kardar brought his India side over here in 1954, when it rained almost every day of the week!
Politics – Out with the old; in with the new! PM May certainly showed her resolve in putting in her own people, which saw 10 government casualties looking for alternative gainful employment or something to supplement the paucity of an MP’S salary. It seems extraordinary that political heavyweights such as Messrs Osborne and Gove have been cast in to the long grass of ignominy. Both were fine ministers who did much good, but both making fatal errors of judgement in the end. Certainly if you backed the wrong horse in this drama which continues to unfold on a daily basis you have paid dearly with your career. There seems little more vile occupations than high octane politics. Quentin Letts in the Mail today on this subject is a guinea a minute.
A new PM and a fresh government has brought some stability to markets in recent days. It has also contribute to an improved sentiment in the US, where there is some hope that the earnings season may not be too bad. Also in Asia, since Abe-San was returned to power in Japan with a thumping majority, the NIKKEI has been rocking and rolling. I am less than convinced that the economy has improved one scrap but if folk feel better about life, it can have a very positive effect on confidence. In the past 48 hours in Japan, Nintendo’s new game has set its share price on fire, rising 10% yesterday and another 4% today. Japan also introduced the biggest tech company to the IPO market since Alibaba and this messaging App raised $1.3 billion today in Tokyo and this afternoon in New York, valuing the company at $8 billion. Line’s ability to compete against apps from Facebook and WeChat seems to have some credence with the shares initially rallied by 48% in the first day’s trading, before settling up 27% at $26.61 towards the close with all to play for in New York. .
Yesterday on the Street of Dreams, apart from the NASDAQ, which has been held back by an indifferent performance by Apple in recent months, the DOW and S&P continue to hit new record highs – in fact the DOW has also had a 5-day run of gains – the first since March. Yesterday the DOW added 0.73%, the S&P 500 0.53% and the NASDAQ 0.73%. JP Morgan’s results beat expectations EPS came in at $155 against expectations of $1.42. Net revenues were up 2% at $24.35 billion with a profit for the quarter of $6.2 billion, which included a windfall of a $430m provision for litigation charges, which were released. M&A activity was down 10% from this time last year, but 23% up on the first quarter. Debt trading was up 35% but equity trading was up only 2%. JPM’S shares rallied by 2.7%. JPM’S CEO Jamie Dimon said BREXIT won’t affect the bank’s earnings.
Asian stocks were in quite good form today for two reasons. Firstly 2nd quarter GDP came in marginally better than expected at 6.7% (EST: 6.6%). Also a weaker Yen helped the NIKKEI. At 6.00am BST the ASX was up 0.36%, the Shanghai Composite was near enough flat at +0.05%. The hang Seng added 0.62% and the NIKKEI 1.06%.
The big financial deal that was to capture everyone in the UK’s imagination was an expected 25 basis point cut in official rates by the BOE – the first since 9th March 2009 – expectations were flagged up by Mark Carney the Governor of the BOE and we all held our breaths. It never materialised. Now the BOE is an independent body and government is precluded from bringing influence to bear on the MPC’S guidance. Whether Mark Carney and the committee knew that the new Chancellor Philip Hammond intended to end austerity for the time being and borrow stacks more money will remain a conundrum. Nonetheless rates remained unaltered, which made huge sense to me. As a result of no change the Pound rallied to $1.3445, which just took the Dollar earnings geared FTSE down just a smidgen – 15 points at 6654 – a mere bagatelle. By August Carney’s committee will have more data when the Inflation Report is presented. If he feels the economy is on its back – so be it! Cut! But until then leave some bullets in the chamber. I know QE can be used and that Central banks seem to be cooperating on stimulus packages more on a global basis than they have in the past. Mark Carney has been a very controversial Governor as an acolyte of George Osborne’s. Many politicians think he has over stepped the mark with his concern over BREXIT. As an appointee of George Osborne there is a school of thought that says he should go. I do NOT subscribe to that idea. He has played a huge role in the last 2 weeks in stabilising the financial situation – Very statesmanlike. Perhaps he should not have been such a disciple of ‘Doom & Gloom!”
UK companies posting numbers – Friday – DCC
US companies posting interim results this week – Friday – Citibank, Wells Fargo
Economic data – Friday – EU trade balances
Market Commentator – Panmure Gordon & Co
D +44 (0)20 7886 2775
Mobile – 0044 7788 144 877
Panmure Gordon & Co
One New Change | London | EC4M 9AF | United Kingdom