THIS AFTERNOON’S FAYRE – Tuesday, 19th July 2016
“It is the cause, it is the cause, my soul,–
Let me not name it to you, you chaste stars!–
It is the cause. Yet I’ll not shed her blood;
Nor scar that whiter skin of hers than snow,
And smooth as monumental alabaster.
Yet she must die, else she’ll betray more men.
Put out the light, and then put out the light:
If I quench thee, thou flaming minister,
I can again thy former light restore,
Should I repent me: but once put out thy light,
Thou cunning’st pattern of excelling nature, know not where is that
Promethean heat That can thy light relume.
When I have pluck’d the rose, I cannot give it vital growth again.
It must needs wither: I’ll smell it on the tree.
Ah balmy breath, that dost almost persuade
Justice to break her sword! One more, one more.
Be thus when thou art dead, and I will kill thee,
And love thee after. One more, and this the last: So sweet was ne’er so fatal.
I must weep, But they are cruel tears: this sorrow’s heavenly;
It strikes where it doth love.
The Tragedy of Othello
William Shakespeare – poet & playwright – 1564-1616
The King is dead! – Long live the King! Politics is ruthless and though Messrs Cameron and Osborne have gone with indecent haste, it might be folly and rather unfair to dismiss them and their achievements with the contempt that neither deserve! David Cameron was on the whole a very good Prime Minister. Unemployment has been slashed. The deficit has been cut by 2/3rds and welfare is on a more even keel, with educations standards having been improved immeasurably.
George Osborne inherited a dire economy as could ever be imagined. To use his phrase, he did much to mend the roof for the future. Such a pity that ‘Project Fear’ was their main weapon for the EU Referendum. It was so unnecessary. A friendly BBC breakfast interview with Cameron & Osborne eating croissant with 4/5 members of the public, deftly handled would have been far more effective. Such is life and there’s no jobbing backwards! It would be unfair to condemn them just for poor referendum judgement and the fact that the lower paid used this Heaven-sent-opportunity to protest against social injustice, which they never sussed out!
Most people in this office and my family have given me absolutely unceasing and relentless stick for my stance on BREXIT. Sorry, everyone, I am totally unapologetic. I am pleased to see that the political brexiters are now in place to implement as smooth a transition as possible over the next few years. I am very excited at the positive comments made by the likes of Boeing, Lockheed Martin and Wells Fargo that they couldn’t care a jot about BREXIT! This may only be small beer in terms of the grand picture but they are significant players on the world stage. It would also appear that Australia, New Zealand and Canada would be only too happy to accommodate us in a trade agreement and so would the US but for the fact that Kerry is Obama’s bag boy. However the US’s attitude may change when Obama heads back to Chicago to lecture.
Also I have a little piece of advice for Messrs Dimon and Blankfein. Do you really want to send 5/6k staff to Paris and or Frankfurt to relocate some of your business when the EU banking sector is creaking from every seam. Italy, as we know is grabbing all the headlines, but Germany, France and Spain wait in the wings with their tales of woe! Just let them stay here where the infrastructure is proven. The system works and the regulatory controls are top drawer. What many observers may have forgotten when the banking sector comes under duress is not only the erosion of value and share capital but more to the point when depositors lose their confidence and withdraw their money. It’s like the plague or ‘Black Death!’ Trust me its toxic! Remember Northern Rock – not that long ago!
So far this week global markets have been relatively quiet; however there have been a few nuggets of information to cast our beady eyes over. In the wake of tolerable US bank results, Bank of America disappointed. However, Goldman Sachs’ interim results beat expectation (EPS $3.72 against expectations of $3). The shares rallied by 0.97% pre-opening. Yesterday Netflix’s efforts last night did not pass muster. Costs went up and subscribers fell way short of the mark, and investors did not hesitate for a Nano second in venting their spleens and removing 15% in value from the share price. In Asia Line, the fresh Line IPO app lost 10% as did Softbank post their £24.3 billion bid for ARM Holdings. However Nintendo remained on fire with the addition of another 14.3% in its share value! UK CPI – Inflation, measured by the consumer price index, rose to 0.5 per cent in June after being stable at 0.3 per cent in May, according to the Office for National Statistics, thanks to fuel and airline flights. This unexpected blip saw Sterling rally a smidgen. Finally we are expecting the new UK Chancellor Philip Hammond to leave austerity in the in-tray and watch him borrow some more 10 year Gilts under 1% to fund infrastructure initiatives to keep his foot on the growth pedal.
Never let it be said that I was a protectionist when it comes to international business. However I am sorry to say goodbye to ARM Holdings. The reason is that the FTSE 100 has few constituent stocks that represent the future. It’s all about banks, retail, mining, oil tobacco, utilities etc. There is only Sage left to represent the brave new world. Unlike the NASDAQ and the US in general when companies like Google (Alphabet), Apple, Intel, Cisco, Amazon, Netflix, eBay, Texas Instruments etc blazed the trail, we, here in Old Blighty, have no comparable companies. We lost most them when the TNT bubble burst in 2000. Autonomy was sold to Hewlett-Packard very unsatisfactorily. So it would have been great to have a couple more operations to use as springboards for the future. In order to tuck ARM into its portfolio Softbank had to drop its stake in Alibaba (quoted in the US and Switzerland) from 32% to 28%. There seems little change in corporate culture in Japan. It remains or conveys the impression that life remains very incestuous!
The IMF cut its forecast for UK growth in 2017 to 1.3% from an earlier forecast of 2.2% as the impact of the vote is felt. UK growth this year is expected to be 1.7%, 0.2 points lower than the IMF’s previous forecast. Global growth is forecast to rise by 3.1% this year and 3.4% in 2017, a 0.1 point cut for both years. – Whoopee! The IMF’S forecasting has always been average at best.
UK companies posting numbers – Tuesday – Dairy Crest, BHP Billiton, Royal Mail Group, IG Group, SSP Group, Wednesday – Fresnillio, Anglo-American, Severn Trent, TalkTalk, Johnson Matthey, Electrocomponents, Thursday – Unilever, Babcock International, Tate & Lyle, AO World, Howden Joinery, Halma, Euromoney, SAB Miller, EasyJet, Premier Foods, Friday – Beazley, Vodafone, Acacia Mining
US companies posting interim results this week – Tuesday – UnitedHealth, Microsoft, Lockheed Martin, Johnson & Johnson, Philip Morris, Goldman Sachs, Wednesday – Morgan Stanley, Halliburton, Northern Trust, Fidelity, Mattel, eBay, Intel, General Motors, Thursday, Pulte, DR Horton, Bank of New York Mellon, Blackstone, Biogen, Starbucks, Schlumberger, Visa, AT&T, Friday – American Airlines, Whirlpool, Honeywell
Economic data – Tuesday – UK inflation data, US Housing starts, Wednesday – UK Employment data, Thursday – UK Retail sales, Friday – CBI Industrial orders
Market Commentator – Panmure Gordon & Co
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