TODAY’S FAYRE – Sunday, 4th September 2016
“I have seen dawn and sunset on moors and windy hills
Coming in solemn beauty like slow old tunes of Spain:
I have seen the lady April bringing in the daffodils,
Bringing the springing grass and the soft warm April rain.
I have heard the song of the blossoms and the old chant of the sea,
And seen strange lands from under the arched white sails of ships;
But the loveliest things of beauty God ever has showed to me
Are her voice, and her hair, and eyes, and the dear red curve of her lips.”
John Masefield – poet laureate – 1878 –1967
The more I hear and read about this junior doctors’ strike, the less I am convinced that it has anything to do with patient welfare and care. It’s all about the BMA hanging its hat on the peg of unpleasant reactionary left-wing politics – anything to bring grief to a Conservative Government. The BMA should be utterly ashamed of itself. The only comment I would make is that if the Government is disposed to spending money on more infrastructure, far better it should be spent on NHS projects, than ridiculous schemes such as HS2, provided excessive bureaucracy is cut and BMA is kept a million miles away from any negotiations! Hell has a better chance of freezing over than my wish being granted, but I can live in hope!
Anyone who watched the group one sprint at Haydock on Saturday saw a very high-class filly in ‘Quiet Reflection’ who won over 6 furlongs with quite a bit left in the tank. This Karl Burke trained 3-year old filly ridden by Dougie Costello is clearly happier on soft ground. I sincerely hope ‘Quiet Reflection’ is entered up in the Prix de L’Abbaye on ‘Arc’ day, despite the race being only 5 furlongs. She will almost certainly get the required cut in the ground. If she runs, we must hope that she is not ‘in season’ on the day of the race.
Ed Balls, so often the ‘Moriarty’ of the political arena, whom many voters enjoyed hissing at as the villain of the plot, has in recent months been given excellent PR advice. He has taken the disappointment of being removed as MP for Morley and the disintegration of the Labour party, which he has nurtured and loved for decades, on the end of the chin. His participation in ‘The Great British Bake-off’ and a to-date-low-key appearance in ‘Strictly Come Dancing’ to bolster his image as a ‘good egg’, will do him no harm and will certainly help to bolster sales of his book ‘Speaking Out.’ However I suspect he won’t pull a hat-full of punches in these memoires!
Looking at economic and financial data in isolation can often be a very misleading occupational hazard. Global indices found the going very tough for the first three days of last week. Gains were hard to come by as oil and commodity prices fell. Also corporate results, such as they were, offered little in the way of solace and the threat of higher US interest rates hovered over most bourses with clouds of financial uncertainty. There was some improved data in the UK, post the BREXIT fear campaign, on the manufacturing front and better construction numbers, though they were still below par. Conversely manufacturing data in the US announced on Thursday for last month was also below par.
Then on Friday the ‘Grand Daddy’ of them all – US Non-Farm Payrolls – posted employment data short of expectation – 151,000 jobs created in August against expectations of 180,000. However the unemployment rate did fall by a pip to 4.8%. FED Chairman Yellen let it be known that any number above 100,000 was probably satisfactory for a rate hike of 0.25% to remain on the agenda probably for December, though she and her cohorts would have preferred to see greater evidence of wage inflation and more improvement in the global economy to guarantee or justify a rate increase.
Last week the net result was that the S&P 500 gained 0.32%, the FTSE a bizarre 0.83%, European stocks an average of 1.94% and the NIKKEI a whopping 3.45% on the back of a weaker Yen, which bolstered export stocks. Here in Old Blighty the FTSE 100 added a mesmeric 2.2% on Friday, having previously drifted for most of the week, with energy and oils stocks blazing the trail on the back of a strong Pound which flirted to hit $1.32 against the Greenback. There were also solid performances from banks throughout the week, thanks to the threat of higher US rates as well as from drugs, utilities and tobacco. Mining stocks were rather mixed and though retail stocks have been in the doldrums for much of the year, Friday saw many bounce out of the traps. The likes of Next -26% in the last year, M&S -29% and Sports Direct -59% in the same period have been desperate laggards with the latter requiring radical overhauls and governance changes, but all added some glitter on Friday. Stocks like Unilever (+3.8%) were also very popular. Bond yields rallied a little and oil prices (Brent) fell 6% last week, causing concern. Pension ‘black holes’ were on many investors’ agenda and their lips last week. There has been significant chat about BT’s and BAE Systems’ £7 billion and £4 billion shortfalls. GKN’S £2.2 billion also came under the microscope. These problems cannot be swept under the carpet. It seems as though dividends may come under pressure, if companies fail to deal with these unacceptable deficits.
On Friday Samsung had a set back with faults in the batteries of its Galaxy 7 smartphones. There are 2.5 million in circulation and many may need to be recalled. Samsung’s shares actually rallied 0.6% on Friday but have fallen nearly 5% in the last 2 weeks. The timing of this problem is unfortunate as Apple presents its iPhone 7 on Wednesday. I suspect Tim Cook will enjoy this occasion with some relish. With PM May attending the G20 in China, with many attendees indulging in much ‘back-slapping’ over climate change, she will be more concerned about Hinckley Point and China’s and France’s possible gargantuan investment. It feels as if it has stalled – cost? Security? At this juncture we need a decent diplomatic outcome. It has also transpired that the Reuben Brothers allegedly worth £13 billion, are in advanced talks to sell 50% of Global Switch, the World’s biggest computer hosting networks to the Chinese for circa £5 billion.
M&A activity could provide some momentum behind the FTSE 100 and 250 in the autumn, despite valuations looking quite rich. Several IPOS – £1.5 billion SkyBet sale by CVC plus a possible £10 billion sale of 02 by Telefonica, a regurgitation of Misys for £5 billion, a £2 billion float by cinema chain, Vue and TI Automative, the car parts operator providing another opportunity in a £2 billion new issue.
To end on a worrying note many will have been disturbed that RBS has been syphoning £70 billion a year from NatWest’s coffers to support RBS’S riskier financial transactions. These loans will of course be disallowed under fresh regulation legislation to be introduced in 2019. It does not leave RBS an excessive amount of time to get its financial act together.
UK companies posting results this week – Monday – Dechra Pharma, Plus500, Hunting PLC, Tuesday – Redrow, Applegreen, DS Smith, Halfords, Ashmore, Berkeley Group, Stadium Group, Wednesday – Hargreaves Lansdown, McBride, Barratt Development, Ashtead, Thursday – Fenner, Dixons Carphone (TS), Monitise
US companies posting interim results this week – Tuesday – Casey’s General Stores, Wednesday – Hewlett=Packard, Thursday – Donaldson’s, Barnes & Noble
Economic data this week – Monday – UK PMI Services, US PMI Services, Tuesday – BRC Retail Sales, Wednesday – UK Industrial Production, Halifax House Price Index, UK NIESR GDP estimate, Thursday – US Initial Jobless Claims, ECB Press Conference, Friday – RICS House prices, UK Trade Balances
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