TODAY’S FAYRE – Thursday, 17th November 2016
“Have you news of my boy Jack? Not this tide.
“When d’you think that he’ll come back?”
Not with this wind blowing, and this tide.
“Has anyone else had word of him?” Not this tide.
For what is sunk will hardly swim,
Not with this wind blowing, and this tide.
“Oh, dear, what comfort can I find?”
None this tide, Nor any tide,
Except he did not shame his kind—
Not even with that wind blowing, and that tide.
Then hold your head up all the more,
This tide, And every tide;
Because he was the son you bore,
And gave to that wind blowing and that tide.”
Rudyard Kipling – poet & author – 1920-200
As I crawled out of my pit at 4.30am this morning to be hit between the eyes by the FT’S Chris Giles’s headline ‘UK Faces £100bn Budget Hole after Brexit vote hits growth forecasts’ I was none too happy on more counts than one. Mr Giles is a superb journalist on top of his game, but he revelled in dining out on the threat of a supposition that growth will collapse in the years to come. In fact it might be fair to say that he, metaphorically, was salivating at the chops at the possibility of an economic dip. I know the FT is obsessive about the EU. Nonetheless it would be great if, occasionally, the ‘Pinkun’ sounded vaguely supportive of UK PLC!
Many working in the City have heard little reassuring comment about the future, apart from Mark Carney. So it was great to hear positive comments from Barclays’ CEO Jes Stayley yesterday. He said London’s ‘gravitational pull’ on finance will not wane after Brexit! I think he’s dead right!
I see the pollsters only give Marine Le Pen a 40% chance of winning next April’s Presidential Election – likely to be fought against the mildly left, though much respected, Alain Juppe. I am surprised it is as low as that. Some bookmakers are offering 2-1. I think I might avail myself of some largesse.
India 264 for 3 – Pujara 119 and Kohli not out 121. Sounds like a good toss to win and very tough going for our bowlers, who will probably toil for two days in the hot sunshine!
Depending on what equity markets investors and analysts deal with, most have had a decent run on the rails in the last 7-9 sessions. So it must come as no surprise if there is a modest slow-down, with a little risk coming off the table on both sides of the Atlantic. Also until President-Elect Trump names his Cabinet particularly the Treasury Secretary and the Secretary of State, it is unreasonable for fund managers and investors to go totally out on a limb. I learned today that it took President Clinton nearly a month to form his administration and both Bush Presidencies over a week. So clearly patience is the name of the game. Steve Bannon is certainly drawing great headlines with as many provocative statements as the media require, with a view to keeping their notebooks bulging.
Yesterday on the Street of Dreams it was a question of profit takers satisfying their needs, particularly after comments made by the likes of Carl Icahn, who believes that equities have over shot on all known data and lack of policy information. The DOW eased by 0.54% with the S&P just nudging down a tad by 0.16%. Conversely the NASDAQ, having languished in recent sessions added a parsimonious 0.36%, despite slightly better than expected numbers from Cisco Systems. 3rd quarter revenue just beat expectations with revenue of £12.35 billion and EPS was 61 cents against estimations of 59 cents. Target at last pleased its acolytes with share rising 6.43% yesterday. Target earned $1.04 per share, adjusted, in the fiscal third quarter, on sales of $16.44 billion. Analysts had expected the company to report earnings of 83 cents a share on $16.3 billion in revenue, according to Thomson Reuters. In the prior-year period, Target earned 86 cents a share on sales of $17.61 billion. Today, it’s eyes down for a ‘full house’, waiting for Walmart’s numbers.
The Asian session was excruciatingly boring with the ASX closing +0.2%, the Shanghai Composite closed up 0.10% with the Hang Seng easier by a similar amount. Today the FTSE has been treading water and at the time of writing it is up 16 points at 6766 (10.10am). Royal Mail Group failed to impress with its very modest effort. Shares are down 5%. It share price is surely only close to £5 thanks to the fact that one day it will be a takeover target. Investors did not like the fact that Wilbur Ross sold 53 million shares in Virgin Money, probably because he want to focus on key investments with political considerations taking pride of place. Rio added 1%; the market acknowledging the positive action taken by the management in removing colleagues who had allegedly transgressed in Guinea. Morrison’s shares are up nearly 40% in the last year. Dave Potts’s team have responded to the challenge with gusto. Its recent initiative with Amazon with offers of a 2 hour delivery service for £6.99 is likely to hurt Ocado. Ocado is vulnerable to a lack of clients – Waitrose & Morrison – and need to look further afield – maybe abroad. Ocado shares were sharply lower yesterday – down 9.3% and down 32% in the last year.
UK companies posting numbers this week – Thursday – Majestic Wines, Royal Mail, Investec, WS Atkins, Johnson Matthey, Manchester United, Friday – Electrocomponents
US Companies posting interim results today – Thursday – Walmart, Staples, Best Buy, Ross Stores, Gap,
Economic data this week – Thursday – UK Retail Sales, ECB Meeting
David Buik 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