TODAY’S FAYRE – Thursday 13thApril 2017

 

“Ah, you should see Cynddylan on a tractor.

Gone the old look that yoked him to the soil,

He’s a new man now, part of the machine,

His nerves of metal and his blood oil.

The clutch curses, but the gears obey

His least bidding, and lo, he’s away

Out of the farmyard, scattering hens.

Riding to work now as a great man should,

He is the knight at arms breaking the fields’

Mirror of silence, emptying the wood

Of foxes and squirrels and bright jays.

The sun comes over the tall trees

Kindling all the hedges, but not for him

Who runs his engine on a different fuel.

And all the birds are singing, bills wide in vain,

As Cynddylan passes proudly up the lane.

 

Rev RS Thomas – poet – 1913 – 2000

 

On non-market related issues suffice to say referee’s penalty award against Leicester City in Atletico Madrid’s backyard wasn’t one – a poor decision! It could prove costly in the second leg! From the sublime to the ridiculous, I do wish the Beckhams would stop using their children as commercial brands. You’d have thought that post his outburst on failing to secure a knighthood he would have battened down the hatches and kept Brooklyn from the tattoo needles, whilst keeping his children out of the public eye. But no! Posh just loves the old publicity!

 

It was a strange day yesterday with equity markets not particularly enamoured with life’s immediate political prospects. In fact on the whole investors and traders virtually withdrew labour rather than just shut up shop.  Each index showed signs of nervous twitches. When you look at US Secretary of State, Rex Tillerson; he gives you confidence that he is a thoughtful man of stature, who selects his words very carefully. Unfortunately President Trump and Sean Spicer are not very bothered about the diplomatic niceties of life – they frighten ordinary folk with their aggressive and thoughtless rhetoric. US/Russian relations are in the vortex of despair. One hopes that the US Navy does not provoke Kim Yong Un and that China helps keep military insanity at bay.

 

On the domestic front yesterday and today the news was mixed but far from disastrous. The FTSE was rather listless and unsettled and closed -16 at 7348. Rolls Royce was a shining star adding 2.5% on news that it won a contract for an automated crossing system in a Norwegian fjord. Post the Tesco results supermarkets were taken lower on outlook and inflation issues – Tesco -5.t%, Sainsbury -2.7% and Wm Morrison –1.7%. The news on employment data was mixed. Good news that 45k people came off the unemployment register and that the rate of 4.7% was maintained at 1.5 million. Wage inflation, however, fell from 2.3% to 2.2%. This is not good news as with inflation likely to hit 2.7% even 2.8% by the end of the summer this will mean that folk will have less disposable income. Retail could contract – GDP will suffer. However by August London should be swarming with tourists.

 

Dunelm and WH Smith yesterday posted adequate results without making the hairs on the back of my neck stand on end! In the case of WH Smith it seems that the sale of ‘5 on BREXIT ISLAND’ seems to have abated falling sales. The British Chamber of Commerce’s report posted today was cheerful, uplifting and encouraging with the service sector looking really ebullient with manufacturing orders increasing, resulting in export orders looking very healthy. RICS’s report on housing was on the whole negative with house prices in the London area looking as if they have peaked.

 

Meanwhile on the Street of Dreams President Trump said that the dollar “was getting too strong,” though he also said he would like to see interest rates stay low. I suspect he would to boost exports, since he is having huge difficulty getting his legislative programme through Congress. Even his $1 trillion infrastructure spending programme is far from a ‘slam-dunk! Industrials and materials were the biggest drags on the market along with financials, while utilities and telecommunications gave the S&P 500 its biggest lift.

 

The S&P financial index was down 0.9% a day ahead of results from three major banks in what will mark the start of the corporate earnings season. Small-company stocks did far worse than the rest of the market. The Russell 2000 index gave up 18 points, or 1.3%, to 1,359.Delta closed down 0.5% despite a better-than-expected quarterly profit. Markets closed as follows – DOW: 20,591 -0.29% +4.19% S&P: 2,344 -0.38% +4.74%, NASDAQ: 5,377 -0.40% +10.57%.

 

 

In quiet trading conditions the strength of the Yen put the Nikkei to the sword today and Chinese markets were encouraged by more robust trading data in March with exports up 16% and imports by 20%. Markets were heading for the close as follows – NIKKEI: 18,394 -0.86% -3.90%, HANG SENG: 24,342 +0.12% +10.47%, CHINA: 3,513 +0.13% +6.20%, ASX: 5,888 -0.76% +3.95%.

 

 

The US 2nd quarter earnings season gets under a wet sail today with three of the major banks reporting results – JP Morgan, Citibank and Wells Fargo. Since Election Day on 8th November 2016 these banks have rallied by 22.6%, 17.4% and 17% respectively based on hope and expectations of higher interest rates, reduction in Dodd/Frank regulation and infrastructure spending. In the past week these share prices have come off their best levels as it seem unlikely that Trump will be able to deliver many of these policies in full.

 

 

Akzo Nobel has felt the wrath of Elliott Advisors with founder Paul Singer to the fore, who is moving to have its chairman removed. As an activist shareholder, Elliott certainly brings its influence to bear where ever it sticks its nose in to as an active shareholder – Ask Alliance Trust, Poundland, BHP Billiton and now Akzo!

 

In closing I fully endorse the sentiments of Ofcom in stating unequivocally the service provided by Broadband in the UK is worse than that of the banks. The UK’s broadband service is third world at best. So many parts of the country have inadequate access – this appalling for education as well as business. Government – DO SOMETHING!

 

 UK companies posting results this week – Thursday – Hays, Avocet Mining, PZ Cussons

US companies posting results this week – Thursday – JP Morgan Chase, Citibank, Wells Fargo.

Economic data out this week – Thursday – BOE Credit, Friday – University of Michigan Consumer Confidence, US CPI and Retail sales

 

 David Buik

 

Market Commentator – Panmure Gordon & Co

  +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co

One New Change | London | EC4M 9AF

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