TODAY’S FAYRE

TODAY’S FAYRE – Tuesday 18thApril 2017

 

“The Silver Birch is a dainty lady, 

She wears a satin gown; 

The elm tree makes the old churchyard shady, 

She will not live in town. 

 

The English oak is a sturdy fellow, 

He gets his green coat late; 

The willow is smart in a suit of yellow 

While brown the beech trees wait. 

 

Such a gay green gown God gives the larches- 

As green as he is good! 

The hazels hold up their arms for arches, 

When spring rides through the wood. 

 

The chestnut’s proud, and the lilac’s pretty, 

The poplar’s gentle and tall, 

But the plane tree’s kind to the poor dull city- 

I love him best of all!”

 

Edith Nesbit – poet – 1886 – 1924

 

As France heads to the first round of the Presidential election it is ‘nip & tuck’ as to who will go through to the final round in early May. The Far-Left candidate Jean-Luc Melenchon has come rattling up on the rails with a very strong showing based on cutting EU regulation and hiking taxation to as high as 90% in places. In the first round he is expected to poll 19.5% of the vote with Francois Fillon from the right expected to attract a similar percentage. Marine Le Pen from the far-right may poll 23% with Emmanuel Macron, the ‘preppy banker from Paris’ with the matinee idol good looks as though he expects to capture about 24%. However one wonders whether Erdogan’s worrying victory in Turkey could have adverse effects on French immigration pressures, giving Le-Pen some momentum next Sunday.

As we know the press has slammed the doors in Le-Pen’s face and domestic banks won’t lend her a brass farthing or maybe I should say centime for her campaign. Those that know tell me that Le-Pen and Macron will go through in the first round and that Macron will triumph in adversity on Sunday 7th May. The French are culturally and notoriously conservative and absolutely loathe change. Despite the hereto successful rhetoric of Le Pen and Melenchon for dramatic change, I suspect that France will take the easy option and vote for the youthful Macron. France always ‘bottle it’ – famous last words!

 

What a colossal disappointment the final episode of ‘Broadchurch’ was? They wind the audience up for 7 episodes and let is down with the biggest damp squib of an episode imaginable, leaving nothing for the imagination in what had been a gripping ‘whodunit!’

 

That was a really bad election result in Turkey. It’s such a shame that this beautiful country of 70 million people is no longer a democracy. If you disagree with the regime in Turkey, it appears that you find the quickest route to prison, without trial or any discussion. The US and most of Europe will be very unhappy with this parlous state of disrepair. The immigration problem may well be exacerbated in the EU.

 

Spokesmen from North Korea spent much of the day yapping away about what rockets and a compendium of nuclear war heads they might use if provoked by President Trump. The Street of Dreams paid not a scrap of interest as investors took all three markets higher yesterday – DOW +0.90%, S&P 500 +0.86% and the NASDAQ by 0.89%. Netflix grabbed the major earnings and corporate news headlines with a 34% increase in revenues to $2.64 billion in the last quarter. Net profit was up from $28 million to $178 million. 4.95 million subscribers were added in the quarter slightly shy of the expected 5.2 million. This shortfall was put down to its flagship programme revenue being put down to the 2nd quarter rather than the first. Before the close shares were up 3% before closing 1.56% up on the day. After hours trading saw shares down by 2%. However they are up 32% in the last year.

 

Today results from Goldman Sachs, Bank of America Mellon and Yahoo! will be eagerly awaited. The market consensus for Q1 earnings growth is +10.4% for the S&P 500 companies. That would be the strongest growth rate in over 5 years, i.e., since Q3-2011 when earnings were recovering sharply from the Great Recession. One caveat to the strong +10.4% consensus for Q1 earnings growth is that top-line growth is being artificially boosted to some extent by the sharp year-on-year recovery in petroleum earnings from last year’s recessionary levels. The energy sector is expected to show nearly 6-fold earnings growth in Q1. Excluding the energy sector, the S&P 500 index is expected to show a more modest, but still respectable, +6.5% increases in earnings. We should all keep a watching brief on US markets. Many believe that Trump’s inability to get through the repeal of Obamacare could well adversely affect the tax reform legislation which Trump is desperate to introduce particularly corporate rates of tax – down from 35% to 15% over a two-year period.

 

London was obviously closed yesterday. This morning at 8.50am the FTSE 100 was down 80 points at 7249. Ashmore posted numbers in line with expectation leaving its shares unchanged. A strong Pound and weak Dollar have affected mining (2-4%), oil (BP -2%), pharmas (small) and tobacco stocks. Banks have also eased by 2% on average. Conditions are quiet, but equities do not appear to want to fall vigorously out of bed. It was feared that an alleged sex scandal at Fox News which is thought to have resulted in $10 million being paid to four harassed ladies, may prevent 21st Century buying the remaining 61% of Sky. Certainly investors do not think that this news will affect Culture & Media Secretary Karen Bradley’s decision as to whether she should block this deal, which could be much to the chagrin of Tom Watson and all newspaper proprietors apart from Times The Sun and the WSJ. Shares are down by -0.05%. Akzo Nobel we hear is still putting in a rear-guard action to fight off a $19 billion takeover by PPG.

 

UK companies posting results this week – Tuesday – Ashmore Wednesday – AB Foods, Segro, Burberry, Henderson, Bunzl, Fenner, RELX, Greggs, Rentokil Initial, Rio Tinto, Thursday – Hvivo, Debenhams, Unilever, Acacia Mining, Sky, Senior, Go-Ahead, Moneysupermarket, Evraz, Man Group, Essentra, Friday – Reckitt Benckiser

US companies posting results this week – Monday – Brown & Brown, Netflix, Tuesday – Bank of America Merrill, Abbotts Labs, Goldman Sachs, Charles Schwab, Harley-Davidson, Yahoo!, Wednesday – Blackrock,  American Express, Abbotts Labs, eBay, Thursday – Philip Morris, PPG, Bank of New York, Mellon, DR Horton, Travelers, Visa, Mattel, Friday – GE

Economic data out this week –  Monday – US Empire state manufacturing Index, Tuesday – NAHB Housing data, Germany’s ZEW, Wednesday – Beige Book, Thursday – Phili-Fed Manufacturing Index, Friday – UK 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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