Monthly Archives: June 2018

Many traders were thinking of heading off to the trough at 12.45pm, leaving the FTSE 100 uneasily ahead of the game when they returned an hour later – up 47 points at 7557. It was a rather lack-lustre session with traders still ruminating over the trade tariff spat and the thought that it may escalate.  Shares in J Sainsbury drifted by 1.8% to 307p after data from Kantar Worldpanel showed sales and market share declined in the 12 weeks to June 17. Tesco suffered similarly easing by 1.1% to 258p. Inmarsat tanked 10% to 568p after French rival Eutelsat ruled out a takeover bid for the UK satellite firm. Carnival regained some poise jumping by 3.8%.

 

The Pound drifted to half a cent to $1.32after Bank of England’s Jonathan Haskel was seen to suggest interest rates could rise more gradually. Haskel, who is replacing Ian McCafferty at the BoE, told MPs on the Treasury select committee that there may be ‘more slack’ in the UK economy than is currently considered. An aggressive rise in rates could disturb investment and borrowing plans by more than is desired.  Miners and energy stocks grabbed back a small amount of yesterday’s sharp losses.

Traders are far from exhilarated and if Wall Street has a ‘monkey on its back’ later in the day, today’s gain could be surrendered. DJIA futures having been +90 four hours ago are just +20 at 1.55pm. Equity markets across the spectrum seem to be suffering from something close to the ‘pip!’ It is interesting to note that the DAX has fallen from 13559 on 29th January 2108 (the height of this year’s rally) to 12295 as I speak – down 9.6%, whereas te FTSE 100 has only fallen by 1.47% in the same period. Yesterday’s IFO implied that Germany’s economy has drifted on the back foot, (GDP downgraded to 1.8% from 2.6% in 2018) with its auto industry seriously under the cosh and if Trump takes retribution out German auto imports (say 20% tariff) it could be tin hat time.

David Buik

Communications

Mobile – 07788 144 877

 

Spread bets and CFDs are leveraged products, which means you could lose more than you deposit. You should ensure spread betting meets your investment objectives. View full risk warning

This email neither constitutes, nor is to be construed as an offer to buy or sell investments. The information and opinions expressed herein are based on sources we believe to be reliable but we do not represent that they are accurate or complete. No liability is accepted by Core Spreads for any direct or consequential loss arising from this email. Please carry out your own virus checks.

Core Spreads  is a trading name of Finsa Europe Ltd, a company registered in England and Wales under number 07073413, which is authorised and regulated by the Financial Conduct Authority under firm reference number 525164. Registered Office: Tower Bridge Business Centre, 46 – 48 East Smithfield, London, E1W 1AW, United Kingdom. www.corespreads.com is owned and operated by Finsa Europe Limited. © 2018 Core Spreads.

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PRESIDENT TRUMP WOULD BE WELL-ADVISED TO TAKE HIS HOB-NAILED BOOTS OUT OF THE TRADING WORLDS RIBS!”

 

“PRESIDENT TRUMP WOULD BE WELL-ADVISED TO TAKE HIS HOB-NAILED BOOTS OUT OF THE TRADING WORLD’S RIBS!”

 

 

Company 29/1/18 25/6/18 % gain/loss
McDonald’s $177.77 $159.81 -10.1%
Walmart $109.55 $86.47 -21.1%
Boeing $337.71 $331.20 -0.19%
GE $16.28 $12.75 -21.7%
Pfizer $39.02 $36.38 -6.8%
JP Morgan $116.20 $104.79 -9.8%
Bank of America $32.28 $28.48 -11.8%
Citibank $79.96 $65.75 -17.8%
Goldman Sachs $268.94 $221.54 -17.6%
AT&T $37.26 $31.71 -14.9%
Exxon Mobil $88.01 $79.74 -9.4%
Caterpillar $162.58 $136.58 -15.9%
Honeywell $159.07 $150.01 -0.57%

 

 

Company 29/1/18 25/6/18 % loss/gain
Intel $49.98 $50.71 +0.15%
Apple $167.96 $182.17 +8.5%
Cisco Systems $42.85 $42.29 -0.13%
Facebook $185.96 $196.35 +5.6%
Netflix $284.59 $384.48 +34.9%
Alphabet $1186.48 $1139.28 -3.98%
Amazon $1417.68 $1663.15 +17.3%
Twitter $25.18 $44.17 +74.5%

 

From 29th January 2018 to 25th June 2018 the DOW JONES INDUSTRIAL AVERAGE has fallen 8.27%, the S&P 500 by 0.37%. However, the NASDAQ COMPOSITE is up 0.88% in the same period.

 

It is generally agreed that US markets hit their record levels on 29th January 2018, apart from the NASDAQ Composite, which has seen its way clear to crack on modestly since those lofty days. There was so much euphoria over President Trump’s plans for tax cuts and the enormous amount of money he was going to pour into infrastructure spending, which will create jobs.  We have not seen too much of the latter. Perhaps Congress is playing hard ball.

 

Even though President Trump told us all unequivocally that his Presidency was always going to be about America FIRST, perhaps we underestimated the virulent manner he would tackle trade imbalances.  There is no doubt in recent years that China has abused its privileges on trade and currency fixing, but I doubt President Trump realises the potential damage his policies could do to global markets and more importantly to growth around the world. He seems to have the full support of Treasury Secretary Steve Mnuchin – ex Goldman Sachs banker and more recently movie mogul. He has given his full support to these policies and has also chipped in with tough measures on ownership of technological companies. China has been informed that no Chinese investor can own more than 25% of any US tech enterprise. The US will be implementing its increased trade tariffs on 6th July and we must expect reprisals from China, Canada and the EU. Harley-Davidson is a great brand name but in terms of size only employs 2100 people.  The President will be embarrassed as well as irritated to hear that H-D have made contingency plans to have some of their bikes made elsewhere to avoid the increased tariff which initially will cost $50 million, which the company will take on the chin – probably in Europe where they sell 40,000 units a year.

 

Back to the markets which concern us. We are now back in that vortex of uncertainty, which markets loath. The damage could be significant. The DOW has surrendered much of this year’s early gains with banks and industrials getting clattered as well as operations such as McDonald’s. Defence companies like Boeing and Honeywell have weathered the storm. AT&T can be forgiven the fall in its share price as it has just completed its gargantuan $85 billion takeover/merger of Time Warner. It is interesting that most tech operations have kept their heads above the Plimsoll line, despite the significant fall in appetite for risk and the rather downbeat sentiment that prevails. There is little sign of panic. However it would not be a good idea for the President to decouple the US from agreeably friendly trade and business agreements.

 

Steve Mnuchin and others would be well advised to tell POTUS to take his hob-nailed boots out of the world’s ribs or the market’s performance could turn from being dispirited to catastrophic!

David Buik

Communications

Mobile – 07788 144 877

 

Spread bets and CFDs are leveraged products, which means you could lose more than you deposit. You should ensure spread betting meets your investment objectives. View full risk warning

This email neither constitutes, nor is to be construed as an offer to buy or sell investments. The information and opinions expressed herein are based on sources we believe to be reliable but we do not represent that they are accurate or complete. No liability is accepted by Core Spreads for any direct or consequential loss arising from this email. Please carry out your own virus checks.

Core Spreads  is a trading name of Finsa Europe Ltd, a company registered in England and Wales under number 07073413, which is authorised and regulated by the Financial Conduct Authority under firm reference number 525164. Registered Office: Tower Bridge Business Centre, 46 – 48 East Smithfield, London, E1W 1AW, United Kingdom. www.corespreads.com is owned and operated by Finsa Europe Limited. © 2018 Core Spreads.

WEEKLY FAYRE

WEEKLY FAYRE – Monday 25th June 2018

 

I remember, I remember, 
The house where I was born, 
The little window where the sun 
Came peeping in at morn; 
He never came a wink too soon, 
Nor brought too long a day, 
But now, I often wish the night 
Had borne my breath away! 
I remember, I remember, 
The roses, red and white, 
The vi’lets, and the lily-cups, 
Those flowers made of light! 
The lilacs where the robin built, 
And where my brother set 
The laburnum on his birthday,— 
The tree is living yet! 
I remember, I remember, 
Where I was used to swing, 
And thought the air must rush as fresh 
To swallows on the wing; 
My spirit flew in feathers then, 
That is so heavy now, 
And summer pools could hardly cool 
The fever on my brow! 
I remember, I remember, 
The fir trees dark and high; 
I used to think their slender tops 
Were close against the sky: 
It was a childish ignorance, 
But now ’tis little joy 
To know I’m farther off from heav’n 
Than when I was a boy. 


Thomas Hood – poet – 1799-1845
 

 

Isn’t it amazing how in a period of two weeks the fortunes and the form of a sporting team can be turned on its head.  Such has been the case of the England ODI cricket team.  Vanquished on merit at the Grange cricket Club against unfancied Scotland two weeks ago, Eoin Morgan’s mob have bounced back with a vengeance, taking the recent ODI series 5-0 against Australia, admittedly a very depleted side.  Nonetheless, the clinical manner they have beaten the boys from ‘Down Under’ has been nothing less than emphatic. Trent Bridge saw the ODI single innings record smashed by England in making 481 for 6. There has been some great batting by Buttler, Roy, Bairstow, and Hales with the odd delightful cameo effort from Skipper Morgan; the batting proving to be cornerstone of their success. 

 

The highlight of a memorable Royal Ascot was witnessing Sir Michael Stoute eclipsing Sir Henry Cecil’s record of 75 winners at the Royal Meeting.  He ended the 5-day racing epic with 3 winners taking his tally to 78. Surely there has never been a greater English trainer of older middle distant thoroughbreds?

 

Until yesterday afternoon, when England trounced Panama 6-1 in a thoroughly clinical manner, despite some ‘strong-armed’ tactics adopted by the South American debutantes, I was making rather heavy weather of getting in to a positive World Cup mood or frenzy. Yes, there was merit in   the 3-3 draw between Spain and Portugal, England’s 2-1 win against Tunisia and Germany getting out of jail with Kroos’s later winner against Sweden. However, many of the games have been dull affairs. There is, of course, so much at stake; hence some very boring negative defensive tactics adopted by so many countries – not very pleasing on the eye and for good measure many football ‘purists’ are singularly under-whelmed by the occasionally flawed use of VAR. But now that England have progressed to the knock-out stage, expectations are running high, as all England fans tingle with excitement.

 

 

INDEX 18/6/18 22/6//18  % gain/loss  
FTSE 100 7633 7682 +0.64%  
XETRA-DAX 12921 12579 -2.64%  
CAC40 5469 5387 -1.31%  
DJIA 24944 24580 -1.46%  
 S&P 500 2765 2755 -0.36%  
NASDAQ 7692 7692 unchanged  
Hang Seng 30441 29338 -0.39%  
Nikkei *22806 22516 -1.27%  
Shanghai Comp *3037 2889 -1.58%  

 

  • Denotes from 15/6/18

 

 

The same old problem that has dogged markets since time immemorial returned to the agenda last week – UNCERTAINTY – and it returned in spades. Looking at the table above, it does not quite reflect, firstly the very negative level of sentiment that prevailed in the first part of the week, nor the level of volatility. Some of the global indices had quite a strong run on the rails on Friday, particularly the FTSE 100 which benefitted from a rally in oil and the subsequent surge in energy stocks such as BP and Shell and in Europe – ENI and Total – most of whom rallied by an average of 3%. Brent rose by 5.7% on Friday, triggered by the OPEC meeting, when members struck a deal to increase production. 

 

Early last week the retaliatory trade tariffs imposed by the EU to add to those involving the original Sino-US trade spat took their toll on market confidence. European bourses suffered and only on Friday did the Dow Jones break an 8-day losing streak. The FTSE 100 was the only main global index to finish the week with its head marginally above the Plimsoll line. As the new Italian Government starts winding itself up in to action with a few controversial policies, with immigration to the fore, there was some unexpected but welcome good news over its ailing banking sector. BPER Banca rallied by 7% on confirmation that Unipol had agreed to increase its stake to almost 20%. By some extraordinary reason Greek 10-year bond yields fell by about 25 basis points thanks to an agreed debt relief plan to 4.08%.

 

 

It is no coincident that Airbus’s Tom Williams, fired another salvo at the UK Government by threatening to take business away from its 25 units in the UK which employs about 14,000 people, unless there is immediate clarity over the customs union and the single market. Of course, Airbus is state-controlled (30% owned by Germany, France and Spain and currently far from our best mates). I do take this threat seriously as the UK Government has provided little clarity and needs to do so before too long.  However, there is more than a touch of jingoism in this threat as it will not be easy to up sticks in Bristol and in other specialised areas, without seriously damaging the business. Boeing must be licking its chops at the prospect of this folly.   This is a very clever ploy by Airbus in fuelling UK media, which in many influential places will just love to fan the flames of fear. It appears that BMW has used Airbus’s intervention to jump on the bandwagon warning about the future of its Goodwood operation amongst other UK interests. It is as well to note that the CBI, BCC, Institute of Directors and the Federation of Small Businesses have rounded on the Government over its inept handling of BREXIT. Inadequate progress has been made and with the clock ticking it is not surprising that these influential trade associations want to bring their influence to bear in the wake of many companies threatening to withdraw investment. 

 

On Thursday the MPC voted 6-3 in favour of no change in base rate with BOE Chief Economist Andy Haldane surprisingly voting in favour of a change with McCaffrey and Saunders. The likelihood of an August rate hike moved up from a 40% to 55% chance, according to Panmure Gordon’s Chief Economist, Simon French. He believes that the next round of consumer borrowing, retail & Index of Services data are key for whether this marks an inflection for Gilt yields & GBP/USD, or blip in a downward pattern. He also observes that data-agnostic points for BoE watchers. McCafferty’s last MPC vote is in August with the Brexit negotiation process heading for a fractious Q4, which could favour an August move over November one. An MPC quorum may conclude that the window to start gradual normalisation path could close quickly later in 2018.

 

It looks as though the House of Fraser has agreed terms with its bankers and financial advisors to keep the operation going, but it also means that 31 out of its 59 stores will close including its Oxford Street flagship store, resulting in significant redundancies.

 

We hear very little about the financial machinations of famous private companies, but last week luxury fashion house Chanel bucked that trend by revealing its profit figures for the first time. This international fashion brand luminary, famous for its perfumes, jackets, ties and handbags posted profits $1.79bn (£1.35bn) last year, up 18% on the year before, on sales up 11% at almost $10bn. Chanel decided to unveil these figures to show the strength of its balance sheet. Its main rivals include Louis Vuitton owner LVMH and Hermes – both all listed on the stock market. Chanel’s chief financial officer, Philippe Blondiaux, made it clear it had no ambition or intention of seeking a public quotation.

 

Finally, CityAM tells us gratifying and encouraging news that German asset managers call for ‘unhindered access’ to City post-Brexit.

 

 

UK companies posting results this week – Tuesday – Northgate, HIS Markit, Carpetright, Petrofac, Carnival – Wednesday – Whitbread, LionTrust Asset Management, Bunzl – Thursday – Tullow Oil, Greene King, Stagecoach, Wood Group, Friday – Serco

 

US companies posting results this week – Tuesday – Lennar, Sonic, Wednesday – General Mills, HB Fuller, Bed, Bath & Beyond, Thursday – Walgreen, Boots Alliance, ConAgra Brands, KB Homes, Friday – Constellation Brands

 

 

Economic data posted this week – Monday – US New Home Sales, Tuesday – UK Housing loans – Wednesday – US Durable Goods & Pending Home Sales, Thursday – US 1st quarter final GDP forecast, Friday –  UK Gfk Consumer Confidence, UK GDP 1st Quarter estimate, UK Lending data

 

 

David Buik

Communications

Mobile – 07788 144 877

 

Spread bets and CFDs are leveraged products, which means you could lose more than you deposit. You should ensure spread betting meets your investment objectives. View full risk warning

This email neither constitutes, nor is to be construed as an offer to buy or sell investments. The information and opinions expressed herein are based on sources we believe to be reliable but we do not represent that they are accurate or complete. No liability is accepted by Core Spreads for any direct or consequential loss arising from this email. Please carry out your own virus checks.

Core Spreads  is a trading name of Finsa Europe Ltd, a company registered in England and Wales under number 07073413, which is authorised and regulated by the Financial Conduct Authority under firm reference number 525164. Registered Office: Tower Bridge Business Centre, 46 – 48 East Smithfield, London, E1W 1AW, United Kingdom. www.corespreads.com is owned and operated by Finsa Europe Limited. © 2018 Core Spreads.

“WILL IT BE DISNEY OR COMCAST WHO WILL LAND THE SPOILS OF WAR – 21st CENTURY?”

 

“WILL IT BE DISNEY OR COMCAST WHO WILL LAND THE SPOILS OF WAR – 21st CENTURY?”

 

For over 25 years BSKYB, as it was then, and the News Corporation dynasty has been full of surprises, action, intrigue, professional jealousy, achievement and contempt. However, let me declare my hand. Though some of the behaviour at the NotW, in terms of phone hacking, has been reprehensible, the Murdoch Empire has been brilliant for this country.  It has employed thousands of people, provided intense competition for the BBC, ITV and other broadcasters in terms of media input and it has kept the light shining brightly under ‘The Sun’, ‘The Times’ and ‘The Wall Street Journal’, when many others have failed to get the trip and when a few press barons have had no stomach for the competition or the fight.

 

Apart from a dip at the time of the ‘TNT’ share collapse in 2000-2002 and the reversal it experienced at the time of the financial crisis in 2008/9, BSKYB/SKY has proved to be a share worth holding on to. In January 1996 the share price stood at 250p.  It then reached £21 in March 2000, before collapsing to 590p in September 2001. It fell in to another trough at 368p in October 2008, when stock markets crashed at the time of the credit crisis. Since then Sky has made steady progress to 1400p, aided and abetted by various bids including Murdoch bidding £7 a share for the remaining 61% it did not own back in 2012, which hopelessly undervalued the company. Sky has also made more than useful acquisitions in Italy and Germany, which will hopefully compliment its operations in the UK and its sister outfits in Asia. During this protracted period the Competition Commission has been a thorn in the side of News Corpn/21st Century Fox.  Many peers feel Murdoch has had too much media influence and in all-fairness, there has been a fair degree of professional jealousy and resentment. Certainly, in terms of TV news and political thinking, the Government would have been unhappy at the prospect of Sky falling under the political influence of Fox News. There is little doubt that lobbying the Government has been subjected to, has probably been off the charts over recent years, in attempting to prevent Murdoch achieving his goals.

 

BskyB/Sky have always had innovative leadership from Rupert Murdoch, son James, Sam Chisholm, Mark Booth down to Jeremy Darroch, who has been CEO since December 2007. Sky has dominated the sport market as well as providing an array of programmes right across the entertainment spectrum. Sky is also probably more aware of the increasing market share of the likes of Netflix and Amazon, with others such as Google and Apple likely to follow.  Hence it can see the merit of being part of a larger operation with greater viewer penetration. So, the recent round of frenzied negotiations, which started with a £12 billion bid by 21st Century for the remaining 61% of Sky, has set the M&A ball rolling! SKY has 22 million receptive customers.

 

The Government and the Competition Commission have just about agreed to Murdoch’s request to buy the remaining 61% of Sky, provided SKY NEWS is protected. Disney then expressed interest to buy 21st Century assets for $52 billion last spring, with the acquiescence of Murdoch, to then be outbid by Comcast, the owner of NBC, CNBC and Universal, who bid $65 billion a few weeks ago. So, the bidding war starts with Disney upping its offer to $71 billion a few days ago – just below the supposedly successful and record $85 billion bid AT&T will be paying for Time Warner. Will Comcast respond?  Many believe that Disney, who really craves market penetration more than Comcast are close to paying top dollar. Comcast continues to seek power and influence and if all else fails may well be the proud new owner of Sky News.  The next few days should be fascinating. Comcast may not be finished and is supposedly consulting its bankers BoA and Wells Fargo for further finance facilities. This could raise Comcast’s debt to $170 billion, a figure some rating agencies are uncomfortable with. So, watch this space!

 

David Buik

Communications

Mobile – 07788 144 877

 

Spread bets and CFDs are leveraged products, which means you could lose more than you deposit. You should ensure spread betting meets your investment objectives. View full risk warning

This email neither constitutes, nor is to be construed as an offer to buy or sell investments. The information and opinions expressed herein are based on sources we believe to be reliable but we do not represent that they are accurate or complete. No liability is accepted by Core Spreads for any direct or consequential loss arising from this email. Please carry out your own virus checks.

Core Spreads  is a trading name of Finsa Europe Ltd, a company registered in England and Wales under number 07073413, which is authorised and regulated by the Financial Conduct Authority under firm reference number 525164. Registered Office: Tower Bridge Business Centre, 46 – 48 East Smithfield, London, E1W 1AW, United Kingdom. www.corespreads.com is owned and operated by Finsa Europe Limited. © 2018 Core Spreads.

WEEKLY FAYRE

 

 

WEEKLY FAYRE – Monday 18th June 2018

 

Fear no more the heat o’ the sun,

Nor the furious winter’s rages;

Thou thy worldly task hast done,

Home art gone, and ta’en thy wages:

Golden lads and girls all must,

As chimney-sweepers, come to dust.

 

Fear no more the frown o’ the great;

Thou art past the tyrant’s stroke;

Care no more to clothe and eat;

To thee the reed is as the oak:

The scepter, learning, physic, must

All follow this, and come to dust.

 

Fear no more the lightning flash,

Nor the all-dreaded thunder stone;

Fear not slander, censure rash;

Thou hast finished joy and moan:

All lovers young, all lovers must

Consign to thee, and come to dust.

 

No exorciser harm thee!

Nor no witchcraft charm thee!

Ghost unlaid forbear thee!

Nothing ill come near thee!

Quiet consummation have;

And renownèd be thy grave!”

 

.

William Shakespeare – playwright & poet – 1564-1616

 

So, the great World Cup Party finally got underway in Moscow with the host nation giving Saudi Arabia a 5-0 drubbing in front of its omnipotent President, Vladimir Putin and 82000 ecstatic fans in glorious sunshine. What a PR exercise Russian TV put on for its leader, including handshakes and smiles during the game with his guest of honour The Crown Prince of the Kingdom of Saudi Arabia. I suspect the two of them were far more interested in chatting about how they could keep the price of oil close to $80 a barrel for the benefit of their respective economies, than they were about the thrills and spills of the beautiful game! In terms of superficially improving his image, Putin will have thought that this occasion was ‘manna from Heaven!’

 

On Friday the BBC beamed the Portugal/Spain Match. This 3-3 draw was as exciting and as skilful a game as any neutral fan could ever wish to see, with Cristiano Renaldo providing millions of fans with a masterclass as to why he must be the most valuable footballing asset on the planet with his 52nd hattrick, despite being 33 years of age. He is the ultimate professional.

 

On Saturday, all football fans hoped that Lionel Messi would put on a similar display as Ronaldo had in Argentina’s 1-1 draw against Iceland. It was not to be, but there is still all to play for! On Sunday Mexico lowered Germany’s colours winning 1-0 in a desperately exciting game. Let’s hope England do us proud in their opening game against Tunisia on tonight, Expectations are at fever-pitch!

 

 

INDEX 11/6/18 15/6//18  % gain/loss  
FTSE 100 7881 7633 -0.62%  
XETRA-DAX 12816 13010 +1.51%  
CAC40 5459 5501 +0.78%  
DJIA 25336 25090 -0.97%  
 S&P 500 2780 2719 -0.01%  
NASDAQ 7647 7746 +1.29%  
Hang Seng 31018 30309 -2.27%  
Nikkei 22687 22851 +0.72%  
Shanghai Comp 3057 3022 -1.14%  

 

 

Global equity markets started the week promisingly, despite the inevitable 25 basis point hike in the Fed rate to 2%, which was confirmed by Fed Chairman Jay Powell on Wednesday, accompanied by a slightly more hawkish statement than many expected with. A further two increases are expected this year. Thursday’s ECB meeting had few fears for markets with Draghi suggesting that the tapering of QE would probably start at the end of the year as a final valedictory act of his tenure. Once it became clear that President Trump was going to impose tariffs of $50 billion on the import of Chinese goods, the mood on some global bourses changed, with investors in Shanghai and Hong Kong being underwhelmed at the prospect, knowing that China was likely to respond with equally chilling reprisal tariffs.

 

By the end of the week the losses incurred on the Street of Dreams were minimal with the Nasdaq continuing to blaze the trail. The confirmation that AT&T would be allowed to buy Time Warner could well prove to be a litmus Test for other large M&A deals to follow. It looks as if Comcast may well usurp Disney’s efforts to buy 21st Century Fox, once the Sky deal has been completed by the Murdoch empire. It may just be that 700 Sky employees could share as much as £350 million from this deal. At the end of the week there were strong performances by Procter & Gamble, Nike and Coca-Cola. Conversely Caterpillar, Chevron and GE surrendered some value. US retail sales rose sharply by 0.8% in May against expectations of 0.4%. In the U.K. Retail sales rebounded quite sharply – +1.3%; much of the euphoria being attributed to Harry’s & Meghan’s Wedding. This news may cause the MPC to twitch but any rise in rates may require a sustained improvement in the growth of the UK’S economy.

 

Here in Old Blighty there were quite a few nuggets of news to keep us on our toes. UK inflation remained benign at 2.4% in May, but the price of oil and petrol at current levels may trigger a symbolic increase by the end of the year. The rather tawdry Sorrell Saga seems to have plenty of legs on it. Chairman Quarta gave a rather pathetic explanation to justify Sir Martin’s severance package in suggesting he might ‘throw his toys out of his pram’ if he was not satisfied with the settlement. Many will admire Sir Martin’s courage or maybe arrogance, when he delivers a key note speech at a Cannes Advertising bunfight at the end of this coming week, with all his guns blazing!

 

The rumour that Rolls Royce would be making 4000 people redundant became a reality on Wednesday when CEO Warren East explained the realities of life, by announcing the loss of 4600 jobs. Cutting 5 divisions down to three does not require duplication of management. There may be more bad news for the folk in Derby. Canada’s Bombardier UK operation failed to land the tube’s new rolling stock contract, which could cost a few hundred jobs. Having returned £23 billion to shareholders in recent years, it appears that Allianz still has the appetite to pick up a large synergistic operation in the UK. It is thought that RSA or Aviva are under consideration according to the Sunday Times.

 

Though the recent retail sales numbers were a blessed relief, the ‘High Street’ is starting to look like a morgue; so, it was good to see Boohoo with a 53% increase in sales and Ted Baker continuing to buck the trend. Also, Tesco on Friday saw a 3.5% increase in like for like sales for the last quarter, thanks to a 14.3% increase in sales from its recent acquisition – Booker. House of Fraser is far from out of the woods despite closing half of its units.

 

With house prices starting to dip, resulting in demand for new houses falling, house builder share prices took a bit of a tumble last week with some, such as Bellway falling by an average of 3%. Many are amazed that TSB’S Peter Pester has kept his job after the damning evidence provided by IBM on its IT system. These issues may have cost TSB a £1 billion. Dixon Carphone seem to have avoided a£17 million fine for a data protection breach, which may have exposed 5.9 million customers. Finally, it was a surprise to see Nationwide’s management taking such a huge bonus of £6.4 million out of the pot with CEO Joe Garner, ‘trousering’ £2.3 million.

 

 

UK companies posting results this week –  Monday – DS Smith, Tuesday – Telecom Plus, Ashtead Group, Flybe Wednesday – Berkeley Group, Thursday – Saga, Chemring, Dixon Carphone

 

US companies posting results this week – Tuesday -Oracle, La-Z-Boy, Wednesday – Micron Technology, Thursday – Barnes & Noble, Darden Restaurants, Kroger, Red Hat, Friday – Carmax

 

 

Economic data posted this week – Monday – US NAHB Housing, Tuesday – US Housing starts, Wednesday – US MBA Mortgage Applications, US Existing Home Sales, Thursday, UK PSBR, UK MPC meeting, US Initial Jobless Claims, US FED Bank Stress tests

CEOS HAVE A HABIT OF OUTSTAYING THEIR WELCOME!

 

“CEOS HAVE A HABIT OF OUTSTAYING THEIR WELCOME!”

 

We may be enjoying the balmy summer days with test cricket, the World Cup, Royal Ascot and Wimbledon upon us. However, the business headlines are continuing to shake the very fabric of financial society.

Reams has already been written and reported on Sir Martin Sorrell’s departure from WPP with indecent haste and the rather tawdry and lude allegations of his private life, providing the reasons for the severance of his connection from WPP, after 33 years of devoted servive and relentless duty. I have no intention of having the drains up on any aspects of his alleged tasteless private life which he vigorously denies.

 

However, suffice to say there is a strong message that should go out to all chief executives, who are prone to outstay their welcome, even if they are entrepreneurs like Sir Martin, who built WPP’s business up man and boy. An over-extended tenure of such senior positions is fraught with danger. The situation becomes even more exacerbated when the CEO involves himself metaphorically with anything from the purchase of paper clips to corporate finance. It will eventually and inevitably end in tears. There is no doubt that the art of good management is delegation. It appears that Sir Martin was none too smart on this point and because he could hardly spell relaxation; hence the waters on genuine expenses and leisure were muddied. Sir Martin has been immersed in his operation since its inception, with I suspect business and pleasure being one and the same thing.  How well his new advertising venture will be received remains to be seen. In passing, how Roberto Quarta, WPP’S chairman was allowed to walk out of the door, without signing a ‘non-compete’ agreement amazes me and many other observers.

 

Sir Martin’s unfortunate plight is frankly purely a catalyst. Sir John Rose made the same mistake as CEO of Rolls Royce. He took over in 1996 until 2011 and saw the share price go from 235p to 1150p. He handed over to John Rishden, the then CFO, who completed 14 years at RR, when he retired as CEO in 2015. The share price then was 800p.  The cracks in the business started to appear, the allegations of bribery, the profits warnings, triggered by increasing expenditure, all started to manifest themselves. Warren East, the newish CEO, who came from ARM Holdings, who has been CEO since July 2015, has been attending to these issues, streamlining the company from five divisions to three.  Of course, cost-cutting exercises and we suspect 4000 redundancies will be implemented before too long. There has been too much duplication of the middle management. Again, these changes will need to be delivered to give momentum to its share price – currently 832p.

 

As for Tesco’s Sir Terry Leahy, he was in situ for 14 years – too long. He did an amazing job. However, when he left, Tesco’s share price was 400p. It then fell to 162p under Phil Clarke and is currently in remission under the stewardship of Dave Lewis – share price today 249p. So often after a sustained period in office CEOS cannot see the wood from the trees.  It needs a fresh outlook to prevent mistakes and fresh initiatives to take the company forward. There are many other illustrations of CEOS out-staying their welcome – too many to list.

 

 

David Buik

Communications

Mobile – 07788 144 877

 

Spread bets and CFDs are leveraged products, which means you could lose more than you deposit. You should ensure spread betting meets your investment objectives. View full risk warning

This email neither constitutes, nor is to be construed as an offer to buy or sell investments. The information and opinions expressed herein are based on sources we believe to be reliable but we do not represent that they are accurate or complete. No liability is accepted by Core Spreads for any direct or consequential loss arising from this email. Please carry out your own virus checks.

Core Spreads  is a trading name of Finsa Europe Ltd, a company registered in England and Wales under number 07073413, which is authorised and regulated by the Financial Conduct Authority under firm reference number 525164. Registered Office: Tower Bridge Business Centre, 46 – 48 East Smithfield, London, E1W 1AW, United Kingdom. www.corespreads.com is owned and operated by Finsa Europe Limited. © 2018 Core Spreads.

WEEKLY FAYRE

WEEKLY FAYRE – Monday 11th June 2018

 

Light, so low upon earth,

You send a flash to the sun.

Here is the golden close of love,

All my wooing is done.

Oh, all the woods and the meadows,

Woods, where we hid from the wet,

Stiles where we stayed to be kind,

Meadows in which we met!

 

Light, so low in the vale

You flash and lighten afar,

For this is the golden morning of love,

And you are his morning star.

Flash, I am coming, I come,

By meadow and stile and wood,

Oh, lighten into my eyes and my heart,

Into my heart and my blood!

 

Heart, are you great enough

For a love that never tires?

O heart, are you great enough for love?

I have heard of thorns and briers.

Over the thorns and briers,

Over the meadows and stiles,

Over the world to the end of it

Flash of a million miles.

 

Alfred, Lord Tennyson – poet – 1809-1892

 

“My Name Is Lucy Barton” is currently being produced at the Bridge Theatre, near Tower Bridge and is a dramatization of Elizabeth Strout’s bestselling novel. It is a one person play about a woman laid up in a Manhattan hospital bed, battling a life-threatening illness after a routine appendix operation. It stars the American Laura Linney.  In the play she reveals not only her fear of her hospitalisation, but also her dysfunctional relationship with her mother who lives in Amgash, Illinois, her decaying marriage, which eventually ends in divorce, which seriously and adversely affects her relationship with her two daughters.

Laura Linney’s performance is breathtakingly strong, as well as it being filled with subtle humour. Laura is on stage for 90 minutes without a break. This is a must for all theatre goers. An outstanding performance by this wonderfully sensitive actress, who portrays her mother’s chilly attitude to her daughter as well as her own shortcomings in life with great heart-rending emotion in a low-key manner. 

 

 

Before assessing the reasons as to why the only international bourses to perform with any aplomb last week were US and Japan, it is as well to look at reasons why investors have just started to feel a little more cautious about global growth than they were led to believe at the beginning of the year. Investors are losing a little confidence in equities, even in the US, despite barnstorming employment data. 2.5% US GDP is just starting to look ambitious for 2018 and there are signs of anxiety the EU is not selecting another gear in the manner France’s President Macron and others would have had us think. Of the larger constituent countries, only Spain seems to be blazing the trail. Admittedly we are only half way through the year. As for the UK some of the trashed embers of UK economic data are beginning to be rekindled – UK PMI and retail sales perked up over the recent holiday period and some encouraging news that the UK’S export sales soared by more than 6% last month was pleasing, defying the fear of a post-Brexit slump in trade, despite overall growth seemingly unexciting at about 1.4%.

 

INDEX 1/6/18 8/6//18  % gain/loss  
FTSE 100 7701 7681 -0.26%  
XETRA-DAX 12839 12766 -0.57%  
CAC40 5497 5450 -0.86%  
DJIA 24727 25316 +2.39%  
 S&P 500 2741 2779 +1.39%  
NASDAQ 7570 7645 +0.99%  
Hang Seng 30836 30958 +0.40%  
Nikkei 22365 22694 +1.47%  
Shanghai Comp 3083 3067 -0.52%  

 

 

The sting came out of the Italian political storm and the pressure on its banks, but many believe there will be a scorpion sting in the tale to this saga. The EU will eventually feel uncomfortable.  So, in some respects it was surprising to hear ECB’S Mario Draghi discuss the possibility of tapering QE before too long. The trade tariff war, which President Trump is attempting to wage, seems to have gathered momentum in Quebec over the weekend. There were already signs of anxiety last week with ‘Le Petit Napoleon’ stoking the fires of retaliation. At the G7 meeting Canada’s PM Trudeau seemed to hit a raw nerve with President Trump over agricultural tariffs, which may result in the US hitting back with car import duty!  The President seemed to throw his toys out of his pram before heading back to Washington, ahead of his meeting with Kim Jong-Un in Singapore on Tuesday.   So, last week US markets were full of summer joy, with the NASDAQ hitting an all-time high on Thursday. The UK Culture minister, Matt Hancock nodded through 21st Century Fox’s £11 billion bid for 61% of Sky provided Sky News is protected, allowing Comcast or possibly Disney, though unlikely, to scrap it out for 21st Century.  Then enter stage left came a $7.6 billion bid for software specialist Github by Microsoft.

 

Here in Europe the auto sector and steel making operations took a bit of tap and the market cynics were convinced that there were large cracks appearing in the ‘Fortress EU’s’ defences with Italy and Spain providing the evidence to support that theory. In the UK, despite better news for retail over the Bank Holiday, Poundsworth and Mothercare were throwing out distress signals as did House of Fraser, which served notice to close 29 of their 59 outlets with a view to placating their creditors and banking covenants. This dispiriting news follows in the wake of bad news emanating in recent weeks from Maplin, Toys R Us, Debenhams and M&S. Local government and Central Government need to understand that business rates are too ‘high’ and that corporation tax is too low at 17-19%.  Quiz, which came to the market last year broke the negative trend with a 30% increase in sales and AO World also saw some improvement. This week Ted Baker and Boohoo are expected to please their acolytes on Tuesday. Amazon announced that another 2500 jobs will be created in the UK.

 

TSB’S Paul Pester was subjected to some severe criticism from Andrew Bailey at the FCA and from Nicky Morgan’s Treasury Select Committee for gross incompetence over its flawed IT systems.  He will do well to keep his job. Such good fortune did not fall on BT’S Gavin Patterson, who was thrown to wolves at the behest of the city.  Since Patterson took over from Lord Ian Livingstone in 2013, BT’S share price has fallen from 330p to 205p due to a litany of judgement errors and poor management.  This compendium of bad news includes a €500m Italian fraud issue, an £11 million pension black hole, over-spending on BT Sport and the total incompetence of BT to provide quality broadband service to millions of customers and users. Who will replace him?  It is hard to look further than Marc Alera from the internal candidates.  Maybe Chairman Jan Du Plessis will want fresh blood from outside – someone like Adam Crozier who has retail experience even though he will lack the technical savvy. News filtered out over the weekend that 4000 jobs are due to be shed by Rolls Royce – most of them in Derby. CEO Warren East has been ruthless in his efficiency drive at RR. Finally, the CYBG/Virgin Money merger may trigger the loss of 1500 jobs.

 

This morning equity and bond markets have a reflective look about them. Corporate results are thin on the ground and the investment agenda is likely to be dominated by the FOMC and ECB meetings.

 

 

UK companies posting results this week –  Tuesday – BATS, Bellway, Halma, Ted Baker, Cres Nicholson, Boohoo, Wednesday – Norcross, Thursday – Aveva, Majestic Wine, SafeStore, N Brown, PZ Cussons, Friday – Tesco (TS)

 

US companies posting results this week – Wednesday – Korn/Ferry, Thursday – Fred’s, Adobe Systems, Jabil

 

 

Economic data posted this week – Monday – UK Industrial production & Manufacturing output, UK Trade Balance, Tuesday – UK Labour statistics, US CPI Data, Wednesday – UK Inflation, UK House Prices, FOMC Meeting, Thursday – ECB Meeting, US Retail sales, UK Retail Sales, Friday – US Industrial Production

 

 

David Buik

Communications

Mobile – 07788 144 877

 

Spread bets and CFDs are leveraged products, which means you could lose more than you deposit. You should ensure spread betting meets your investment objectives. View full risk warning

This email neither constitutes, nor is to be construed as an offer to buy or sell investments. The information and opinions expressed herein are based on sources we believe to be reliable but we do not represent that they are accurate or complete. No liability is accepted by Core Spreads for any direct or consequential loss arising from this email. Please carry out your own virus checks.

Core Spreads  is a trading name of Finsa Europe Ltd, a company registered in England and Wales under number 07073413, which is authorised and regulated by the Financial Conduct Authority under firm reference number 525164. Registered Office: Tower Bridge Business Centre, 46 – 48 East Smithfield, London, E1W 1AW, United Kingdom. www.corespreads.com is owned and operated by Finsa Europe Limited. © 2018 Core Spreads.

NO ONE VOTED FOR THIS POLITICAL SHAMBLES!

No one, but no one – ‘Brexiteer’ or ‘Remainer – voted for this shambolic state of political disrepair that the UK finds itself in. A Government that has no stomach for delivering a clean break from the EU, as was decreed on 23rd June 2018, is not ideal, nor is it helpful, particularly when it appears to be driven and led in these negotiations, by civil servants, of the highest quality who serve the government, but who are clearly not in tune with the mandate delivered by the country’s electorate. It appears that the tail is wagging the dog! PM May and her government have employed far too few top-class international negotiators to deal with this unbelievably complex issue, resulting in David Davis and his team getting hopelessly behind in arriving with a cogent plan. To compound the problem, M Barnier, aided and abetted by persistent caustic comments and interjections from Juncker and Verhofstadt, has shown little inclination to negotiate and have preferred to adopt a dictatorial stance. Yes, the UK asked to leave; so why should the EU be constructive? The outcome to last June’s disastrous General Election has put Mrs May in a very weak position, giving M Barnier, on behalf of his ‘Lord & Masters’ a very strong hand to do as he likes, and he is relishing the free hand he has been given!  What I don’t think the UK government has yet grasped is that the electorate is not enjoying a love affair or much of a relationship with the establishment or the Westminster ‘bubble.’

 

The Cabinet is hopelessly ‘divided’ and the country remains venomously split! Time is running out; so ‘No deal is better than a poor deal’ appears to be no longer an option. I suspect, that if we are lucky we will be asked to swallow such a weak and watered-down version of BREXIT, the entire country will turn around and say – “What the hell was that exercise all about?” I find the EU’S arrogance intolerable, considering the disproportionate role the UK plays in the defense and security of Europe and how the EU relies so heavily on the UK for intelligence information. Only Greece, Estonia and Poland pay their full 2% spending target.  Let’s hope at the end of the day, business, industry and commerce on both sides of the divide will be more pragmatic than self-interested politicians and bureaucrats, resulting in good sense prevailing. However, I won’t be holding my breath!

RBS – THE SHOW IS SLOWLY GOING ON THE ROAD!

RBS – THE SHOW IS SLOWLY COMING ON THE ROAD!

 

Last night’s news, after trading hours, that the process of selling off the taxpayer’s 71% stake in RBS would be underway soon, came as no surprise to the market, with perhaps a few observers muttering under their breath – ‘Hammond, you are a bit late with this initiative, Old Bean!’ However, in all fairness, market conditions are not exactly ideal for an off-load of billions of Pounds worth of shares over a protracted period. Political turmoil in Europe leaves something to be desired! There could be a fair number of unforeseen imponderables over the proposed sale period. Investors dislike overhangs at the best of times, particularly if the time scale is 5 years.

 

So, as we understand it, UKGI will sell circa 925m shares – 7.7% of the bank, through what is described as an accelerated book building process. The idea is for the Government to offer £3 billion of shares over the next 5 years. With last night’s closing share price being 280.9p and breakeven for the taxpayer at 503p, a loss of £2 billion for the first tranche seems likely. A loss to the taxpayer is not a great concept, there is clearly a need to get RBS back into private ownership to give the bank a chance of making decent advances in terms of lending.  The balance sheet is about half the size it was a decade ago. There is little evidence of any remnants of investment banking. The fines have been made and paid.  PPI is diminishing in terms of damage limitation. There is of course the outstanding problem with its Global Restructuring Group and this issue could drag on. However, Optics and credibility suggest that RBS should come off the Government’s balance sheet and the net proceeds for the Treasury would be very welcome, even though a fair old loss of maybe as much as £10 billion could be incurred, unless the share price were to rise like the Phoenix from the ashes.  

 

News of this forthcoming part sale of RBS shares has hardly captured the market’s imagination this morning – shares are down 3.42% to 271.3p! Hopefully UKGI will put some more meat on the bone! The banking sector is very much ‘unloved.’ However, Rome was not built in a day and there are many investing punters out there who believe that there is scope for recovery in the years to come. But the process may be long and tortuous. However, there a fair few obstacles to negotiate and first and foremost we need to know if Ross McEwan is staying as CEO and who will be replacing Ewen Stevenson as finance Director?

 

UNICREDIT/SOCIETE GENERALE  

After 20 years at Societe Generale, UniCredit’s CEO Jean Pierre Mustier has clearly had the idea of this Franco/Italian bank merger in his sights for some time.  Italian banks were woefully under capitalised and in many cases, they still are. UniCredit’s health is in better shape than any others, after a €13 billion rights issue last year.   I would hardly describe the timing of this proposed merger, when cracks in the EU infrastructure are starting to appear with monotonous regularity. However, give M Mustier dix points for his vision, drive and ambition for putting these two banking titans in bed together. It is hard to see some of the synergy, but M Mustier knows both businesses exceptional well. To have shrugged off the Jerome Kervier scandal after a decade, says something of the resilience om M Mustier – Teflon come s to mind. We will all be watching the developments with interest, as Italy’s populous seems rather tired of the omnipotent power of Germany in France in EU affairs.

 

David Buik

Communications

Mobile – 07788 144 877

 

Spread bets and CFDs are leveraged products, which means you could lose more than you deposit. You should ensure spread betting meets your investment objectives. View full risk warning

This email neither constitutes, nor is to be construed as an offer to buy or sell investments. The information and opinions expressed herein are based on sources we believe to be reliable but we do not represent that they are accurate or complete. No liability is accepted by Core Spreads for any direct or consequential loss arising from this email. Please carry out your own virus checks.
Core Spreads  is a trading name of Finsa Europe Ltd, a company registered in England and Wales under number 07073413, which is authorised and regulated by the Financial Conduct Authority under firm reference number 525164. Registered Office: Tower Bridge Business Centre, 46 – 48 East Smithfield, London, E1W 1AW, United Kingdom. www.corespreads.com is owned and operated by Finsa Europe Limited. © 2018 Core Spreads.

 

WEEKLY FAYRE

WEEKLY FAYRE – Monday 4th June 2018

 

“On Waterloo Bridge, where we said our goodbyes,
the weather conditions bring tears to my eyes.
I wipe them away with a black woolly glove
And try not to notice I’ve fallen in love.

On Waterloo Bridge I am trying to think:
This is nothing, you’re high on the charm and the drink.
But the juke-box inside me is playing a song
That says something different. And when was it wrong?

On Waterloo Bridge with the wind in my hair
I am tempted to skip. You’re a fool. I don’t care.
the head does its best but the heart is the boss —
I admit it before I am halfway across.”

 

Wendy Cope – poet – 1945 –

 

One of life’s great privileges is to be invited to Glyndebourne to not only experience opera of the very highest quality, but also to witness the great beauty and ambiance of the setting and the occasion. Such was my luck in being invited by dear friends to see a wonderful production of ‘Madama Butterfly’ last Thursday. This opera has a dramatic ending and I doubt there was a dry eye in the house. Glyndebourne is uniquely British and is cherished by all patrons of this fantastic occasion, despite having to dodge torrential downpours last week!  I am still purring with contentment like a ‘Cheshire Cat’!

 

“Forever Together” really got herself together, having negotiated Tattenham Corner in softish ground before pulling away from “Wild Illusion” with a bit to spare, to win the Oaks at Epsom on Friday, yet again another huge triumph for the O’Brien family. However, the Derby on Saturday produced a shock result, with the odds-on favourite at 4/5, ‘Saxon Warrior’ running no kind of a race. Godolphin’s ‘Masar’ gave Charlie Appleby his first Derby win at 20/1, with a fair bit left in the tank.

 

 

 

INDEX 29/5/18 1/6//18 Another astonishing % gain/loss
FTSE 100 7716 7701 -0.19%
XETRA-DAX 13016 12724 -2.24%
CAC40 5565 5465 -1.80%
DJIA* 24781 24635 -0.59%
 S&P 500* 2723 2735 +0.44%
NASDAQ* 7422 7554 +1.78%
Hang Seng 30759 30492 -0.86%
Nikkei 22488 22171 -1.40%
Shanghai Comp 3137 3075 -1.97%

 

  • Denotes from 25/5/18

 

Brexiteers like me are not cackling away like hyenas, in response to the political and almost certainly subsequent financial distress, which is likely to be suffered in Italy and to a lesser degree in Spain. These are harrowing times for Italy with the ‘populous’ being told by their autocratic President Mattarella that democracy matters little to him if the coalition of ‘Five Star’ and ‘League’ want an anti-EU finance minister. So, a compromise candidate had to be found by the original nomination to be PM, Giuseppe Conte and consequently the heat is temporarily out of Italy’s kitchen, though another election before too long cannot be ruled out. The FTSE MIB had lost 14% in value from 15th May 2018 until last Wednesday, where it made a 2% recovery and 10-year bond yields rose like grilse from 1.90% to 3.10% before settling back to 2.67% on Friday. Italian banks have also been beaten up. They have recovered a little poise but are far from out of the woods. Spain’s Rajoy has been replaced as PM by Pedro Sanchez, thanks to corruption allegations, but there are number of imponderables, which will test Senor Sanchez’s resolve in the months to come.

 

All this political uncertainty, which started with Greece in 2010 followed up by the UK’s decision to leave the EU in 2016, with Italy showing its displeasure at the status quo and Spain at ‘sixes and sevens’ over independence for Catalan should have given the EU a sufficiently strong message that all was not well with many of its members. Had the EU been more accommodative towards members issues and problems with a touch less arrogance and intransigence and particularly by taking its foot off the ‘federalism’ accelerator, perhaps Europe would not be in this unholy mess! If this ‘Italia job’ goes pear-shaped, the devastating domino effect it will have on the European banks and the EU’S economy does not bear thinking about. The threat of the EU becoming a ‘busted flush’ looks more realistic as the months role by.

 

Let’s hope that this protectionist trade war adopted by the US does not see the EU over-react. Trump is misguided if he does not think protectionism is dangerous for the US consumer in the long-term.  This prickly issue requires diplomacy and I have my doubts if Messrs Merkel and Macron are up to the job in hand.  I am ever the ‘Walter Mitty’ in hoping that the EU will see sense over trade negotiations with the US and excessive reprisals towards their allies and learn from all these global trade problems, but I have my doubts.

 

Last week again saw most global indices finish in negative territory apart the S&P and the NASDAQ, which added 1.5% on Friday thanks to a very strong Non-farm payroll number, which saw 223k jobs created in May 2018 triggering gains in heavyweight tech companies such as Apple, Microsoft and Alphabet. Average hourly wages increased 0.3 percent, both topping economist estimates. The unemployment rate fell to an 18-year low of 3.8 percent. This data has all the hallmarks of a rate hike at the next FOMC meeting.

Here in Old Blighty, though the reconfirmation of 1st quarter GDP at 0.1% was disappointing, news that Gfk’s Consumer Confidence and unsecured borrowing bounced back in April helped to keep the loss on the FTSE 100 for last week at a bare minimum. Grocery sales, courtesy of the Royal Wedding had also popped; So, there was some good news about though the lack of progress in the BREXIT negotiations is cause for concern. The FCA’S managing director Andrew Bailey made it clear that limits and caps on high cost credit and overdrafts would be implemented after further investigation. De La Rue posted a profit warning, as did Card Factory and First Group’s CEO Tim O’Toole was shown the door after an inadequate performance.  RBS’S FD Ewen Stevenson served notice to leave the bank at a critical moment in its recovery process, prior to any sale of equity back to the public.  The bank had previously announced the closure of 162 branches. It look as though it will be ‘For Whom the Bell Tolls’ for House of Fraser unless it can pull the proverbial financial rabbit out of the hat in dealing with its banking covenants.

Deutsche Bank’s new chief executive officer, Christian Sewing, suffered a fresh setback in his efforts to reinvigorate Europe’s largest investment bank as S&P Global Ratings cut the lender’s credit rating. However, the bank’s share price rebounded on confirmation from S&P confirmed that it has good capital and liquidity buffers. TSB will also be gathering some unfavourable headlines as Paul Pester comes under scrutiny next week for inadequate stewarding over the IT crisis which has dragged on. The inability of the government to deliver another runway at Heathrow quickly may see the project hijacked by the airlines in attempt to stop the cost spiralling to more than £20 billion. CYBG have upped their bid for Virgin Money valuing the joint operation at £4 billion, giving this fresh operation greater market penetration with 6.1 million customers.

Save the best until last? – Not Sure! However, one must admire the stoicism and relentless drive of Sir Martin Sorrell, who is set to rise like the ‘phoenix from the ashes’ by starting another advertising empire to challenge WPP. I suppose revenge is best served up cold. I am gobsmacked that WPP Chairman Roberto Quarta did not tie Sir Martin up with a non-compete agreement for at least a year after he left.

UK companies posting results this week –  Tuesday – AO World, Johnston Press, Wednesday – WH Smith, RPC Group, Workspace, Thursday – CMC Markets, Auto Trader, Mitie

 

US companies posting results this week – Monday – Dell Technologies, Wednesday – Brown Forman, Thursday – Vail Resorts. Broadcom

 

 

Economic data posted this week – Monday – UK PMI Construction, US Factory Orders, US Durable Goods, Tuesday – UK & US PMI Services, US ISM Non-manufacturing, UK New Car Registrations, Wednesday – US Trade Balance, Thursday – Halifax House Prices, US Consumer Credit, EU 1st quarter GDP Estimates, Friday – BOE Inflation expectations survey

 

 

David Buik

Communications

Mobile – 07788 144 877

 

Spread bets and CFDs are leveraged products, which means you could lose more than you deposit. You should ensure spread betting meets your investment objectives. View full risk warning

This email neither constitutes, nor is to be construed as an offer to buy or sell investments. The information and opinions expressed herein are based on sources we believe to be reliable but we do not represent that they are accurate or complete. No liability is accepted by Core Spreads for any direct or consequential loss arising from this email. Please carry out your own virus checks.

Core Spreads  is a trading name of Finsa Europe Ltd, a company registered in England and Wales under number 07073413, which is authorised and regulated by the Financial Conduct Authority under firm reference number 525164. Registered Office: Tower Bridge Business Centre, 46 – 48 East Smithfield, London, E1W 1AW, United Kingdom. www.corespreads.com is owned and operated by Finsa Europe Limited. © 2018 Core Spreads.