WEEKLY FAYRE – Monday 30th July 2018
“I have got a new-born sister;
I was nigh the first that kissed her.
When the nursing-woman brought her
To papa, his infant daughter,
How papa’s dear eyes did glisten!
She will shortly be to christen:
And papa has made the offer,
I shall have the naming of her.
Now I wonder what would please her,
Charlotte, Julia, or Louisa?
Ann and Mary, they’re too common;
Joan’s too formal for a woman;
Jane’s a prettier name beside;
But we had a Jane that died.
They would say, if ’twas Rebecca,
That she was a little Quaker.
Edith’s pretty, but that looks
Better in old English books;
Ellen’s left off long ago;
Blanche is out of fashion now.
None that I have named as yet
Is so good as Margaret.
Emily is neat and fine.
What do you think of Caroline?
How I’m puzzled and perplexed
What to choose or think of next!
I am in a little fever
Lest the name that I should give her
Should disgrace her or defame her,
I will leave papa to name her.”
Charles & Mary Lamb – Authors & Poets – 1775-1834 & 1764-1847
The news in the press and on television currently make very dreary reading and viewing. I think we are all in need of a ‘pick-up.’ So, without reservation I recommend a visit to see the sequel to ‘Mumma Mia! – Here we go again.’ – What a tonic and an injection of a much-needed ‘feel-good-factor! The same old guard are in it – Piers Bronson, Julie Walters, Meryl Streep, Dominic Cooper and glorious cameo performances from Cher and Andy Garcia. Lily James’s career will have come to no harm – acting, singing and dancing as a young ‘Donna Sheri’ to an ‘Abba’ culture of music; the girl done good! I just skipped out of the cinema full of the joys of life!
Saturday’s King George at Ascot may not have been of the very highest quality but what a race! Sir Michael Stoute trained the first two home, with Saeed Suhail’s ‘Poet’s Word’ mugging Sir Evelyn de Rothschild’s ‘Crystal Ocean’ by a head on the line, eight lengths clear of the field. This was a remarkable training feat giving the Freemason Lodge handler his record sixth winner of this most prestigious of races over 1.5 miles. The man is in a league of his own. His first came 37 years ago in 1981, with the great ‘Shergar!’
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I suspect most people in this country would not select President Donald J Trump as their number one choice as their dinner guest of honour on a Saturday night. However, love him or despise him, President Trump must have achieved some goals in the first 21 months of his Presidency, regardless of the peripheral personal bad press, such as the open difference of opinion he and his former close advisor, Michael Cohen have expressed over an alleged meeting with a Russian lawyer and his reckless and obsessive use of ‘twitter!’
Notwithstanding all these distractions, there is a dialogue of sorts going on with President Putin, though the mood swings are irrational. Global trade imbalances are now up for serious discussion, though the President cannot really believe that there can be any winner from a trade war. Trump has told the defence-shy EU it is not paying its way and I have a feeling they will, before too long or the US will withdraw troops from Europe and why not! And in passing the US President’s meeting with Kim Jong Un in June has created some modest positive reaction.
On Friday the US posted its best growth figure for the last quarter in four years – 4.1%. This figure was probably accentuated by the fact that consumer and export activity selected another gear ahead of trade tariff duty being imposed by Mexico, China and the EU. Consequently, stock markets are at near enough at all-time ‘highs.’ Tax-cuts have delivered low levels of unemployment and have been encouraging for corporate earnings.
The notice ECB’s Mario Draghi served on the market that bond buying would cease at the end of this year and the Central bank’s intention to raise rated in 2019 grabbed most the economic headlines this past week. However, maybe a little caution should be observed if global growth is on the decline, which many believe is the case. Economists, as a breed, are very upbeat about the EU’s future, whilst they continue to pour scorn on the UK. I am not sure I subscribe to either theory, but time alone will tell. Stock markets were given a temporary boost last week, when President Trump managed to persuade the EU to buy gargantuan amounts of soya beans, which apparently has abated the possibility of trade war between the US and the EU. Who in the EU is going to buy all this produce remains to be seen.
As can be seen above global markets did well last week. Earnings in US, UK and EU were good. Trump also took his foot off the trade tariff accelerator, which helped Asia and the EU. The NASDAQ was the only major index to close below the Plimsoll line, thanks in the main to disappointing user membership by Facebook and Twitter. Both share prices were clattered after hours by 20%. Despite this worrying trend, it was good to see Microsoft and Alphabet putting in stellar efforts. Finally, on Friday, Amazon posted a big ‘earnings beat’, though revenue was slightly light. Shares rose by 3% and this tech retailer is heading towards becoming the first ‘trillion Dollar’ company.
To date, 53% of the companies in the S&P 500 have reported actual results for Q2 2018. In terms of earnings, 83% have beaten profits estimates and 73% have beaten their sales targets. It must be remembered many of these companies tend to underestimate their quarterly numbers. There were some very credible efforts from Boeing, General Dynamics, Raytheon, Johnson & Johnson, GE and McDonald’s. However, some of these business titans were a little timid with their forecasts – hence some disappointing reactions in certain quarters. Exxon Mobil and Chevron posted slightly neutral efforts, as did Royal Dutch Shell in the UK, though France’s Total performed with aplomb.
Earnings in the UK were very satisfactory, rather than spectacular. Sky, GSK, ITV, BT and Reckitt Benckiser seemed to make real progress with plans as well as profits. In comparison to its peers, the performance of the FTSE was sedentary due to a lack of clarification over BREXIT. Perhaps Sterling weakness has buoyed the FTSE’S apparent robustness. TSB posted a loss of £107 million thanks to the incompetent installation of an IT system. I am amazed that post the Merrill Lynch report that CEO Peter Pester has kept his job. European earnings were also upbeat, with UBS’s improvement catching the eye with the likes of Roche and Nestle also flying the flag for Switzerland.
It is another massive earnings week on both sides of the pond. Results from UK’S Lloyds, Barclays & RBS will be eagerly awaited, and especially those from BP, BAE Systems, Shire, Rolls Royce and Centrica. Hopefully investors will hear more news as to the current plight Countrywide, Domino Pizza and House of Fraser are experiencing. The UK banks are expected to report huge profits totalling £14 billion for the first half of the year, which may not endear them to their customers, as many of them are savers and continue to struggle with low interest rates
The MPC meets on Thursday and they are expected to raise rates by 0.25% to 0.75% – UK’s highest level for a decade. The recent economic data has been solid, and the market believes that there is a 90% chance of a rate increase. Andrew Sentence, PWC’S former MPC member points out that since the financial crisis, UK inflation has averaged the highest in the any rate hike in the G7, about 1pc above the average of the other 6 countries. UK is the only country to average above 2pc target – further evidence, in his opinion that monetary policy has been too loose. The 2-day FOMC meeting starts tomorrow. A rate hike is unlikely to come in September. Finally, on Friday US Non-farm payrolls are likely to confirm 195k jobs were created in July, with unemployment benign at 3.9% and wage inflation at 2.7%.
UK companies posting results this week – Monday – Hiscox, Keller, Senior, Cranswick, Tuesday – BP, Centrica, Gocompare, Greggs, Just Eat, Standard Chartered Bank, Coates Group, International Game Technology, Provident Financial, Rentokil, Shire, Taylor Wimpey, Travis Perkins, Weir, Glencore, Thos Cook, Wednesday – Aggreko, Capita, Lloyds Banking Group, BAE Systems, Direct Line, NEXT, IMI, Man Group, Rio, Smurfit Kappa, St James’s Place, Sage, Thursday – Aviva, Barclays, LSE, Inmarsat, RPS Group, Spirent, Mitchells & Butler, Countrywide, Willis, Tower, Watson, Centamin, Ferrexpo, Rolls Royce, RSA, Serco, Merlin Entertainment, Friday – Essentra, Millennium & Copthorne, RBS, Cobham, IAG, William Hill, Mondi
US companies posting results this week – Monday – Caterpillar, Loew’s, Rambus, Tuesday – Pfizer, Procter & Gamble, Archer, Daniels Midland, Apple, Wednesday – Humana, Sprint, Tesla, Zynga, Thursday – Aetna, Cigna, Kellogg, Yum Brands!, Motorola Solutions
Economic data posted this week – Monday – BOE lending data, Tuesday – Gfk Consumer Confidence, FOMC Meeting (2 days), Wednesday – BRC Shop Prices, US, UK PMI Manufacturing indices, Thursday – UK PMI Construction, MPC Meeting, Friday – UK & US PMI services, US Non-Farm Payrolls & employment data
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