Monthly Archives: July 2018

MARKET UPDATE

Foreign & Commonwealth Secretary, Jeremy Hunt has warned there is a very real risk of the UK leaving the EU without a deal in March next year. The FT refers to it as ‘crashing out!’ Sorry, but that is in keeping with the FT’S stance on BREXIT and is bordering on hysterical. It will be perfectly orderly, if as I hope, contingency plans have been made.  It is ‘high-time’ someone in a senior position spelt it out in words of one syllable what the ramifications are for a ‘stand-off!’.  Even if this threat is hollow, maybe it might just bring some of the negotiators to the table to just talk rather than a tsunami of ‘NON! NON! NON! Just in passing the WTO route is not as terrifying as some make out! Roberto Azevedo dismisses fears Britain could suffer a sudden seizure of trade during or after its negotiations with the EU. Britain’s customs system is already one of the most efficient in the world, per World Bank. 98% of containers arriving into Britain from outside the EU are cleared within 5 seconds. FIVE! I am not advocating a ‘NO DEAL’ situation, but as far as I can see there is ‘no talking’ – just threats and many may not be idle.

 

Considering the uncertainty and the lack of clarity over BREXIT, the FTSE 100 and pre and post China’s recent message this afternoon, that talks to defuse trade tariffs will take place, has rallied by 59 points to 7759 at 3.00pm. This ventures to suggest that a ‘no deal’ is probably priced in.  If the Pound is sold off, due to this undesirable event becoming an eventuality, 60% of FTSE 100 constituent stocks are Dollar related.  As for FTSE 250, investors seem somewhat sanguine.

 

BP’s profits were up 300% and the dividend was increased for the first time since 2014. The market expected good news and a share ‘buy-back’ and were not disappointed – shares up 1.3%. Of other companies to report they have performed as follows – Centrica, thanks to a loss of customers was down 2.3%. The reception to Standard Chartered Bank was neutral +0.3%, Thos Cook thrived +3.5%. Rentokil was down 0.7%, Taylor Wimpey, after a slow start was 1% to the good and as for Just Eat; well expectations were ‘high’ and investor’s disappointment was reflected in a 5% fall in value. The main winners on the day were Fresnillo +4.8%, Admiral +3.36%, IAG +2.9% ahead of Friday’s figures and BATS +2.4%. 

 

The Street of Dreams’ DJIA was up 77 points at 25384. Procter & Gamble results came up a little ‘light’ but shares were all but unchanged. Pfizer pleased their acolytes – shares were up 0.95% at the time of writing.  Eyes down for APPLE’S results after hours and some news from FOMC. Market is not expecting a hike until next month.

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WEEKLY FAYRE

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!’

 

INDEX 23/7/18 27/7/18  % gain/loss  
FTSE 100 7678 7701 +0.29%  
XETRA-DAX 12510 12860 +2.80%  
CAC40 5382 5511 +2.40%  
DJIA 25036 25451 +1.66%  
 S&P 500 2799 2818 +0.68%  
NASDAQ 7806 7737 -0.88%  
Hang Seng 28298 28804 +1.79%  
Nikkei 22480 22712 +1.03%  
Shanghai Comp 2815 2873 +2.06%  

 

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

 

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.

MARKET UPDATE

After a dispiriting start to the session this morning, when the FTSE 100 only opened up +12 at 7667, in the wake of a 1.5% bounce in Asia by Chinese stocks, thanks in the main to a weak Yuan, it has since girded up its loins.  At 10.55am London’s main index is up 65 points at 7721, with much of the rally being due to the financial sector, which seemed buoyed by UBS’S fine 2nd quarter results and a feeling that banks will come in to their own in the second half of the year.

UBS announced a 9% rise in net profit (CHF1.28 billion) in the second quarter of the year. Rising interest rates in the U.S. should further support its global wealth management unit. UBS bought back 550 million Swiss francs worth of its own shares – shares up 3.7%. Deutsche Bank post numbers tomorrow and we already know they will be decent. Credit Suisse reports next Tuesday. In the same breath it was disappointing to hear that The Serious Fraud Office is attempting to reinstate previously dismissed fraud charges against ‘The Bald Eagle’ (Barclays) in relation to its Qatar fundraising during the financial crisis. The SFO made another application to the High Court yesterday to reinstate all charges. Barclays will defend the action. The SFO’S track record is no great in getting convictions, though allegations against Varley, Jenkins and others remain unanswered – it is all taking far too long to come to come to trial. Despite this weeping carbuncle, shares were up 1.38% at 10.35am. RBS has added 2.7% this morning with Lloyds up 1.04% and HSBC just +1.34%.

 

Several companies reported results today. Drax was disappointing – down 4.7% having initially fallen by 7% at the opening. Fever Tree Drinks made a quiet start, but ‘wow!’ analysts were impressed – up 12.9%! Hammerson and Just Group posted solid efforts. It’s a huge earnings day in New York and the DJIA futures are 80 points to the good.

 

 

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 23rd July 2018

 

“Clouds spout upon her

Their waters amain

In ruthless disdain, –

Her who but lately

Had shivered with pain

As at touch of dishonour

If there had lit on her

So coldly, so straightly

Such arrows of rain:

 

One who to shelter

Her delicate head

Would quicken and quicken

Each tentative tread

If drops chanced to pelt her

That summertime spills

In dust-paven rills

When thunder-clouds thicken

And birds close their bills.

 

Would that I lay there

And she were housed here!

Or better, together

Were folded away there

Exposed to one weather

We both, – who would stray there

When sunny the day there,

Or evening was clear

At the prime of the year.

 

Soon will be growing

Green blades from her mound,

And daisies be showing

Like stars on the ground,

Till she form part of them –

Ay – the sweet heart of them,

Loved beyond measure

With a child’s pleasure

All her life’s round.”

 

Thomas Hardy – Author & Poet – 1840-1928

 

What an astonishing ‘Open’ golf championship Carnoustie hosted last week. It had every ingredient over the four days – different weather conditions and an array of challengers. Francesco Molinari was a worthy winner – the first Italian to win the claret jug! To see Tiger Woods, so competitively on the prowl again added greatly to enjoyment of this sporting epic, with Justin Rose and Rory McIlroy flying the flag for the UK with some style.

 

I was recently lunching with a few esteemed friends from the world of finance, media and PR and they certainly put me right on a few issues such as the change in attitude towards visual media and the importance they now attach to social media in keeping in touch with public opinion.  There’s nothing new in terms of the increasing popularity of social media but its influence is now at astonishing levels.

 

I was told that ‘Love Island’ was easily the most popular and influential programme on TV.  I laughed uncontrollably at the thought of people wasting hours of their valuable time watching such desperately numbing TV (back to those awful days when ‘Big Brother’ put millions of people into a trance until the small hours). Maybe my astonishment was slightly misplaced, as I have never watched one minute of it. Apparently, there was a conversation on this esteemed programme between one of the couples about BREXIT. One of the girls thought BREXIT was about trees or something akin to it. Clearly that is indicative as to what BREXIT meant to her and presumably to a huge percentage of the population. According to these luminaries I was talking to, millions of tweets are exchanged whilst watching one of these episodes, which is on ITV six out of seven days a week.

 

 BREXIT is clearly not part of the contestant’s agenda, nor would it appear to be part of most of their viewers’ agenda.  Further research done on the public interest in BREXIT suggest that only 5% of ‘REMAINERS’ are passionate about the outcome for this much unloved referendum and about 7.5% of ‘LEAVERS’ exude similar obsessiveness.  The rest of the public just want the government to get on and deliver it, which would enable them to get on with their lives!  They supposedly cannot understand why, after over two years, people are still debating the “pros & Cons!” – BORING!  I am astonished and obviously totally out of touch with the real world.

 

INDEX 16/7/18 20/7/18  % gain/loss  
FTSE 100 7661 7678 +0.22%  
XETRA-DAX 12530 12561 +0.25%  
CAC40 5429 5398 +1.27%  
DJIA 25025 25058 +0.13%  
 S&P 500 2801 2801 unchanged  
NASDAQ 7831 7821 -0.12%  
Hang Seng 28581 28224 -1.39%  
Nikkei 22397 22698 +1.34%  
Shanghai Comp 2827 2829 +0.07%  

 

The earnings season in the US is now well and truly ‘under a wet sail.’ Of the 87 companies in the S&P 500 that have reported earnings to date for Q2 2018, 83.9% have reported earnings above analyst expectations. This is above the long-term average of 64% and above the average over the past four quarters of 75%. Second quarter revenues are expected to increase by 8.3% from Q2 2017. Excluding the energy sector, the revenue growth estimate declines to 7.2%. The banks have done their stuff with Bank of America, Goldman and Morgan Stanley delivering good numbers last week, though investors are wary of threats from a wave of aggressive rate hikes, despite FED Chairman Powell’s conciliatory comments. It is important that the FED does not adopt too aggressive a stance to monetary policy. Why?  Many market protagonists are of the opinion, that inflation, aided and abetted by excessive FED intervention could easily be the catalyst to a measurable equity market correction.

 

Last week, Johnson & Johnson, Microsoft, IBM and Honeywell posted eye-catching performances.  The same cannot be said of eBay and especially Netflix, whose revenue stream and membership numbers were short of expectation, resulting in the tech entertainment titan losing 14% of its value after hours on Monday. It is interesting to hear that UK terrestrial TV channels are in talks to make their biggest shows available through a combined streaming service designed to fight off the threat of Netflix. The earnings floodgates open in earnest this week, as can be seen below. On the economic data front, US retail sales, industrial production and the content of the Beige book appeared to keep investors on side.

Looking at the table above, it is understandable that President Trump’s histrionics in Helsinki and his ‘about-turn’ on Putin’s and Russia’s involvement in the US Presidential election caused observers consternation.  President Trump’s subsequent invitation to Putin to visit Washington, without prior consultation with the State department, kept investors on ‘White House Watch’ rather than the performance of markets. Clearly further trade tariff threats of up to $250 billion against China unsettled the markets, though Shanghai did make a measured recovery at the end of the week. It was hardly surprising that European car manufacturers took some stick last week based on what could happen to them if Trump widened his net and the unsatisfactory progress made in the BREXIT negotiations. The Dollar fell from its recent record levels and Treasury yield rates were quietly steepening.

Here in Old Blighty inflation stabilised at 2.4%, though wage inflation remained benign, leaving the Bank of England in a bit of a bind as to whether it implements a rate rise of 25 basis points to 0.75% on 3rd August. There seems to be a modest improvement in the economy but is it enough to warrant an increase. Symbolically I am sure it will be fine, but there seems little room for any further increase. Panmure’s Chief Economist, Simon French comments on retail sales were as such – “UK retail sales ended Q2 on a mixed note. Volumes up by the largest amount since Q1 2015 at 2.1% YoY, but stay-at-home shoppers pared back spending in June. With UK savings ratio near its 60Y low and real wage growth muted the chances of a return to 2015-2017 growth rates are slim. The Pound dipped on Thursday to $1.29 against the Dollar but recovered some poise on Friday due to better than expected PSBR numbers, with Government borrowing in the April-to-June period fell to its lowest level since 2007.

On the corporate front, Rio and BHP posted good production numbers. Mothercare worried its investors with an expected set of weak numbers. Executive pay at Royal Mail caused some fury. Sport Direct bucked the trend of soft retail sales with a better than expected set of numbers. Due to a £85.4million write-down on its investment in struggling department store chain Debenhams, profits fell from £272m to £77m.  However, a payment due to be made to Mike Ashley’s future son-in-law of £5m raised a few eyebrows. These dispiriting BREXIT negotiations helped to keep the lid on Sterling and there is little doubt that the FTSE 100 stayed above the Plimsoll line, as 60% of earnings from constituent companies are Dollar related. Glaxo SmithKline is giving due consideration to pressure from some of its main investors to spinning off the company in to healthcare consumer unit. In concert with US, it is a huge week for earnings (see below).

It was good see some sensible pragmatic comment from Airbus’s Tom Enders suggesting a tie up with BAE Systems’ fighter to compete with the US, rather than listening to a continuous flow of acrid sneering dialogue from politicians. This week we may see Hammerson’s CEO David Atkins come under shareholder pressure and Countrywide may require £100m cash call, such is the parlous state of estate agencies in places. Tesco is set to launch a chain of 60 discount shops to take on cut-price German retailers Aldi and Lidl at their own game.

 

UK companies posting results this week – Monday – Paragon, Tuesday – Drax, Fever-Tree Drinks, Britvic, Just Group, Unite, Hammerson, Wednesday – ITV, Croda, Metro Bank, Tullow Oil, 3i Group, Indivior, Marston’s, Vodafone, Informa, Glaxo SmithKline, Pentail, Thursday – Royal Dutch Shell, Diageo, BATS, Anglo-American, National Express, RELX, Sky, Compass Group, Smith & Nephew, Segro, Intu Properties, PayPoint, Inchcape, Howden Joinery, Johnson Matthey, Bodycote, Countrywide, CMC Markets, Schroders, Virgin Money, Tate & Lyle, Sophos, De La Rue, Friday – BT Group, Pearson, Rightmove, Reckitt Benckiser, AON

 

US companies posting results this week – Monday – Hasbro, Halliburton, Alphabet, Whirlpool, Tuesday – Eli Lilly, Lockheed Martin, 3Ms, Harley Davidson, United Technologies, Biogen, JetBlue, Texas Instruments, AT&T, Wednesday – Boston Scientific, General Dynamics, Northrop Grumman, Boeing, General Motors, HCA Healthcare, Coco-Cola, Corning, Facebook, Visa, Mattel, Ford, PayPal, Thursday – Xerox, Raytheon, Altria, Hershey,  CME, Conoco-Phillips, Bristol Myers Squibb, DR Horton, Valero Energy, McDonald’s, Allergan, Mastercard, Amgen, BJ Restaurants, Amazon, Friday – Exxon Mobil, Chevron, Colgate-Palmolive, Twitter, Abbvie, Merck

 

Economic data posted this week – Monday – US Existing Home Sales, Tuesday – CBI Industrial trends survey, Wednesday – UK housing loans, Thursday – ECB Monetary policy, Friday – US & UK GDP growth estimates

 

 

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.

POLITICAL SHENANIGANS – NEVER SEEN ANYTHING LIKE IT IN 56 YEARS – MARKETS REMAIN CALM!

 

POLITICAL SHENANIGANS – NEVER SEEN ANYTHING LIKE IT IN 56 YEARS – MARKETS REMAIN CALM!

 

I know I am older than God, but I can never remember political shenanigans of this nature in all the 56 years I have been working in the City. Yesterday it was too hot to be ‘out and about’, so I watched the Trump/Putin press conference on TV.  I must admit, my eyes were out on stalks, listening to President Trump dismiss evidence on Russian interference in the 2016 US election from the FBI, CIA and the DOJ with utter contempt, all but accusing them of being perpetrators of ‘fake Nooze!” – Incredible! There is clearly no diploma coming POTUS’S way for statesmanship. The indignation expressed by both Democrat and Republican luminaries – particularly those in the twilight zone – was, to say the least, stark and blisteringly critical. I don’t think we have heard the last from Robert Meuller.

President Trump might just be starting to tread on very thin ice. I respectfully suggest to POTUS that Russia is not the West’s ally. President Putin, despite the current huge red herring – alias the World Cup – is a despot. We are a million miles away from the Gorbachev era. I salute Mr Trump for opening a dialogue with Russia; Barack Obama abrogated his responsibilities in failing to do so for eight years and boy, has the West paid the price. However, to expect anything apart diplomatic cordiality from this meeting, could be folly!

As for PM May’s Chequers blue-print for a BREXIT agreement; it seems to be in tatters already, ripped to pieces by ‘remainers’ and ‘leavers’ alike. Four amendments proposed by Jacob Rees—Mogg MP to a key piece of the PM’S BREXIT legislation were tabled and agreed, but the Government only had a majority of three for the EU withdrawal Bill and had Sir Vince Cable and ‘Little Timmy’ bothered to vote…. Who knows? What is so depressing is the lack of leadership. The House of Commons is like a kindergarten playground as member just squabble in a totally rudderless manner. The divisions are at an intolerable level. Labour seem even worse than the Government. The EU must be laughing like hyenas. Such is the lack of cohesive thought process. As the days roll by it is distinctly possible that we are heading for a ‘NO DEAL’ scenario, which is a dangerous ploy. 18 months ago, I would have relished the prospect. But that time has passed; we are running out of time to stand up to the relentless bullying from the EU. That desperate June 2016 General Election put the government’s negotiating stance to the sword. Time, I think for pragmatism, though there is little evidence of a will to acquiesce.

Despite all this political tomfoolery, markets remain relatively stable. Wall Street had its mind in neutral yesterday as most people in beautiful downtown Manhattan were on Putin/Trump watch. Energy stocks were slightly under the cosh as crude oil drifted down to $72 for Brent and $68 on Nymex. After hours Netflix posted numbers.  The shares were larruped – down 14% though admittedly they are up 146% on the last year. New member numbers fell short at 5.8m (EST 6.15m) making a total of $130m subscribers. A record profits of $384 million was posted up from $66 million last time. EPS came in at 85 cents with operating margins of 11.8% against expectations of 12%.  This is surely a temporary setback.

What these numbers do highlight is a possible lack of content, which may have restricted new members joining. I think it is becoming clearer that Comcast will end up with SKY for $26 billion, giving this joint venture greater world penetration for sport and news.   I also believe that 21st Century’s assets will fall in to bed with Disney, who are desperate to take on Netflix and will be able to do so because of incredible content from Universal and Disney, who together will make maybe 75% of films and TV dramas. The earning season should be good in the US, though investors approach to bank results which were good, has been cautious. Bank of America’s shares were up initially by 2% but closed even higher by 4.8%, in contrast to JPM, Citi and Wells Fargo

In typical French/EU style of protectionism, France is having the drains up over the Tesco/Carrefour deal and the mega Auchan/Casino/ Schiever/Metro deal to be known as Horizon.  I have no time for protectionism – charge what the traffic will bear.

In Asia markets mainly had a ‘monkey on their back’, apart from Tokyo in response to New York and trade tariff threats – Shanghai -0.65%, Hang Seng -1.25% and Nikkei +0.44%.

The FTSE 100 was down 60 points yesterday thanks to IMF lowering growth for UK to 1.4% for 2018 and oil stocks falling with miners. Today the FTSE 100 is up a cautious 13 points at 7614. BHP & Rio posted decent updates. TalkTalk though still half its share price since October 2017 added 3.3%. Petropavlovsk has bee slaughtered in the past 5-years down from £42 to £7.47 today, with a neutral trading statement. Galliford Try was up 2.5%.

 

 

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 16th July 2018

 

“When you are old and grey and full of sleep,

And nodding by the fire, take down this book,

And slowly read, and dream of the soft look

Your eyes had once, and of their shadows deep;

 

How many loved your moments of glad grace,

And loved your beauty with love false or true,

But one man loved the pilgrim soul in you,

And loved the sorrows of your changing face;

 

And bending down beside the glowing bars,

Murmur, a little sadly, how Love fled

And paced upon the mountains overhead

And hid his face amid a crowd of stars.”

 

WB Yeats – poet – 1865-1939

 

After all the hype from England’s performance leading up to the semi-final against Croatia, the play-off for 3rd place against Belgium seemed rather pointless, though the weakness in Gareth Southgate’s squad was rather nakedly exposed, as it was against Croatia – NO midfield general like De Bruyne, Hazard, Modric or Rakitic to hold the team together. Nonetheless the Three-Lions did us very proud. What a festival of fun and excitement!

 

Newmarket looked a picture this weekend for the July meeting. Having won the Dewhurst and nearly won an Irish Guineas, who would have believed that Aiden O’Brien’s ‘US Navy Flag’ had been running over the wrong trip, as he hacked up in ‘The July Cup’ 6-furlong sprint? Ryan Moore gave this son of ‘War Front’ a peach of a ride as he flew home at mouth-wateringly tasty odds of 8/1!

 

It was good to see Joe Root return to form at Lord’s with a great century on Saturday. I do not understand why India made a poor attempt to chase England’s 325. I must confess to being irritated by Dhoni deciding to have a net ahead of the test series. Some Indian batsmen have been short of practice, but cricket lovers paid £100 a seat and may have left the ground feeling cheated.

 

INDEX 9/7/18 13/7/18  % gain/loss  
FTSE 100 7617 7661 +0.57%  
XETRA-DAX 12541 12540 unchanged  
CAC40 5403 5429 +0.48%  
DJIA 24519 25019 +2.03%  
 S&P 500 2768 2801 +1.19  
NASDAQ 7731 7825 +1.21%  
Hang Seng 28606 28525 -0.28%  
Nikkei 21838 22597 +3.37%  
Shanghai Comp 2752 2831 +2.87%  

 

 

Last week was certainly action packed, politically, economically and from a commercial perspective. President Trump’s visit to Europe was every bit as controversial as expected.  Her certainly rattled the EU’s and the UK’s cage over defence expenditure and Brexit and we wait for news from Helsinki of his meeting with Putin, whose stock is flying erroneously high after the World Cup. PM May is in a terrible bind, in attempting to persuade a deeply divided country and more to the point her fractious party that a heavily ‘watered-down’ Brexit, almost certainly with the connivance of the EU would be better for us all. The next week could be not only interesting but very unsettling. On the economic front in the UK retail sales looked better due to great weather and England’s run in the World Cup endorsed today by Visa’s data on spending. UK Construction and it service sector posted adequate, but industrial production looked very soft; again, uncertainty over Brexit was blamed.  In Asia the trade tariff spat took its toll in Hong Kong, though Shanghai shook off the its blues vigorously with a stellar performance.

 

As can be seen from the table above, US markets were under a modest ‘wet sail’ with the prospect of a decent earning season and its economy looking robust with possibly two rate hikes on the FED’S agenda this year. JP Morgan and Citibank posted very strong results on Friday, but investors took some profits on fears of interest rate hikes – Citi eased by 3.3% and JPM by 1.6%. Wells Fargo is still having difficulties shaking off scandals and its shares were down by 4.3%. Last week the NASDAQ put in another strong performance with Amazon, Alphabet, Facebook and Microsoft all hitting new record levels. Last Monday it appeared that Xiaomi, the Chinese mobile’s operator’s IPO in Hong Kong was less spectacular than expected. It valued the company at less than $50 billion, which was below expectation.

 

Here in Old Blighty last week we saw a decent trading statement from Burberry with sales up 3% for the last quarter – down from the halcyon days of a decade ago but respectable. ASOS slipped slightly on metaphorical banana skins with their shares dipping by 8% on Thursday. Conversely Dunelm, the household upholstery titan, posted encouraging progress which saw it shares rise by a similar amount on Friday. Ocado had a very volatile week, adding 14% on Tuesday ahead of its trading statement and surrendering 6% on Wednesday, thanks to slightly disappointing sales, though its forthcoming association with Carrefour is very exciting.  TF ICAP hosed out its CEO John Phizackerley after a fairly ‘king-sized’ profits warning. Airbus, having warned the UK Government that it would take its toys away unless there was a decent outcome to BREXIT, were outraged to have lost a contract to Boeing. If you threaten that is what could happen.  Boeing has been in the UK for 80 years and is committed to the UK ‘cum or ex’ Brexit!

 

The two big stories of the week are Unilever and Sky. Many key shareholders in Unilever are unhappy about the Anglo-Dutch conglomerate returning its head office to Holland.  No disrespect, but Amsterdam is a ‘Micky Mouse’ financial centre and Unilever is in danger of losing its FTSE 100 quote and therefore some supportive shareholders.  A decent international shareholder register is essential. Unilever reports on Thursday its results and hopefully we will hear more news from its active shareholders. I am sure this decision is political and has nothing to do with financial considerations. Paul Polman may well have had his lapels fingered by the EU hierarchy. Unilever’s share price has been relatively unaffected – up 5% in the last month!

 

Comcast seem determined to get Sky – having outbid 21st Century with a $26 billion bid. It’s hard to believe that in 2011 Rupert Murdoch bid 675p a share for the remaining 61% of Sky. The share price is now £14!! In fairness Sky has expanded and businesses in Italy and Germany have been acquired.  As an outsider looking in it strikes me that a combination of Disney acquiring assets of 21st Century give the combined operation a great opportunity of taking on the likes of Netflix, with Comcast and Sky from a news penetration perspective, makes much more sense. Time alone will tell.

 

 

UK companies posting results this week – Monday – WH Ireland, Tuesday – BHP Billiton, Rio Tinto, Dairy Crest, Galliford Try, Petropavlosk, Royal Mail, TalkTalk, Wednesday – Close Bros, easyJet, Hochschild Mining, Premier Foods, Severn Trent, Thursday – Domino Pizza, Sports Direct, Unilever, Moneysupermarket, Anglo-American, AO World, Euromoney, Hilton Foods, Mothercare, SSE, Friday – Acacia Mining, Beazley

 

US companies posting results this week – Monday – Bank of America, Blackrock, Netflix, Tuesday – Goldman Sachs, Comerica, Omnicom, UnitedHealth, Johnson & Johnson, Wednesday – US Bancorp, Morgan Stanley, Northern Trust, Abbott Labs, eBay, Alcoa, Thursday – Bank of New York Mellon, Philip Morris, Friday – Baker Hughes, Schlumberger, GE, Honeywell

 

Economic data posted this week Friday – Monday – US Retail Sales, Tuesday – UK Labour data, US Industrial Production, Wednesday – UK inflation data, US Beige Book, Thursday – UK Retail sales, CBI Industrial trends survey, Friday – US PSBR

 

 

 

Monday – US Consumer Credit, Tuesday – BRC Sales, UK Trade Balance, Industrial Production, Construction & Services Index, NIESRGDP estimate, Wednesday – US PPI & Wholesale Inventories, Thursday – BOE Credit Conditions, UK CPI

 

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.

VIEWS OF A DISENCHANTED PRAGMATIC BREXITEER, WITH SOME WALTER MITTY HOPES!

This has been a momentous week in the UK politically, which has raised emotions to fever pitch, resulting in the country being more divided than I can ever remember since the great British public threw Churchill unceremoniously out of office in 1945, regardless of his achievement in WW2.

 

The coffee and wine bars, the corridors of power, the chattering classes are all talking about throwing PM May to the wolves, with conspirators attempting to persuade the PM to either ‘water down’ or withdraw the white paper which is going to be submitted to Brussels on our terms for leaving the EU and a mutually agreeable trade deal. There will also be a high degree of skulduggery as dissenting members of Parliament attempt to persuade Sir Graham Brady and his 1922 Committee to find another leader, which will inevitably lead to a General Election, which I fear, Labour would win, with a little bit in hand!

 

I am a passionate BREXITEER and I am very disappointed with what is currently on the table, having, I must be fair and say, only having heard of a 3-page document. HOWEVER, I am a pragmatist. Having lost its majority at that painful General Election, this Conservative Government cannot realistically expect anything more than a ‘watered-down’ deal. It is a question of how ‘watered-down.’  What Mrs May and Olly Robbins have cobbled together – I get the impression that David Davis has had little input for some time – may just about be palatable, with a few provisos.  Firstly, this white paper must not a negotiating stance, this is the UK’S definitive proposal. EU, Messrs, Barnier, Verhofstadt & Juncker – take it or leave it! There are no counter proposals and no ‘backdowns’ to consider. The UK has just made a wave of concessions over the past 18 months. Frankly this country is sick and tired of the arrogant and rude attitude of M Barnier, his troops and the ‘EU Establishment.’ We are not going to put up with being rubbished in perpetuity! Now, this where the sting in the Scorpion’s tale comes from. Mrs May has to be prepared to say – ‘NO MORE, NO DEAL, WE ARE OUT!’ in the event of further obstructions and objections and will need to have her contingency plans in place, which I suspect she does not. However, there is still time. Leaving with no deal could be a very dangerous ploy and could damage the economy for a couple of years, but it would be worth it in the long run. SO, I BELIEVE TORY MPS SHOULD BACK THE PM TO THE HILT ON THESE TERMS. The $64000 question is does she have the moral courage to call the EU’S bluff and walk away if she does not get what she has asked for? I am confident that WTO trade deals with individual countries could be negotiated with resolve. Business industry and commerce on both sides of La Manche would insist on being accommodated. In closing I accept the world is not perfect and that pink elephants don’t fly!

DESPITE TALES OF RETAIL WOE, THERE HAVE BEEN SOME INTERESTING PERFORMERS ON BOTH SIDES OF THE POND IN THE LAST YEAR!

DESPITE TALES OF RETAIL WOE, THERE HAVE BEEN SOME INTERESTING PERFORMERS ON BOTH SIDES OF THE POND IN THE LAST YEAR!

 

Company 10/7/17 10/7/18 % loss

gain

Company 10/7/17 10/7/18 %loss

gain

Abercrombie

& Fitch

$9.59 $25.63 +266% Hennes & Mauritz SKR 208.50 SKR141.72 -32%
Norstrom $46.45 $51.56 +11.0% Inditex €33.34 €29.99 -10.1%
Dollar Tree $67.40 $85.30 +26.5% M&S 339p 311.4p -8.2%
Dollar General $69.04 $99.79 +44.5% Tesco 171.05p 255.5p +85%
Macy’s $21.17 $37.08 +75.1% Morrison 242.6p 255.4p -5.3%
JC Penney $4.48 $2.44 -45.5% Sainsbury 246.10 330.2p +34.1%
Walmart $73.23 $86.51 +18.1% Metro €42.55 €43.91 +3.2%
Target $50.18 $78.33 +56.1% Casino €52.39 €35.36 -32.5%
Kroger $22.61 $29.00 +28.1% Carrefour €21.19 €14.34 -32.3%
Barnes & Noble $7.15 $5.35 -25.1% Debenhams 43p 14.77p -65.6%
Foot Locker $48.24 $53.46 +10.8% Boohoo 200.5p 201.5p -0.5%
Walgreen Boots $77.29 $63.50 -17.8% Next 3617p 5994p +65.7%
Costco $151.11 $212.20 +40% Ted Baker 2325p 2328p +0.13%
CVS $78.14 $68.50 -12.3% Kingfisher 306.5p 301.9p -1.5%
TJX $68.68 $95.06 +38% Halfords 339p 358p +5.6%
Best Buy $53.69 $75.09 +39.9% WH Smith 1694p 1994p +17.7%
Bed, Bath & Beyond $28.50 $21.06 -26.1% Quiz 161p 192.88 +19.8%
L-Brands $44.15 $37.40 -15.3% Mothercare 129.18p 27.10p -109.7%
Home Depot $151.18 $196.70 +30.1% Aldi Private owned    
Dean Stores $15.10 $10.92 -27.7% Lidl By Albrecht family    
               

 

In a quiet moment when most people are concerning themselves with a few interesting and testing political conundrums, I decided to have a look at the performance in the last year of a few key retail stocks in the US and in Europe and the UK. Retail is responsible for about 60% of GDP in the US and coupled with the service sector it accounts for 80% of GDP here in Old Blighty.

 

In the US, it is interesting to note that A&F and Macy’s have made astonishing gains from very trashed positions. Dollar Tree and Dollar General continue to be outstanding performers from the discount sector and Costco from a wholesale perspective has been a stellar performer. From the supermarket sector Target has been memorable and when one considers that Walmart lost 10% (from $104 to $91) in one day in March on a suspected profit warning, its share price has remained in the doldrums though still up 18% in a year. On-Line shopping is the key to the Kingdom and needless the great God Amazon continues to kick ‘derriere!’

 

Europe has been a tough hunting ground. H&M seems to have run out of steam and Inditex a little somnolent, though still popular. Those who taken their time to discover that shopping culture has changed are suffering – Debenham, House of Fraser, Mothercare – at the head of affairs.  Of course, Toys R Us and Maplin have headed off to administration.  UK supermarkets have recovered well even though Aldi & Lidl remain threats. Carrefour and Casino have had a torrid time – hence Carrefour making other arrangements with Ocado.

 

Though Boohoo’s efforts look modest their share have risen like the proverbial grilse in the last 5 years from 70p to 201.5p. M&S has been given the benefit of the doubt since Archie Norman arrived as chairman, but since November 2015 the shares have dropped from 594p to 311p. Hats off to Lord Simon Wolfson on NEXT’s recovery from 3617 to 5994 (+65%) this year. However NEXT share price was £79 in November 2015. Finally, welcome to Quiz, who have done well since their IPO last year.

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.

LATE WEEKLY FAYRE

WEEKLY FAYRE – Monday 9th July 2018

 

Home is the sailor, home from sea:
Her far-borne canvas furled
The ship pours shining on the quay
The plunder of the world.

Home is the hunter from the hill:
Fast in the boundless snare
All flesh lies taken at his will
And every fowl of air.

‘Tis evening on the moorland free,
The starlit wave is still:
Home is the sailor from the sea,
The hunter from the hill.”

 

AE Housman – poet – 1859-1936

 

It has been a momentous week politically with the Sino/US trade tariff spat now under way, which threatens serious problems, across the spectrum if it is escalated. Then it became clearer that Frau Merkel re-established her position as Germany’s Chancellor with a cobbled-together compromised deal on Germany’s immigration issues and policies. The final icing on the cake for the week was provided late on Friday night by PM May’s fudged proposal on the UK’s future trading relationship with the EU.  This watered-down edition of BREXIT clearly triggered BREXIT Secretary David Davis’s, his deputy Steve Baker’s and F&C Secretary Boris Johnson’s resignation. They have been humiliated.

 

In passing, I have been known to have a tilt at the ring in my time and my cynical experience tells me that Barnier, Juncker, Verhofstadt and the EU collectively, are very unlikely to accept PM May’s best efforts, which were no doubt decided and orchestrated by Olly Robbins, despite PM May marking Merkel’s cards ahead of the Chequers meeting.  Few are likely to be content with the ‘outcome’. BREXIT has not been delivered; nor is it likely to be. Timing is everything! The time to be tough was 18 months ago. That time has passed. Government is weak and has no power; So, it’s a fudge! – It simply has to be! ‘Leavers’ never tried to engage with ‘Remain’ and vice-versa – hence the acrid stench of contempt and hatred – horrid!

 

The most challenging political issue likely to rear its ugly head next week will be President Trump threatening to withdraw troops form Europe until the EU steps up to the plate and pays at least its 2% of GDP dues to NATO. Are you listening Germany? For so may years your arms have been short and your pockets too deep to reach!

 

However, these historic events were all temporarily kicked in to the long grass in favour of the World Cup, which this week saw France, Belgium, England and Croatia progress to the semi-final of this amazing competition!  The quality of football fayre on offer was par-excellence, with England now having every chance of pulling off the impossible next Sunday – Dare I dream – 1966 all over again, perhaps?

 

INDEX 2/7/18 6/7/18  % gain/loss  
FTSE 100 7636 7617 -0.25%  
XETRA-DAX 12147 12496 +2.8%  
CAC40 5264 5376 +2.12%  
DJIA 24323 24456 +0.55%  
 S&P 500 2727 2759 +1.17%  
NASDAQ 7544 7688 +1.91%  
Hang Seng 28463 28315 -0.51%  
Nikkei 22233 21788 -2.01%  
Shanghai Comp 2841 2747 -3.31%  

 

As you can see from the table above the performance of global indices last week was very mixed. The DAX and CAC did well, based on a stronger Euro, improved industrial production and the perception that the EU was more together on immigration. Also, PMI data on manufacturing and the service sectors in US, EU and UK had made progress from earlier readings. Wall Street was happy that Trump was in the driving seat over the trade tariff tiff. Also Friday’s Non-Farm Payrolls were sufficiently positive to encourage the FED to consider implementing another two 25 basis point hikes this year. 213k jobs were created in June against expectations of 195k.  However, the unemployment rate was up from 3.8% to 4% and wage inflation at 2.7% was marginally disappointing when 2.8% was expected. A reasonably upbeat mood prevailed, encouraging enough to persuade tech stock geeks to remain involved throughout the week.

 

 

 The FTSE 100 remained in the doldrums thanks to a slightly stronger Pound and the negative performance of the mining sector, especially Glencore, whose share price fell by circa 12%, due to a subpoena from the US DOJ on allegations of possible money laundering. However, the price of Brent at circa $77 a barrel prevented the FTSE 100 dropping much below the Plimsoll line, with BP and Shell being such prominent constituent stocks.

 

 

And so finally to problems in Asia and especially Chinese stocks and those closely aligned in HK, where it proved to be a torrid and unappetising week for trading. The Shanghai Composite had a particularly rough time, due to a downbeat mood over the implementation of tariffs on $34 billion of goods by the US, which resulted in a reciprocal tariff being implemented on a ‘tit-for-tat’ basis by China for the same amount of goods. $34 billion is a trifling amount and is but a mere bagatelle and it does not add up to a trade war – merely ‘handbags at five paces.’  However, should this spat escalate, it could become very messy and dangerous for global growth, particularly with Trump’s jingoistic threats to increase tariffs to up to $500 billion worth of goods! The downbeat mood in Shanghai was exacerbated by the concern expressed towards over-expansive bank credit, which could reach crisis pitch. Many are also further concerned, if banks continue to constrain consumer borrowing, which could severely damage growth.

 

Here in Old Blighty BOE Governor Mark Carney was out and about with mixed messages for the economy.  Speaking in Newcastle he warned of the dangers of an unsatisfactory Brexit outcome, plus the danger emanating from growing nationalism, which he believes is creating unnecessary social divisions.  However, he was also unabashed at the prospect of a great World Cup run by England and how positive it would be for the economy, which could trigger a rate rise from 0.5% to 0.75% in August 2018.

 

As for company issues, HK’S IPO for the Chinese mobile, Xiaomi, only raised $4.72 billion this morning with shares falling 3%, valuing this company at just under $50 billion. Market confidence and sentiment were in slightly short supply and the pricing was maybe too ambitious. Tencent will soon be seeking a US listing.  Amazon served notice that it is investigating the possibility of launching free TV channels. Sir Martin Sorrell seems to be making progress with his new agency – S4 Capital.  He appears to have received support or backing from Crispin Odey and Unilever and intends to offer 25% of the company to senior managers, if he is successful in acquiring the Dutch digital operation – MediaMonks – for €300 million. Jaguar Land Rover let their feelings be felt in warning the government of withdrawing investment in the event of a bad BREXIT outcome.  Hopefully some of their fears will have been allayed over the weekend. Rolls Royce, as promised, announced the intended sale of its marine division to Kongsberg of Norway for £500 million. Despite continued positive input from Argos and the pending merger with ASDA, Sainsbury’s sales figures for the last quarter were disappointing – up only 0.2% on a like for like basis.

 

M&S posts a trading statement on Tuesday. Chairman Archie Norman and CEO Steve Rowe will hope to be upbeat about the future.  However, to improve trading conditions it is thought many stores will need to be closed with possible redundancies. It is hard to see an upbeat trading statement for the last quarter being forthcoming, though food and beverages could be doing well, thanks to the good weather and the World Cup and hopefully some signs of improvement in general merchandising will appear, though fashions remain dowdy.  The share price has fallen by 40% in the last 3 years. 

 

TalkTalk Chairman Sir Charles Dunstone is under the cosh. Having sold new shares in the company for £200m (20% of the value of TalkTalk) to ease debt problems, will he keep his job?  Some shareholders are incandescent with rage.

 

Finally, China through its China General Nuclear, its state-run operation, has indicated its interest in buying 49% in 8 UK power stations.  I have my doubts whether the Government will acquiesce due to security issues.

 

Economic data will dominate the investment agenda next week, though political differences, such as Davis’s & Johnson’s resignation could usurp the effect corporate news and economic data.  Markets may be thinly traded and volatile within a narrow trading range!  Asian markets have felt ‘over-sold’ and this morning they responded strongly to US jobs numbers. Sterling has come under a little pressure but the FTSE remained in positive territory.

 

 

UK companies posting results this week – Monday – Centamin, Tuesday – Photo-Me, Ocado, Gocompare.com, HSS Hire, M&S, Robert Walters, Kier Group,  Wednesday – Burberry, Micro-Focus, Aveva, JD Wetherspoon, Speedy Hire, Eddie Stobart, MJ Gleeson, NEX Group, Hotel Chocolat, Thursday – Ophir Energy, DFS Furniture, ASOS, Dunelm, Drax, Ten Entertainment, Premier Oil, Friday – DCC, Experian, Hays, Workspace

 

US companies posting results this week – Tuesday – Pepsi-Co, Wednesday – Costco, Thursday – L-Brands, Delta Airways, Friday – JP Morgan, Citibank, Wells Fargo

 

Economic data posted this week Friday – Monday – US Consumer Credit, Tuesday – BRC Sales, UK Trade Balance, Industrial Production, Construction & Services Index, NIESRGDP estimate, Wednesday – US PPI & Wholesale Inventories, Thursday – BOE Credit Conditions, UK CPI

 

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.

MARKET UPDATE

Yesterday the Street of Dreams, in the face of investor concern, which resulted in adverse trading conditions, attempted to hold its head up high. To some degree it succeeded, particularly the tech related NASDAQ which saw Apple +1.1%, Alphabet +1.1%, Facebook +1.5% and Netflix 1.7% lead the charge. 

 

At 5.00am this morning the Shanghai Composite and the Hang Seng seemed to be stuck in a quagmire of despair with investors concerned not only about the trade tariff spat with US and the EU but also rising doubts about the robustness of Chinese banks and the general quality of credit. Shanghai was down 1.27% but as I speak it is now in positive territory – just – but the Hang Seng has remained in negative territory as I write it is still down 1.4% having been down 2.9%!  

 

At the ‘crack of dawn’ the US DJIA futures were down about 90 points and now at 9.00am GMT they are up about 40 at 24340.  European bourses bounced out of the traps and at the opening the FTSE 100 was up 47 points at 7595 thanks to energy and mining stocks. These gains have been quietly eroded to just +17 points at 7565 at 9.10am, thanks to a subpoena being issued in the US to Glencore, whose shares have reversed by 10.16% at 313.80.

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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