TODAY’S FAYRE – Monday, 22nd October 2018
“Once more unto the breach, dear friends, once more;
Or close the wall up with our English dead.
In peace there’s nothing so becomes a man
As modest stillness and humility:
But when the blast of war blows in our ears,
Then imitate the action of the tiger;
Stiffen the sinews, summon up the blood,
Disguise fair nature with hard-favour’d rage;
Then lend the eye a terrible aspect;
Let pry through the portage of the head
Like the brass cannon; let the brow o’erwhelm it
As fearfully as doth a galled rock
O’erhang and jutty his confounded base,
Swill’d with the wild and wasteful ocean.
Now set the teeth and stretch the nostril wide,
Hold hard the breath and bend up every spirit
To his full height. On, on, you noblest English.
Whose blood is fet from fathers of war-proof!
Fathers that, like so many Alexanders,
Have in these parts from morn till even fought
And sheathed their swords for lack of argument:
Dishonour not your mothers; now attest
That those whom you call’d fathers did beget you.
Be copy now to men of grosser blood,
And teach them how to war. And you, good yeoman,
Whose limbs were made in England, show us here
The mettle of your pasture; let us swear
That you are worth your breeding; which I doubt not;
For there is none of you so mean and base,
That hath not noble lustre in your eyes.
I see you stand like greyhounds in the slips,
Straining upon the start. The game’s afoot:
Follow your spirit, and upon this charge
Cry ‘God for Harry, England, and Saint George!”
William Shakespeare – Playwright & poet – 1564-1616
Though I was not able to go to Ascot for Champions Day on Saturday, I did manage to watch the recorded fayre. It was as good a day’s racing as could be served up at one meeting. Outstanding performances by ‘Stradivarius’ in the stayers, ‘Roaring Lion’ in the Queen Elizabeth and ‘Cracksman’ in the Champion Stakes gave John Gosden an amazing three-timer. All three put in amazing performances. ‘Stradivarius’ has won all five of his starts this year and is the first ‘Gold Cup’ winner to win the stayers’ race from this fixture in fifty years.
It will be interesting to see how the US, UK and other close allies respond to the skulduggery in Saudi Arabia’s consulate in Istanbul. It appears that the Kingdom has admitted that there was a fracas in the building which probably cost Jamal Khoshoggi his life. Dollar and Pound signs seem to have triggered rather muted comments from President Trump, but it is early days! However, it was good to see a joint statement – strong in its content – from the UK, Germany and France – deploring this action. Will there be sanctions, when the drains have been pulled up?
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The week before last was an unnerving trading period, even for the most battle-hardened traders and market observers. However, during the first half of last week, markets witnessed a bit of a rally, thanks to a combination of a ‘dead-cat-bounce’ and a very upbeat start to the US 3rd quarter earnings, with the five main banks, JP Morgan, Wells Fargo, Citibank, Morgan Stanley and Goldman Sachs in full cry, posting increased profits varying from 19% to 33%, courtesy of the Trump tax cuts. Towards the end of last week markets started to run out of steam as concerns about a global slowdown, humungous debt, inflation, the threat of increased rates in US and Trump’s trade spat with China, started reappearing on investors’ agenda, with monotonous regularity.
So, what was looking like quite a decent week for equities turned out to be quite a modest effort. The Shanghai Composite shed 2.11% in value last week, despite posting a 2.58% gain on Friday, with another 4% added this morning. China’s main index has shed a worrying 23.8% up to last Friday since the beginning of the year. Thursday saw China post a year to date GDP of 6.5%, slightly below expectations of 6.6%. It has fallen from 10% a decade ago. Concern prevails over the robustness of its banking sector and the fact that so many business properties are not being utilised. Export figures have yet to be affected by US sanctions and were up 14.8% from 9.8% up in July and imports were up 14.3%.
Banking was not the only sector to produce decent earnings last week. Netflix, having recently been the subject of a downgrade, produced some stellar numbers on increased membership – up 2 million for the last quarter. There were also eye-catching performances from UnitedHealth and Johnson & Johnson. May of us will be watching Facebook’s share price next week – not I hasten to add on news of its results – but the surprising appointment of Sir Nick Clegg as its Communications aficionado. The lure of filthy lucre has great attractions. Uber served notice that intends to stage an IPO in early 2019, subject to market conditions, which could value this global phenomenon at about $120 billion.
Back here in London, the FTSE 100 just about kept its nose clean. The mining sector had a small renaissance and despite oil threatening to fall below $80 a barrel, BP and Shell near enough held it together. However, if sanctions are taken out on Saudi Arabia, which produces 7 million barrels of oil a day, for their adverse political behaviour, this price lull could come to a rapid end. Unilever posted adequate numbers with sales up about 2.4% for the last quarter. CEO Paul Polman showed not the slightest bit of contrition for irritating shareholders in his quest to have Unilever’s head office removed from London for Rotterdam. This initiative never had a chance.
Some of the UK’s economic data posted last week was encouraging. Inflation dropped to 2.5% with wage inflation rising to 3.1%. However, not unexpectedly retail sales were disappointing – down last month by 0.8% and on an annualised basis easier from 3.4% to 3%. Sales were particularly robust in the summer, thanks to the amazing weather. So, it was hardly surprising that the retail therapists were reluctant to hit the high street in their droves for winter clothing with the sun still siting relatively high on the yardarm for the time of year.
Debenhams’ results will be closely scrutinised on Thursday. The runes in the sand do not look good. Expect a dividend cut and the closure of some outlets as the hedge funds circle like vultures to scoop up any reasonable looking assets in the event of their bankers and shareholders losing patience. It looks as though Intu’s property (shops) operation may be sold to Brookfield Property and Saudi Arabia’s Olyan Group for £2.9 billion. Intu shares jumped 12% on Friday. Most of the UK banks post results this week and will be the focus of investors’ attention this week. To date this year, they have proved to be very poor value – Barclays down 19.7%, Lloyds -16.8% and RBS -15.01%! Let’s hope the news is a little more cheering. LSE has increased its stake in LCH, which coincided with a warning from the US that messing with the current system out of a fit of political pique could have unattractive consequences for clearing in Europe. Interesting to see if the EU heed the notice!
Next week is a huge week for US earnings (See below). By Friday we should have a very reasonable idea as to whether the US economy is as robust as FED Chairman Jay Powell says it is. Chancellor Hammond presents the Budget on Monday week – 29th October. It does not look like he has much room to manoeuvre. However, he needs to dispel the rumour that austerity will be over in two years, with positive news on housing – building more, by forcing councils to release the land. The Government also needs to deal with social service issues. Otherwise the Conservatives will be ‘toast’ in a quickly held General Election, post the universally held views that negotiations on BREXIT have been disastrous.
UK companies posting results this week – Monday – Petra Diamonds, Tuesday – Anglo-American, Bunzl, Plus500, St James’s Place, Travis Perkins, Whitbread, Glaxo Smithkline, Wednesday – Antofagasta, Fresnillo, Barclays Bank, Metro Bank, Stobart Group, Thursday – Debenhams, Elementis, Evraz, Relx, Hastings Group, Kaz Minerals, WPP, Lloyds Banking Group, Friday – IAG, RBS
US companies posting results this week – Monday – Halliburton, Kimberley-Clark, HASBRO, Tuesday – Corning, United Technologies, Pulte, Harley-Davidson, £Ms, JetBlue, McDonald’s, Caterpillar, Lockheed Martin, Wednesday – Boston Scientific, AT&T, General Dynamics, Freeport-McMoRan, Boeing, Xilinx, Visa, Ford, Microsoft, Thursday – Biogen, Merck, Whirlpool, CME, Altria, Raytheon, Valero Energy, KKR, Bristol Myers Squibb, Conoco-Phillips, Intel, Snap, Mattel, Amazon, Alphabet, Twitter, Friday – Zimmer, Colgate-Palmolive
Economic data posted this week – Tuesday – CBI Industrial trends survey, Wednesday – UK housing loans, US PMI survey, US New Home Sales, US Beige Book, Thursday – US Wholesale inventories and Durable Goods, ECB Decision, Friday – US GDP 3rd quarter estimate
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