Category Archives: Daily Fayre

WEEKLY FAYRE

WEEKLY FAYRE – Monday 16th April 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 – poet & playwright – 1564-1616

 

Last week’s investment agenda has been unsurprisingly dominated by the bellicose war of attrition and words between Russian and the US and its allies towards the inhuman and barbaric chemical attack against defenceless civilians in Syria. A very diligent and focused military track on Syria, which would not cause the loss of civilian lives, seemed inevitable last Tuesday. But as the week has moved on, there has been a degree of prevarication by the Trump administration as to what form the retaliation would look like. It appears that the Pentagon and the State Department encouraged a more cautious approach than perhaps President Trump might have adopted.  Though the support was there from France and U.K., there still seemed to be a lack of crystal clear evidence to totally satisfy the public at large as to where the chemical attacks originated from to justify an immediate military strike.

 

There were also other major issues to take in to the mix for formulating last week’s investment plans. The trade tariff spat between the US and China looked ugly initially, but the threats seemed to have abated for the time being, but this saga has plenty of momentum left in its tank. Trade tariffs will be at the top of the agenda at meetings of the IMF and World Bank this week.  Then, on the US domestic front the FED posted its FOMC minutes, which suggested that the economy was robust enough to cope with further modest rate hikes, which was endorsed by rising inflation in the US, especially wage inflation, which reached 2.7% at its last reading. And finally, the vibes for the second quarter US earnings season, which started in earnest on Friday are by all accounts very encouraging. As the week progressed confidence slowly returned with most global indices gaining between 1% and 2%.

 

Then, low and behold in the small hours of Saturday morning, the US with the help of UK and France bombed chemical weapon development sights and factories, east of Damascus and in Homs. Russia was outraged, and the world waits for reprisals, though it seems unlikely that Russia would want to engage in all-out war with the US. Is that it, we are all asking? We may well ask. One suspects the dirty trick department in Moscow will be flat to the boards with sophisticated and brutal cyber retaliation. Putin is not a man to be trifled with and markets may react with a further degree of excessive volatility in the early part of next week, despite the fact equity markets have the desire to crack on.

 

Looking at the global indices performances collated below, again one could be forgiven for thinking it was a decent week of steady progress, but it wasn’t.  What this table should have expressed was the high degree of volatility and underlying uncertainty. The fact that the world’s economy appears to be in good shape, is not being fully reflected, due to high-octane geopolitical uncertainty.

 

INDEX 9/4/18 13/4/18 % gain/loss
FTSE 100 7183 7264 +1.1%
XETRA-DAX 12311 12442 +1.1%
CAC40 5271 5315 +0.8%
DJIA 24037 24360 +1.2%
 S&P 500 2617 2656 +1.5%
NASDAQ 6971 7106 +1.9%
Hang Seng 30104 30808 +2.3%
Nikkei 21534 21778 +1.1%
Shanghai Comp 3125 3159 +1.1%

 

The US earnings season kicked off in earnest last Friday with Citigroup, Wells Fargo and JP Morgan Chase all posting their numbers. In the past year, thanks to promised tax changes and the attractiveness of proposed higher interest rates, bank shares have enjoyed stellar gains – JP Morgan +28% and Citigroup +20%, Bank of America +30%, Goldman Sachs only 13%, thanks to poor trading revenues, Morgan Stanley +27%, though Wells Fargo, thanks to scandals and write-downs, has seen its shares ease by 2%.   On Friday Wells Fargo’s numbers indicated a 10% drop in revenues in the past year, whilst JP Morgan’s income rose by 35%. Bank tax rates fell from 23% to 17%. Expectations were high for bank earnings. Though these numbers were solid, it was a case of having ‘travelled and arrived!’ – JPM -2.7% on the Friday, Citigroup -1.5% and Wells -1.8%. Analysts and investors are expecting quite a lift in earnings this coming quarter and few analysts are being sucked in to the age-old game of beating unrealistically low earnings estimations. These may not wash anymore. Facebook never left the headlines and it appears that CEO Mark Zuckerberg has much to do to placate Congress and investors that he is on top of corporate governance and security issues.

 

Here in Old Blighty a few FTSE 250 companies posted greatly improved numbers last week – Dunelm, Greene King, Man Group and Saga particularly come to mind; all gaining over 6% in value on Thursday. On Friday Sage posted poor numbers, resulting in the shares falling by 17%. De La Rue will need to be on their metal to avoid being taken over, with its shares having fallen 50% in the past 4 years.  Corporate raider Ed Bramson may raise his game to see Barclays Bank revitalised with perhaps a break up of the bank, easing out investment banking.  That would be bad for London as a leading financial centre. Bramson owns 5.2% of Barclays. Hedge Fund investors with Elliott to the fore will be making demands to have Whitbread broken up, with a view to achieving greater shareholder value, hoping that Costa Coffee will be hived off.

 

Three big personalities hit the business front pages this week. John Cryan CEO of Deutsche Bank was relieved of his duties on Monday. He did not have the Vorstadt’s support to balance Deutsche’s affairs, with decent joint stock banking coupled with a major role in investment banking.  In terms of derivative trading Deutsche global influence was always considered to have been too great! Also, the DOJ’s $7.2 billion fine for market abuse on mortgage backed securities was probably the straw that broke the camel’s back. Deutsche shares have been in the doldrums in recent times falling by 60% in 3 years to €11.70.

 

 

News broke last night that after 32 years Sir Martin Sorrell will step down as CEO of WPP – an amazing compendium of marketing, advertising and PR companies in 120 countries employing over 200k people.  He did an amazing job and often courted controversy with the huge bonuses he earned.  I hasten to add that Sir Martin was an entrepreneur and not a manager; so much of his remuneration was justified in comparison to the huge disproportionate amounts paid to managers of businesses. WPP rather lost its way in the last year. WPP seemed to miss the change in emphasis in its business, with digital advertising being miles more important than TV and newspapers with the likes of Google, Apple, Amazon and Microsoft possibly responsible for 40% of advertising revenues. WPP’s shares have fallen 30% in the last year. There were allegation of exaggerated expenses claims, vigorously denied – all very sad after such a brilliant career. 

 

After an unpleasant and dangerous spat between LSE Chairman Donald Brydon and CEO Xavier Rolet, Europe’s premier exchange has witnessed the departure of the brilliant Frenchman, who distinguished himself over the past 9 years of his stewardship – shares up from 400p to 4270p.  He is being replaced by the relatively unknown Goldman Sachs director David Schwimmer – not the actor. Mr Schwimmer (49), an US Ivy League product form Yale has been at Goldman for 20 years.  He has big boots to fill.  He must make it clear from the start – no deal with Deutsche Boerse. He must reassure markets that BREXIT is not a disaster. He must ensure that most of LCH’s business remains in London. Finally, if there is going to be an alliance one with an international flavour – US or Far East – is infinitely preferable. 

 

Sanctions against Russian oligarchs saw shares in Deripaska’s Rusal and EN+ fall by nearly 50% last week. Many believe that this will be not good news for London as a financial centre.  We shall see.

 

UK companies posting results this week – Tuesday – , JD Sports, AA, AB Foods, Ashmore, Rio Tinto, Wednesday – BHP Billiton, Countryside, Hochschild Mining, Relx, Bunzl, Moneysupermarket, Polymetal, Jupiter, Thursday – Sky, Debenhams, Acacia Mining, Unilever, Rentokil, Essentra, Pentair, Segro, Domino Pizza, Friday – Reckitt Benckiser

 

US companies posting results this week – Monday – Netflix, M&T Bank, Bank of America Merrill Lynch, Tuesday – Goldman, UnitedHealth, Comerica, Omnicom, Johnson & Johnson, CSX, Wednesday – Morgan Stanley, Abbott Labs, Fred’s, American Express, Alcoa, US Bancorp Thursday – Bank of New York Mellon, Philip Morris, Friday – Baker Hughes, Honeywell, Schlumberger, Proctor & Gamble, GE

 

Economic data posted this week – Monday – US Retail Sales, Tuesday – Germany’s ZEW, UK Labour figures, US Housing data, Wednesday – UK Inflation data, House prices, FED Beige Book, Thursday – UK Retail sales

 

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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WEEKLY FAYRE

WEEKLY FAYRE – Monday 9th April 2018

 
“LOVE lives beyond the tomb
And earth, which fades like dew:
I love the fond,
The faithful, and the true.
Love lives in sleep:
’Tis happiness of healthy dreams;
Eve’s dews may weep,
But love delightful seems.
’Tis seen in flowers,
And in the morning’s pearly dew;
In earth’s green bowers,
And in the heaven’s eternal blue.
’Tis heard in Spring;
When light and sunbeams, warm and kind,
On angel’s wing
Bring love and music to the mind.
And where ’s the voice
So young, so beautiful, and sweet,
As Nature’s choice
Where Spring and lovers meet?
Love lives beyond the tomb
And earth, which fades like dew:
I love the fond,
The faithful, and the true.”

 

 

John Clare – poet – 1793-1864

 

 

 

Towards the second week in April the sporting calendar starts to come in its spring coat with US Masters’ Golf, the Grand National and the latter stages of our domestic football season entering the final stages, as does the Champions league tournament. Of course, it would folly to forget the IPL, which is now a ‘red letter’ competition to savour. I still experience the same tingling feeling of excitement as I did sixty years ago.  Starting with Aintree next week, could it be ‘Anibale Fly’ or ‘Total Recall’ both at about 12/1 or ‘Tiger Roll’ at 14/1 or an outsider like ‘Regal Encore’ at 33/1.  If the latter bothers to turn up, he certainly has the ability – who knows? In the Champions League, Manchester City have made life very difficult for themselves, losing 0-3 to Liverpool at Anfield. What a wonder ‘bicycle-kick’ goal Ronaldo scored against Juve! Also, Man City losing at home to United 2-3 was also unexpected. As I write this week’s piece, the outcome to the US Masters’ golf was initially always going to be difficult to predict – but what astonishing golf! However by the last round, it was hard to see another winner apart from Patrick Reed, though Rory McIlroy pushed him most of the way, with Ricky Fowler and Jordan Spieth finishing under a wet sail!

 

INDEX 29/3/18 6/4/18 % gain/loss
FTSE 100 7044 7183 +1.97%
XETRA-DAX 11956 12241 +2.4%
CAC40 5152 5258 +2.1%
DJIA 23949 23932 -0.01%
       
S&P 500 2614 2604 -0.3%
NASDAQ 6984 6915 -0.9%
Hang Seng 30510 29844 -2.2%
Nikkei225 21441* 21567 +0.6%
Shanghai Composite 3127 3131 +0.1%
       

 

 

  • Denotes from 2/4/18

 

INDEX 29/12/17 6/4/18 % gain/loss
FTSE 100 7687 7183 -6.6%
XETRA-DAX 12917 12241 -5.2%
CAC40 5312 5258 -1.1%
DJIA 24719 23932 -3.2%
 S&P 500 2673 2604 -2.6%
NASDAQ 6903 6915 +0.2%
Hang Seng 29919 29844 -0.3%
Nikkei 22764 21567 -5.3%
Shanghai Comp 3307 3131 -5.3%

 

Again, the global political agenda dominated international equity bourses last week. President Trump seems not content to just throw a pebble in to a pond to get a reaction to his proposed policies. No, it must be a boulder to send out seismic waves of concern and uncertainty. So, it was hardly surprising that China reacted adversely to Trump’s proposed trade tariffs by returning their imposed tariffs with interest. Then we saw some conflicting placatory comments on Wednesday from the White House, which calmed frayed nerves. By Thursday night POTUS raised his game with more trade tariff threats, which sent Beijing in to overdrive with even greater retaliatory measures. As I said last week, in observing global markets for over 50 years, I have never seen greater intraday volatility such as has been experienced by the DJIA in recent weeks, with close to 1000 points turn around in a day, not uncommon. This is all caused by fear of the unknown. We can only hope that all these threats are only jingoistic nonsense and that once all the huffing and puffing has abated, good sense will prevail. If not, the world’s trade will be severely damaged at enormous cost.

 

There is little doubt that China has behaved badly over trade arrangements for some years. Nonetheless a sensible resolution to this spat is a prerequisite. I am less than convinced that US Treasury Secretary Steve Mnuchin’s intemperate and injudicious comments on the threat of a trade war being a reality, was helpful.  It certainly wasn’t to Wall Street’s plight on Friday, with the DJIA falling by 700 points, though finishing just 572 points down on the session. Many like me felt that Mnuchin probably did not care as he has made his pile at Goldman and as a successful film producer. My former colleague and still great friend Simon French at Panmure Gordon made the salient comment “If you are going to use tariffs as credible threat to bring China to the table then your rhetoric needs to be convincing. If Beijing think the US is bluffing it hasn’t got any chance of working (note I don’t think the chances are that high to start with). Mnuchin was on the money!” I have my doubts that diplomacy should be conducted on social media, Fox or NBC. Simon would argue that Trump has tried the diplomatic route and it has failed abjectly.  It’s time to try a harder line! I sincerely hope that the EU is observing the dangers of an unnecessary trade war.

 

Friday’s rather disappointing non-farm payroll data paled in to insignificance in comparison to Trump’s trade tariff war and was drowned in the morass of Mnuchin’s jingoism towards China. Only 103k jobs were created in March – a third of what was created in February. The unemployment rate remained at 4.1%, when consensus expected a pip drop.  However, wage inflation rose by 0.3%, which is likely to carry on encouraging the FED with its gentle rate increase policy.

 

At the end of this coming week, the earnings season gets under way with Blackrock and Costco reporting on Thursday and JP Morgan and Wells Fargo stepping up to the plate on Friday.  It is hoped that the earnings season will be positive, thus alleviating concern and uncertainty over trade tariffs, which has put markets on the back foot. However last week was the third week running that investors were deserting US equity markets for emerging market risk to the tune of $38 billion.

 

On Tuesday Spotify  finished its long-awaited “direct listing” experiment. The music streaming company went public without the IPO. After completing its first trade halfway through the session at $165.90, Spotify fell to $149.01, 10 percent beneath the open. Despite adverse market conditions, Spotify was valued at $26.5 billion.  The shares ended the week at $142, which considering the level of uncertainty and volatility was satisfactory.

The top end of the recent range of $132, was used as a “reference point,” valuing the company at $23.5 billion. Because there was no IPO price, that demarcation is being used to say that Spotify traded up about 13 percent on its first day. Morgan Stanley, Goldman Sachs and Allen & Co were advisors to this tech giant.

On the domestic front, it looks as though Disney will be the eventual owners of Sky News, which may allow 21st Century to complete its 61% purchase of Sky before selling on key assets to Disney – all being well. De La Rue’s failure to land the UK passport contract has been met with a wave of criticism. Its uncompetitive bid in comparison to the Franco-Dutch Gemalto group seems to be irrelevant. I suspect we have not heard the last of this issue – De La Rue lost 6% in share value.  Executive pay also hit the headlines with Persimmon’s Jeff Fairbairn, Reckitt’s Rakesh Kapoor, the Pru’s Mike Wells and BP’S Robert Dudley, all under the cosh to cut their pots of gold. The UK retail sector is enjoying a very bad trading period. This week Mothercare and Card Factory are expected to endorse that trend, though Tesco’s improvement is expected to continue. Food inflation is coming down, so any increase beyond May’s 25 basis point expected hike is unlikely. Tesco may post profits up 60% to £1.6 billion. We shall see.

 

WPP’S Sir Martin Sorrell has his work cut out, as he vigorously defends his reputation against allegations of financial impropriety by enlisting the help of the very best legal advice money can buy. The 73-year-old PR and advertising veteran, who started WPP in 1986 has been at the heartbeat of this astonishingly effective global media mogul. This investigative process could be damaging for WPP, whose share price has already fallen 40% in the last year, though hardly at all in the last week. Last year WPP invoiced £15 billion of services and made a profit of £2 billion. Whatever the outcome WPP will be overhauled.

 

UK companies posting results this week – Monday – Centamin, Tuesday – Card Factory, Eddie Stobart, Hostelworld, Robert Walters, Wednesday – McCarthy & Stone, Tesco, ASOS, PageGroup, Vedanta Resources, Thursday – WH Smith, Man Group, Saga, Dunelm, Greene King, PZ Cussons, Mothercare

 

US companies posting results this week – Thursday – Costco, Blackrock, L-Brands, Delta, Friday – Wells Fargo, JP Morgan, PNC Financial Services

 

 

Economic data posted this week – Monday – Halifax House Price Index, Tuesday – BRC Sales, US PPI, Wednesday – UK Manufacturing & Industrial Output, US CPI, US FOMC minutes, UK NIESR GDP, Thursday – BOE Credit Conditions, US Import Export Price Index

 

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.

“ARE WE DONE? OR COULD THERE BE ANOTHER PULLBACK?”

“ARE WE DONE? OR COULD THERE BE ANOTHER PULLBACK?”

 

Since the 2008/9 banking and credit crisis, equities have come a long way – much of the initial rally was down to quantitative easing and of course, we have little idea how much damage unwinding this facility would have on the market.  There are signs that the US are tapering their needs and others are ruminating over the possibility. The FED have indicated that it could raise rates for times this year, such is the robustness of the US economy.  Speaking personally, I would much rather all major central banks raised their game over QE tapering than deal with inflation through monetary policy. The US has started in a very modest way and Japan has been tapering sensibly since 2014. Many will say that I am in ‘cloud-cuckoo-land’; however, I am less than convinced that the world’s economy would be able to cope with interest rates much higher, such are the wafer-thin margins of profit that currently prevail.

 

INDEX 6th March 2009 3rd April 2018 Percentage gain
DJIA 6626 23644 256%
NASDAQ 1293 6870 431%
FTSE 100 3530 7004 98%
XETRADAX 3666 11994 227%
Hang Seng 11921 30227 153%
NIKKEI 7173 21292 196%

 

*These losses gains do not allow for the vagaries of the currency markets.

The table above took my breath away somewhat, apart from the FTSE 100, which is not a barometer of the UK’s economy and this index has suffered at the hands of banking stocks, mining and oil shortfalls.  Since the turn of the year the DJIA is down -6.4%, NASDAQ only -0.47%, FTSE 100 -8.8%, DAX -7.2% and the NIKKEI -6.4%. We have seen phenomenal levels of daily volatility, especially in US markets, which I have never experienced in 56 years in the market. Even though geopolitical issues such as Trump’s trade tariff war and serious diplomatic global issues with Russia have been the driving sources of the recent market corrections, may I venture to suggest that valuations in many places, particularly tech stocks are eye-wateringly rich.

The basic ‘fundamentals’ for the world’s economy are still positive and unless geopolitical issues get totally out of control, there is probably no need for a meltdown. Dividends still represent good value and rates have yet to be challenging. After a quiet start M&A activity seems to have regained its appetite. However, with the likes of Amazon, Tesla, Facebook and Twitter have rich valuations and in their own way have incurred the wrath and indignation of Trump, investors, economists, research geeks and the media in varying degrees.  Many of my market contacts tell me that a further 5% correction of global indices is not out of the question.  This could well be a year for stock picking. There is still some good value out there!

 

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

 

WEEKLY FAYRE

WEEKLY FAYRE – Tuesday 3rd April 2018

 

“You did not walk with me
Of late to the hill-top tree
By the gated ways,
As in earlier days;
You were weak and lame,
So you never came,
And I went alone, and I did not mind,
Not thinking of you as left behind.

I walked up there to-day
Just in the former way;
Surveyed around
The familiar ground
By myself again:
What difference, then?
Only that underlying sense
Of the look of a room on returning thence.

 

Thomas Hardy – poet and author – 1840-1928

 

Stephen Smith, the former Australia cricket captain and disputably the finest batsmen playing until last week, looked a broken man at his press conference over the ‘ball-tampering’ saga. I totally concur with Times’s Matthew Syed article on Good Friday. Enough is enough. This was ball tampering not murder. The public have enjoyed their emotional blood-letting at the caustic attitude adopted by this current Australian cricket team, resulting in draconian suspensions of the duplicitous Smith, the unattractive Warner and the naively weak Bancroft. Let’s move on!

 

March, normally a decent month for equities, was a dispiriting one this year. The downturn of global indices was attributed to President Trump’s persistently jingoistic attitude to trade tariffs and a realisation that the tech sector, which had two strident issues, which also gave cause for concern – valuation and corporate governance. The NASDAQ’S correction was highlighted by Facebook’s lack of responsibility in protecting data. Also, in the case of Amazon, Trump was becoming increasingly irritated with the lack of tax contribution from the e-commerce Titan.

 

 

On Monday and Tuesday last week the ‘heavy tech brigade’ came in for some very heavy treatment and the likes of Amazon, Alphabet, Netflix, Microsoft and Facebook losing more than an average of 5%. However, by the end of the week, many had recovered some poise, apart from Amazon down 5.9% on the week and Tesla down 14% (part courtesy of car death).  Last week’s machinations saw Alphabet was down 1.4%, Facebook -3.6%, Netflix -3.9% and Microsoft -2.2%.  In 50 years of observing markets, rarely have I witnessed such seismic levels of daily volatility.  The analogy would be dealers running around like headless chickens.  Spotify’s $20 billion IPO due this Tuesday is hardly ideal timing, with so much uncertainty prevailing. China announced tariffs of up to 25% on 128 US products, measures which match a list of potential tariffs on up to $3 billion worth of US goods which was published in China last month. This could be bad news for US farmers and companies like Walmart. Wall Street expressed its displeasure yesterday with a sharp ‘sell-off’ of circa 2.5%, with Amazon severely under the cosh – down 5.2%!

 

On the economic front US GDP increased at an annual rate of 2.9% in the fourth quarter of 2017, with the 3rd quarter being increased to 3.2%.

 

INDEX 23/3/18 29/3/18 % gain/loss
FTSE 100 6909 7056 -2.1%
XETRA-DAX 11886 12096 +1.7%
CAC40 5075 5167 +1.8%
DJIA 23533 24157 +2.7%
S&P 500 2588 2641 +2%
NASDAQ 6994 7063 +0.99%
Hang Seng 30297 30093 -0.7%
Nikkei225 20605 21159 +2.7%
Shanghai Composite 3151 3160 +0.3%
       

 

INDEX 28/2/18 29/3/18 % gain/loss
FTSE 100 7175 7056 -1.6%
XETRA-DAX 12435 12096 -2.7%
CAC40 5262 5167 -1.8%
DJIA 25029 24157 -3.4%
S&P 500 2713 2641 -2.7%
NASDAQ 7273 7063 -2.9%
Hang Seng 31044 30093 -2.3%
Nikkei 22068 21159 -4.2%
Shanghai Comp 3273 3160 -3.3%

 

Here in Old Blighty, again it was not a happy week, with the FTSE 100 dipping below the record close for December 1999. The retail sector continued to be under the cosh, with House of Fraser, New Look, Homebase, Jigsaw and Moss Bros adding to the existing concern of the High Street. Also, with Pound looking quite perky above the $1.40 level, mining stocks seemed to lose some of its glister. The UK’S GDP grew slower than any other EU country – steady at 0.4% in the fourth quarter, same as that seen in the previous readout. The annualized reading is also expected to show that the pace of expansion slowed down to 1.4% in Q4 versus 1.5% seen in the previous quarter. The marginally disappointing effort was way above the recession level forecasted by Project Fear. Such a pity the country could not have been more united in working together for the common cause. This has clearly had a negative effect on investment and planning, as has the government’s lack of preparation for the negotiation talks, if one can call them that, with the EU.

 

Despite the rather anaemic sentiment that prevailed, there was plenty of M&A activity to peruse over. GSK’s new CEO Emma Walmsley left her stamp on her first significant M&A initiative, in agreeing to buy Novartis’s healthcare division for $13 billion.

 

Also, after a rather nasty visceral and hostile bid for GKN, lasting over the last few months, Melrose, the most persistent of predators managed to persuade just over 52% of GKN’S shareholders to back the £8 billion takeover. However, the bid is far from done and dusted. Had GKN’S management done more to deliver shareholder value over the years, this part aerospace part car part engineer, employing 60k people world-wide and 6k here in the UK, would never have been put in this invidious position.

 

So, on the face of it Chairman Mike Turner (ex BAE Systems) and CEO Anne Stevens may have to bow to pressure and eventually move on. The prospect of GKN being given the opportunity of splitting the operation looks remote to many observers. The Unions, the staff and some politicians are up in arms at the prospect of this successful ‘asset stripper’ landing the spoils of war, despite Melrose insisting that jobs will be ‘secure’ and that head-office will remain in the UK. The Melrose management event went out of their way to reassure AIRBUS, an important client of GKN, that there were long term plans in place for the aerospace operations. Whether Melrose was believed or not remains to be seen.

 

Business Secretary Greg Clark, who in my humble opinion announced his inquiry rather too late, is aware of the concern expressed by Lord Heseltine most vociferously on Saturday’s BBC ‘Today’ programme and those of many others. I think I can dispel their concerns for two reasons – firstly the security issue and secondly who will Melrose eventually sell on to? I think the reasons are as follows. GKN is being sold to a UK operation, not an overseas company over whom there would be no control. Secondly, when GKN has been hospitalised, sharpened up and eventually ready to be re-sold, the Government of the day can intervene preventing a sale to an undesirable predator. As an illustration as to how GKN were under-valued as well under-performing, its share price since the beginning of the year has risen from 317p to 450p -up 42%!

 

There seems to have been no resistance to CME’S bid for NEX. Both parties appear to have been talking for some time and have agreed a £10 a share deal valuing NEX at £3.8 billion. NEX provides perfect synergy with CME offering the best tech driven IDB for the global bond market, with prowess for the massive US Treasury market. Many will be pleased that there will be a place on CME’S board for Michael Spencer. Since the start of 2018 NEX’S share price is up from 601p to 981p – up circa 55%.

 

Other M&A news includes and early conversation that Takeda, the Japanese drug Titan, has had with Shire of Ireland, though quoted in London about a possible takeover. Shares drifted from 3892p in January to 2953p in late March back up to 3570p on Thursday. Again, this liaison from a biotech perspective makes sense, though some investors believe that Takeda is a suitable bedfellow. Conviviality, owners of cheap booze are under the cosh and may call in the administrator – very short of cash and with a £30 million tax liability. Now that Barclays has settled its US $2.2 billion lawsuit, CEO Jes Staley may be looking to return money to shareholders, though he will 5.2% stakeholder, Edward Bramson breathing down his neck, looking for a good reason why the bank could not be broken up.

 

UK companies posting results this week – Tuesday – BTG, Thursday – Electrocomponents, Ferrexpo, Hammerson

 

US companies posting results this week – Wednesday – MaxCyte, Acuity Brands, Thursday – PriceSmart

 

Economic data posted this week – Tuesday – UK PMI, US PMI, US ISM       Manufacturing, Wednesday – UK PMI Construction, US ADP Employment index, US PMI Services and Factory Orders, US ISM Non-Manufacturing – Thursday – UK New car registration, UK PMI Services, US trade balance and Labour statistics, Friday – Non Farm Payrolls (+225k) & employment data (employment rate 4.1%)

 

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

NEX – IT LOOKS AS THOUGH IT WILL FALL IN TO THE CLUTCHES OF CME – OR IS THERE A TWIST TO THIS TALE?

NEX – IT LOOKS AS THOUGH IT WILL FALL IN TO THE CLUTCHES OF CME – OR IS THERE A TWIST TO THIS TALE?

 I have always considered Michael Spencer to be not only a very shrewd business man, but also a lucky one and a person with a generous heart. Talent and luck work well together. Michael Spencer built ICAP up over 30 years to be the most progressive and innovative IDB in the world, bar none.  ICAP captured the derivative markets before most other brokers had woken up to how the financing of loans and the bond market had changed irrevocably. ICAP, having gone public in 1998 went into the FTSE 100 in 2006, such was the success of the company.

 

Michael Spencer introduced ICAP’S charity day in 1993 and over £140 million has been raised for charitable causes since then – a staggering feat. Unfortunately, ICAP was fined £55 million by the FCA in 2013 for a LIBOR misdemeanour, even though his staff were found not guilty in Court as individuals. Unfortunately, this prevented Spencer from receiving a peerage, which he richly deserved for charitable reasons, if not for an amazing contribution to the success of the City of London, which started before ‘Big Bang!’ ICAP’S business was split last year with the voice broking operation going to Tullett Prebon. The company was renamed TP ICAP. Spencer retained the tech broking side – renamed NEX.  Few prizes for guessing who was on the better side of this deal, though TP ICAP remains a power in the land of IDBs.

 

Few observers were ever comfortable with Deutsche Borse’s bid for the LSE. It was called off.  Once it was clear that Xavier Rolet was going, I was very keen on the idea of LSE either buying or merging with NEX with Michael Spence becoming CEO of the joint operation. I think it was always a non-starter. It would have been the perfect marriage! NEX’s prowess in fixed interest bonds and derivatives dovetailing in to the LSE and equities.  Spencer never really got any kind of a stranglehold on equities or futures over a long and distinguished career. It was never to be – or could the LSE come and talk to NEX about a tie-up – I think not; terms appear to have been agreed between the two parties. So, the CME will be scooping up NEX for £3.8 billion (circa £10 a share)?  NEX’S share price has rallied from 606p on 29th December 2017 to 972p yesterday. CME has agreed in principle pay £10 a share for NEX. The deal would be structured as a cash payment of £5 and 0.0444 new CME shares per NEX share. NEX said it would recommend the deal to shareholders.

 

CME buying NEX makes perfect business sense – the businesses look to be quite synergistic. Also, even though CME have a reputation for asset stripping and cutting costs to the bone, this policy may not be applicable in this case.  I suspect that any deal consummated between CME and NEX might exclude Spencer, which would be a great pity. He is a real City stalwart.  If all else fails, maybe Michael could be persuaded to run the LSE!  That would ruffle a few feathers!

 

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

US EQUITIES HAVE TAKEN QUITE A CLATTERING – ARE WE FINISHED?

US MARKETS HAVE TAKEN QUITE A CLATTERING – ARE WE FINISHED?

 

COMPANY Price 26/1/18 Price 23/3/18 % rise/fall
Apple $171.51 $164.94 -9.1%
Alphabet $1187.56 $1026.55 -14%
Amazon $1402.05 $1535.57 +9.4%
Snapchat $13.56 $16.36 +20.6%
Twitter $24.27 $31.03 +16.4%
Intel $50.08 $49.36 -1.4%
Cisco Systems $42.56 $42.42 -0.3%
Facebook $190.00 $159.39 -16.1%
Microsoft $94.06 $87.18 -7.3%
General Electric $16.13 $13.07 -18.9%
Texas Instruments $113.69 $101.36 -10.8%
McDonald’s $178.36 $154.98 -13.1
Goldman Sachs $268.14 $245.26 -8.5%
JP Morgan $116.32 $107.01 -8.0%
Caterpillar $167.06 $144.29 -13.6%
Walmart $108.39 $85.42 -21,2%
Boeing $343.22 $321.00 -6.5%
General Dynamics $226.24 $218.37 -3.5%
Procter & Gamble $87.73 $75.91 -13.5%
Target $76.95 $67.88 -11.8%
Pfizer $39.01 $34.49 -11.6%
Merck $62.04 $53.41 -13.9%
Lockheed Martin $344.90 $336.31 -2.5%
Exxon Mobil $89.00 $72.89 -18.1%

 

Most investors look at the performance of individual stocks they are involved in, on a minute by minute basis.  However, one tends to forget what has happened over a period of a month or two.  We have had the most tumultuous start to the year, I can ever remember, with perhaps the pull back from the ‘TNT’ debacle in 2000 running it close!

 

The Trump syndrome – alias tax cuts and threatened infrastructure spending – sent equities in to orbit, even though most global indices had overly rich and very frothy valuations. Most analysts put the most recent sell-off down to Trump’s trade tariff war with China and the EU.  I think that assessment has credence, but I believe we have all underestimated the damage inflicted by general geopolitical unrest – Trump behaving like a loose cannon and changing his executive appointments more often than most people change their under-garments, Putin behaving like a hoodlum on the global stage and turmoil continuing to prevail in the EU/UK severance agreement, whatever we might all read or hear to the contrary.

 

Some of the losses made in the past two months have been severe. Yes, some tech operators have suffered. However, GE, Walmart and Target have been trashed in a manner one would not expect from three large household names. So, despite all the attention given to politics, these operators have under-performed and consequently investors have vented their spleens. These stocks have only been chosen at random.  However, they are not a bad barometer of the climate that has prevailed in recent weeks. With the sun now higher on the yardarm, some of these share prices have improved by between 2% and 5% yesterday, as the ‘big-bears-in-the-pit’ start to calm down!  This is not meant to be an erudite piece.  It is just an illustration of the market’s high expectations and its frustrations.  Even banks suffered, which is surprising as the fundamentals have not changed, with 3-4 rate hikes expected. Defence industry acolytes suffered least. How about that great GOD, Amazon – what a performance!

David Buik  

Communications

Mobile – 07788 144 877

 CORE SPREADS

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 26th March 2018

 

“She looked like a bird from a cloud

On the clammy lawn,
Moving alone, bare-browed
In the dim of dawn.
The candles alight in the room
For my parting meal
Made all things withoutdoors loom
Strange, ghostly, unreal.

 

The hour itself was a ghost,
And it seemed to me then
As of chances the chance furthermost
I should see her again.
I beheld not where all was so fleet
That a Plan of the past
Which had ruled us from birthtime to meet
Was in working at last:

No prelude did I there perceive
To a drama at all,


Or foreshadow what fortune might weave
From beginnings so small;
But I rose as if quicked by a spur
I was bound to obey,
And stepped through the casement to her
Still alone in the gray.

 

“I am leaving you . . . Farewell!” I said,
As I followed her on
By an alley bare boughs overspread;
“I soon must be gone!”
Even then the scale might have been turned
Against love by a feather,
– But crimson one cheek of hers burned
When we came in together.”

 

 

Thomas Hardy – author & poet – 1840-1928

 

 

  

 

   Stephen Smith may be the best batsman in the world, but ever since that incident at Lords involving Mitchell Starc and Ben Stokes’s dismissal, I’ve never liked the cut of his jib! There’s tough and there’s fair! Time for a new broom! The bans imposed on Smith and Bancroft are derisory at best and pathetic at worst. Here’s hoping Cricket Australia mete out proper punishment befitting the crime.

    

 

INDEX 19/3/18 23/3/18 % gain/loss
FTSE 100 7164 6921 -3.4%
XETRA-DAX 12346 11886 -3.7%
CAC40 5263 5095 -3.2%
DJIA 24893 23533 -5.5%
S&P 500 2741 2588 -5.6%
NASDAQ 7419 6992 -5.8%
Hang Seng 31370 30309 -3.4%
Nikkei225 21876 20617 -5.8%
Shanghai Composite 3264 3152 -3.4%
       

 

INDEX 2/1/18 23/3/18 % gain/loss
FTSE 100 7648 6921 -9.5%
XETRA-DAX 12871 11886 -7.7%
CAC40 5288 5095 -3.6%
DJIA 24824 23533 -5.2%
S&P 500 2696 2588 -4%
NASDAQ 7007 6992 -0.2%
Hang Seng 30515 30309 -0.6%
Nikkei 23506 20617 -12.3%
Shanghai Comp 3348 3152 -3.3%

 

26/1/18 – DJIA – 26616 – 23533 – –11.5%

26/1/18 – NASDAQ – 7505 – 6992 – -6.8%

26/1/18 – FTSE – 7665 – 6921 – -9.7%

26/1/18 – DAX – 13450 – 11886 – -11.6%

 

After the hybrid level of euphoria, triggered by Trump’s tax cut initiative in January which took global stock markets to record levels, unsurprisingly fund managers experienced quite a sharp correction of about 5% in late January/early February. These bourses were over-cooked, overvalued with some political imponderables constantly nagging away at investors’ confidence. Markets did recover a little poise but there was a total lack of conviction on many fronts. This week, ironically geopolitical issues have dominated the agenda, rather than economic and corporate issues, and these problems will not go away swiftly.  Hence, last week investors vented their spleens on all global bourses in a very pernicious manner (see tables above). BREXIT hovered around Europe like a bad dose of halitosis. Then in the past two weeks President Trump has raised his game with China with potentially a $60 billion tariff charge on steel and aluminium imports.  China has threatened similar tariffs on food, coffee and clothes! This spat does not look as if it will end well! China is the US’s 3rd largest export market as well as being its largest foreign owner of Treasuries. So, let’s be under no illusion China has considerably more leverage over US than Washington politicians care to admit.  There were also some disappointing PMI numbers from the EU and Germany last week. To put a final sour taste on events from ‘left field’ Facebook’s and Cambridge Analytica’s abuse of personal data really rattled tech stocks’ cage, with Facebook itself losing the best part of 10% ($60 billion) in value last week. Ironically on Friday ‘Dropbox’ had its IPO and the shares closed 36% to the good!

 

Then of course the UK has been outraged by Russia’s antics over criminal nerve-gas intrusion in Salisbury.  Though support has been quite solid on an international basis, it has not been wholesome, with Jeremy Corbyn adopting a contrarian approach.   Trump has been rather frivolous towards this alleged attack and the EU, though superficially defiant in concert with the UK, has made sure its bread was buttered on both sides for pragmatic purposes. President Trump really is going for broke declaring war on 3 fronts: antagonism towards Bob Mueller, economic attrition towards China/others on trade, and a jingoistic attitude towards Iran. North Korea currently seems to amuse the US President like a ‘Punch & Judy’ side show. This is turning out to be one of the most perilous moments in modern American history. On Friday President Trump dismissed HR McMaster as head of National Security replacing him with the pugnacious John Bolton. It strikes me that the President changes his key administration personnel more regularly than we change our undergarments.

 

For good measure the FOMC raised rates by 0.25% – maybe one of four hikes scheduled for this year.  However, President Trump’s trade war could take its toll on GDP – so Chairman Jay Powell may have to reconsider the FED’s plans later in the year. Here in Old Blighty the MPC voted 7-2 to keep rates where they are, after inflation fell from 3% to 2.7% last month’s thanks to lower food and travel prices.  Again, the MPC has never been happy about BREXIT. However, it has had to upgrade growth.  Rates are due to rise by 25 basis points to 0.75% in May. However, the better than expected inflation number leaves the MPC in a bit of a conundrum. It will be hoping that wage inflation continues to select another gear.

 

Irrespective of politics there was some interesting corporate news to ruminate over. In the US Oracle posted what appeared to be rather anaemic growth progress of about 1% on the year with revenues of $9.7 billion. Overall M&A activity largely remained in the in-tray, due to negative market sentiment.

 

On this side of the Pond Ocado saw an 11% increase in sales for the past 13 weeks of £363m with baskets of goods increasing in size and value. Kingfisher’s numbers and anxiety waves from Moss Bros and House of Fraser continued to flag up retail’s brittle and parlous state. 888Holdings posted a 4% increase in sales to £542 million on the equivalent quarter last year. The downbeat performance of WPP this year with shares falling circa 35% will mean that Sir Martin Sorrell’s bonus will only be £12million – far cry from the £70million a couple of years ago. Barclays saw a 5% stake taken by Sherborne’ Edward Bransom with mixed reactions. With HSBC focused on the Far East, Barclays is the only UK bank with a strong presence in investment banking in the US. Now that most of the skeletons are out of Barclays cupboard, growth opportunities are obvious, particularly with Trump relaxing regulation obligations. Any attempt to break up Barclays should be resisted.

 

France’s Klepierre is looking to spoil Hammerson’s party by possibly bidding £5 billion for this company, which might prevent Intu being bought. Not to be outdone, Michelin has bid for Fenner, which saw the latter’s share price rally by 24%. Micro-Focus’ reverse takeover of a HWP division seems to have turned sour after estimates for income for 2018 would fall by 6-9%. Shares fell by 50% on the week. On Thursday Reckitt Benckiser shares jumped 4% on news that it had ended discussions with US pharmaceutical giant Pfizer about acquiring part of its $20bn Consumer Healthcare business. On Friday, GlaxoSmithKline shares are up almost 4% after it too had pulled out of talks with Pfizer about its Consumer Healthcare division, stating that new opportunities “must meet our criteria for returns and not compromise our priorities for capital allocation” which suggests the deal was too expensive. Melrose’s hostile £8 billion cash and share bid for GKN garnered some investment muscle on Friday from Elliott. Despite opposition to the bid, Melrose still feels it has unfinished business.

 

UK companies posting results this week – Monday – Pennon, Tuesday – AG Barr, Moss Bros, United Utilities, Churchill China. HIS Markit, Wednesday – AA, DFS Furniture, Tui Travel, Thursday – CMC Markets, RPC

 

 

US companies posting results this week – Monday – Red Hat, Tuesday – Sonic, Thursday – Constellation Brands

 

 

Economic data posted this week – Wednesday – US Trade Balance & GDP estimate, Thursday – UK lending data, UK revised GDP estimate, Gfk Consumer Confidence

 

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 19th March 2018

 

When Beauty and Beauty meet
All naked, fair to fair,
The earth is crying-sweet,
And scattering-bright the air,
Eddying, dizzying, closing round,
With soft and drunken laughter;
Veiling all that may befall
After — after —

Where Beauty and Beauty met,
Earth’s still a-tremble there,
And winds are scented yet,
And memory-soft the air,
Bosoming, folding glints of light,
And shreds of shadowy laughter;
Not the tears that fill the years
After — after – “

 

Rupert Brooke – poet – 1888-1915

 

 

I have been going to Cheltenham for more than 30 years and have seen some wonderful races and some champion horses in action from ‘Arkle’, to ‘Desert Orchid’ to ‘See You Then’ to ‘Istabraq to ‘Kauto Star’ to ‘Mastermind’ to ‘Sprinter Sacre’ – the list is endless! However, I have never witnessed Gold Cup excitement that was on display last Friday when ‘Might Bite’s’ colours were lowered in the last half furlong by ‘Native River’, brilliantly ridden by the champion jockey Richard Johnson to out stay the ‘Seven Barrow’s handler’ steed by 4.5 lengths.  ‘Might Bite’ would almost certainly have won on ground that was less than desperate.  Take nothing away from Native River’s blue riband performance – one of staggering bravery, but the conditions were always in his favour.  It was a 2-horse race throughout the 3 miles 2 furlong marathon chase, where they went a real gallop in testing ground with some spring-healed, pulsating and spectacular fencing with very few mistakes in evidence! That is easily the best Cheltenham Gold Cup I have ever watched!

 

It is astonishing how a country like Ireland including the North, with a total population of 6.5 million can beat its neighbour, England, with a population of 53 million, so comprehensively to win the Grand Slam at Rugby, even accepting that football is England’s national game. This Ireland did on Saturday with a little bit in hand! Congratulations!

    

 

INDEX 12/3/18 16/3/18 % gain/loss
FTSE 100 7224 7164 -0.83%
XETRA-DAX 12453 12389 -0.51%
CAC40 5298 5282 -0.31%
DJIA 25372 24946 -1.67%
S&P 500 2791 2752 -1.39%
NASDAQ 7581 7481 -1.32%
Hang Seng 31536 31501 -0.11%
Nikkei225 21826 21676 -0.69%
Shanghai Composite 3319 3270 -1.47%

 

 

It was the considerable uncertainty surrounding several geopolitical issues that saw global equities surrender some measurable value last week, rather than any dismal economic news or corporate shortcomings.

 

What a compendium the threat of Trump’s trade tariff plus a little side order (the dismissal of Andrew McCabe from FBI), the UK’s spat with Russia over allegation of nerve gas on the Streets of Salisbury, condemned in unison by the Western world and the omnipotence of President Xi in China, make up! Some believe that Boris Johnson’s over exuberant comments about Putin’s and the Kremlin’s personal involvement have not helped to lower the diplomatic temperature. As a generalisation, if those issues occurred in a month, it might be a cause for worry, let alone a week! Even the deliberation over the UK’s withdrawal from the EU, where inertia seems to have set in, took a back seat, almost paling into insignificance.

 

Across the Pond news filtered out that Broadcom’s enthusiasm to add Qualcomm to its portfolio was put on the back burner. The deal is now off, with President Trump intervening, despite Broadcom being prepared to have US status. Trump also made his presence felt, with Treasury Secretary Mnuchin rejecting EU plans to invoke a realistic digital levy out of the like of Apple, Google, Facebook. This move by the EU is of course in retaliation to steel and aluminium tariffs. Retail stocks suffered with Tiffany’s results failing to sustain the better performances in November and December – down 5%. JP Morgan, Goldman, Caterpillar, Amazon, Apple, Microsoft and Alphabet all surrendered between 1.5% and 3% on the week. Bond yields rose in expectation of further FED rate hikes as did the value of the Greenback.

 

In Old Blighty, the ongoing takeover battle between Melrose and GKN, with Airbus feeling out of the loop and therefore threatening withdrawing support, the repatriation of Unilever to Rotterdam, Shell’s Van Beurden’s £7.9m bonus, and Michael Spencer’s NEX possibly falling into the loving arms of CME, grabbed the main headlines. Maybe I should also include Prudential splitting its business in to two!

 

Though Melrose’s hostile bid remains in doubt, what is clear is that the consummation of this deal will incur fees totalling a gargantuan £82 million to the likes of JPM, UBS, Slaughter & May and Gleacher Shacklock, flagged by the distinguished Neil Collins in Saturday’s FT – nice work!

 

So much brouhaha has been ‘made out’ of Unilever decision to repatriate exclusively to Rotterdam. The ‘Remainers’ just loved the raw flesh to gnaw on! Not so! I suspect Polman’s board see tax advantages, one board of directors rather than 2, one set of corporate laws rather than 2, one set of shareholders and administrative cuts in costs. The move will not be without turmoil as Unilever could lose the support of tracker funds. Having seen its share price drop sharply, if Unilever is to avoid attention from potential predators, best it goes on the front foot and acquire synergistic operations such as Estee Lauder or Colgate-Palmolive. Paul Polman is scheduled to leave soon. Who could replace him? – Vittorio Colao of Vodafone and Unilever’s CFP Graeme Pitketling are amongst the front runners.

 

Finally, to Michael Spencer’s NEX – the possible target of CME’s affections. Though Spencer has been an arch critic of CME’s domination of global futures, he has never been one to allow emotions to get in the way of a pragmatic deal that makes business and financial sense. For me this deal ticks all the boxes. Though for several decades ICAP/NEX has been at the pinnacle of inter-broker dealing operation, it has never been able to get a handle on a decent market share of equity or futures. This can be achieved with this deal. I was a strong advocate of Michael buying the LSE or for that matter the LSE buying NEX with Michael replacing Xavier Rolet, when he goes. However, this deal looks even more sensible, though with the CME to the fore, will the Competition authorities whinge? I hope not. NEX’S shares were up 30% on Friday. Now that the horse has bolted there will be other predators that could throw their hat in to the ring! ICE, parent of the NYSE, could well be prominent in the bidding war, but its affections could also be headed in the direction of the LSE. Many observers suspect that the LSE and Deutsche Bourse could also pop their respective heads above the parapet as contenders to repulse the CME. So, £10 a share is likely to be the ‘business’ price rather than 870p!

 

 

FT said that global investors ploughed a record $43bn into stock funds and ETFs in the past week, with an inflow that exceeded the previous record set after the 2016 election of Donald Trump. The $34.9bn net inflow into funds tracking US stocks was big enough to help America shed a year-to-date outflow, according to EPFR data compiled by investment bank Jefferies tracking March 8 – 14. Within the US, the technology and consumer discretionary sectors both had record inflows at $8.6bn and $4.9bn respectively, while financials drew $6.8bn.

 

 

UK companies posting results this week – Tuesday – Faroe Petroleum, IQE, 888 Holdings, John Wood Group, Bellway, Ocado, Wednesday – Kingfisher, Ferrexpo, Vectura, Softcat, Thursday – Ted Baker, Genel Energy, Carnival, Halma, IG, Friday – NEXT

 

US companies posting results this week – Monday – Oracle, Tuesday – FedEx, AAR, Wednesday – General Mills, Thursday – Darden Restaurants, KB Homes, Micron Technology, Nike

 

Economic data posted this week – Tuesday – UK Inflation data & House Prices, Wednesday – UK PSBR, UK Net borrowing, US FOMC & Existing Home Sales, Thursday – MPC Meeting, UK Retail sales, US PMI, Friday – US Durable Goods and New Home Sales

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

Equity markets in London have been frustratingly dull, though the news flow has been almost electric – political, economic, corporate and sporting prowess, in no particular order! Funnily enough the least interesting news came from stock markets with the FTSE 100 down 36 points at 717 at 2.45pm, mainly down to the strength of the Pound – $1.3950 thanks to Trump irrationally hosing Tillerson (he read it on Twitter) for Mike Pompeo and hinting that Kudlow would replace Cohn as his economic advisor.  Then, just to ‘muddy the waters’ a little more, it could all go off with Russia ‘squaring up’ to the US in Syria.  Chancellor Hammond’s neutral budget comment of no change in policy had as much affect as a stale scone at a vicarage tea party.  Obviously, miners, oil and dollar related earnings have seen some cream skimmed off the top.

 

Of those companies reporting today they performed as follows – Antofagasta +2.3%, Cairn Energy -3.8%, Fever Tree -4.2% (profit taking after a great run) TP ICAP -9.6% (profits warning) and Computacenter (profits warning) -7.6%.  Across the pond the DJIA is up 81 points with little activity.  GE was down 4% before dealing started due to a negative note from JPM and JC Penney was 2% light.

David Buik  

Communications

Mobile – 07788 144 877

 

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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.