“Stop all the clocks, cut off the telephone,
Prevent the dog from barking with a juicy bone,
Silence the pianos and with muffled drum
Bring out the coffin, let the mourners come.

Let aeroplanes circle moaning overhead
Scribbling on the sky the message 'He is Dead'.
Put crepe bows round the white necks of the public doves,
Let the traffic policemen wear black cotton gloves.

He was my North, my South, my East and West,
My working week and my Sunday rest,
My noon, my midnight, my talk, my song;
I thought that love would last forever: I was wrong.

The stars are not wanted now; put out every one,
Pack up the moon and dismantle the sun,
Pour away the ocean and sweep up the wood;
For nothing now can ever come to any good.”

 

WH Auden – poet – 1907-1973

 

Apart from Fulham winning promotion to the Premiership, I very much doubt that any sporting competition could bring me as much pleasure as Willie Mullins winning the Irish NH training championship. I have nothing at all against Gordon Elliott, who is an amazing trainer - having won Gold Cups and Grand Nationals by the age of 40.

 

At the start of the Punchestown festival meeting the legendary Irish trainer, Willie Mullins was a short $500k behind Elliott in Irish Trainers’ Championship. With one day to go it looks as if Willie Mullins will win with a bit to spare with a current lead of €550,648! His horses have been on fire at this gloriously competitive festival.

 

A couple of years ago, Michael O’Leary of Ryanair fame took close on 60 horses away from Mullins’s Closutton Yard and sent most them to Elliott - having refused to accept a 10% increase in training fees (the first request for an increase for some years). I dislike disloyalty and bullying. These are unattractive traits. Willie Mullins is not only a trainer in a league of his own, he is also a delightful person, who refrained from complaining about the potentially dramatic and damaging action taken by Gigginstown Stud (O’Leary), never once ‘bad mouthing’ the Ryanair magnate. In concert with millions of other race goers, this achievement has provided unbridled joy for all of us.

 

After an amazing race meeting in Ireland, NH enthusiasts heard that Katie Walsh - daughter of Ted and sister of Ruby and Mark and Nina Carberry, daughter of Tommy and sister of Paul - easily the best lady riders ever to grace the NH scene - both announced their retirement. This has not been an uneventful week for this fabulous sport.

 

Another astonishing week has manifested itself – full of fascinating political stories and innuendos, a slew of mainly decent earnings and economic news with some varying degrees of satisfaction and disappointment.

Out of the clouds came the ‘love-in’ between North and South Korea, warmly supported by the Trump administration. The cynics say Kim Jong Un will never give up nuclear weapons, but N Korea’s economy is hanging in rags, so maybe there is a genuine need and will to make peace.

 

On the economic front US GDP came in at a slightly disappointing level of 2.3% on an annualised basis. In the case of the U.K., though there was good news on the public sector borrowing front - the lowest level since the credit crisis. However, GDP posted on Friday was confirmed at 0.1% for the 1st quarter, down to the weather and supposedly uncertainty of BREXIT, though Moody’s, the rating agency, believes that the ‘Brexit effect’ on UK growth has been minimal. By the end of the week the foreign exchange market decided that the greenback had been under sufficient pressure in the last six weeks. So, it had a very strong run on the rails with Sterling suffering at the hands of those who believe that the U.K. economy is looking brittle - Cable fell from $1.4120 early last week to $1.3785 on Friday.

 

Due to the drop in Sterling the FTSE 100 had a decent little surge on Friday to finish above 7500 Threshold, with so many dollar related earning companies in that index. The DAX had a relatively sepulchral week with Paris performing with a little more panache. The earnings season in the US was rather more mixed than had been expected, though there were great results from Amazon, Twitter, Microsoft, Chevron, Viacom and the resurgence of Facebook being the picks of the week, with the defence industry stocks, Caterpillar, 3Ms and Exxon Mobil slightly disappointing their acolytes. There was an insufficient excellence to encourage the Street of Dreams to push on.  This coming Tuesday Apple announces results and is rumoured to invoke a $100 billion share buy-back.

INDEX

23/4/18

27/4/18

Another astonishing % gain/loss

FTSE 100

7368

7502

+1.82%

XETRA-DAX

12538

12581

+0.34%

CAC40

5405

5483

+1.44%

DJIA

24488

24311

-0.72%

S&P 500

2675

2670

-0.18%

NASDAQ

7174

7120

-0.75%

Hang Seng

30327

30281

-0.15%

Nikkei

22157

22468

+1,40%

Shanghai Comp

3063

3082

+0.62%

 

 

Here in Old Blighty the banks dominated the agenda with Lloyds and RBS posting improved efforts, though it may be some time before RBS leaves the vice like grip of the taxpayer.  Certainly, there were signs of encouragement for shareholders.  In the case of Barclays, CEO Jes Staley threw the kitchen sink at the market, posting a loss of £236m, much of it down to a fine of £1.4 billion paid to the US authorities. Recovery signs are there but the market needs full discovery on the Qatar fund raising trial and Amanda Staveley £1.5 billion claim. Edward Bransom should be more interested in the future tie up with PayPal than breaking up the investment bank. Numbers from UBS and Credit Suisse suggest that their respective shows are back on the road, but it will be some time before Deutsche Bank, under Christian Sewing, will be able to post a strong enough balance sheet to regain market confidence.

 

There were tales of woe from Metro Bank – some might say conflict of interest at board level and further damaging technical nightmares from TSB, which might have been avoided.  A £700 million rights issue for Capita which was well received and there were some decent numbers from Boohoo, one of a few retail outlets not suffering the slings and arrows of outrageous fortune.

 

The bulk of the corporate news was provided by Whitbread and Shire. CEO Alison Brittain confirmed that Costa Coffee would be sold off by 2020, having been bullied by Paul Singer and Elliott Advisers. Shire confirmed that it had agreed terms to fall in to the arms of Japan’s Takeda for £46 billion.

 

Finally, out the blue came news that Walmart (ASDA) have been in talks for some time with J Sainsbury about a £12 billion merger.  It is hard to see the synergy of this deal – ASDA supplies for the lower end of the market and Sainsbury, having just bedded down Argos in a £1.4 billion acquisition, supplies groceries for the better healed. This joint venture will corner just short of 31% of the supermarket share in the UK leaving Tesco with 28%. Tesco recently consummated its £3.7 billion takeover of Booker, which gave it better access to the wholesale supply market. Will the Competition regulator be happy with this state of affairs? Probably not, meaning hundreds of outlets may need to be sold to satisfy its criteria. Who might benefit? – Aldi’s and Lidl’s prospects will surely be enhanced by this deal and many are rekindling gossip that Morrison and the Coop may do more than hold hands in the weeks to come. It appears that Walmart will own 42% of the joint venture. Neither ASDA or Sainsbury have increased the supermarket share for some years; So a merger makes sense and could see annual costs cut by £500m. Online trading and Amazon have dramatically changed the dynamics of retailing.

 

As an aside, business sanctions against Russia seem to be biting. Oleg Deripaska is considering cutting his 70% stake in EN+ to below 50%, which to all intents and purposes means relinquishing control. If the US agrees to this proposal, it could mean that 8% of the world’s supply of aluminium, supplied by Rusal, could be released. 

 

UK companies posting results this week – Monday – WPP, Tuesday – BP, Jardine Lloyd Thompson, DS Smith, Just Eat, Virgin Money, Wednesday – Howden Joinery, Standard Chartered Bank, Direct Line, J Sainsbury, Inmarsat, Indivior, Paddy Power Betfair, Sage Thursday – Smith & Nephew, IMI, Cardtronics, Centamin, eSure, Glencore, Lancashire Holdings,  Friday – HSBC, Pearson, Intercontinental Hotel Group, Millennium & Copthorne Hotels, Aon, Smurfit Kappa

 

US companies posting results this week – Monday – Allergan, Loews, Tuesday – Aetna, Carlyle Group, Pfizer, Apple, Merck, Wednesday – Estee Lauder, Mastercard, Pitney Bowes, Tesla, Kraft Heinz, Metlife, Thursday – BGC Partners, Cigna, Kellogg, Marriott, CBS, Friday – Johnson Outfitters

 

Economic data posted this week – Tuesday - UK Mortgage and credit data, UK & US manufacturing PMI, Wednesday – FOMC decision, UK PMI Construction, US ADP Employment Index, Thursday- UK & US Services PMI, UK New Cars, Friday- Non-Farm payroll and employment data

 

David Buik

Core Spreads

Core Spreads is financial trading as it should be. No noise – just tight spreads on thousands of markets.

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