“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

Core Spreads

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

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