“It was your way, my dear,
To be gone without a word
When callers, friends, or kin
Had left, and I hastened in
To rejoin you, as I inferred.

And when you'd a mind to career
Off anywhere - say to town -
You were all on a sudden gone
Before I had thought thereon,
Or noticed your trunks were down.

So, now that you disappear
For ever in that swift style,
Your meaning seems to me
Just as it used to be:
'Good-bye is not worthwhile!' 


Thomas Hardy – author & poet – 1840-1928


Like thousands of people I was very sad to hear of the death of Dame Tessa Jowell yesterday. She was a true humanitarian respected across the political divide. I was privileged to meet her a few times, as she very sensitively looked after the British families, who lost loved ones after the ‘9/11’ attack at the World Trade Center. Most of the British people, who perished worked for Cantor Fitzgerald, for whom I worked at that time in London.




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# UK holiday (7/5/18) from 4/5/18


International politics grabbed most of the headlines on global markets’ agendas last week, with President Trump rejecting the Iran Nuclear deal, much to the chagrin and disappointment of his European allies, China and Russia, even though it was no surprise to Washington. This decision, of course, put the powers that be in Iran, Israel and Syria on high alert, as tensions were raised. Also, Trump’s PR bandwagon was at its most assertive, as he was seen welcoming three US citizens, detained North Korea, back at Andrews Airbase in the small hours of Thursday morning ahead of his scheduled meeting with Kim Jong Un in Singapore on 12th June 2018.


Despite all this uncertainty and bellicose behaviour, equity markets took these diplomatic shenanigans in their stride, with most international bourses making memorable gains. The contributing factors were as follows. Oil maintained its 40-month high, despite drifting mildly in price towards the end of the week. The Dollar retreated from recent highs. The S&P 500 enjoyed its most significant rally on the week for two months and the US Treasury yield curve started to flatten, due to some rather benign comments made by FED Chairman Powell in Switzerland, though he expressed mild concern that business seemed reluctant to accept that the FED may raise rates regularly if not slowly in the next couple of years.


The relative strength of the Dollar helped the FTSE no end as did the resurgence of the mining and oil sectors. The CAC underperformed most of its peers due to the poor performance of its major banks – Societe Generale and BNP Paribas. In the US the earning season continued to please its acolytes and across the world M&A activity remained buoyant – Takeda and Shire – Sky & Comcast, Vodafone and Liberty Media (European assets), Virgin Money and CYBG, Sainsbury/ASDA and IWG being chased by 3 predators to name the most recent deals. Of course, AT&T’S and Time Warner’s marriage remains very much in abeyance.


Last week the earning season in the US, UK and Europe was starting to come to a satisfactory close (S&P). In the US the next couple of weeks will be focused on retail company results – such an important barometer of economic progress in the US.


Nonetheless there were a few interesting companies in the UK, which set down their stall last week and probably the most interesting and certainly the most controversial was BT Group. When Lord Ian Livingstone took over from Ben Verwaayen as CEO in February 2005, its share price was roughly 70p. The company seemed to have no idea as to what its modus operandi was. 02 had been sold and the regular fixed line and business operations were not performing with any great credit. By the time Lord Livingstone handed over the reins to Gavin Patterson in 2014, this share was in many people’s portfolio breaching the 400p threshold. BT was profitable. It was a cash cow.



Then CEO Patterson was obsessed with pouring billions in to BT Sport, getting back into mobile phones spending £12 billion on EE. In recent times there has been a £500 million fraud in Italy to contend with, coupled with a perception that its Broadband operation was poor with so many other operations reliant on it.  It is a disgrace for the UK, supposedly the 5th largest economy in the world, to provide a 3rd world broadband service. Investors also believe too much emphasis has been placed on attempting to take on Sky at sport. The share price has almost halved in the last 27 months and the fact that BT has an £11 billion pension black hole is not helping its recovery process.  Last week, CEO Patterson announced 13000 redundancies are to be implemented over the next 3 years to cut costs. Many are beginning to think that BT may well be vulnerable to takeover.  Maybe Deutsche Telekom, which already owns 12% of this telecom titan, could be the obvious predator.



News of RBS’s agreed $4.9 billion fine in New York for mis-selling mortgage backed securities was heralded as good news by analysts.  Many believe that UK investments could start selling £4 billion of stock back into private ownership within the next year, now that there is some clarity for the balance sheet. CEO Ross McEwan may feel that his time is up before too long. So, there will be much speculation as to who will want this coveted position, which 5 years ago was a poisoned chalice! Though there are a few internal candidates, Virgin Money’s Jayne-Anne Gadhia’s name is also being bandied about. Personally, I thought she would want to deal with Virgin’s acquisition of CYBG.  ITV came in to focus with analysts now that advertising revenues are on the increase. Many feel it may just be time for Dame Carolyn McCall to start talking to John Malone of Liberty Media about possible synergy going forward with I suspect ITV being the bride rather than the groom. Imperial Brands had a decent run on the rails, as sales appear to be on the increase. Representing the bookmakers William Hill will have the last throw of the dice in trying to persuade the government against implementing the £2 maximum bet on slot machines. If this figure is not adjusted, it could cost the revenue £1 billion and the loss of 20k jobs.


Economic data in the UK last week was very disappointing. Retail sales were down by 3.8% in April, much of it blamed on the weather, though lack of disposable income cannot be underestimated as a contributing cause.  This news and the ‘drop’ in service sector activity and industrial production plus house prices falling 3.1% last month, according to the Halifax, put the skids under the MPC, which kept rates on hold at 0.5% on Thursday, with Governor Carney being the recipient of some solid criticism for attaching credence and importance to forward guidance. All and sundry from the Bank, including Deputy Governor Broadbent were sent to strut their stuff with the media in defence of their boss. Not sure forward guidance works any more. Whilst on the subject of retail, it looks as though Mothercare may require financial assistance to keep up its business plans and also it now appears that Poundland, after its owner Steinhoff, ditched a rescue plan and put the discount chain up for sale instead.


In closing, despite some pieces of dispiriting economic news, many across the pond are beginning to think that some UK companies are beginning to look rather cheap. PM May could have some decisions to make on M&A, which would make a change away from BREXIT!


UK companies posting results this week – Monday – Dignity, Lonmin, Centrica, Tuesday – Vodafone, CYBG, BTG, Land Securities, Hargreaves Lansdown, Northgate, Wednesday – Coats Group, Burberry, SSP Group, Mitchell & Butlers, National Express, Marston’s, Crest Nicholson, Galliford Try, Mondi,  Thursday – Experian, Investec, Mothercare, National Grid, Sophos, Grainger, Thos Cook, Countryside, Just Group, Royal Mail Group, 3i Group, British Land, Manchester United, Friday – Astra Zeneca, Hikma Pharmaceuticals


US companies posting results this week – Wednesday – Macy’s, Jack-in-the-Box, Cisco Systems, Thursday – JC Penney, Nordstrom, AMD


Economic data posted this week – Tuesday – UK wage growth, Wednesday – US Housing data and Industrial Production 


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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