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 everyone,
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


So, we are all sentenced to another postponed break-off date by the EU – 31st October 2019 - and a further prolonged period of indecision.  No one voted for this level of uncertainty.  It is not good for business or the economy. The Government is split. ERG is showing resistance and Labour are dissembling, as part of its intentions for Mrs May’s administration to fall – understandable for a main opposition party.

The House of Commons has a strong 75% ‘REMAIN’ majority and the electorate may feel hard done by. It is hard to see an accord being agreed between Mrs May and Mr Corbyn. I hope I am wrong, but this scenario has all the hallmarks of being cleverly manipulated into a ‘NO BREXIT’ situation. It may also trigger the demise and the decimation of the Conservative party, potentially arising out of failure to deliver BREXIT, which could result in a fervently left-wing Labour Government being handed the keys to No.10. Perhaps that is what the majority wants, such is the angst and division that prevails in our country!

I spent Sunday like a ‘couched potato’ watching the unbelievable theatre unfolding at this year’s US Masters at Augusta. Seeing Tiger Woods win his fifth green jacket after fourteen years, and in the face of what appeared to be unsurmountable personal and physical challenges over recent years, was a sight to behold and must have warmed the cockles of any human’s heart. It was riveting drama, with scintillating commentary by the 88-year-old Peter Alliss, adding to the enjoyment of one of the great sporting events in the sporting calendar. Peter Alliss’ candour, impish humour and choice of English usage puts him in a league of his own as a commentator and raconteur.


8th April 2019

12th April 2019

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Investors’ nerves were quite frayed in the early part of last week, but China’s improved export figures – up 14.2% (EST: +7.3%) on an annualised basis in March in response to a 20.8% dip in February helped buoy Asian markets and some great numbers from JP Morgan Chase on Friday at the start of the first quarter earnings season certainly gave investors a fillip. EPS beat expectations for the first quarter at $2.65 a share, vs $2.35. JPM also reported a revenue beat at $29.851 billion vs the $28.439 billion estimates. – shares rallied on Friday - up 4.6% at $111.20. Wells Fargo’s efforts were not quite so positive with EPS coming in at $1.20 per share vs $1.09 per share expected. However, revenues dipped 2% at $21.609 billion vs $21.012 billion forecast. The earnings floodgates start to open in earnest this week.


Europe’s economy continues to suffer with some poor manufacturing and industrial production data. Also, the IMF downgraded global growth last Tuesday, the Fed having eased its estimations for the US from 2.6% to 2.2% for 2019 two weeks ago. I hasten to add that the IMF is not the most reliable of forecasters. This Washington based bureau has lowered expectations for Germany down from 1.3% to 0.8% and the U.K. from 1.5% to 1.2% for 2019. As usual Mme Lagarde had her usual ‘pop’ at BREXIT, warning the damage it could do to Europe’s economy with a NO DEAL outcome. However, there is no prospect of that scenario before the end of October. Many are hopeful that ‘some rabbit will be pulled out of the hat’ by the UK Parliament before Halloween, but I am not about to hold my breath. Despite the US all but being self-sufficient in oil through shale, Brent Crude flirted all week with a $70 a barrel price tag, thanks to issues in Libya. Gold fell marginally below the $1300 an ounce threshold. On the back of a slightly less gloomy global outlook, bond yields bounced off their recent ‘lows’, even taking German bund 10-year yield into positive territory. 


In the wake of the rather disappointing performance of LYFT’S IPO two weeks ago – now 15% below issue price, speculation on how well UBER’S public offering, due on the NYSE in May 2019 would perform, was rife.  It appears that its investment bankers have dropped its valuation from $120 billion to nearer $90 billion.  This is still a huge premium for a company that operates in 65 countries, and has declared a loss of £3 billion last year, ($4 billion in 2017), though in fairness its revenue has increased to $11.3 billion from $7.9 billion in 2017 and a gargantuan leap from $495 million in 2014.  UBER has experienced corporate governance issues, which has seen Travis Kalanik replaced by Dara Khosrowshahi as CEO. It will be interesting to see UBER’S plans to deal with drivers’ emoluments and the change in motoring culture (driverless & electric) to justify a valuation that is greater than Ford Motor Co. 


Disney also announced that its streaming service, which would include 8000 films and TV episodes would be available in November at an average cost of $6.99 a month. Bob Iger is determined to take on Netflix and Amazon – a tough call – but Disney/Fox probably have the finest film making studios in the world, which include the Star Wars and Marvel series of films. Disney expects to have 7.2 million subscribers by the end of 2020.


Here in the UK, it was the retail sector that grabbed most of the headlines and the news was very mixed. Mike Ashley, the 29% owner of Debenhams, saw his bid for the company and the value of his shareholding go up in smoke, as it fell in to the hands of its bankers (Barclays) and two hedge funds. However, Sergio Bucher, the CEO, is likely to fall on his sword, as suggested by Ashley. Terry Duffy, the chairman has been asked to take on CEO duties pro-tem. Many are of the opinion that this saga is far from over. Philip Lay put in a derisory bid for Bonmarche (£5.7 million). It was dismissed with the contempt it probably deserved, though retail is not exactly the flavour of the month.


On Wednesday Tesco posted pre-tax profits up by 28.8% year on year to £1.67bn for the 12 months to December 2018, while revenue also grew 11.2 per cent to £63.9bn. Net debt grew nine per cent to £2.86bn after the £4bn purchase of wholesaler Booker while net cashflow shrank 9.8% to £2.5bn. Diluted earnings per share rose 11.9% to 13.55p while Tesco told investors to expect a dividend of 4.10p, hiking its full-year dividend by 92.3 per cent to 5.77p. The purchase also improved Tesco’s top line as UK like-for-like sales helped push revenue higher, growing 1.7% at Tesco and measurable 11.1% at Booker.


In a bid to restructure Arcadia’s ailing presence on the high street, owner Sir Philip Green has appointed Jamie Drummond-Smith as chairman of Topshop, Topman, Arcadia Group and its parent company Taveta, while Peter Bloxham is joining the board as a director. Drummond-Smith is currently the chair of finance group Cattles, where he was previously chief restructuring officer. ASOS’s founders have attacked BDO of bungling a move off-shore to avoid taxation.


Finally, it is understood that GVC Holdings’ CEO Kenny Alexander and Lee Feldman signed off each other’s sale of their shares, which caused a significant drop in the company’s share price. There is no suggestion of ‘wrong-doing’, but the company was relegated from FTSE 100 last month. Mr Alexander has promised not to sell any more shares during his tenure as CEO. 

UK companies posting results and trading Statements– Monday – Rio Tinto, Tuesday – Card Factory, JD Sports, Ashmore, BHP Billiton, Wednesday – Mediclinic, Countryside Properties, Bunzl, Segro, Hays, Thursday – Moneysupermarket, Polymetal, PZ Cussons, Rentokil, Unilever

US companies posting results this coming week – Monday – Citibank, Goldman Sachs, Tuesday – Comerica, Bank of America, Merrill, Omnicom, Johnson & Johnson, Blackrock, UnitedHealth Group, CSX, Netflix, Wednesday – PepsiCo, Bank of New York, Mellon, Morgan Stanley, Abbott Labs, Alcoa, US Bancorp, Thursday – American Express, Honeywell, Schlumberger, Philip Morris, Citizens Financial

Economic data posted this week – Monday – Rightmove House Prices, Tuesday – UK Labour Market Data, US Industrial Production, Wednesday – UK Inflation, UK House Price Index, FED Beige Book, US Wholesale Inventories, Thursday – UK & US Retail Sales, BOE Credit Conditions, US PMI Index, Friday – US Housing 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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