WEEKLY FAYRE – Tuesday 6th February 2018
“Behold her, single in the field,
Yon solitary Highland Lass!
Reaping and singing by herself;
Stop here, or gently pass!
Alone she cuts and binds the grain,
And sings a melancholy strain;
O listen! for the Vale profound
Is overflowing with the sound.
No Nightingale did ever chaunt
More welcome notes to weary bands
Of travellers in some shady haunt,
Among Arabian sands:
A voice so thrilling ne’er was heard
In spring-time from the Cuckoo-bird,
Breaking the silence of the seas
Among the farthest Hebrides.
Will no one tell me what she sings –
Perhaps the plaintive numbers flow
For old, unhappy, far-off things,
And battles long ago:
Or is it some more humble lay,
Familiar matter of to-day?
Some natural sorrow, loss, or pain,
That has been, and may be again?
Whate’er the theme, the Maiden sang
As if her song could have no ending;
I saw her singing at her work,
And o’er the sickle bending:
I listened, motionless and still;
And, as I mounted up the hill,
The music in my heart I bore,
Long after it was heard no more.”
William Wordsworth – poet – 1770-1850
To see three great films in a month is a very unusual occurrence. ‘Darkest Hour’ and ‘Three Billboards Outside Ebbing Missouri’ ticked two of the required boxes. Against my better judgement I went to see ‘Phantom Thread’ – the story of one of London’s leading couturier of the day (1950s). Reynolds Woodcock’s life was dominated by the success of his work and the influence of his sister played by Lesley Mandville. Woodcock is exquisitely portrayed by Daniel Day-Lewis. He then meets Alma, a waitress, who soon becomes a fixture in his life as his muse and lover. Once controlled and planned, he finds his carefully tailored life disrupted by love. Vicky Krieps portrays the spell-binding Alma brilliantly! Though I did not much care for the story line, don’t be surprised if Day-Lewis walks off with the ‘Oscar’ and ‘BAFTA’ for best actor, despite Gary Oldman’s portrayal of Churchill. Day-Lewis may have recently won with ‘Lincoln.’ This performance is off the scale – Absolutely stunning!
We have had several dramatic pull-backs/sell-offs in the last 30 odd years – the most memorable being the 1987 crash, when the DOW fell 24% in one session and the FTSE by 10% on 2 consecutive days. Then there was the slow and painful dot.com boom of 2000 to 2003 encapsulating the Iraq war when the FTSE 100 fell from 6950 to 3300 approx. There was also the Greenspan’s ‘irrational exuberance’ speech in 1996 and the Russian Credit crisis in 1998.
Few people can really be surprised to have seen the current correction of equities that is currently manifesting itself. One the ‘Trump Hysteria’ had been inhaled by the ‘Street of Dreams’, which saw Wall Street leap like a grilse by between 6-7.5% for the lion’s share of January 2018 – much of these gains fuelled by the injection of $102 billion of funds – it would have been insane to think that equities would continue to head north without some sort of correction, particularly since there was no volatility! It was always going to be case of at least ‘Call for the Rennies!’ Valuations, by any standards, were becoming too rich for many investors’ blood. If we add the nervousness that prevails in the bond markets with the added threat of a potential bubble – with 10-year Treasury yields nudging 3% – inflation concerns and the risk of higher rates, though probably not virulent. This compendium of issues makes for quite a toxic cocktail resulting in acute indigestion! This is just what we are currently experiencing.
In 7 working days since 26th January 2018 some of the major global indices have surrendered measurable value – DOW -8.5%%, NASDAQ -7.1% and Nikkei -8.5%. If the European opening goes to plan with the FTSE losing 130 points and the DAX 630, FTSE 100 will be down 7.3% and DAX by -9.4%. How much further does it have to go? Who knows? This feels different from other pull-backs. The fundamentals for the US economy have not changed. Business is brisk; corporate activity and results are buzzing with M&A activity with life in Europe buzzing! However yesterday on the Street of Dreams the DOW surrendered 1000 points in 10 terrifying minutes – traders behave like headless chickens. There was no market! Also, this morning at 6.00 the DOW futures were 1150 points further down, but as I write 360 only down!
The earning season was under a wet sale last week with the large oil companies – Exxon & Chevron disappointing. Amazon knocked their investors dead with fantastically stellar sales of $60 billion + and a profit of $1.9 billion for the last quarter. Apple’s efforts weren’t shabby, though Alphabet’s looked slightly light. So far for Q4 2017 (with 50% of the companies in the S&P 500 reporting actual results for the quarter), 75% of S&P 500 companies have reported positive EPS surprises and 80% have reported positive sales surprises earnings growth rate for the S&P 500 is 13.4%. This week is interesting, but my attention is focused on next week and the week after when the retail sector reports. The Non-Farm Payroll numbers were marginally better than expected with 200,000 jobs being created in January and the unemployment rate remaining at 4.1%. However hourly wage inflation rose from 2.4% to 2.8%, which could signal the first of three rate rises expected in March.
This morning the FTSE 100, as I write is down 130 points at 7165. BP posted profits of $2.1 billion against expectations of $1.93 billion. Despite CEO Bob Dudley upbeat comments inferring that these are BPO’S best figures for some time, the market was in no mood to agree due to adverse sentiment – shares down 3%
UK companies posting results this week – Tuesday – BP, Babcock International, Ocado, Hargreaves Lansdown, St Modwen Properties, Wednesday – Grainger, Severn Trent, Glaxo SmithKline, Rio Tinto, Tullow Oil, Redrow, Thursday – Thos Cook, Tate & Lyle, Compass, Smith & Nephew, TalkTalk, Bellway, AA, Manchester United, Willis Towers Watson, Beazley, Ashmore
US companies posting interim results – Tuesday – General Motors, Allergan, Walt Disney, Wednesday – Humana, Carlyle Group, Zynga, Thursday – Costco, Tyson Foods, Twitter, KKR, Snap-On Inc, Viacom, Kellogg, Nvidia, NCR, Expedia, Friday – Moody’s
Economic data posted this week – Tuesday – BRC Sales, Wednesday – Halifax house prices, Thursday – MPC meeting, Friday – UK industrial production.
David Buik
Communications
Mobile – 07788 144 877
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