WEEKLY FAYRE – Monday, 10th August 2020

August 10, 2020

“Behold the apples’ rounded worlds:
juice-green of July rain,
the black polestar of flowers, the rind
mapped with its crimson stain.

The russet, crab and cottage red
burn to the sun’s hot brass,
then drop like sweat from every branch
and bubble in the grass.

They lie as wanton as they fall,
and where they fall and break,
the stallion clamps his crunching jaws,
the starling stabs his beak.

In each plump gourd the cidery bite
of boys’ teeth tears the skin;
the waltzing wasp consumes his share,
the bent worm enters in.

I, with as easy hunger, take
entire my season’s dole;
welcome the ripe, the sweet, the sour,
the hollow and the whole.”


Laurie Lee – poet – 1914-1997


What a match the EFL ‘play-off’ between Fulham and Brentford at Wembley was, despite our national stadium being empty! However, the expletives and invective from players and coaches alike provided sufficient atmosphere to make the occasion one of real excitement. Few would argue that  Brentford were the better footballing side, but Fulham Manager Scott Parker’s tactics on the night were far superior, capped by two brilliant goals from the unlikeliest of strikers in left-back Joe Bryan, who had the first, a long-range pop from 35 yards orchestrated by his manager from the touch line.

As a Fulham fan, I am thrilled the Cottagers have been given another chance to make a better fist of playing in the Premiership having won the match 2-1. Nonetheless bystanders and Brentford fans will be dismayed at “the Bees” having lost the last eight play-offs they have participated in. Also, what fun it would have been for Brentford to have played their first game in the highest echelons of the football league since 1947 at their splendid new ground – The Brentford Community Stadium.  

With England 117 for 5 in the final session of the 4thday of the First Test V Pakistan at Old Trafford, requiring 277 to win the match, who would have given any credence to Jos Buttler and Chris Woakes knocking the runs off to give England a spectacular and very unexpected win? Riveting sport of the highest quality!



3rdAugust 2020

7thAugust 2020

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The economic war of attrition that has prevailed for the past three months mainly between US equity acolytes who seem certain that ‘the land of milk and honey’ or if you prefer ‘the promised land’ in terms of a swift recovery is nigh and those who profoundly disagree, rumbled on.  High flying investors seem comfortable riding on the coattails of massive Central bank quantitative easing and hope for a quick recovery springing eternal. That differs significantly from those who are convinced that COVID-19 remains virulent under the surface, until vaccines are discovered, coupled with double digit unemployment prevailing in far too many strategically important countries across the globe. At present the optimist have it, winning yet another battle last week, as can be seen above, apart from Hong Kong, which is preoccupied with its diminishing relationship with China, which suggest that the economic war rages on!

For much of last week, US investors were preoccupied with the yet to be agreed $1.2 trillion stimulus package and President Trump’s trade war with China, especially the action he threatened to take against Tik-Tok and WeChat in the wake of the Huawei debacle. There is potentially a 45-day moratorium for the US to agree the purchase of Tik-Tok’s US, UK, Australian and New Zealand operations, which from a regulatory perspective, may prove a bridge too far. The US side of the spat has also become personal against influential luminaries in China and Hong Kong, as well as these companies and there will of course be reprisals from China, which could affect the influence and success of major international brand names in the US such as Apple and in China’s case, Tencent.

The earnings season has not proved as much of a problem that many feared it might do. However, unemployment remains a constant thorn in the side of investors and politicians alike. US Initial Jobless Claims for unemployment benefits last week totalled 1.186 million, the lowest level of the coronavirus era. Wall Street had been expecting more than 1.4 million. In another positive sign, continuing claims, or those who have collected benefits for two straight weeks, dropped by 844,000, but was still at 16.1 million. Then on Friday, Non-Farm payrolls regained fewer jobs in July after a record in June when 4.8 million were created, as a resurgence of coronavirus cases in some states earlier this summer weighed on the labour market recovery. However, the number of jobs added topped estimates, and the unemployment rate fell more than expected to 10.2%. China’s dollar-denominated exports rose 7.2% from a year ago and its dollar-denominated imports fell 1.4% from a year ago. In passing, gold has been very much in demand with its price reaching $2068 an ounce late last week, with some equity investors starting to feel uncomfortable – hence the flight to quality. Gold has rallied by 40% since the beginning of the year - $1475 to $2068.

In the UK, markets were preoccupied by last Thursday’s MPC meeting and the quarterly inflation report. Rates were left unchanged at 0.1% with the voting unanimous (9-0) and quantitative easing unaltered at £475 billion, with no immediate necessity to tighten monetary policy unless inflation went above 2% - unlikely in the current climate. Many think another £100 billion (QE) would be available in the event of a deepening financial crisis. Governor Andrew Bailey said the BoE was at present reluctant to adopt negative interest rate policies, but the option will be kept in the tool bag. The Bank thinks unemployment will reach 7.5% by the end of the year. The estimate for Q2 GDP was 20% (the ONS suggested that 35% could not be ruled out four months ago), with GDP for the year dropping as low as 9.5%, better than other estimates that came in at 14%. A ‘V-shaped’ recovery of the UK economy seems unlikely though Governor Bailey was not as downbeat as many feared he might be. The economy is estimated to grow by 9% in 2021.  Next Tuesday, official UK unemployment data will be posted. It is expected to make unappetising reading with the dole queue possibly reaching 3 million, withup to 60,000 more people thought to be claiming unemployment benefits. The Government’s furlough scheme will end completely on October 31.

On the street of Dreams the NASDAQ reached new record heights courtesy of the large techs, such as Amazon, Apple, Microsoft with aspirants such as Facebook, Netflix and Tesla continuing to throw their ‘two-cents-worth’ in to the mix. Walt Disney’s CEO Bob Chapek, who recently took over from the iconic Bob Iger, posted a net loss for the quarter of $4.72 billion due in large part to charges related to its earlier acquisition of Twenty-First Century Fox, including severance and contract termination costs and integration expenses. The Company took a $3.5 billion hit to its operating income from parks being closed during the quarter. What was really exciting was news that Disney now has 100 million paid subscribers across its streaming offerings, more than half of which are subscribers to Disney+. Revenue came in at $11.78 billion, vs $12.37 billion expected. Its main film productions ‘Mulan’, ‘Star Wars’ and ‘Avatar 2’ have been postponed. Market acolytes were encouraged by this news on streaming and shares rose 4% last Wednesday. The following day. Viacom/CBS absorbed a decline in its advertising business from COVID-19 in the second quarter, but managed to beat Wall Street analysts’ thoughts, with revenue of $6.275 billion slid 12% from the same quarter a year ago but exceeded the $6.17 billion consensus. On Friday Uber Technologies posted a loss of $1.8 billion, with taxi revenues plummeting by 75%. Active consumers fell by 44%, though food deliveries were significantly up. Shares were taken 2% lower and are 28% down in the past 14 months.

Many key UK titanic companies posted results last week and sadly a few did not ‘cut the mustard.’ Last Monday HSBC saw its profits plunge 96% as loan-loss provisions jumped to $6.9 billion on coronavirus, with full year estimates coming in at $13 billion. Also, the return on equity of just over 5% was considered derisive. China and the Far East will increase in importance and many staff are expected to be shed in Europe and the US.

BP’s Bernard Looney ‘threw the kitchen sink’ at investors last Tuesday, confirming the $16.8 billion loss/write back promised recently, due to the drop in crude oil prices down to briefly $11 in May. The interim dividend was only cut by 50% from 10.5 cents to 5.25 cents. 10,000 jobs will go, as BP continues to change direction in favour of renewable energy projects. Diageo’s CEO Ivan Menezes posted slightly disarming results with profits down 47.1%, though an increase in dividend of 2% was well received. Sales in the US were strong but disappointing in Africa, Asia, and Europe. Dame Carolyn McCall posted dispiriting numbers for ITV, with revenues down 21% for the last quarter with advertising revenue also dipping. Productions are starting again, but no forward guidance on earnings was provided. Whilst on the subject of dividends payable in the UK, it is possible that dividends, such an important source of income for many, may be cut by 40% this year from £98 billion

News from BA was bad, but not unexpected, with 10000 jobs to go, 20% salary cuts being implemented with benefits also being cut, resulting in cabin staff and Unions being incandescent with rage. In fairness to BA, it recorded a £3.8 billion loss in the last 6 months and has needed to raise £2.5 billion funding from its largest shareholder Qatar Airways. Some BA pilots have agreed to pay cuts which has saved nearly 1000 jobs out of 4300. Also, 32 747s have been dispensed with and the procurement of 68 new planes – from Airbus and Boeing have been postponed. The loss of jobs continues at an uncomfortably high rate. Last week LGH, the managers of Crown Plaza and Hallmark hotels, shed hundreds of jobs as did Travelex, Hays, Pizza Express, Dixon Carphone and DW Sports. With furloughing coming to an end at the end of October, the job crisis could be even more acute. If the occasion arises. I beg folk to get back to work, to help alleviate the problem. Just to add fuel to the fire NatWest have dispensed with the services of its leading investment bank management team, which threatens the livelihood of 5000 employees amongst the smouldering embers of its investment bank. This would leave Barclays as the only bank with a presence in investment banking and that is largely in New York. Virgin Atlantic has also filed for bankruptcy in the US as the global aviation industry feels the impact of the coronavirus pandemic, despite a financial package having been agreed for its survival, leaving 3000 jobs vulnerable.

UK companies posting interim results this week – Monday – Cineworld, Countrywide, Clarkson, Capita, Informa, Fever Tree, Tuesday – Intercontinental Hotels Group, Prudential, Domino Pizza, SDL, Petrofac, Pendragon, Wednesday – Admiral Group, CLS Holdings, Balfour Beatty, Avast, Just Eat, Thursday – National Express, Just Group, Renishaw, GVC Holdings, Tui Travel

US Companies posting interim results this week – Monday – Marriott, Liberty Media, Tuesday – Eastman Kodak, Wednesday – Zoom, Cisco Systems, Lyft

Economic data to be posted this coming week – Monday – Monday US CPI est, Tuesday – UK Average earnings, UK Unemployment (June 4.2%), US PPI, Wednesday – UK Balance of trade, UK GDP Y/O/Y -18%, UK Manufacturing, Industrial Production & Construction (June 2020), US MBA Mortgage applications, US Inflation, Thursday – US Import & Export Prices, US Initial Jobless Claims, Friday – EU GDP -15% (EST), US Retail Sales, US Industrial Production, US Univ of Michigan Consumer Confidence