WEEKLY FAYRE – Monday, 14th June 2021

June 14, 2021

When all the world is young, lad,
And all the trees are green;
And every goose a swan, lad,
And every lass a queen;
Then hey for boot and horse, lad,
And round the world away;
Young blood must have its course, lad,
And every dog his day.

When all the world is old, lad,
And all the trees are brown;
And all the sport is stale, lad,
And all the wheels run down;
Creep home, and take your place there,
The spent and maimed among:
God grant you find one face there,
You loved when all was young.

Charles Kingsley – poet & author – 1819-1875


Most observers were focusing on the G7 meeting in Cornwall over the weekend, which encompassed President Biden first overseas visit since he assumed office. The pleasantries with PM Johnson seemed to go smoothly as did the G7 members meeting with HM the Queen and the Royal family. However, the hostile atmosphere between Messrs Von Der Leyen, Merkel and Macron towards the UK Government over BREXIT issues concerning the protocol with Northern Ireland was plain for all to see.

There was an excellent point made in this week’s Spectator about this problem – ‘Read the protocol and you can see what the government means when it argues that the agreement was never intended to be the last word on post-Brexit arrangements. The text mentions nothing about sausages, but it does speak of setting up a working party to establish the finer details of its implementation. Moreover, Article 16 states that if the protocol leads to ‘serious economic, societal or environmental difficulties’ then the UK would have the power to take its own ‘safeguarding measures’. This point appears to have been conveniently forgotten. Hopefully, security issues, the pandemic and climate change will help to heal these weeping sores.

CEBR’s Douglas McWilliams points out that “This issue is fairly easy to fix with a modicum of goodwill. However, both negotiating sides want to be seen to be tough for their internal political audiences (eg Macron ‘NI not part of UK’). It’s time to get away from high profile discussions and move to technical talks for a solution.”

The sporting fayre turned out to be very average this weekend apart from the Djokovic/Tsitspas final of the French Open, which saw the Serb snatch victory from the jaws of defeat in a thrilling five-set match, when he was metaphorically dead/buried and a rather workmanlike England 1-0 victory over Croatia in a Euro tournament match at Wembley. However, a win is a win. England’s defeat by New Zealand by 8 wickets in the 2nd test match at Edgbaston was a pitiful and spineless display.



7th June 2021

11th June 2021

% Loss/Gain

















S&P 500





















Apart from the NASDAQ Composite and the CAC 40, which only has a limited number of constituent stocks, gains were modest in the West and slightly dispiriting in Asia. Asian stocks ended slightly lower last week after struggling for direction amid a dearth of fresh factors – both corporate and economic. Inflation was the dominant concern of all global investors. Officially, inflation in China jumped to 1.3% in May 2021 from 0.9% the month previously. The supply chain, which includes all raw materials, minerals and chips has contributed to a major hike in US CPI inflation to 5% in May from 4% in April, the fastest rate of increase for 13 years and Core inflation rose from 3% in April to 3.8% in May. US Treasury Secretary, Janet Yellen indicated that if inflation does not come back on the bridle, a rate increase may be considered. However, Initial Jobless Claims gave investors encouragement, when the sixth straight week of decline falling by 9,000 to 376,000 was posted for the week ending 5th June, on Thursday. The median estimate in a Bloomberg survey of economists called for 370,000 applications.

The UK enjoyed encouraging GDP numbers for April +2.3%. However, the UK economy is still 3.7% below its pre-pandemic levels. The UK’s powerful service sector grew by 3.4% in that period, but activity remains 4.1% below pandemic levels, in February 2020. Domestic holiday lets and caravan park activity grew by 68.6%. In one of his ‘valedictory’ interviews, the outgoing Bank of England Chief Economist Andy Haldane, talking to LBC’s Nick Ferrari, was very upbeat about UK's recovery, believing it would be greater than EU’s in 2021! He said we may need higher wages to stimulate employment away from furloughing and to fight inflation! Andy is an absolutely top man - he will be missed! We wish him well as CEO of the Royal Society of Art.

With the Government threatening to postpone the opening of the economy, the pub, restaurant, and hospitality sectors’ future heads into jeopardy again. The Euro football tournament could well have triggered a sale of ten million pints of beer (three million pints, worth £63 million on Sunday alone), over the weekend. If the rumours are correct about postponing the return to normality, the momentum will come to a grinding halt. Bar and pub sales were 38.3% and 34.3% respectively lower than May 2019, due to thousands of venues not having outside space.

Even though political relationships between the UK and the EU could not be less cordial, veterans and luminaries of the City of London will be very pleased to hear that London remains the largest financial centre in Europe by a country mile, even though the EU has done everything, understandably, in its power to infiltrate and detonate the City’s prowess. The Think Tank ‘New Financial’ scored the UK with 35 out of 100, with France and Germany scoring 12 and 13, respectively. However, domestic activity has stagnated since BREXIT. The US scored 84, with China, Japan and Hong Kong all creeping up on the rails with scores of 29, 19 and 14, respectively.

Unsurprisingly, the UK is pressing for the City of London’s financial services to be carved out from G7 global tax plans in the same manner others will want similar exemptions from tech giants. It looks as though getting global agreement on a minimum of 15% corporation tax will prove challenging with so many mavericks, such as Ireland, throwing their hat in to the ring for exemption. It is interesting to note that a record £9.4 billion has been raised by firms on London’s Stock Markets, including the aspiring Aquis Stock Exchange, so far this year – with the highest number of companies floating since the financial crisis of 2008/9.

The earning season in the US has all but ended last week. Apart from the tech sector, where investors’ appetite for risk seems insatiable, there was a reluctance to crack on due to imponderables such as the increasing threat of inflation. Corporate issues had limited appeal, though IPOs remain popular. Amazon’s Jeff Bezos announced that he and his younger brother, plus a third party, who paid $2.8 million in a charitable auction, were on their way into space next month on ‘Blue Origin’. Google was fined €220 million for advertising abuse in France. This is not its first offence. In 2018, Google was fined €4.3 billion for using a popular android system to block rivals and in 2019 it was fined €1.49 billion for blocking on-line search advertisers. United Airlines served notice that it plans to buy 15 supersonic airliners, returning in part to ‘Concorde’ style aviation by 2029.

The FTSE 100, 250 and AIM continue to attract investors. In comparison to other bourses shares look relatively cheap. The FTSE 100 has made steady progress and is up 8.5% since the beginning of the year, but still remains 9% below its record of 7,778 in June 2018. The FTSE 250 is up 10.7% year to date. Inditex, Spanish owner of Zara and Massimo Dutti brands, has seen a remarkable change in its fortunes and has posted a net profit of €421 million this year against a loss of €409 million last year. Nonetheless, Inditex continues to streamline its operation and will close 1,200 outlets in Europe and 500 in Asia. SSP, the owner of ‘Upper Crust’ has seen losses spiral to £300 million in six months to March, compared to a £34 million loss the previous six months. SSP’s operation is reliant on travel. Its revenue is down by 87.8%. Business in Germany and France has been more robust. However, SSP has cut 14,000 jobs and furloughed 22,000. A rights issue raised £475 million to strengthen its balance sheet, with bank facilities being extended until 2024.

Reckitt Benckiser suffered a £2.5 billion loss from the sale of its Chinese baby milk arm to private equity - Primavea. Reckitt acquired this operation, having bought Mead Johnson in the US for $13 billion. This second write-down by the Slough based consumer product mogul, will have cost a whopping $8.5 billion. Rolls Royce have appointed Anita Frew as its new chairman. She is a very successful business person, with wide ranging experience. She was deputy to Sir Martin Sorrell at WPP and deputy chairman of Lloyds Banking and more recently chairman of Croda International. She will receive a salary of £490,000.

CVC, the private equity giant announced that it will be taking a stake in the ATP/WTA £420 million deal. CVC has been controversially involved in F1 in the past and has taken a £200 million stake in Rugby – the premiership and Pro-14. Talking of private equity, in recent weeks Sanne has fallen to Cinven for £1.4 billion; Sigma Capital to Pinebridge for £188 million and Proactis to Pollen Street for £75 million.

Former VW boss Martin Winterkorn has been fined £9.7 million for his role in the ‘Dieslgate Scandal’ after years of legal wrangling. Other VW and Audi executives have agreed to pay £5.7 million. VW and Porsche will still be subject to claims worth £3.5 billion, of which only £240 million will come from insurance.

Stephen Hester the former RBS CEO, who did an excellent job at the time of the financial crisis, until he fell out with George Osborne and subsequently also did an excellent job tidying up RSA, prior to this insurance titan being sold to Denmark’s Tryg for £7 billion, is in the frame to become Chairman of BT Group. The competition will be fierce with Adam Crozier, Rona Fairhead and Sir Ian Cheshire all vying for the prestigious post. Whoever is appointed will have their work cut out, especially answering to Patrick Drahl’s Altice taking a 12.1 stake.

Huawei’s UK operation seems to have been adversely affected by the impact of the UK’s ban with profits falling 27.5% to £913 million. 12,500 out of 19,500 BT mobile masts contained Huawei kit. JD Sports has been vilified for the£4.3 million bonus paid to Peter Cowgill, the CEO. JD Sports tapped the furlough scheme for £86.1 million and availed itself of £38 million is business rates relief. Cowgill has delivered a 9,800% return to shareholders over the past 17 years. A profit of £324 million was posted last year with a dividend of £16.7 million.

UK companies posting interim results this week – Monday – Crest Nicholson, Sthree, Tuesday – Ashtead Group, Thursday – Dr Martens, Halfords, Whitbread, Friday - Tesco

US companies posting interim results this week – Tuesday – H&R Block, La-Z-Boy, Oracle, Wednesday – Lennar, Thursday – Adobe, Kroger & Co, Smith & Wesson, Jabil Circuits

Economic data to be posted this coming week – Monday – EU Industrial Production, Tuesday – UK Employment data, US retail Sales, US PPI, Industrial Production, Business Inventories, Wednesday – UK inflation, US MBA Mortgage Applications, US Housing Starts, US Building Permits, US Crude Oil Inventories, Thursday – US Initial Jobless Claims, US Phili-Fed Index, Friday – UK Retail Sales