WEEKLY FAYRE – Monday, 15th February 2021

February 15, 2021

“The gas was on in the Institute,
The flare was up in the gym,
A man was running a mineral line,
A lass was singing a hymn,
When Captain Webb the Dawley man,
Captain Webb from Dawley,
Came swimming along the old canal
That carried the bricks to Lawley.
Swimming along -
Swimming along -
Swimming along from Severn,
And paying a call at Dawley Bank while swimming along to Heaven.

The sun shone low on the railway line
And over the bricks and stacks
And in at the upstairs windows
Of the Dawley houses' backs
When we saw the ghost of Captain Webb,
Webb in a water sheeting,
Come dripping along in a bathing dress
To the Saturday evening meeting.
Dripping along -
Dripping along -
To the Congregational Hall;
Dripping and still he rose over the sill and faded away in a wall.

There wasn't a man in Oakengates
That hadn't got hold of the tale,
And over the valley in Ironbridge,
And round by Coalbrookdale,
How Captain Webb the Dawley man,
Captain Webb from Dawley,
Rose rigid and dead from the old canal
That carries the bricks to Lawley.
Rigid and dead -
Rigid and dead -
To the Saturday congregation,
Paying a call at Dawley Bank on the way to his destination.”

 

‘A Shropshire Lad’

  

John Betjeman – Poet Laureate – 1906-1984

 

 

After last week’s great victory in Chennai, the England cricket team were up against very different conditions this week. This wicket looked to have beautifully doctored to suit the Indian spinners and why not? It is their backyard and India are one down in the series. As this wicket deteriorates, England will do well not be beaten by a very wide margin. Whoever won the toss was going to win this test match. What a stunning performance by Rohit Sharma in making a 160 in the first innings, which laid the foundations for India’s inevitable victory.

England’s response of 134 to India’s 329 looks rather forlorn and many would be surprised if the match reaches the fourth day.

England’s victory against Italy was no more than workmanlike (41-18) and Scotland were unlucky to lose 24-25 to Wales. A man short for much of the second half was a bridge too far for the men north of Hadrian’s Wall!

The icing on the cake for this weekend was of course, Fulham’s superb win at Goodison Park for the first time against Everton – Richly deserved. It was a great team effort, with Harrison Reed the man of the match for me.

 

INDEX

8th February 2021

12th February 2021

% Loss/Gain

FTSE

6489

6589

+1.54%

DAX

14156

14049

-0.76%

CAC40

5688

5703

+0.44%

DJIA

31191

31458

+0.86%

S&P 500

3892

3934

+1.08%

NASDAQ

13937

14095

+1.13%

SHANGHAI

3503

3655

+4.34%

HANG SENG

29305

30173

+2.97%

NIKKEI 225

28631

29520

+3.12%

 

 

Apart from the Far-East, where the recovery process has been underway for a longer period than the rest of the world, most global indices either made modest gains or trod water last week. The economic data emanating from China was positive resulting in measurable gains being made across Asia. The fact that Tokyo Olympic Games are still going ahead will have provided some extra impetus for the NIKKEI 225. The table above might be considered misleading, as it does not reflect the frenetic political and economic activity that transpired last week. Unlike the previous week, economics played a spear carrying role in the US, which is more than can be said for politics. Initial Jobless Claimsfor the week ending 6thFebruary 793,000 vs. 760,000 expected and with a revised number 812,000 for the previous week. Federal Reserve Chairman Jerome Powell, in a speech to the Economic Club of New York said the U.S. job market remains a long way from a full recovery and called on both lawmakers and the private sector to support workers. He went on to say -“We are still very far from a strong labor market whose benefits are broadly shared,”

On the political front President Trump was impeached for the second time last week, but was found not guilty of criminal incitement, as the Senate was always unlikely to gain the support of seventeen Republicans, which would be required to give the Senate a two thirds majority to enable President Trump to be found guilty. Trump remains defiant and I suspect we have not heard the last of him. President Biden seems to be going quietly about his duties in an unobtrusive manner, with the pandemic appearing to be at the top of his agenda. Vaccinations and the contagion of Covid-19 preoccupied the newly elected Biden administration.

UK GDP findings and comments by Governor Bailey and Chief economist Andy Haldane were the main topics of conversation here in Old Blighty last week. A figure of -9.9% drop in GDP for 2020 was posted by the ONS – the worst since 1709, I am told. Superficially, it looks like one of the worst efforts in the Western World. In fairness the UK’s measurements are recorded differently from many of its peers. Simon French, Panmure Gordon’s Chief Economists makes these salient points – “UK continues to lag G20 average growth rate with three main explanations. Firstly, slightly higher share of close-contact services prevails. Secondly, the way public sector output is measured in the UK and finally higher levels of caution/ compliance with WFH instruction during the pandemic.”

The last quarter’s GDP was in positive territory (+1.2%), thus avoiding the expected double dip recession. However, the first quarter, with the UK suffering from yet another lockdown, went sharply into reverse (estimated -4.2%). Notwithstanding this problem, Mr Haldane is of the opinion that the UK economy is like a "coiled spring" ready to release large amounts of "pent-up financial energy.” The consumer coupled with some areas of the business community has squirreled way between £125 billion to £250 billion. Subject to the success of the vaccination programme and a return to an environment that looks close to normality as possible, a serious bounce in spending and economic activity is very likely. The timing is, of course, fundamental.

Governor Bailey, in a speech made to finance chiefs, felt It would be "unrealistic" and "dangerous" for the UK to stick to EU banking rules after Brexit, “The EU has argued it must better understand how the UK intends to amend or alter the rules going forward. Andrew Bailey felt that it would be injudicious for the EU to shut UK banks out from competing for business. He felt it would damage consumers, with inevitable increases in mortgage interest rate charges, expensive currency transactions, higher insurance premiums. Since the turn of the year, the EU has adopted a very caustic attitude towards the UK, focusing on criticism of vaccination policy, which is wholly unfounded. In addition to the EU’s belligerent attitude towards vaccination, financial services, fishing, and general trade are now beginning to suffer.

It should not be forgotten that financial services raised £76 billion for HM Treasury’s coffers (10% of all receipts) in 2020. Also, the tough stance adopted by the EU might cost the City £9.5 billion in lost revenue. I think it is time Michael Gove and Lord Frost bore their teeth, setting out contingency plans in response to this unpleasantness. In times of strife and national crisis, one might have hoped for a degree of cooperation. At this moment in time, it appears not to be the case. The Chancellor presents his Budget in 10 days. How does the Government start to prepare for the future with infrastructure spending and plans to clear this gargantuan deficit? Will Corporation and fuel tax be raised? Will proposed stealth tax thresholds be removed? Raising capital gains tax at this juncture would surely be folly! It would be like throwing the baby out with the bath water.

The relentless presentation of the US earnings season for large companies started to abate last week. Nonetheless, there was some interesting announcements, none more so that Wal Disney’s efforts. In the past year Disney has suffered from the closure of its theme parks and its limited ability to make movie productions during the pandemic. However, Bob Chapek, who succeeded Bob Iger as CEO has seen some remarkable success with Disney’s streaming campaign, with 95 million subscribers signed up for Disney+ by 2ndJanuary 2021, and 146 million across the spectrum. Elon Musk rarely stays out of the headlines for long. Last week he committed $1.5 billion Dollars to the Bitcoin gravy train. Bitcoin touched $48,000 last week.Bitcoin is up more than 60% since the start of the year after quadrupling in value in 2020. With Apple threatening to join the ranks of users, who knows where it may end up. Volatility is always waiting round the corner. Friday experienced another amazing performance by an IPO. Bumble came to the market, valuing the dating website at $13 billion dollars and in the process making its CEO Whitney Wolfe Herd a billionaire at 31 years of age.Coca-Cola found the going tough in 2020 thanks to the pandemic with sales falling by 5% in the last quarter, which triggered the loss of 11% of its workforce.

The UK was not exactly short of corporate news either. There were decent earnings from Dunelm and Astra Zeneca. Astra’s numbers were particularly gratifying with sales up 18%. The drop in Astra’s share price, down from £92 to £72.50 on Friday, should probably be put down to humanitarian reasons. Astra has focused on the vaccine which it produces in vast amounts with little if any profit. Oncology drugs did well with sales up 23%. Ocado saw a 35% growth in revenue last year to £2.18 billion. There was a trading profit of £73.1 million but a pre-tax loss of £44 million, much of it attributable to investment in technology with the purchase of Kindred Systems and Haddington Dynamics. Ocado’s share price dipped by 6% last week. Investors would like to see some profit banked.

BP went into a joint venture with Germany’s EnBW on a 50-50 venture on wind farms in the Irish Sea, which will supply energy for 3.4 million household. Shell also presented its carbon neutral plans. Shell’s share price has dropped by 9% in the last month and BP’S by 16% in the same period. Boohoo completed its £295 million purchase of Arcadia assets, Miss Selfridge, Top Shop, Top Man and HiiT for its on-line prowess and brand to the exclusion of 200 shops and 2450 jobs very sadly. JD sports complained bitterly at BREXIT red tape bureaucracy. It has cost million of pounds. JD Sports will be setting up a warehouse in the EU, possibly costing 1000 jobs. Royal Mail Group will continue to employ 10k temporary staff out of 33k, thanks to parcel delivery rising by 37% with 496 million parcels being delivered in the last quarter of 2020. The Issa Brothers issued £2.75 billion of junk bonds to help pay for the £6.8 billion takeover of ASDA. The auction for these bonds received bid totalling £8 billion. The reason for the positive response was the perception that the ISSA bother’s borrowing of £9 billion was at manageable levels. Dame Carolyn Fairbairn was been appointed a non-exec of Bae Systems. The former director general of the CBI was employed by ITV, BBC, and Capita in previous lives.

Heineken eased out 8000 jobs after a very indifferent pandemic ridden year. Commerzbank will be closing many branches and will be making thousands redundant as it attempts to save costs totalling €6.4 billion.

Suffice to say that antics at KPMG, resulting in CEO Bill Michael resigning over what some thought injudicious remarks is bizarre to say the least. So many views that I suspect the less said the better. Mike Lynch, who sold Autonomy for $11 billion to Hewlett-Packard, is fighting for his life to prevent being extradited to the US, where, if found guilty, could see him facing a 25-year prison centre for fraud. Mr Lynch strongly denies the allegations, Former Hewlett CEO Meg Whitman is determined that these charges will be answered in court. Mike Lynch has been involved in the forthcoming IPO of Darktrace. UBS has withdrawn its advisory capacity but insists there is no connection over Lynch’s involvement. To end on a good note, Burberry has returned a £300 million loan under the CCFF agreement. Burberry has faired well in China in recent months.

UK companies posting interim results this week – Tuesday, HSBC, Glencore, BHP Billiton, Petra Diamonds, Marston’s. Safestore, Wednesday – BATS, Plus500, Rio Tinto, Thursday – Barclays, Invidior, Smith & Nephew, Hays, Friday – NatWest, Segro, TBC Bank

US Companies posting interim results this week – Monday – Liberty Global, Tuesday – Agilent, La-Z-Boy, Denny’s, Wednesday – Jack-in-the-Box, Marathon Oil, Hyatt Hotels, Thursday – Westinghouse, Hormel Foods, Walmart, Friday – Deere & Co

Economic data to be posted this coming week – Monday – EU Balance of Trade, EU Industrial Production, Tuesday – EU GDP (EST:-4.3%) Germany ZEW, Wednesday – UK Inflation (PPI, CPI, RPI), US PPI, US Retail Sales, Thursday – US Initial Jobless Claims, US Imports & Exports, US Housing Starts & Building Permits, US Crude Oil inventories, Friday – UK Retail Sales, UK PMI Manufacturing, UK PSBR, US PMI (services, Manufacturing).