WEEKLY FAYRE – Monday, 18th October 2021

October 18, 2021

“Rain, midnight rain, nothing but the wild rain

On this bleak hut, and solitude, and me

Remembering again that I shall die

And neither hear the rain nor give it thanks

For washing me cleaner than I have been

Since I was born into this solitude.

Blessed are the dead that the rain rains upon:

But here I pray that none whom once I loved

Is dying tonight or lying still awake

Solitary, listening to the rain,

Either in pain or thus in sympathy

Helpless among the living and the dead,

Like a cold water among broken reeds,

Myriads of broken reeds all still and stiff,

Like me who have no love which this wild rain

Has not dissolved except the love of death,

If love it be towards what is perfect and

Cannot, the tempest tells me, disappoint.”


Edward Thomas – Poet & Soldier – 1878-1917



Trevor Hemmings, former owner of Blackpool Tower & winner of 3 Grand Nationals died last Monday aged 86. He was an amazing supporter of National Hunt Racing over many decades. He also owned Preston North End. His 3 national winners included 'Hedgehunter', 'Ballabriggs' & 'Many Clouds.' He will be sorely missed by the NH racing community. RIP

I have been obsessed with this year’s IPL cricket competition – such riveting entertainment! The league leaders – Delhi Capital were defeated by Kolkata Knight Riders, astutely captained by England’s Eoin Morgan, in the knock-out round. KKR, until the final four matches, had shown very little form. KKR were comprehensively beaten in the final by the Chennai Super Kings, captained by MS Dhoni. There so many outstanding performances in the final from Gaikwad Du Plessis, Moheen and Patel  for the Super Kings and Iyer and Nadine for the Knight Riders. The men in yellow (CSK) ran out comfortable winners by 27 runs in the final.



11th October 2021

15th October 2021

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+HK closed for much of last week


I cannot remember the last time there was so much brouhaha being circulated across the globe on the dangers of a constipated supply chain, rampant inflation, and a global debt mountain of unthinkable proportions culminating with the implementation of tapering quantitative easing and the threat of an inevitable interest rate increase later this year and certainly further increases next year. Yet, the market has chosen to ignore these issues by ‘backing the truck up’ to take on more risk. Any interest rate hikes are likely to limited in total; so, there are no obvious alternative asset classes to attract money away from equities. Bonds remain an unattractive prospect for the time being. Apart from Shanghai, which went into reverse last week, despite good export numbers, the other main indices made gains.  The approach by many investors was one of gay abandon, possibly in the hope that the 3rd quarter earnings season would provide a springboard for momentum.

Panmure Gordon’s chief Economist, Simon French, wrote in Saturday’s Times “That if you believe that interest rates are going to rise quickly, think again!” He reminds us that the current high rate of inflation is supply and NOT demand driven. He believes a very cautious and minimal increase in rates next year is the more likely outcome. The consumer has been hammered with tax increases, fuel and energy hikes and higher mortgage charges. If the economic recovery is to be maintained – “Don’t throw the baby out with the bath water!”

US Initial Jobless Claims were better than expected with only 293,000 claiming benefits against expectation of 318,000. However, US wholesale producer prices rose 0.5% in September and 8.6% over the past year. Investors were ambivalent about any negative economic news and focused their attention on a much better-than-expected start to the 3rd quarter ‘earning’ season, especially the stellar earnings from JP Morgan, Citigroup, Bank of America, Morgan Stanley, and Goldman Sachs, where profits rose from between 27% and 68% during the last quarter. These outstanding numbers were due to a marked improvement in the US economy, as it comes through the pandemic, the ability of their banks to cut back on huge provisions made for bad debts and humungous earnings from investment banking. Though bond trading returns were limited, equity trading and fees from M&A activity were sensational.

The UK Unemployment rate fell from 4.7% to 4.5% for September (in line with expectations). The Claimant count was down 51.1k; 207k moved into payroll jobs in September. This was encouraging data. There's still the furlough conundrum, which concerns jobs in the retail and entertainment sectors. Many of these people are vulnerable to losing their jobs, but there are 1 million job vacancies in UK! It’s a question of mobility of labour and who wants these jobs? News from the UK GDP front was less encouraging, GDP in August only increased by a miserly +0.4%, which was 0.8% down on the same period in 2019. The quarterly rate was +2.9% (EST: +3%) and year on year it grew by +6.9% (EST: +6.7%) (last month 7.1%). However, construction was down -0.2% in August (+10.1% y/o/y). The services sector was more robust and was +0.3%

Germany’s top economic research institute has cut its growth forecasts for Europe’s largest economy this year to 2.4% from 3.7%, blaming supply bottlenecks in manufacturing and the lingering impact of the pandemic on services. Last month China’s exports jumped, though imports were lower than expectations. However, coal and gas import volumes hit highest this year. IMF Director of Monetary and Capital Markets  made a telling comment in the press to the effect that “the authorities in China do have the means to address Evergrande” issues. In almost the same breath its Chief Economist warned central banks that they should be “very, very vigilant” on inflation second-round effects.

There has been a wave of listings and public sales in the US, which has resulted in a windfall for investors and technology employees, providing a record $582.5 billion in profit for the year through September. Start-ups that completed initial public offerings, direct listings or deals with special-purpose acquisition companies accounted for $513.6 billion of the total, with 93 listings between July and September, the highest of any quarter this year.

Earnings activity in the UK started to raise its game last week with a plethora of companies posting quite a ‘mixed bag’ of results. In hindsight it appears that ‘The Hut Group’s’ eagerly awaited IPO last year was grossly overpriced. Its shares have fallen 63% year to date, including a disastrous 35% last week. Investors were unimpressed that CEO Matthew Moulding wanted to split the luxury fashion and beauty from nutrition, with greater technological emphasis in both divisions. THG has work to do, to win round support after a disastrous capital markets meeting. The company reports on 26th October. ASOS, in the year to August saw its profits rise by 36%, but the outlook for next year was disappointing with the company expecting profits to fall to between £110-£140m, despite sales in the last year rising by 22%. Investors took the shares down 15% in a heartbeat.  Ashmore, the institutional Asset manager surrendered $3.1 billion of assets in three months as China’s woes rocked the emerging market specialist. easyJet posted a loss of £1.2 billion, but forward holiday bookings are expected to see passenger numbers rise to 70% of pre-covid levels. Dame Sharon White, the chairman of John Lewis Partnership saw losses  narrow in the last trading period from £635 million to £29 million. Some 2400 redundancies have been made in the last year and eight stores have been closed. The JLP expects to build or create 10,000 new homes in the next decade utilising part of its many 375 JLP and Waitrose stores. It also expects 40% of its profits to come from non-retail businesses.

Dunelm, the homes furnishing retailer, posted an encouraging trading statement and hopes to deliver a full-year profit of £179 million. Sir James Dyson saw a £1.3 billion profit from his electrical appliance operation on sales of £5.7 billion. Some of the 18% increase in profits was down to a hair straightener! Just Eat passed the one billion order mark since its inception. Orders in the UK were up 51% in the last quarter but only up 3% in the US, which triggered a  3% fall in the Dutch owned operation’s share price.  Barratt Development saw a 14% increase in the sale of homes in the last quarter with the inflationary cost being held to between 4-5%. Shares were up 6% on Wednesday.  The brewer Marston’s sales rose 2% in the last quarter and trading since April has reached 94% of pre-pandemic levels. The Euro football championship and outdoor facilities greatly enhanced the improvement in its operation.

Bet MGM’s joint operation with Entain (Ladbrokes, Coral etc) maintains it controls a third of betting in the US, whose gambling market is expanding rapidly. Bet MGM has operations in 16 states. This joint venture poses quite a conundrum over DraftKing’s $22.5 billion bid for Entain – yet to be agreed or even approved! Domino Pizza is hoping to hire 8,000 cooks and drivers to meet the Christmas demand. Ikea has also warned of staff shortages as well as the supply of 1,000 product lines.  The UK government has offered to relax the drivers’ visa applications for fuel during the next few weeks. However, to date, applications have been minimal. This initiative comes too late. Also, Europe is having its own supply chain shortages.

Louis Vuitton has seen a 24% increase in the sale of luxury goods in the last quarter, especially brands such as Moet et Chandan, Dior and Bulgari, with demand in China remaining very strong. Tesla hopes to eventually manufacture 10,000 cars a month in its Berlin factory, which opens in November.

UK Companies posting earnings this week – Tuesday – Bellway, YouGov, 888 Holdings, BHP Billiton, Wednesday – Antofagasta, Segro, Thursday – Barclays, AJ Bell, Anglo American, Rentokil Initial, St James’s Place, Unilever, Friday – Virgin Wines, Superdry

US companies posting interim results this week – Monday – State Street, Tuesday – WD-40, United Airlines, Bank of New York, Mellon, Halliburton, Procter & Gamble, Lam Research, Omnicom, Netflix, Phillip Morris, Johnson & Johnson, Wednesday -  Abbott Labs, Baker Hughes, Biogen, Citizens Financial, Comerica, IBM, Verizon, CSX Corp, Tesla Thursday – American Airlines, AT&T, BJ Restaurants, Blackstone, Whirlpool, Intel, Valero Energy, Freeport McMoRan, Snap, Mattel, Friday – American Express, Honeywell, Schlumberger

Economic data to be posted this week – Monday – US Capacity Utilisation, US Industrial Production, Tuesday – US Building Permits & Housing Starts, Wednesday – UK Inflation (PPI, RPI, CPI), US MBA Mortgage Applications, US Crude Oil inventories, Germany Gfk Consumer Confidence, Thursday – UK PSBR, US initial Jobless Claims, US Phili-Fed Index, US Existing Home Sales, Friday – UK Gfk Consumer Confidence, UK Retail Sales, Germany ifo