WEEKLY FAYRE – Monday, 25th January 2021

January 25, 2021

“Once more unto the breach, dear friends, once more;

Or close the wall up with our English dead.

In peace there's nothing so becomes a man

As modest stillness and humility:

But when the blast of war blows in our ears,

Then imitate the action of the tiger;

Stiffen the sinews, summon up the blood,

Disguise fair nature with hard-favour'd rage;

Then lend the eye a terrible aspect;

Let pry through the portage of the head

Like the brass cannon; let the brow o'erwhelm it

As fearfully as doth a galled rock

O'erhang and jutty his confounded base,

Swill'd with the wild and wasteful ocean.

Now set the teeth and stretch the nostril wide,

Hold hard the breath and bend up every spirit

To his full height. On, on, you noblest English.

Whose blood is fet from fathers of war-proof!

Fathers that, like so many Alexanders,

Have in these parts from morn till even fought

And sheathed their swords for lack of argument:

Dishonour not your mothers; now attest

That those whom you call'd fathers did beget you.

Be copy now to men of grosser blood,

And teach them how to war. And you, good yeoman,

Whose limbs were made in England, show us here

The mettle of your pasture; let us swear

That you are worth your breeding; which I doubt not;

For there is none of you so mean and base,

That hath not noble lustre in your eyes.

I see you stand like greyhounds in the slips,

Straining upon the start. The game's afoot:

Follow your spirit, and upon this charge

Cry 'God for Harry, England, and Saint George!”

 

 

William Shakespeare – Poet & Playwright – 1564-1606

 

 

England eventually polished off Sri Lanka by 7 wickets in Galle last week, but this match at the same venue looks a different proposition. Joe Root, as a batsman with a double century in the first test match and 185 in the current one, appears to be in a league of his own. I must confess to being in slight trepidation when England face India next month on pitches doctored to suit the home team and why not? With strong batting, some excellent seam bowling and with Ashwin and other wily spinners to mop up on dusty wickets, England will have their hands full. Leach, Bess and a fit Moeen will need to step from their current level of performance.

 

 

INDEX

18th January 2021

22nd January 2021

% Loss/Gain

FTSE

6735

6695

-0.89%

DAX

13701

13873

+1.26%

CAC40

5584

5559

-0.45%

DJIA

30926

30996

+0.23%

S&P 500

3788

3841

+1.40%

NASDAQ

13099

13543

+3.37%

SHANGHAI

3554

3606

+1.46%

HANG SENG

28454

29447

+3.49%

NIKKEI 225

28238

28631

+1.39%

 

 

Last Wednesday the world waved ‘goodbye’ to President Donald Trump, as he left Washington. In the media’s and in most peoples’ minds, President Trump left in disgrace, or at best in a graceless manner! However, it might have been a little precipitous of the UK’S visual media to be fawning so enthusiastically, akin to Dickens’s ‘Uriah Heap’, over the advent of President Joe Biden, clearly a very decent man, but with the cares of the US’S wellbeing on his elderly shoulders. President Obama was universally welcomed like ‘the Messiah’ in an equally enthusiastic manner, but he disappointed so many supporters in terms of his achievements, especially in foreign affairs. He, dangerously, though perhaps inadvertently, handed the initiative to Russia and China for global dominance, especially in terms of international and military influence and prowess.

Certainly, the 46th POTUS has immediately ‘thrown the kitchen’ sink at a mountain of problems, by initially tackling the severity of Covid-19, which has already claimed 400,000 lives and climate change, at the top of his agenda. He also needs to deal with the $1.9 trillion stimulus package, global trade issues, as well as threating higher taxation. How debilitating an effect will these seismic problems have on the US’S ability to recover and grow its economy quickly, whilst at the same time healing the cavern of political rift that prevails in so many parts of the US? Just to put the magnitude of the US’S problems into context, the 2008/9 sub-prime lending and banking crisis cost the US Treasury $787 billion.

President Biden is a senior citizen. Let us hope he has visionary people in his administration to help him with the mammoth task at hand. Treasury Secretary Janet Yellen is well respected around the world, with an excellent track record as a sound, if somewhat conservative Chairman of the Federal Reserve, in the Obama administration.  Vice President Kamala Harris will not be playing a  ‘spear-carrying’ role for very long. Many believe that she will bring her influence to bear sooner rather than later. The world watches and waits and very much hopes that the 78-year-old President ‘gets the four miles in a bog’, which the challenge in hand demands. I will not be holding my breath. The employment data posted last week was not that encouraging with ‘Initial Jobless’ claims suggesting that a further 1 million people will be applying for benefits. Many observers feel that it will be very difficult for the Biden administration to bulldoze controversial legislation through the Senate.

On a pari-passu basis, the UK has its share of economic challenges. However, its vaccination programme would appear to be more advanced. Some of the data posted last week was unsurprisingly dispiriting. The borrowing requirement continued to reach record levels. The Government  borrowed £34.1 billion in December 2020, reaching a total of £270.8 billion for the eight months of this financial years. This figure is expected to reach £400 billion by 5th April 2021. Retail sales were the worst since 1997. The data confirmed that sales fell by 1.9% in 2020 and only rose by a disappointing 0.3% in December. Spending has fallen dramatically since the lockdown, which was reflected in the use of credit and debit cards, activity having fallen  by 35%. Catering and hospitality advertising are at just 25% of last year’s levels. Chancellor Rishi Sunak is under huge duress from Labour for being reactive rather than proactive. Many believe this to be unfair criticism. Eye watering sums of money have been spent propping up the UK’S floundering economy. The Chancellor is considering giving added support for 500,000 freelancers, who have yet to receive any direct help from government, especially those self-employed in hospitality. He has also been asked to extend furloughing to the end of July, which would cost a further £9 billion. This request seems unlikely to receive a positive response for the time being.

Apart from Asia, where equities posted satisfactory gains, the US initially responded to a Biden relief rally, especially the tech sector, where Apple added 8.5% in value ahead of next Wednesday’s numbers, which are expected to be very good. Netflix added to the NASDAQ’s ebullience adding 8.5 million new subscribers taking their total above the 200 million mark. Intel’s numbers initially looked very positive. Then it was discovered that the world’s largest chip maker reacted to a reported hack, which forced the company to release earnings early. The shares fell 9% on Friday. Goldman Sachs and Morgan Stanley posted stellar earnings with equity trading profits leaping at Goldman by 40% and general trading profits at Morgan Stanley reaching outstanding levels. Bank of America’s net income slumped by 35% in 2020. However, it still earned almost $18 billion last year. During the pandemic, the company rolled out a raft of extra benefits for its staff, 85% of whom were sent to work from home. So far, the US earning season has started positively. The 4thquarter earnings floodgates open next week, which will tell us more about the overall performance of the US economy and the rate of the recovery process.  Some investors feel that US equities are starting to look a little rich and may well turn the attentions and affections towards Japan, Asia, and the UK. Assets in the UK look reasonably cheap in comparison to the rest of Europe.

The FTSE 100 had a little bit of a setback last week. The banking and energy sector saw constituent stocks pull back from the exalted level they achieved earlier in January. Burberry posted a 9%  drop in sales for the quarter ending 26th December. The adverse effect the fall in tourism has had, has been dramatic. Sales in Africa, India and the Middle East were down 37%. Dixon Carphone posted encouraging numbers for the sale of electrical goods in the last quarter – UK up 8% and international sales up 14%. It was uplifting to have seen the recovery of Premier Foods. Two years ago, you could not give their shares away. The makers of Angel’s Delight, Ambrosia, Mr Kipling, Home Pride, Bird’s, and Batchelor’s has seen its share price rally by  155% in the last year, Sales in the last trading period were up 9%, with online sales up a staggering 90%. WH Smith posted a very average trading statement, with sales only at 59% of 2019 levels. CEO Carl Cowling had his proposed salary increase put on hold.  Vodafone served notice that the IPO for its Vantage Towers, which has 80,000 global masts across Europe will float its IPO in Germany, with a valuation of circa €20 billion. Why Frankfurt? – a legacy when Vodafone bought Mannesmann for €220 billion in 2000.

MGM Resorts withdrew their bid for Entain (GVC, Ladbrokes Coral etc). Entains’s management felt the company had been hopelessly undervalued. Shay Segev, Entain’s CEO resigned and has been replaced by 52-year-old Dane, Jette Nygaard-Andersen, who will be paid £750k basis salary plus bonuses up to £4.1 million. Jack Ma appeared like the ‘phoenix from the ashes’ after disappearing for three months, having offended the Chinese authorities. Though the ANT IPO remains on hold, Alibaba’s shares bounced by 7% on Thursday thanks to his reappearance.

Many people thought that Authentic Brands or China’s Shein were the front runners to buy Green’s Top Shop empire for circa £300 million, with Next having withdrawn from the fray because of the inflated valuation. It now appears that ASOS has broken cover as a frontrunner, so the Sunday Times informs us. Goldman Sachs and Morgan Stanley are bringing Dr Martens to the market in an IPO , valuing the operation at £3.5 billion. Its CEO Nick Beresford is likely to pick up £58 million. In the past 6 years sales have increased six-fold to £672 million. Senior staff are likely to share £350 million.

UK companies posting interim results this week – Monday – Crest Nicholson, Tuesday – PZ Cussons, Quiz, AG Barr, Wednesday – 3is, Brewin Dolphin, Tullow Oil, Diageo, Thursday – Joules, Rank, Wizz Air, Anglo-American, Britvic, TalkTalk, Friday – Evraz, Paragon

 

US Companies posting interim results this week – Monday – HB Fuller, Kimberley-Clark, Tuesday – Archers, Daniel Midland, Lockheed Martin, Verizon, Starbucks, Microsoft, Xerox, DS Horton, Freeport-McMoRan, Xilinx, Texas Instruments, Johnson & Johnson, eBay, Wednesday – Apple, Abbotts Labs, AT&T, Boeing, Levi Strauss, Whirlpool, Lam Research, General Dynamics, Facebook, Tesla, Thursday – JetBlue, Altria, US Steel Corp, McDonalds Corp, Comcast, Valero Energy, Northrop Grumman, Friday – Eli Lily, Colgate-Palmolive, KKR, Caterpillar, Chevron, Weyerhaeuser, Honeywell

Economic data to be posted this coming week – Tuesday – UK Employment data (unemployment rate Est: 4.9%) and average earnings, UK CBI Distributive trades, US House Prices & Consumer Confidence, Wednesday – US MBA Mortgage Applications, US Durable Goods, US FOMC Meeting, Thursday – EU Consumer Confidence, Inflation and Industrial Sentiment, US Initial Jobless Claims, US GDP 4th quarter EST: US New Homes Sales, Friday – Nationwide House Prices,  US Chicago PMI, US Michigan Consumer Confidence, US Pending Home Sales

 

SOURCES – BBC, CNBC, Reuters, Daily Mail, FT, The Times, Sunday Times, Telegraph Group, Bloomberg, Yahoo Finance