WEEKLY FAYRE – Monday, 28th June 2021

June 28, 2021

“Loveliest of trees, the cherry now
Is hung with bloom along the bough,
And stands about the woodland ride
Wearing white for Eastertide.

Now, of my threescore years and ten,
Twenty will not come again,
And take from seventy springs a score,
It only leaves me fifty more.

And since to look at things in bloom
Fifty springs are little room,
About the woodlands I will go
To see the cherry hung with snow.”

AE Housman – poet laureate – 1859-1936


Regrettably, the Government continues to frustrate the country with its not only unclear but also its unambitious effort to ‘open up’ travel and overseas holiday arrangements. This level of inertia could drive a seriously deep nail into that sector’s coffin in terms of employment and financial sustainability. Fortunately, a few ‘quality’ sporting events have helped to cover up the deep concerns and exasperation expressed up and down the country. Before delving into the joys of ‘Euro 2020’ and New Zealand being crowned the number one Test cricket team in the world, two points are worth making about international travel.

Firstly, what was the point of rushing two jabs for 60% of the UK adult population, if they are unable to benefit from it? Secondly, despite the transmissibility of the Indian variant, Chancellor Merkel’s relentless quest to dissuade Europe from granting entry to UK citizens who have had two jabs, is no more than an act of political hostility – unadulterated retribution in response to BREXIT. I suppose that in these times of turmoil, behaviour of this nature is only to be expected.

And so, to the joys of sporting achievements! I salute the New Zealand cricket team. WORLD TEST CHAMPIONS! – an accolade it richly deserved. Playing conditions at the Ageas Bowl may have suited New Zealand more than India. Nonetheless, New Zealand capitalised on the conditions. This talented team played with great skill and was brilliantly captained by Kane Williamson. There is no doubt that New Zealand was relentless in its quest to succeed! Virat Kohli, the Indian captain, proved to be the epitome of graciousness, whilst remaining the most competitive and talented of batsmen.

England and Wales made it through the next stage of Euro 2020. Sadly, Scotland failed to make the cut. Then on Saturday night, Wales was comprehensively vanquished by Denmark 0-4. England’s defence to date has been very sound, but its brand of football has been excruciatingly boring. I admit no goals have been conceded. If England beat Germany on Tuesday, the road to the final looks achievable. If England win the Championship, then job done! However, goals look exceptionally hard to come by. The team looks as though it needs a ‘Davy Lamp’ and compass to find its way to the goal!




21st June 2021

25th June 2021

% Loss/Gain

















S&P 500






















As can be seen from the table above all the main global indices finished the week in positive territory. Inflation was the ‘buzz word’ on most analysts and traders’ minds. Despite the constant threat of rapidly rising prices, most central banks seem reluctant to increase interest rates for fear of damaging the economic recovery, which now seems to be ‘under a wet sail.’ FED Chairman Powell made it crystal clear to the US Coronavirus Pandemic Committee that it was not the intention to raise rates in the foreseeable future, even though CPI had hit 5%. Jay Powell thought the ‘spike’ was temporary and quantitative easing would be tapered before any increase in rates were implemented.

Traders on the Street of Dreams threw caution to the wind and selectively increased their level of risk. The tech sector continued to attract buyers, resulting in the NASDAQ reaching fresh heights, as did the S&P 500. With Brent Crude bouncing above $75 a barrel, it was unsurprising that the likes of BP and Shell also benefited. The Nikkei and the Hang Seng reflected the upbeat mood in New York. GDP in the US was reconfirmed at +6.4% for the third quarter. Initial Jobless Claims are taking longer to fall than had been hoped for.  They totalled 411,000 for the week ended June 19, a decline from the 418,000 in the previous period, but worse than the estimate of 380,000. Continuing claims decreased to 3.39 million.

Here in the UK, Thursday’s MPC meeting captured most of the economic headlines. The fact that rates remained unchanged at their lowest level of 0.1% was no surprise. The threat of inflation (+2.1% last month and rising) seemed to be of more concern to the outgoing Chief Economist Andy Haldane, than his eight other colleagues. He voted on his own to cut quantitative easing by £50 billion down from £895 billion as his final valedictory challenge to the current status quo. The market expects two rate increases in 2022 – a quarter of a percent in February and another in November. The MPC is worried that inflation will hit 3% in the current cycle, but again hopes that the current supply chain issue, which has triggered higher prices will be ironed out in the next 6 months or so. Panmure Gordon’s Chief Economist is of the opinion that ‘a strong run of activity data’, plus encouraging signs on 19 July start to roadmap Stage 4 and exceptionally loose financial conditions all mean that the MPC can prepare the ground for an early end to asset purchases, perhaps starting in August, with a cut to £850 billion, rather than wait until November.

Monday’s Public Sector Borrowing saw May 2021 requirement come in at £24.339 billion - £19.4 billion less than May 2020. The 2021 total so far (April & May) is £53.4 billion - £37 billion less than £90.3 billion for first 2 months of 2020! Government tax receipts for May 2021 were £56.9 billion - £7.5 billion more than May 2020. The first three months of this year saw some slightly disappointing news on the trade front. Exports to the EU fell by 50% for a combination of reasons – the pandemic, Brexit regulation and bloody-mindedness. Also trade with Ireland fell by 70% in the same period. So, until joined-up-thinking and conciliatory behaviour returns to the table, the Government needs to find alternative markets with indecent haste. Trade deals with Australia, Japan and New Zealand will help, but they alone, however friendly the terms, will not suffice. Maybe one day the EU/UK will realise that being at economic war in times of strife, is counterproductive. Deutsche Bank also put out a statement, expressing its concern about the threat of a serious Eurozone debt crisis. Loose talk of debt reaching 130% of GDP was being bandied about!

Having experienced a torrid year 2019/20, when posting a loss of $790 million, Nike’s fortunes turned around dramatically last year. It announced a profit of $1.5 billion last year – up the best part of 200%. The pandemic savaged this global brand, but the recovery has been meteoric, with digital sales jumping by 147%. Total sales came in at $12.34 billion, with sales in the US topping $5.38 billion. McDonald’s announced that it was to hire an extra 20,000 people in the UK in opening 50 new outlets this year, McDonald’s employs 130,000 in the UK in 1,400 restaurants. Whitney Wolfe Herd, the motivating founder of Bumble, the second largest on-line dating agency, announced a week’s holiday for its 700 staff, due to an unreasonable level of pressure they had been subjected to during the pandemic. The entire business will be closed during that week.

In the UK earnings were sparse last week. DS Smith the packaging titan, used by Amazon amongst others, posted an increase in growth of 3.5%, but up 8.5% in the second half. The company’s profitability was adversely affected by increased charges due to Covid-19. It was down 38% at £270 million, but revenues only fell by 1% to £5.98 billion. The recovery in the US has been very strong. Joules has seen a sharp rise in sales of raincoats and Wellington boots. Revenues were up 4% to £199 million. In-store sales fell by 41% last year, but on-line sales increased by 48%. Another company which benefitted from the lockdown was Gear4Music, with guitars and keyboards flying off the shelves. Profits rocketed by 371% last year to £14.6 million. In the ‘grand scheme of life’, it is small beer, but clearly a barometer of social activity.

Corporate news continued to flow thick and fast. Lloyds Banking announced it will close another 44 branches making a total of 100 to be shut this year. BT had announced its intention to sell BT Sport, but CEO Philip Jansen said that a joint venture with Rupert Murdoch’s News UK was a possible alternative plan. Murdoch was the pioneer of Sky and owns TalkSport amongst other broadcasting units. There will be competition from Dazn and possibly ITV. Deliveroo’s shares have been in the shadows since its recent IPO. However, they bounced by 9% last Wednesday when the High Court announced that its drivers were self-employed contractors rather than employees, but they are due the same rights as employees. Lego announced that it planned to make its bricks from recycled plastic bottles – all part of the climate change agenda. Lego currently makes 3,500 different bricks and shapes; so, this plan will take some inventive management.

Victorian Plumbing concluded a successful IPO, valuing the company at £1.1 billion, with CEO Mark Radcliffe scooping up £212 million for his efforts. Soho House has 111,000 global members and operates 28 hotels. Nick Jones, the CEO has asked members for their backing in a $3 billion float in New York. If successful, the number of outlets could be expanded to 43. The market eagerly awaits the public offering of Wise, previously known as Transferwise. This money transfer operation, founded by Taavet Hinrikus and Kristo Kaarman in 2011 is expected to come to the market on 7th July, valued at between £6 billion and £9 billion. It transacts the movement of money significantly cheaper than the banking sector. The company has been profitable for four years and boasts access to 10 million customers with £5 billion worth of transactions a month. The problem is valuation. A repetition of what happened to Deliveroo must be avoided. An excessive valuation could spoil the prospects for the largest fintech IPO London has ever seen.

GSK’s CEO Dame Emma Walmsley has been under the cosh for some months since Paul Singer’s Elliott Management bought a significant minority stake in Europe largest drug company. GSK has performed poorly in comparison to Astra Zeneca. It shares are down 10.3% in the past three years by comparison to Astra’s which have added 32% in value over the same period. Dame Emma came out fighting last week with all guns blazing, promising to deliver total sales of £33 billion by 2031, having split the company into two divisions – drugs, vaccines and oncology and a joint venture with Pfizer in healthcare. In recent years GSK has prevaricated as to its agenda. It has done deals with Novartis, then boughtan oncology specialist, Tesaro, for $5.1billion. GSK’s plans for the future have been unclear until last week. It remains to be seen if Dame Emma’s presentation was robust enough for her to survive.

Clayton, Dubilier & Ryan’s £5.5 billion audacious bid for Morrison plus its debt of £3 billion has been rejected out of hand by Chairman Andy Higginson and the board, for grossly undervaluing the company. It has been suggested that the offer would have to be nearer 280p rather than the 230p currently on the table. This news has seen the value of all supermarkets rally last week as the market waits to see if there is any reaction from Amazon or other possible predators, who might be quietly waiting in the wings!

In closing the Sunday Times tells us that Broadcom, MediaTek and Marvell have approved Nvidia’s $40 billion takeover of ARM Holdings from Softbank. Concern prevails that this deal could stoke national security fears.

UK companies posting interim results this week – Monday – Avacta, Tuesday – Stagecoach, Lookers, Wednesday – Serco, Dixons Carphone, Thursday – Micro Focus, AB Foods, AO World, Friday - Reach,

US companies posting interim results this week – Monday – Jeffries Financial, Wednesday – Bed, Bath & Beyond, Constellation Brands, General Mills, Micron Technologies, Thursday – Walgreen, Bots Alliance

Economic data to be posted this coming week – Tuesday – UK Mortgage Applications, UK Consumer Credit, UK M4 Money Supply, US House Prices, US Consumer Confidence, Wednesday – BRC Shop Prices, UK Current Account, UK GDP (EST: final for 1st quarter -1.5%), Nationwide House Price Index, US MBA Mortgage Applications, US Pending Home Sales, US Crude Oil inventories, Thursday – UK PMI Manufacturing, US/EU PMI Manufacturing, US ISM Manufacturing, US Car Sales, Friday – US Non-farm Payrolls (EST: for June +620k), US Unemployment (EST: 5.7%), US Factory Orders