October 4, 2021

“O hushed October morning mild,

Thy leaves have ripened to the fall;

Tomorrow’s wind, if it be wild,

Should waste them all.

The crows above the forest call;

Tomorrow they may form and go.

O hushed October morning mild,

Begin the hours of this day slow.

Make the day seem to us less brief.

Hearts not averse to being beguiled,

Beguile us in the way you know.

Release one leaf at break of day;

At noon release another leaf;

One from our trees, one far away.

Retard the sun with gentle mist;

Enchant the land with amethyst.

Slow, slow!

For the grapes’ sake, if they were all,

Whose leaves already are burnt with frost,

Whose clustered fruit must else be lost—

For the grapes’ sake along the wall.”

Robert Frost – poet – 1874-1963


The European political arena has been quite fraught and inconclusive, starting with the machinations from the German election, which saw Angela Merkel leave the political stage as Chancellor after 16 years. As predicted by Blonde Money’s Helen Thomas - Germany is ‘Going Left and Going Green!’ The SDP, under Olaf Scholz, was the largest party at last Sunday’s election and will probably form the next coalition government, but it may take months to be formalised. The ambitious, though dangerous energy deal negotiated with by Merkel with Putin may leave Germany and the EU horribly exposed. 

The party Conference season is now under way. Sir Keir Starmer’s speech pleased many of his acolytes, but it was still rather full of rhetoric rather than content and policies. He has a mountain to climb to win over the affections and support of the electorate. In a different way PM Johnson is equally under the cosh this week, in attempting to placate the electorate, who are rather disenchanted with the Government’s performance, apart from the vaccination programme, which with some quality has given the country back a life. He will be hoping that Chancellor Sunak’s speech on Monday, will restore some confidence. However, it is hard to see the Chancellor winning many friends with what is likely to be a very tough budget, which will adversely affect business, as well as the lower-paid members of society.

The winner of the Arc de Triomphe at Longchamps - yesterday - Germany’s ‘Torquator Tasso’ – could have started on Saturday and I still would not have backed him. He won a tad cosily at 139-1 on Betfair, beating a very decent field in the process. Soft ground often finds out some of the better horses and yesterday the ground was soft, which took its toll of the more fancied English Irish runners – Broome Adayar, Snowfall, Hurricane Lane and Tarnawa.



27th September 2021

1st October 2021

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S&P 500




















+Closed on Friday 1st October 2021 – Golden Week


Let me start this missive by making a cold reality statement - US equities suffered their worst September since 9/11 – DOW -4.16%, S&P -4.79%, NASDAQ -5.62%. The DAX surrendered -3.56% and CAC 40-3.53%. However, the FTSE 100 eased by only -0.89%. The UK’S main index’s loss was mitigated by the strength of the Dollar (60% of constituent stocks have dollar earnings – Sterling has fallen 1.8% against the Greenback in the last month). Also, the UK energy sector was robust last month. This dispiriting data is hardly surprising when there is so much ‘economic and commercial heat’ in everyone’s kitchen. Inflation fears, supply chain shortages, interest rate hike threats, gargantuan global government and corporate debt and frothy valuations make the basis of a very toxic cocktail for investment uncertainty,

Last week trading conditions were extremely volatile within a narrow range, but sentiment, until Friday, was far from positive, with investors’ appetite for risk visibly waning. Apart from the Hang Seng, which took its punishment in the previous two weeks, due to Chinese regulatory interference, every major global index finished the week below the Plimsoll line. The spike in energy costs, the supply chain constipation, a visible spiral in general inflation were classic ingredients for a decline in growth, making valuations look a little over stretched. However, a Central bank gathering last week attended by Messrs Powell, Bailey, Lagarde and Kuroda expressed their concerns that inflation may prevail longer than they had originally hoped and understandably there was a quorum, which threatened interest rate increases, as well as tapering quantitative easing in places. They are fully aware that timing is of the essence. To precipitate a tightening of monetary policy, whist the global economy is starting to stutter could have dire consequences for growth and the dole queue. It seems unlikely that any increases will be implemented before 2022. 

Last week data was posted indicating that the U.S. economy grew at a robust 6.6% annual rate last quarter, slightly faster than previously estimated. The US government pointed to a sustained consumer-led rebound from the pandemic recession. Weekly jobless claims totalled 362,000 last week, an increase of 27,000 from the previous week and above the estimated 335,000. Continuing claims rose to 2.84 million. President Biden signed a nine-week stopgap funding bill, averting a default on government debt and an immediate government shutdown. Also, House Leader Nancy Pelosi postponed a ‘House’ $1 trillion infrastructure vote, as the Democrats remain split. These two interventions may well have helped alleviate the pressure on stock market prices that were coming under increasing pressure. 

On Thursday a final encouraging UK GDP estimate for the 2nd quarter was posted by the ONS - +5.5% (EST: +4.8%). Business investment was +9.7% year on year. However, third and fourth quarter GDP may be very different with energy costs and shortages as well as supply chain issues, thwarting progress! The government’s generous furloughing scheme ended at the end of September. 11.6 million people have benefitted and the cost to the taxpayer has been an eye watering £70 billion. There are likely to be one million workers, whose jobs may become vulnerable. Conversely, there are a one million job vacancies. However, concern has been expressed that insufficient time and effort has been spent on retraining people for alternative careers. Travel and retail will inevitably lose jobs. Why so little effort has been spent encouraging employment as lorry drivers, when the Government, industry, business, and commerce have known there would be a shortage for 5 years, ever since the BREXIT announcement, escapes me. According to the IoD, business confidence has fallen off a cliff in September, courtesy of the supply chain and the increase in fuel costs. UK Car production fell 27% in August, largely down to shortage of chips. Weakness in China’s economy has also been flagged up by Nomura and Goldman Sachs – both cut growth estimates from 8.2% for 2021 to 7.7% and 7.8% respectively. 

It was quite a week for deals being consummated in the UK, starting with Wm. Morrison seemingly having fallen into the arms of Clayton Dubilier & Rice for £7 billion (287p per share) plus a debt mountain of £3.6 billion. The successful bid was cannily guided through by Sir Terence Leahy, who will be reunited with his former protégé at Tesco, Dave Potts. CDR finally saw off the Softbank/Fortress competition in an auction that was concluded on Saturday. 

Oxford Nanopore, the DNA tracking techno-giant, concluded its brilliant public offering with shares bouncing by 40% on the first day, valuing the company at £5 billion. The founders Messrs Sanghera, Willcocks, Brown, and Cowper walked ‘out of the ring’ £100 million to the good. The board of Blue Prism, the software conglomerate, which counts the NHS and eBay amongst its clients, agreed to be acquired by US private equity Vista for £1.1 billion. Cazoo, the on-line car seller, partly owned by DMGT, increased the number of cars it sold five-fold (20,454 cars) in the first 6 months of the year, with revenue close to £1 billion, with a widening lost of £102 million, ahead of its forthcoming IPO in New York. Last Thursday private equity investment company Petershill Partners was valued at £4bn by parent group Goldman Sachs, as it raised £1.2bn via an initial public (IPO) offering at a price of 350p. On a slightly smaller scale, Peel Hunt, the stockbroker, completed a very satisfactory IPO, valuing the operation at £280 million, though by the end of the week its shares were not trading at a premium. 

Mike Ashley, owner of 64.8% of Frasers (Sports Direct) ‘rail-roaded’ Michael Murray’s (his son-in-law to be) £100 million incentive scheme, based on share price performance, despite opposition from independent shareholders and the fact that Frasers benefitted by £80 million from furloughing and £97.5 million from business rate relief. In raising £1.2 billion from a rights issue Stelios surrendered his shareholder grip in easyJet down from 25.3% to 15.3% after 26 years. Go-ahead lost its South-Eastern Rail franchise by failing to declare more than £25 million of taxpayers’ funding. Its shares fell by 25% to 799p. 

Such corporate earnings that were posted last week in the UK, were mixed. Again, Lord Wolfson’s NEXT PLC excelled with outstanding sales – up 8.8% against the same half year in 2019. Profits were up 5.9% to £347 million on 2019 with the company estimating it will make £800 million in the year. NEXT’S shares are up 37% from a year ago. Boohoo’s sales were up 20% in the 6 months to August to £975.9 million but profits were down 64% to £24.6 million, due to much higher shipping costs from their many factories abroad. Shareholders were underwhelmed, taking the share price down by 19.5% on the week. Diageo enjoyed a renaissance in their global drinks business – sales up by 16% to £12.7 billion and profits up 18 % to £3.7 billion in the year to the end of June. 

JD Wetherspoon’s CEO Tim Martin reported pre-tax losses of £194.6million, after exceptional items in the year to the end of July - wider than last year's £105.4million and the biggest on record, much of it down to staff shortages and inevitably to the lockdown. Travel recovery boosted sales for SSP, which were at 50% of pre-covid levels, as 40% of Upper Crust outlets were still shut. Lego sales were up by a very impressive 43% to £2.7 billion with profits up by 140% to £730 million in the first 6 months of this year. 

It was reassuring to see Rolls Royce making a strong come back by winning a $2.6 billion contract from the US Airforce to build engines for B-52 stratofortress bombers. There was also good news from GSK on its HIV drug, Cabotegravir. The US FDA are likely bring forward its review of this patent. Virgin Money, which acquired Clydesdale and Yorkshire Bank in 2015 are closing 31 branches and lightening up staff by 112 people. This makes a total of 4525 branch closures for all banks since 2015 – It appears little importance is attached to manager/customer relations. 

‘No Time to Die’ returns to the big screen this week. This long-awaited production will provide a great fillip to Odeon Cinemas which have already lured back 40k customers and to Cineworld, which has sold 175k tickets in the past two weeks. 

Next week investors will stare over a precipice of uncertainty, as the supply chain threatens to hit chaos levels! 

UK Companies posting earnings this week – Tuesday – James Halstead, Revolution Bars, Vertu Motors, Hotel Chocolat, Greggs, Wednesday – Tesco, Ferrexpo, Thursday – Entain, Mondi, Friday – N Brown

US companies posting interim results this week – Tuesday – PepsiCo, Wednesday – Levi Strauss, Constellation Brands, Thursday - ConAgra

Economic data to be posted this week – Monday – EU PMI Services & Composite, US Factory Orders, Tuesday - UK PMI Services, EU PPI, US PMI Services & Composite, US ISM Services, Wednesday – UK PMI Construction, EU Retail Sales, US MBA Mortgage Applications, US Crude Oil Inventories, Thursday – RICS Housing Survey, Halifax House Prices, US Initial Jobless Claims, US Consumer Credit, Friday – US Non-Farm Payrolls (EST: +500k jobs created in September), US Unemployment rate (EST: 5.1%), US Wholesale Inventories

Sources – FT, Times, Sunday Times, Telegraph, Sunday Telegraph, Daily Mail, Mail on Sunday, Guardian, Observer, Bloomberg, CNBC, BBC, Yahoo Finance, Reuters