WEEKLY FAYRE – Monday, 8th June 2020

June 8, 2020

“Behold her, single in the field,

Yon solitary Highland Lass!

Reaping and singing by herself;

Stop here, or gently pass!

Alone she cuts and binds the grain,

And sings a melancholy strain;

O listen! for the Vale profound

Is overflowing with the sound.


No Nightingale did ever chaunt

More welcome notes to weary bands

Of travellers in some shady haunt,

Among Arabian sands:

A voice so thrilling ne'er was heard

In spring-time from the Cuckoo-bird,

Breaking the silence of the seas

Among the farthest Hebrides.


Will no one tell me what she sings?—

Perhaps the plaintive numbers flow

For old, unhappy, far-off things,

And battles long ago:

Or is it some more humble lay,

Familiar matter of to-day?

Some natural sorrow, loss, or pain,

That has been, and may be again?


Whate'er the theme, the Maiden sang

As if her song could have no ending;

I saw her singing at her work,

And o'er the sickle bending;—

I listened, motionless and still;


And, as I mounted up the hill,

The music in my heart I bore,

Long after it was heard no more.”


William Wordsworth – poet – 1770-1850


Though the political rhetoric, caustic comments and poisonous invective have reached intolerable levels – enough to drop fair-minded people into a vortex of despair, there is hope peaking through over the horizon – sadly not of much economic benefit, but to those, who love their sport, live action started to appear on our TV screens last week in the form of horse racing. Some of the ‘fayre’ at Newcastle, Kempton and Yarmouth was moderate in places, though it was good to see some of Mark Johnson’s super fit team do the business for the Middleham handler. However, Andre Fabre, at Deauville, produced his 9th French Guineas winner, who looked a useful tool – Godolphin’s ‘Victor Ludorum’ – which won with a bit in hand, under a classy ride by Mickael Barzalona.

The icing on the cake to this weekend’s sporting extravaganza came on Saturday, when Andrew Balding’s charge ‘Kameko’, owned by the sponsors Qipco, saw ‘Wichita’ and the ‘red-hot jolly’ ‘Pinatubo’ off, to win the 2000 Guineas at 10/1. Oisin Murphy gave the son of ‘Kitten’s Joy’ a peach of ride and it was such a pity that he should enjoy his first classic winner in deafening silence!

Yesterday ‘Love’, the daughter of ‘Galileo’, in the hands of Ryan Moore ran away with the 1000 Guineas to give trainer Aidan O’Brien his 6th Guineas win.

Football is back in just over a week! Enthusiasts are salivating at the prospect of there being Premiership action.



1st June 2020

5th June 2020


















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Many investors were happy to swing along for the ebullient ride, hanging on to coattails of global equity market momentum for much of last week. In all honesty, during that period, on every known economic piece of data, logic flew out of the window, with punters dining out on adrenalin, praying on the idea that hope will continue to spring eternal! There was a slight hint on Wednesday with the US ADP employment index and again on Thursday, when initial jobless claims posted a rather parsimonious number of 1.88 million people seeking benefits, taking the total to 42 million, that perhaps the economic outlook may not be as fearful as many had believed. For many investors, this data might prove to be a pointer that Friday’s non-farm payrolls may not be as devasting as many thought they might be. There was talk of 20% unemployment in places.

However, at 1.30pm BST on Friday, the official payroll data posted saw a PLUS number of 2.509 million versus -7.5 million estimate and -20.687 million in April - An unemployment rate of 13.3% versus 19.0% expected and 14.7% in April. So, in a heartbeat, the DJIA futures rose like the proverbial grilse adding 750 points. At the close on Friday the DJIA had accumulated another 829 points at 27110. Still, it remains to be seen how many businesses stay open and employ the same number of people in the coming months amid the coronavirus-induced recession. It is interesting to note that corporate bankruptcies spiked during May as the coronavirus pandemic slammed the U.S. economy, pushing the number of filings to levels recorded in the wake of the 2007-09 recession. U.S. courts recorded 722 businesses nationwide filing for chapter 11 protection last month, a yearly increase of 48%. In May 2019, a total of 487 businesses filed for that type of bankruptcy, which lets corporations resolve their financial problems and continue operating.

There were other issues that contributed to this rally, which looked to be ‘under a wet sail.’ On Thursday ECB President Mme Christine Lagarde said it would expand its massive bond-buying programme to combat the shock from the coronavirus pandemic. The central bank has now committed to buy €1.35 trillion ($1.5 trillion) of bonds, an increase of €600 billion ($675 billion). Moreover, the bank extended the length of the PEPP to June 2021 – a year from now. Furthermore, Mme Lagarde warned that -20% GDP in the second quarter may not be an idle threat.  The fact that the perception that the world was going back to work plus the liberal supply of liquidity both from central banks and from fund managers kept the dream alive; that recovery was on the way. Blondemoney’s Helen Thomas poignantly pointed out – “Given the persistent demographic related disinflation PLUS the lack of full monetary and fiscal union, avoiding debt monetisation, is the Euro the true hard currency of choice in a money printing world?” 

American factory activity rose from April’s 11 year low, with the ISM manufacturing index edging up to 43.1 in May from 41.5. Here in Old Blighty, the PMI index, compiled from surveys of business activity – rose to 40.7 in May from 32.6 a month earlier, when harsh restrictions brought Britain’s economy to an effective standstill. This data hardly caused a ripple – positive or negative. It was all about employment data. On the political/economic front, the Bank of England Governor is rumoured to have told UK banks to gear up for a ‘no deal Brexit’; just prudent judgement to cover all eventualities rather than erroneously interpreting Mr Bailey’s views. After last week’s positive comments made by Nissan and Renault on the future of their Sunderland operation, this week the Government was given a blunt warning about a ‘No deal Brexit.’ Any possibility of restrictive tariffs could not be countenanced by the Japanese car titan.

On the Street of Dreams gains were made right across the spectrum last week, though the NASDAQ component stocks benefitted by the least amount. McDonald’s (+8%), Boeing (+23%), Exxon (+17%), Chevron (+10%), JP Morgan (+12%) and American Express (+13%) led the charge. It goes without saying that airlines such as United (+50%), Delta (+33%) and JetBlue (+34%) were huge gainers well in to double-digit together with travel operators such as Expedia (+17%) and Booking Holdings (+11%). One cannot help feeling that these two sectors have not got ahead of themselves, since lock-down has not yet finished and restricted-free travel is some way off and frankly business travellers and holiday makers may well have less disposable income than before. 

On another positive front ZoomInfo Technologies priced its initial public offering at $21, last Thursday, above its expected range. Shares of ZoomInfo ‘popped from the off’ when it started trading and surged as much as 100% at intraday highs. The NASDAQ’s the latest big-tech IPO of the year, showing signs of recovery in the market. With the good news comes the bad news. At short notice, Bernard Arnault pulled LVMH out from acquiring Tiffany’s in a $16 billion deal. Significant losses by the diamond jeweller may have been incurred.

There were plenty of corporate issues that received media attention last week here in the UK. Restaurant Group’s ‘Frankie & Benny’ will be closing outlets, which will necessitate 3000 redundancies. The inability to shop, despite on-line prowess saw Ted Baker’s Ray Kelvin back a £95 million covid19 rescue package. BP’s CEO Bernard Looney made his feelings succinctly felt that recovery stimulus packages should come with a ‘green pledge’ including dispensing with fossil fuel subsidies. Fever Tree, the posh drink mixer, whose share price has fallen from £39.12p 20 months ago to £19.81 on Friday, rallying from £9.3p in March, due to a 24% rise in ‘off-trade’ sales in the first month of the lockdown. Sixteen insurance companies are in danger of being taken to court by the FCA in July over payment disputes related to ‘lock-down’ claims. Some insurers have relented and will now be meeting their claims. JD Sports and Primark, two of the UK’s most successful operators, are having great difficulties in securing sustainable rents for the current downbeat environment.  It is thought that the final claims bill for covid19 could be £3.5 billion. SSP, which owns brand names such as ‘Upper Crust’ and ‘Ritazza Café’ have asked shareholders to reinvest the final dividend of £26.8 million for the time being. SSP has also successfully raised £216 million through a share placing to bolster up its balance sheet. 

Many observers will be shocked and irritated that overseas companies such as BASF, the German chemical titan, which employs only 834 people in the UK qualified to borrow £1 billion from the BoE Covid Fund, qualifying through employment requirements. Others include US companies such as Schlumberger and Baker Hughes – not the best use of taxpayer’s money. I suspect there is method in the Government’s madness, but hard for the man in the street to identify.

Despite political condemnation and understandable objection from ‘human rights’ lobbies, for purely pragmatic reasons, the management of HSBC and Standard Chartered Bank came out in measured support of the Chinese government’s interference in the legal and so called security affairs of Hong Kong, which were against the 1997 agreement with the UK government. It is harder to understand Standard Chartered Bank’s CEO Bill Winters’s stance as his operation has more strength in the sub-continent, Africa, the middle east, and Asia, and of course aspiring to improve its standing in China. However, in the case of Mark Tucker chairman and Noel Quinn, CEO of HSBC, the ‘local bank’s’ presence in China and HK is all but omnipotent.  75% of its resources and profits emanate from Asia (£14.7 billion). HSBC’s presence in the US has diminished. Its operation in Latin America incurred a loss of £2.8 billion. As for Europe, in the last year £3.7 billion has been lost by HSBC. It may just be that HSBC will be forced to move its head office back to HK in support of its commitment to the region.

Barclays Bank will be very keen to see this ugly spat between Amanda Staveley and Roger Jenkins over alleged unpaid fees of £1.6 billion to the former’s PCP Capital Partners over the bank’s £8 fund raising by Qatar in 2008, come to a swift and satisfactory conclusion. The four Barclays’ executives were found not guilty of fraud in the High Court in February 2020. IAG’s Willie Walsh and BA’s CEO Tony Cruz maintain the government’s stance on quarantine rules due to come in on 15th June 2020 are stupid and illogical. Many professionals and observers agree. Let us hope good sense prevails.

In closing, the Sunday Times tells us that BoE Governor Andrew Bailey has warned that loans totalling £36 billion to small businesses are at risk of turning toxic and they could impede recovery. This comment will be highlighted in a report due out on Monday on ways to support 250,000 struggling businesses. Data this coming Friday may report that UK GDP fell 18% in April following a 5.8% downturn in March. Finally, it has been suggested by sources close to Bloomberg that Astra Zeneca has discussed the possibility of a merger with US Gilead Sciences, responsible for Remdesivir, an antiviral drug being developed to treat coronavirus, amongst other drugs. This suggestion has been subsequent shelved.

UK companies posting interim results this week – Monday – Quiz, Tuesday – Aveva, Big Yellow, Marston’s, Speedy Hire, Wednesday – LondonMetric, Shaftesbury, Naked Wines, Thursday – Babcock International, Johnson Matthey, CMC Markets, TalkTalk

US companies posting earnings this week – Tuesday – Genesco, Wednesday – Chico’s FAS, Thursday – Adobe Systems, Friday – Christopher & Banks

Economic data to be posted this coming week – Monday – Japan GDP, ECB Lagarde Speech, US Consumer Inflation, Tuesday – EU 3rd quarter GDP estimate, Wednesday – Chinese inflation, US MBA Mortgage Applications, US Inflation, FOMC Meeting, Thursday – US PPI, US Initial Jobless Claims, Friday – UK Trade Balances, UK Construction & Manufacturing Output, UK GDP April Y/O/Y & M/O/M, US Import & Export Prices, Michigan Consumer Confidence