March 9, 2020

“When I go up through the mowing field,
The headless aftermath,
Smooth-laid like thatch with the heavy dew,
Half closes the garden path.

And when I come to the garden ground,
The whir of sober birds
Up from the tangle of withered weeds
Is sadder than any words

A tree beside the wall stands bare,
But a leaf that lingered brown,
Disturbed, I doubt not, by my thought,
Comes softly rattling down.

I end not far from my going forth
By picking the faded blue
Of the last remaining aster flower
To carry again to you.”


Robert Frost – poet – 1874-1963


With wild levels of hysteria over the coronavirus epidemic proliferating in recent weeks, I had to smile at the producers of the next ‘Bond’ film, Michael G. Wilson and Barbara Broccoli postponing its forthcoming premier of  ‘No Time to Die’ - due out in April until 20th November 2020. This decision is all about money and nothing to do with the containment of this virulent disease. There have been 24 ‘Bond’ productions and they have yielded $7 billion at the box office. These movies are blockbusters and if people remain at home out of fear and good sense, revenues would be unreasonably parsimonious.  

After a deeply unedifying ruling in the High Court against Sheikh Mohammed Al Maktoum last week, triggered by divorce proceedings brought by his wife, the Jordanian Princess Haya, I wonder if he will maintain as many horses in training in Newmarket as he and his family have done for decades, keeping hundreds of people in gainful employment with his successful Godolphin operation? This will be a worry on the Limekilns and Al Bahathri gallops!

It appears that the opening salvos between the EU and the UK over trade talks have been uncompromising with fishing and regulation spats somewhere towards the top of the agenda. We understand that the EU requires the UK to have less advantageous deals than Canada and Japan, because of the UK’S proximity to the EU – supposedly too much competition. These alleged comments do not bode well for the future – Nil desperandum.



2nd March 2020

6th March 2020

% loss/profit

FTSE 100
















S&P 500





















It’s amazing the untold damage that the stench of fear can inflict on markets. This kind of pungent aroma permeated across all world markets last week in spades. Equities and bonds – neither were immune from being indiscriminately trashed. The only asset that was unblemished last week was gold. Oil sank by the best part of 9%, once OPEC had failed to agree a cut in production of 1.5 million barrels a day. The situation was of course exacerbated by the drop in demand. This morning crude oil is down almost 30% to $32.44. Gold attracted those set ‘hot-foot’ on a flight to quality and tranquillity for that matter, ending the week at $1667 an ounce.

As we have known over the years, markets handle good and bad news deftly, but they have no empathy with uncertainty. It is an anathema to them. The conditions that currently prevail provides all the ammunition that the ‘teenage-scribblers’ and programme traders require to wreak havoc with their relentless quest ‘to knock seven bails’ out of equities and bonds using ETFs and futures to achieve their goals.

How much longer will it go on? Who knows? That’s the conundrum we all must to face up to. It is not so much the physical damage the virus inflicts, it is the inability of people to travel to work, abroad and on holiday, failing to shop, dine out or visit the pub; it will be a combination of these market forces will take its economic toll on society. 

As can be seen from the above table, last week looks to have been near enough plain sailing. Not so! - the level of volatility has been seismic. The DJIA has especially ‘bounced around like a cork in a bath.’ It has traded within a 4000-point range in the past week. We have had a FED rate cut, promises from all other central banks to assist both on a monetary basis and fiscally, a $50 billion aid package offered by the IMF, if the occasion requires. Both BOE Governor Mark Carney, with valedictory evidence given to the Treasury Select Committee plus Andrew Bailey’s endorsement, will have guaranteed wide-ranging assistance to SMES and maybe even to mortgage owners. None of these initiatives of assistance have managed to abate the level of fear. In fact, traders have treated them with disdain. Even though the economic data in the US and in the UK posted last week has been satisfactory apart from UK retail sales, which are down 0.9% on last February, according to BDO, sadly it appeared irrelevant. UK house prices were on the rise by 2.8% last month, but that may now be to no avail, if the fall-out from the coronavirus prevails. Friday’s Non-farm payroll numbers for February endorsed the perception that the US economy was entering overdrive adding a whopping 273K jobs in February, with the unemployment rate unexpectedly falling to 3.5%. Hourly earnings rose by 0.3% to 3%.


This Monday morning U.S stock futures, Asian bourses and crude oil prices plunged in electronic trading as fears of a global oil-price war combined with coronavirus fears to rattle traders. The FTSE could be down by 400 points and the DJIA futures by 1250 points. It does not augur well for the week.

In the past two weeks the FTSE 100 has surrendered 12.7% in value, with the DOW falling by 11.8%, with the NASDAQ taking a beating to the tune of 12.8%. Asian markets have not fared quite so badly with the Hang Seng off by 5.5% and the NIKKEI had its colours lowered by 11.3% over the same period. Oil has fallen by 23% for reasons mentioned above. The global losses have been humungous – The UK circa £200 billion and the US circa $2 trillion. The sectors most vulnerable have included banks – down about 18%, Autos -17%, Airlines -25% (This crisis may cost $113 billion) and insurance -20%. JP Morgan’s Jamie Dimon’s heart surgery took some value off this well managed bank. He is expected to make a full recovery, though a succession line will surely be developed.

However, the most worrying statistic for me has been the catastrophic drop in bond yields – 10-year US Treasuries yields have halved to only 0.75% with Gilts offering a ludicrously parsimonious 0.23% yield. In years gone by when yields fell as dramatically as they have, it was generally a signal that a recession was on the cards, with a slump a possibility. Let’s hope that this debilitating virus can be ‘brought back on the bridle’ sooner rather than later.

Last week in the US was a significant one for retail earnings. Apart from Target, whose numbers were just about satisfactory, Abercrombie & Fitch, Nordstrom, Urban Outfitters all failed to pass muster and the value of their shares were taken down by mainly double-digit percentages. Here in Old Blighty there was very little to smile about. ITV saw total revenues and advertising down by 10%, despite decent programming. Maybe CEO Dame Carolyn McCall will soon realise that the game is up as an independent and eventually fall into the arms of a media or communications mogul. Direct Line’s pre-tax profit felly by 12% to £509.7 million, but in fairness the flooding may cost £35 million. Greggs’ performance brought a smile to our faces, when CEO Roger Whiteside reported profits of £100 million for the year for the first time, with 2000 outlets. Like for like sales for the past 9 weeks were up 7.5%.

Dame Sharon White has certainly had a baptism of fire in her early days as Chairman of John Lewis. She reported a 23% drop in annual profits to £120 million for the year with a miserly 2% bonus – circa £360 per 83,000 employees – the worst since 1953, when nothing was paid. There will inevitably be redundancies amongst management and some staff with no doubt a few closures.

Flybe, Europe’s largest internal airline finally closed its operation down, with a turnover of 8 million passengers annually. Coronavirus was partly to blame but the business model was not sound. The £13 flight levy per passenger was never cut because of EU rules, which are binding until 31stDecember 2020. So, the £100 million financial assistance required to keep going was not delivered by the government or Virgin Atlantic, its largest shareholder. The government, despite its promises to stimulate business across the spectrum is not obliged to keep the operation afloat. 2000 jobs will be lost with Southampton very badly affected. However, Loganair has picked up some of the slack.

The Sunday Times tells us that Prudential may unveil plans to hive off its US operation by way of an IPO. The Sunday Telegraph informs us that SFO is having the drains up over allegations that Lloyds Banking Group and KPMG are supposed to have conspired to load Angel Group with excessive fees, resulting in the property company going into administration. In the past two months, Chinese exports sank 17.2% with imports dropping 4%. There is concern that China may not have the slack to buy an extra $200 billion of goods from the US. There will be hope of understanding from the US, but Messrs Trump, Mnuchin and Ross are not known for their philanthropy.

Finally, to Wednesday’s UK Budget. Chancellor Rishi Sunak is caught between a rock and a hard place. The revenues from taxation personal and corporate are likely to have dropped. Recession, even temporary, cannot be ruled out. Promises must be kept, helping the regions, as well as crime, housing and the NHS. In addition, small businesses and individuals with temporary problems must be supported in their hour of need. Borrowing is as cheap as chips at present but fiscal discipline is also important. Chancellor Sunak has tricky job on his hands, as the economic carpet has been swept from under his feet.

UK companies posting earnings to be posted this week - Monday  Clarkson, Tuesday – Cairn Energy, Close Brothers, DFS, John Menzies, M&G, Pendragon, Ophir Energy, French Connection, Informa, Standard Life Aberdeen, TP, ICAP, Wood Group, Wednesday – Balfour Beatty, Costain, Lookers, Prudential, G4S, Thursday – Galliford Try, Go-Ahead, Cineworld, Computacenter, Funding Circle, Just Group, Tullow Oil, Bodycote, Marshalls, Savills, Trainline

US earnings to be posted this week – Monday – Vail Resorts, Casey’s General Stores, Tuesday – Dick’s Sporting Goods, Korn/Ferry, Thursday – Dollar General, Gap, Oracle, Broadcom

Economic data to be posted this week – Monday – German Industrial production, Tuesday – UK BRC sales, EU GDP estimates, Wednesday – UK GDP, UK Budget, UK Trade Balance, US Inflation, Friday – UK Consumer Sentiment, UK OBR forecasts


SOURCES – BBC, CNBC, Reuters, Daily Mail, FT, The Times, Sunday Times, Sunday Telegraph