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Liontrust Dealer's Roar - 29/07/2011

“The best blood will at some time get into a fool or a mosquito" - Benito Mussolini, Italian Politician, born 29th 1883 died 28th April 1945.

I’m sure it will not shock you to discover that overnight there was no progress made on the debt-ceiling debate. House republicans decided to delay the vote on Boehner’s plan after he’d met with them in an attempt to gather enough support to get it through the 6pm vote (which clearly failed).

Liontrust Dealer's Roar - 28/07/2011

“The great nations have always acted like gangsters, and the small nations like prostitutes” – Stanley Kubrick, Director, 26thJuly 1928 – 7thMarch 1999

The US moved in a very ugly fashion overnight with the S&P closing -0.97% from when we turned the lights off, followed by a largely negative Asian session (only Hang Seng up on “bargain hunting”). I rather enjoyed this bearish run-down from our man at Barclays Capital so I thought I’d share it: 

Liontrust Dealer's Roar - 27/07/2011

“The USD didn’t even rally versus the Turkish Lira today” – Market commentator, 26th June 2011

The $ came under increasing pressure yesterday as (you’ve guessed it) worries of the debt-ceiling intensified and also probably due some € demand as investors closed their shorts in that currency. A weak $ has generally been good for risk assets for the last couple of years (esp. commodities as they are all priced in $) so we may have an interesting pull develop whereby $ down = bad for risk assets as the US has defaulted on its debt while at the same time being good for some risk assets (e.g. oil).

Liontrust Dealer's Roar - 26/07/2011

“The great nations have always acted like gangsters, and the small nations like prostitutes” – Stanley Kubrick, Director, 26thJuly 1928 – 7thMarch 1999

US markets initially tried to move higher post our departure but couldn’t hold the level and ended up closing lower on the day (albeit on pretty dire volumes). Once again debt ceiling headlines were the main feature as was a Moody’s downgrade of Greek debt to Ca from Caa1 "Greece will still face medium-term solvency challenges: its stock of debt will still be well in excess of 100pc of GDP for many years and it will still face very significant implementation risks to fiscal and economic reform"as the rating agency think the second bailout will only have a limited effect on its massive debt burden. Oil refiners were the standout sector after an extremely positive article in Barrons and Apple tapped the lofty level of $400 a share (and it’s actually smashed through it now). Post the US close President Obama made a TV appearance calling for compromise to avoid a debt failure which started with the sentence, “we can’t allow the American people to become collateral damage to Washington’s political warfare” and went on talk about the US remaining the greatest nation on earth. Quite.

Liontrust Dealer's Roar - 25/07/2011

“Our political machine, composed of thirteen independent sovereignties, have been perpetually operating against each other and against the federal head ever since the peace” – Henry Knox, American General, 25thJuly 1750 – 21stOctober 1806

US markets moved slightly higher post our close Friday with the S&P putting on another 0.25%. It was interesting to see the Nasdaq 100 breakout to the upside thanks to decent numbers from AMD (+19%) & Sandisk (+9.6%) pulling up others in the sector (e.g. Micron +6%) while the Dow Industrial languished (flat from UK close) as Caterpillar (-6%) missed numbers blaming the Japanese earthquake/Chinese slowdown & Verizon (-2.2%) disappointed as they underperformed rival AT&T in shifting Apple kit.  

Liontrust Dealer's Roar - 22/07/2011

“In the words of the old song, it's a long time from May to December but, you know, it's an equally long time from December to May” – Jimmy Hill, football personality, born 22 July 1928

US equities traded slightly upwards post our departure, the S&P managing to put on a further 0.27%, with volumes actually looking a little better than of late. Upside was a function, as you may have guessed, from the dampened contagion concerns surrounding the sovereign crisis in Europe following the aggressive proposals put forward post the summit meeting. Poor PMI data (Germany, France & China) was largely ignored as was a slightly negative jobs report.  

Liontrust Dealer's Roar - 21/07/2011

All our words from loose using have lost their edge”Ernest Hemingway, American novelist, 21st July 1899 – 2 July 1961.

An interesting day today as not only is it Hemingway’s birthday but also that of Baron De Paul Julius Reuter founder of the Reuters news agency. Born in 1816 he started what is today’s Reuters in 1850 by using carrier pigeons to send stock prices and news between Brussels and Aachen (Germany) using 45 trained birds provided by a local brewer. The birds were able to ferry information much faster than the incumbent technology of the time, horseback, so providing his customers with an advantage. Today it’s doubtful the same advantage exists as although the speed of information has increased, the quality can quite quickly fall into Hemmingway’s trap as anyone who has to watch headlines from loose tongued Euro officials moving the prices of stocks they are trying to trade will testify.

Liontrust Dealer's Roar - 20/07/2011

“I feel that the people I trusted, I don't know at what level, let me down and I think they behaved disgracefully, betrayed the company and me and it's for them to pay. I think that frankly I'm the best person to clear this up.” -  Rupert Murdoch, media tycoon, addressing MPs yesterday prior to getting foamed by a man in a checked shirt

Overnight markets received a fillip from US politicians as Barack Obama shoved his weight behind a $3.7 trillion deficit-reduction plan unveiled by six Republican and Democratic senators. While the plan is not currently in a form which could actually be passed quickly it does at least point toward some agreement between the warring factions. House Majority Leader Eric Cantor, one of the party’s most combative conservatives, appeared to back the general idea, "While there are still portions that are unclear and need more detail, this bipartisan plan does seem to include some constructive ideas to deal with our debt”. These six senators are now being known as the “gang-of-six” in the media, after a previous group of six senators (3 democrat, 3 republican)

Liontrust Dealer's Roar - 19/07/2011

“I haven't reported my missing credit card to the police because whoever stole it is spending less than my wife”  – llie Nastase, Romanian tennis player, born 19th July 1946.

Althoug they still closed in negative territory US markets actually managed to rally post our departure, with the S&P putting on 0.4% from UK 16:30. Downside pressure from the off was caused by the same fears effecting us andcorporate results that didn’t really give traders much cause to buy the market; there was no obvious catalyst for the small bounce but perhaps some short covering occurred as the index broke the 1300 level (my guess!).  

Liontrust Dealer's Roar - 18/07/2011

“After climbing a great hill, one only finds that there are many more hills to climb.” – Nelson Rolihlahla Mandela, anti-apartheid activist, prisoner & former President of South Africa, born 18th July 1918.

Post our departure the results of the stress tests I mentioned on Friday were released andas I suspected it appears banking sector analysts had a busy weekend judging by the raft of notes in the inbox this morning. Without going into reams of detail only 8 banks failed the test, however the main takeaway appeared to be that they really weren’t stressful enough e.g. a European sovereign default was not a scenario tested despite the fact, according to the CDS  prices, Greece has a 90% chance of doing just that. 

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Any opinions expressed should not be construed as advice for investment in any [product or] security mentioned or which may form the underlying content of any topics discussed in this blog.  The information and opinions provided in this blog take no account of the investors’ individual circumstances and should not be taken as specific advice on the merits of any investment decision.   Any opinions or information provided has been based on sources we believe to be reliable at the time of this blog’s preparation: no representation or warranty, express or implied, is made as to the accuracy, reliability or completeness of such information.  Neither Liontrust, nor any of its partners, employees, representatives or agents accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of our research or its contents.

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