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Liontrust Dealer's Roar - 16/05/2012

“I've been close to Bette Davis for thirty-eight years - and I have the cigarette burns to prove it.” Henry Fonda, American actor, May 16th 1905 – August 12th 1982

Summary

  • Once again Wall Street drifted post our close….
  • Asian markets hit very hard overnight (HK -3%, Australia -2.6%, South Korea -2.1%)
  • Commodity and currency markets broke down overnight (Gold close to new 2012 low, oil weak, Euro sub $1.27)
  • CNBC report that withdrawals from Greek banks on Monday post the election totalled EUR700m
  • Europe opened sharply lower as new Greek election called for mid June
  • Peripheral bond yields open sharply wider……
  • ….but rally hard as credit markets tighten
  • French bond auction went well which sparked the CAC into positive territory
  • Bank of England quarterly inflation report  sees growth downgraded and a positive steer on inflation (expect 2% by 2014)
  • ECB reported as saying that they will continue to support Greek banks
  • By lunchtime peripherals yields were all lower on the day, prompting further positive momentum for equities
  • …….and they responded accordingly as the rally continued
  • Decent housing start numbers from the US suggesting a genuine improvement in market prospects
  • By mid afternoon, almost all European markets, including the UK, were trading higher on the day, but…….
  • ….the curse of the Greek headlines returned with reports of the ECB freezing emergency liquidity assistance to some Greek banks
  • …..which put almost all markets back into the red on the day
  • FTSE ended the day lower by 0.6%, with most of Europe lower, but France higher by 0.3% as a stand-out
  • The S&P was higher by 0.19% as we put our books away for the night

  

Liontrust Dealer's Roar – 15/05/2012

“To understand Europe, you have to be a genius - or French.” Madeleine Albright, the first female US Secretary of State, born May 15th 1937

Summary

  • US declined further post our close with no sign in sight of a resolution in Greece
  • Asia ended the day mixed, which represented a decent rally for most markets (Hong Kong ended an 8 day losing streak with a rise of 0.81%)
  • Moody’s cut the long-term debt and deposit ratings for 26 Italian banks by one to four notches
  • Europe receives a boost from stronger than expected German Q1 GDP growth, rising by 0.5% quarter-on-quarter, against an expected reading of just 0.1%
  • With Greece still the word, relief that at suggestions that they will make a EUR436m interest repayment due today
  • But with no sign of a pick-up in peripheral bonds, the markets were soon giving the early gains back
  • Mixed signals from the German ZEW survey……..current situation data positive, forward looking indicator negative
  • New French President Hollande sworn in today and is meeting Merkel this evening…….oh, to be a fly on the wall!
  • US macro data largely as expected, although the Empire manufacturing number was a fair bit stronger than expected
  • Afternoon sees a meeting of Greek party leader’s conclude with...
  • ...no agreement. So Greece heading for new elections. Possibly June 10thor 17thso another month of uncertainty ahead
  • ...markets drop like a stone to the day’s lows
  • Late in the day Lagarde says she hopes Greek will not leave the Euro but “we have to be technically prepared for anything”
  • How-hum FTSE down 0.5%, Eurostoxx down 0.7%, S&P currently up 0.4% though so fingers crossed it holds. 

Liontrust Dealer's Roar - 14/05/2012

“My neighbour asked if he could use my lawnmower and I told him of course he could, so long as he didn't take it out of my garden.” – Eric Morecambe, British Comedian, May 14th 1926 – 29th May 1984

Summary

  • Wall Street falls 0.8% after our close as JP Morgan loss weights, despite better US confidence data
  • Telecom sector leader (+1.2%) with Financials unsurprisingly the laggard (-3.15%)
  • AMR (American Airlines) said ready to explore sale among options in bankruptcy the big story
  • Chinese RRR cut over the weekend post the weaker GDP data on Friday but Chinese market unexcited...
  • ...as trade, real economy & financial data from April all point to weakening growth momentum..expect more easing basically
  • Chinese Power Output also falls this morning...Citi think China to grow 7.5% this year versus official forecast of >8%
  • Weekend see’s Merkel CDU suffer heavy defeat in North Rhine-Westphalia -> Key state -> as in France Socialists making hay
  • Greece still struggling to form coalition, weekend press full of reports speculating Greek euro exit
  • Deutsche not worried about that so much, more that it sets a dangerous precedent for other countries were it to happen
  • Der Speigel: “Greece Can No Longer Delay Euro Zone Exit”;
  • Europe unsurprisingly opens rather weekly...“ shares plunge” used by a couple of commentators
  • Spain’s five largest banks set aside 13bn between them to face potential losses, sovereign auction goes ok (as does Italian auction)
  • Weaker European Industrial Production (-2.2%) vs expectations of (-1.4%)
  • JP Morgan CIO, Ina Drew, retires after 30 years
  • Oil falls below $95 a barrel for first time since December on Saudi calls for lower prices...
  • All in all another challenging day for stocks, Fins, Oils, Materials lead us lower as Euro bond yields rise
  • FTSE down 2%, Eurostoxx down 1.8%, S&P currently down 0.75%

Liontrust Dealer's Roar - 11/05/2012

“I hate the word 'sneering', I can't help the way my face looks.” Jeremy Paxman, English journalist, author and broadcaster, born May 11th 1950

Summary

  • Wall Street lost a little ground after our close…..
  • ….but the market got a nasty surprise post close from JP Morgan who have managed to rack up a loss of $2bn on credit derivative positions
  • Economic data from China was disappointing with industrial output up 9.3% against 12.3% expected, new loans, retail spending and money supply also poor…..
  • ….adding further weight to the case for a cut in the RRR sooner rather than later, although not everyone expects dramatic action (see below)
  • Early losses in Europe reduced by a story that Greek conservative leader Antonis Samaras said that there were still hopes that a government could be formed
  • The EU reiterates their forecast for a GDP contraction of 0.3% in 2012 and says it expects Spain to miss their deficit goal
  • Spain’s deputy PM announces an independent audit of all banks entire real estate portfolio: crucial for transparency….
  • ….but the main detail of the proposed bank reform asks as many questions as it answers (see below)
  • Spanish markets (notably the banks) sold off aggressively and 10 year yields reach 6% once again
  • US producer prices data in line with forecasts
  • University of Michigan Confidence survey rises to its highest level for four years
  • Markets rally as the weekend approaches, driven by futures, but with very light volumes in cash market
  • FTSE ended the day up by 0.57%, with most of Europe also better
  • The S&P had also erased earlier losses to stand up by 0.53% as we drew stumps for the weekend 

Liontrust Dealer's Roar - 10/05/2012

“We are better than anyone, ain't we? Except for the Eagles, the Eagles are better than us.” Sid Vicious (born John Ritchie), English musician, bass guitarist of the Sex Pistols, May 10th 1957 – February 2nd 1979

Summary

  • Wall Street recouped a little of its losses post our close yesterday
  • Asian markets mixed, but weaker on very poor Chinese trade numbers (see below)
  • Decent French manufacturing data for March and news that the EFSF will give Greece the EUR4.2bn as agreed today helped Europe to open stronger….
  • ….but it didn’t last as a stream of negative news hit confidence once more, namely….
  • ….poor industrial production numbers from Italy…
  • ….poll results suggesting a majority of investors now think Greece will leave the Euro…
  • …news of a commodity hedge fund winding up
  • Market started to pick up on vague rumours of a coalition government having been agreed in Greece
  • Bank of England leave rates on hold and did not add to the QE programme as expected
  • US macro data in line with expectations
  • Just after the market closed some rather more hopeful headlines concerning the possibility of a government being formed
  • FTSE ended the day up by 0.25% (and feels set to rally further tomorrow)
  • European markets closed up slightly more, led by Spain which rebounded by 3.42% today, led by the banks
  • The S&P was higher by 0.47% as we turned off the lights

Liontrust Dealer's Roar - 09/05/2012

“I am, as I've said, merely competent. But in an age of incompetence, that makes me extraordinary.” Billy Joel, American singer/songwriter, born May 9th 1949

Summary

  • Wall Street rallied post our close….
  • …..but Asia endures another down day and fell to a new three month low
  • Australian bond yields fall to new low and Aussie $ fell after government dumped promised corporate tax cuts
  • Europe opened somewhat better on the back of US rally…..
  • …..but soon moved into the red as nervousness over Greece intensified
  • Troika cancelled its planned trip to Greece proposed for this month
  • Fresh elections next month look increasingly likely as it looks like a big longshot that Tsipras will be able to form a coalition
  • Politicians and officials playing hardball, suggesting no more aid tranches paid if Greece ends reform process
  • Suggestions overnight that Spanish banks may be asked to put aside EUR20-40bn of extra provisions against property loans (see below)
  • Euro peripheral 10 year bond yields continue to rise alarmingly; Spain through 6%, Italy above 5.6%
  • Euro falls below $1.30 once more and continues to track south
  • By lunchtime markets looking decidedly queasy; Spain lower by more than 3%, Italy more than 2% and everywhere else (bar Germany) more than 1%
  • Bank shares and energy stocks lead the descent……
  • ….because the oil price very weak again (Brent intra-day low $111.31 ), as were most commodity prices…….as was the gold price ($1580 )
  • As the afternoon progresses rumours concerning Spanish banks abound, with talk of mergers and nationalisations to be announced as early as after the close today
  • Rise in US wholesale inventories less than expected, implying a downward revision to Q1 GDP
  • Risk assets did manage a rally towards the end of the day, as the S&P once again held the 100 day moving average at 1350
  • FTSE closed lower by 0.44%, in line with most of Europe, although Spain finished lower by 2.77%, Germany higher by 0.47%, Euro/$ closed at $1.2950
  •  The S&P was lower by 0.55%

Liontrust Dealer's Roar - 08/05/2012

“Always be sincere, even if you don't mean it.” Harry S Truman, 33rd President of the United States, May 8th 1884 – December 26th 1972

Summary

  • French and Greek elections go the way that were feared, but largely expected
  • …..although the outcome could have disastrous implications for Greece and, in time, the euro
  • European markets marked sharply lower first thing yesterday, but then rally to close higher
  • …..although Greece ends the day down by 6.7%
  • US and Asian markets quiet overnight
  • Euro struggling to hold $1.30 level…..
  • European markets on the slide first thing
  • Greece and Holland managed to get their latest bond issue away without too much drama
  • Short term shot in the arm for markets from German industrial production numbers for March, rising by 2.8% (vs forecast 0.8%)
  • As we approach end of US reporting season, some disappointing reports today (Electronic Arts, Wynn Resorts, Fossil, McDonalds)
  • New French PM quoted as saying that he will not sign fiscal pact “as it stands”
  • Alexis Tsipras, left wing Greek party Syriza leader, quoted as saying that Greeks have “ended plans for additional austerity” and have voted against “barbaric bailout”
  • Head of ratings agency Fitch quoted as saying that Greece leaving the Euro would be “bearable”
  • Gold price very weak on rumours that IMF may need to sell to raise cash for European support programs
  • Oil price lower by more than 2% in late afternoon trading
  • Slide in equities accelerates as the afternoon draws to a close
  • FTSE ended a miserable day down by 1.78% and is now down year to date
  • Europe generally weaker, led by Greece (-3.63%)France (-2.78%) and Italy (-2.37%)…….Germany still up 9.26% year to date!
  • The S&P was lower by 1.35% as we closed for the day 

Liontrust Dealer's Roar - 04/05/2012

“Nothing is impossible, the word itself says 'I'm possible'!” Audrey Hepburn, British actress, May 4th 1929 – January 20th 1993

Summary

  • Wall Street lost a further 0.5% after we closed last night
  • Mixed session in Asia with volumes uninspiring ahead of the US non-farm payroll data and the weekend
  • …..although China
  • Europe opened down across the board……
  • ……and headed lower as the final PMI services data was released across Europe over the first two hours of trading
  • …..although Spain and Italy bucked the trend by rallying into positive territory
  • Spain going better on talk of a good bank/bad bank or TARP like structure being put up around the Spanish banks
  • .....but ahead of non-farm payrolls, wait and see is the overriding driver
  • On first glance, the US non-farm number looked awful, but upward revisions to last month tempered the disappointment (see below)
  • ……but not sufficiently to save markets from a significant slump
  • The oil price went on the slide, with Brent trading down to $111.75, down by more than $4
  • At the end of an ugly day for holders of risk assets, FTSE closed lower by 1.93%
  • Europe was similarly weak (except Spain which closed up on the day!)
  • The S&P was down by 1.37% as we sloped off for a long…….and rather cold weekend!

Liontrust Dealer's Roar - 03/05/2012

“Never was anything great achieved without danger.” Niccolo Machiavelli, Italian philosopher and writer, May 3rd 1469 – June 21st 1527

Summary

  • Wall Street moved higher after our departure last night
  • China up on the day, despite poor services PMI number and news that Temasek are looking to sell part of their stakes in China Construction Bank and Bank of China
  • Raft of numbers from European companies this morning, overall quite respectable…..
  • ……which helped markets to open better
  • London ignored a somewhat disappointing PMI number
  • The latest Spanish bond auction went satisfactorily, with bid-to-cover ratio good across the board……
  • …..and a similar auction in France also went well, which spurred equities to higher levels
  • Entirely as expected the ECB held rates unchanged following their May meeting….
  • …….but some of the press conference rhetoric from ECB boss Draghi spooked the market somewhat
  • Latest US Jobless figures better overall
  • .....but the latest non-manufacturing ISM number was a big disappointment, coming in at 53.5 against a forecast 55.3
  • .....and that was sufficient to erase the remaining gains across most of Europe
  • A late rally enabled FTSE to close 0.15% higher, whilst most European markets were down a little
  • Meanwhile the S&P was lower by 0.21%

Liontrust Dealer's Roar - 02/05/2012

“It is better that one's customers come to one's shop than to have to look for them abroad.” Manfred von Richtofen, widely known as The Red Baron, German fighter pilot, May 2nd 1892 – April 21st 1918

Summary

  • Post our close Wall street gave up about half of its gains
  • Asian stocks rose after today’s HSBC/Markit April PMI showed an improvement, albeit still below 50
  • Exporters got a boost from the better than expected US ISM manufacturing data released yesterday
  • With European markets (except UK and Denmark) having been closed yesterday, markets started on a firm footing……
  • ….but were derailed by weak PMI data across Europe, most notably in Italy and Spain
  • Unemployment data was also depressingly weak across Europe….
  • …..and job data from the US in the shape of the ADP Employment change did nothing to cheer investors
  • …..although economists were keen to see the number in a favourable light (see below)
  • US factory order data for March was ahead of expectation……..by exactly the same amount as February’s reading was revised down!
  • FTSE ended the day lower by 0.93%
  • Europe a mixed bag, with France holding onto some of its gains, whilst Italy and Spain were both lower by more than 2.5%
  • The S&P was also lower, as we closed, by 0.45%

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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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