Terms & Conditions. Hide

Professional Advisers

Liontrust Blog

Liontrust Dealer's Roar - 31/07/2012

“The truth. It is a beautiful and terrible thing, and must therefore be treated with great caution” - J.K.  Rowling, English author born 31st July 1965

Summary

  • S&P does indeed close down for the 9thMonday in a row for the first time in 27 years, but rallies 0.2% from our close
  • Trading described as “quiet, low volume” & “listless” with volumes c20% below average of last three months as a wait-and-see attitude takes hold ahead of ECB meeting later this week
  • US reaffirms previous forecast that it will hit debt ceiling before end of year, but ‘has the tools’ to postpone the day it actually runs out of cash (a printing press?)
  • Asia rises, (again bar China) ahead of Fed two day meeting which starts today. Japanese PMI fell to 47.9 from 49.9 & Taiwanese Q2 GDP -0.16% vs cons +0.5% (Taiwan +1.56% though)
  • Geithner & Schauble joint statement saying “acknowledge” comments last week -> taken as bullish, but not everyone agrees.
  • Retail sales Germany worse: -0.1% m/m in June (cons +0.5%), Spain better: -5.2% y/y in June (cons -7.7%)
  • Eurozone CPI estimate in line 2.4% (cons 2.4%), Unemployment worse 10.8% (cons 10.3%)
  • Big day for banks earnings, UBS -6% after big Q2 miss (Facebook IPO cost them CHF349m), Deutsche +0.1% but #s miss
  • BP -4.4% 2nd biggest faller in FTSE after all division report substantially below expectations
  • ABI Inbev -3.2% falls after stellar run this year as disappointing performance in US causes profit taking
  • Others included Bayer +1.2% topping estimates & Heidelbergcement falling -1.9% despite better #s
  • By midday markets small down (SXXP -0.2%) but not much harm done..until following headlines hit the tape;
  • GERMAN MINISTRY SAYS NOT HOLDING TALKS ON BANK LICENSE FOR ESM (story below)
  • We start to sell off as this has basically been the reason we’ve rallied this week
  • US data in the afternoon: Chicago PMI small better, Case-Shiller home prices also look better (more below)
  • So all eyes now on FOMC tonight, preview below...with ECB on Thursday, I think we’re set up for a let down
  • Nasty close for month-end as well worthy of note...looks like a rebal from equities into bonds.
  • FSTE -1% (-0.3% in closing auction), Germany flat, France -0.9%, Spain -0.9%, Italy -0.6%, S&P currently -0.2%

Liontrust Dealer's Roar - 30/07/2012

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning” – Henry Ford, founder of the Ford Motor Company,  July 30th1863 – April 7th1947

Summary

  • S&P moves higher post our departure (+0.8%), fuelled by moderately better than expected US GDP report & more comments reinforcing Draghi headlines out Thursday
  • Weekend sees Jean-Claude Juncker say ECB & EFSF are preparing to act together while Monti/Merkel have “agreed  the Germany & Italy will do everything to protect the Euro-zone”
  • German’s changing their tune on ESM as a bank?
  • Schaeuble tells Welt Am Sonntag there is “no truth” in rumours ECB is about to buy Spanish bonds
  • Greek leaders have agreed to most cuts according to a Reuters source, but German Economy Minister Roesler says there are “considerable doubts whether Greek is living up to its reform promises”
  • Britain faces a “Triple Dip” recession in 2013 according to Sunday Times
  • Asia generally stronger, Samsung numbers better, Q2 +48% on last year thanks to mobile division
  • Chinese market weaker on stock exchange proposal to narrow price fluctuation in illiquid names
  • Japanese industrial production disappoints -0.1% mom vs. Cons 1.5% (Nikkei +0.8%)
  • Europe rallies from the opening bell, sell-side notes speculate on next moves from ECB, Euro weakens though
  • Italy sells €5.48bn of 3/5/10yr debt, key 10 year yield fell to 5.96% from 6.19% in June (5yr 5.29% from 5.84%)
  • Swedish Krona trades at 12-yr high versus € as Q2 GDP +1.4% vs survey 0.2%
  • UK mortgage lending data “undeniably weak” (Capital Economics) 44.2k approved vs 48k forecast in June
  • Eurozone confidence data all comings in weaker than expected (table below)
  • Ryan Lochte; Air France (+18%), London Mining (+17%), Umicore (+1.7%, despite worse numbers), HSBC (+2.3%)
  • Michael Phelps; JCDecaux (-7%), Eramet (-1.4%), Steria (-7.7%), Gigaset (-13%), Dufry (-5%)
  • Midday markets generally up, Eurostoxx +0.6%
  • US Dallas Fed Manufacturing Activity report very weak -13.2 vs forecast +2
  • Very strong markets into the close despite no more headlines other the Team GB missing out on a medal in the sychro-diving;
  • UK +1.1%, France +1.2%, Germany +1.3%, Italy +2.8%, Spain +2.8%, 10yr Spain 6.5%, 10yr Italy 5.9%.
  • Stat of the day (Louisebojesen on twitter); IF the Dow closes lower today, it'll be down for the 9th Monday in a row-- something that hasn't happened for 39yrs (since July 1973!)...US currently -0.22%

Liontrust Dealer's Roar - 27/07/2012

“It is sometimes necessary to lie damnably in the interests of the nation” – Hilaire Belloc, Anglo-French writer & historian, born 27thJuly 1870 – died 16thJuly 1953

Summary

  • S&P moves a little higher post our departure(+0.4%) as dovish comments from Draghi fuelled expectations of a more aggressive policy response. All 10 sectors positive. Spain 10year sub 7%.
  • After hours Facebook -10.7% (payment revs light), Amazon +1.4% (EPS inline), Amgen +5% (revs & EPS better), Starbucks -9% (lowered outlook)
  • US prosecutors preparing criminal charges this autumn against traders from several banks
  • Asia markets stronger catching up with yesterday’s risk on move, big +ve move in Jap exporters
  • Japan in deflation June CPI -0.02% vs cons 0.0%, core -0.6% vs -0.5% cons
  • China shipyards falter and glut triggers 49% slump in orders
  • Chinese Industrial profit growth rebounds to -1.7% YoY in June from -5.3% YoY in May (more below)
  • EU’s Barroso say Samaras has clear commitment to Europe, but budget talks “stumble”
  • OECD warns on Portugal’s fiscal targets
  • Fitch says government moves underpin Spanish regions but risks remain
  • Corporate highlights: Barclays +5% (#’s significantly better), EADS +7% (EBIT beat on Airbus), Michelin +6% (price mix strong), Total +2% (divi increase), Solvay +9% (EBIT ahead), Anglo American -2% (10% miss to #), Gamesa -5.5% (revs lower), Pearson -4.5% (# in-line), Saint Gobain -9.5% (flat glass worse than expected), Vallourec -7% (guidance weak).
  • Mid-morning headlines:
  • Latvia Fin Mins says Greece should quit Euro as soon as possible – Market falls 0.5%
  • ECB PREPARING TO BUY SPANISH, ITALIAN DEBT, LE MONDE SAYS – Market rallies 0.4%
  • EU COMMISSION: THERE HAS BEEN NO REQUEST TO USE EFSF TO BUY BONDS OF EURO ZONE COUNTRIES IN THE PRIMARY MARKET – market falls again
  • GERMAN FINMIN SCHAEUBLE SAYS  WELCOMES ECB CHIEF DRAGHI'S PLEDGE TO TAKE NECESSARY MEASURES TO SHORE  UP EURO – market rallies again
  • German CPI data bang in line with estimates, +0.4% MoM in July
  •  US GDP 1.6% for Q2 vs 1.5% consensus forecast..”QE3 prospects fade” headline but market starts to rally
  • Another headline: MERKEL, HOLLANDE READY TO DO ANYTHING TO PROTECT EURO REGION..another rally
  • University of Michigan Confidence 72.3 vs 72 consensus forecast
  • Market ends on day’s high:
  • FTSE +0.97%, Germany +1.6%, France +2.3%, Italy +2.9%, Spain +3.9%, US currently +1.1% 

Liontrust Dealer's Roar - 26/07/2012

“An index is a great leveller” – George Bernard Shaw, Irish dramatist, born 26th July 1856 – died 2nd Nov 1950

Summary

  • S&P moves higher post our departure, but falls into the bell to close +0.22% from UK 16:30
  • Euro PMIs & US housing data weigh but comments from Nowotny/Hilsenrath risk positive
  • Big sector divergence as Industrials better on Boeing & Caterpillar numbers which the techs were weak post Apple disappointment . Zynga (facebook games) plunge 42% on missed estimates..facebook -9.7%.
  • Asia markets “flat & choppy” as official from Chinese National Bureau of Stats say Chinese economy likely to bottom out in Q3 & growth will be higher in H2 than H1 as consumption growth has been “underestimated”
  • Canon in Japan fall 8%, cut forecasts on weaker global growth & stronger Yen, while Nikkei business daily reports 1trln Yen set aside in next year’s budget to promote growth
  • Moody’s change outlook on 17 German banks to negative outlook, following the Sov change (more below)
  • Belgium’s foreign minister in the FT says he wants the ECB to be allowed to finance struggling governments
  • CDU’s budget spokesman Barthle (Merkel ally) says will try to keep Greece in Eurozone
  • Italy downgraded by Egan Jones to CCC+ from B+, 22% default risk in 1 year (quite precise!)
  • Front page of the FT leads with potential for UK to lose its AAA rating
  • Another massive day for earnings in Europe, markets open around unchanged
  • Winners: Cap Gemini, ITV, Lonmin, Metso, PPR, Reed, Rolls Royce, TF1, Unilever, ABB
  • Losers: Alcatel, Clariant, De La Rue, Logitech, Man AG, Shell, Siemens, SSAB, Telefonica
  • Mid-morning headline hit’s the tape;
  • DRAGHI SAYS ECB WILL DO WHATEVER NEEDED TO PRESERVE THE EURO...risk assets fly
  • Eurostoxx +1%, IBEX +3%, FTMIB +3.9%, Sovereigns Italy -13bps to 6.25%, Spain -11.1 to 7.1%...comment below
  • US Durable Goods orders/Initial Jobless claims a nothing done really (more below)
  • Tweet from Pimco: Spanish yields drop 60 basis on #Draghi. No matter. They need 400 basis more to remain solvent longer term
  • We hold levels into the close..UK +1.4%, France +4%, Germany +2.75%, Italy +5.6%, Spain +5.7%
  • 10 years: Spain 6.8%, Italy 6.02%

Liontrust Dealer's Roar - 25/07/2012

“Every friend to the liberty of his country is bound to reflect, and step forward to prevent the dreadful consequences which shall result from a government of events” – Henry Knox, first US Secretary of War, born 25thJuly 1750 – died October 25th1806

Summary

  • S&P falls 0.25% post our departure, but 0.6% off the lows as  article from John Hilsenrath suggests Fed are moving closer to action:
  • Shock as Apple miss analyst forecasts & drop 5% in after hours trading... waiting for the iphone 5 ?!?
  • US 10 year yield closes below 1.4% for the first time ever
  • Overnight Moody’s revise EFSF Aaa rating to negative following Sov moves yesterday
  • Asia generally weaker as supply chain names hit by Apple warning
  • Also news on the Troika’s visit to Athens, further restructuring may be necessary, one official quoted on Reuters said “Greece is hugely off track”
  • OECD secretary General Gurria says the ECB must use “bazooka” & reactivate Spanish/Italian bond buying program
  • Europe opens small up as comments from the ECB’s Nowotny suggests the ESM may get a banking licence, meaning MORE LEVERAGE:
  • Mega results day with about 200 firms reporting.. a few highlights:
  • Stallions: Arm (+8.6%, Q2 revs ahead), EFG (+26%, sees margin improvement), Lonza (+3.7%, EBIT beats), Nexans (+11%, margins to increase significantly), Petropavlovsk (+5%, production better), Qiagen (+4.6%, raises forecasts)
  • Donkeys: BT (-3.3%, sales miss), Cookson (-8%, numbers worse), Drax (-15%, ROC report negative), Informa (-5%, downgrades), Tullow (-6%, potential upside on TEN lowered).
  • German IFO mid-morning looked worse across the board (more below)
  • UK GDP plunges in Q2 -0.7% vs forecast -0.2%, Jubilee blamed, more QE & a rate cut expected
  • Some decent US numbers: Caterpiller & Boeing both raise guidance
  • Glaxo numbers at midday weaker than expected
  • US new home sales miss estimates +350k vs +371k but “limited inventory appears to be straining volume” & Barcap don’t think we should really be looked at them too much (more below)
  • Treading water kind of day with so much news out, stocks moved but markets generally flat
  • FTSE -0.02%, Germany 0.2%, France +0.2%, Italy +1.1%, Spain +0.8%
  • Spain 10 year closes tigher at 7.28% (was > 7.5% this morning)
  • Another blockbuster day tomorrow! 

Liontrust Dealer's Roar - 24/07/2012

“Business? It's quite simple; it's other people's money” – Alexandre Dumas, French author & dramatist, born 24thJuly 1802 – died 5thDecember 1870

Summary

  • US grinds 0.5%  higher post our departure, to close down 0.9% after yesterday’s negative headlines
  • All 10 sector fall, Telco -0.4% best, Materials -1.5% worst. Cisco -2% on job cuts, McDonald -3% seeing slowest growth in 5 quarters and may miss f/yr growth targets for first time since 2004
  • 10yr UK government bond at record low of 1.438%
  • Asian markets round about unchanged, HSBC flash manufacturing PMI better 49.5 v 48.2 last
  • John Paulson says 50% chance euro will break up on Bloomberg
  • Moody’s lower Aaa ratings of Germany, Netherlands, Lux to negative outlook, Finland stays Aaa stable.
  • HK morning session closed due to a Typhoon (Vicente) in the area
  • Japanese Government vows to work “decisively” with BOJ to prevent adverse impact of Yen appreciation and deflation on the economy, Nikkei -0.2%
  • 10 Italian cities would be close to bankruptcy, reports the Telegraph
  • “Spain edges toward bailout as Rajoy rescues regions”
  • Europe opens mixed, around unchanged after yesterday’s heavy falls
  • LCH clearnet have upped margin for trading some Spanish & Italian bonds
  • Eurostat (yesterday actually) data shows E-Z aggregate debt ratio now stands at 88.2%, close to the 90% that some researchers have called potentially unsustainable
  • Euro PMIS looked mixed..more below..no change to GS GDP forecasts (q2 -0.3%, q3 -0.2%)
  • Spanish auction goes ok. Sell €3m(target €2-3m);  3m money at 2.43% vs 2.36% in June, 6m at 3.69% vs 3.23% in June, so a bit more expensive but not too bad given moves yesterday.
  • Stock winners: Man Group +9% earnings better, +7% Software AG core business stronger
  • Stock losers: Dialog Semi -6.5% Q2’s weaker, Kontron -10% profit warning
  • BP to negotiate with Rosneft regarding sale of TNK-BP big story
  • Afternoon sees US PMI just miss forecast 51.8 (vs 52), House price data come in better (+0.8% vs +0.4%) but Richard Fed Manufacturing data very weak -17 vs forecast -1
  • US numbers: Lexmark -15% profit warning, Whirlpool -6.4% on Q2 miss, AK Steel -2%
  • 16:26 (very friendly time!) Deutsche Bank pre-announce numbers, core Tier 1 ratio at 10.2% provides some relief and stock gets lifted
  • 14:30 markets unchanged, but US market sells off (currently -0.8%) to post some weaker closes in Europe.
  • FTSE -0.6%, France -0.8%, Germany -0.45%, Italy -2.7%, Spain -3.5% despite short selling ban (latter two been weak all day) 

Liontrust Fund Manager's Blog: Jan Luthman - 24/07/2012

Jan Luthman’s survival tips for a financial meltdown

The Liontrust manager says investors should look at the Weimar Republic’s implosion for lessons on how to cope with a eurozone collapse.

We cannot create or replace wealth by printing money. If we could, we’d all stop working today and simply ask the nice people at De La Rue to send us over a packet of foldy stuff every Friday and an extra big parcel at Christmas and holiday time.

When Money Dies, by Adam Fergusson, is an account of the collapse of the Weimar Republic into hyperinflation, destitution and chaos.  It is heavy going, with lots of fairly heavyweight economic and financial content, but, for those who can stay the course, it makes deeply disturbing reading.  

Liontrust Dealer's Roar - 23/07/2012

“I knew one thing: as soon as anyone said you didn't need a gun, you'd better take one along that worked”- Raymond Chandler, American writer, born 23rdJuly 1888 – died 26thMarch 1959

Summary

  • S&P closes in negative territory down 0.9%, another 0.2% slide from our close
  • Spanish bond yield action the main cause (10yr at 7.27%), despite EU Fin Mins approving an interim €30bn Spanish bank bailout after Valencia suggested seeking financing from the state facility for regional gmts
  • Banks underperform, Google +3% beat estimates, Microsoft -1.8% despite beating estimates
  • Rout continues into Asia session not helped by weekend press...
  • ...member of PBOC says Chinese Q3 GDP will only be 7.4% not 8% as per consensus
  • ...Fitch downgrade Japanese banks
  • ...$750m placing in China Pacific Insurance fails to get away (offered 5% discount, stock -10%)
  • ...six more Spanish regions are reported to need aid from the central government
  • ...pre Troika visit to Greece story suggests the IMF are pulling more bailout funding
  • Euro markets open -1.5%   / -3%...Euro drops through $1.21 first time in 2 years
  • Corporate winners: Phillips +5% Q2 revs beat, Julius Baer +0.8% bottom line beat
  • Losers: Banks-5%, Eurotunnel -6% Ebita miss
  • Eurozone consumer confidence falls to lowest in three years
  • What to do in a panic situation??
  • 12:35: *DJ ITALY REGULATOR CONSOB BANS SHORT SELLING ON FINANCIAL STOCKS
  • 13:31 *SPAIN BANS SHORT SELLING ON ALL STOCKS FOR THREE MONTHS
  • Italian/Spanish market rally c2% from their lows...France/Germany fall about the same as people switch their attention
  • Overall felt like a day of capitulation though despite good volumes on the surface all was eerily quiet (see note from our trader at Bernstein below).
  • Closes: FTSE -2%, Eurostoxx -2.4%, Germany -3.2%, France -2.9%, Italy -2.89%, Spain -1.1%, S&P currently down -1.45
  • 10 Years: Italy 6.3%, Spain 7.37%, Germany 1.17%, UK 1.46%, US 1.42% 

Liontrust Dealer's Roar - 20/07/2012

“Most people are prisoners, thinking only about the future or living in the past. They are not in the present, and the present is where everything begins” – Carlos Santana, Mexican musician, born 20thJuly 1947

Summary

  • S&P closes up for the fourth straight session, with tech best performer as IBM +3.8% dragged up sector after a margin-driven earnings beat. Morgan Stanley missed estimates and fell -5%
  • 35 S&P firms reports, 74% beat revenue consensus, but only 57% beat on the sales line (Deutsche)
  • Oil rally also worth pointing out, as close last night West Texas +9% & Brent +10% on the month, several agricultural commodities also on the tear, wheat +3%, soya +2.8% (bit of comment below)
  • China A-share pulls back a bit after government said will not relax property controls, most markets close down in the region
  • Bundestag vote in favour of ESM & approve fiscal compact, final ratificationnow required in constitutional court (September 12th) after Budesrat also approved it today, came out mid-morning               
  • Italy’s parliament gives final approval to ESM, Fitch reaffirm Italy –A rating
  • Europe opens small down, with focus on earnings;
  • Winners: Publicis +2.7% (1H rev better, Q3 forecast rev growth) , Scania +3.9% (Q2 strong order book)
  • Losers: Vodafone -1.7% (Sales lower), Swedish Match +1% (Q2 profit missed)..quite a rally intraday +5.5%!!
  • UK budget deficit wider than forecast in June, £14.4bn cons £13.4bn – casts doubts over fiscal target
  • German PPI -0.4% Mom from June (-0.2% forecast), 1.6% (YoY)  1.8% forecast
  • Mid-morning (10.30) market starts to turn south, especially Spain & Italy as yields remain at elevated levels (Spain 10yr >7%, Italy >6%), Spain announce they see 2013 GDP falling 0.5% , Valencia ask for central government help to repay debt & Italy bail out Sicily to tune of €400m (futures expiry as well).
  • Reuters reporting Italy probing Euribor price fixing, doesn’t help banking sector either & Euro making new lows (Mr F your holiday is getting cheaper by the day)
  • GE numbers EPS 38c vs 37c estimate..very small pop
  • Afternoon saw morning slide turn into something of a rout in Spain/Italy though no new headlines, giving us a pretty nasty end to the week
  • UK -1%, Italy -4.45%, Spain -5.8%, Germany -1.9%, S&P currently -0.6%..See below for bond spreads!
  • Fingers crossed for some sunshine this weekend. 

Liontrust Dealer's Roar - 19/07/2012

“I haven't reported my missing credit card to the police because whoever stole it is spending less than my wife” – Ilie Năstase, flamboyant Romanian Tennis Star, born 19th July 1946

Summary

  • US stocks gain as earnings come in broadly better than expected & housing data suggests there may be some momentum in the recent recovery, S&P up 0.12% from Europe close
  • Bernanke on the 2ndday in front of congress that he did not expect US to slide into recession & reiterated Fed was ready to take action if needed
  • Fed Beige Book: economy expanded at a modest-moderate rate in June-early July, unemployment slowed in certain regions
  • After hours IBM +4% on raised guidance, eBay +5% on 2bn buyback, Qualcom +6% better numbers, Honeywell +7% better earnings
  • Asian markets generally better on China policy easing speculation, as a researcher says “relative large” room to boost fiscal spending & 4 biggest banks lend 50bln yuan of new loans in 1st½ of July.
  • AUD gets a boost as Budesbank is expected to add the currency to its foreign reserves
  • World Bank President warns no region immune to E-Z debt crisis
  • Europe opens small better as deluge of numbers hit the tapes
  • Winners: LIONTRUST, Remy Contreau, Akzo Nobel, Nokia (11am), Sandvik , Electrolux, Tele2 ..(Industrials rally on Honeywell numbers)
  • Losers: Skanska, Fortnum, Kingfisher
  • UK retail sales lighter YoY / better MoM. We are eating less but looking better dressed – Clothing +2.5% mom / food week -0.7% mom.
  • Spanish auction results (more below) look poor, yields move, 10 year through 7%, equities unperturbed
  • DJ Newswire reports EFSF will be able to buy bonds in primary & secondary markets, small pop
  • Verizon Q2’s go down well, push Vodafone until on conference call no more news on a formalised dividend..Vod’s fall
  • Morgan Stanley miss numbers EPS $0.28 vs Est $0.30 due to weaker trading & higher expenses
  • US Jobless Claims higher, 386k vs 365k forecast, Continuing claims 3314k vs 3300k forecast
  • Philly Fed quite a bit worse -12.9 for July vs -8 forecast
  • US existing home sales worse 4.37m vs forecast 4.62m, -5.4% MoM vs +1.5% forecast..Goldman lower GDP estimate
  • Late in the day “China will not relax property control policies”..Xinhua News (well informed apparently)..may weigh on Asia
  • Markets up again though, FTSE close +0.5%, Eurostoxx +0.7% & S&P currently up 0.33% 

Pages: 123NextReturn Top

Disclaimer

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.

Liontrust, its partners and/or employees may have had, have or will have positions in the securities (or related financial instruments) which are those referred to, or those underlying the content discussed in this blog.

Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a regulated investment advisor or licensed stock broker before investing.

Shares in companies referred to may be relatively illiquid and hard to trade, therefore riskier than other investments and there could be a large bid/offer spread, so if you need to sell soon after you’ve bought, you might get less back than you paid. This can make them riskier than other investments.