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Liontrust Dealer's Blog - 31/10/2012

“Americans will put up with anything, provided it doesn’t block traffic” Dan Rather, American journalist and former anchor of CBS Evening News, born October 31st 1931




  • Wall Street closed for the second day, but will reopen as normal today
  • Strong data from Taiwan and Korea provided some collaborating evidence of Asian activity picking up late last quarter....
  • .... which bolstered the majority of Asian markets into positive territory, helped by a bounce in Hong Kong property stocks
  • Europe followed the Asian lead, with a mixed bag of earnings released today....
  • ....Novo Nordisk, Air France, Lufthansa all positive, counterbalanced by Barclays, Clariant, Glaxo and BG among others
  • Retail sales in Germany painted a mixed picture....year-on-year looked poor, but the monthly data was ahead of forecast
  • The latest bond auction in France went well and the same was true of the German auction as well
  • Spanish PM Rajoy reiterated that he has not ruled out asking for aid, but that he sees no rush in doing so
  • Eqecat, who provide catastrophe risk models, have reduced their initial estimate for Hurricane Sandy of $5-10bn to the lower end....
  • ....which helped the European insurance sector to bounce today
  • Wall Street resumed trading with a small rally in early trading as the market played catch-up after two days off
  • Today’s US macro data was lead by a weak Chicago PMI number (49.9 v expected 51.1)....
  • ....which was leaked on Twitter some fifteen minutes earlier; a sign of the times!
  • The S&P drifted into negative territory on surprisingly light volume (below 20 day average volume three hours into the day)
  • FTSE ended on its lows for the day, down by 1.15%, whilst most of Europe was down by closer to 0.5%
  • Worth noting that BG, GlaxoSmithkline and Barclays accounted for 36.24 of the 67.2 point fall!
  • The S&P was lower by about 0.4% as we departed

Liontrust Dealer's Roar - 30/10/2012

“A team effort is a lot of people doing what I say” Michael Winner, English film director and restaurant critic, born October 30th 1935




  • Hurricane Sandy gives the Eastern seaboard of the US a fearful battering, President Obama declares a “major disaster”....
  • ....very early estimates put the insurance losses as high as $10 billion, rivalling Hurricane Irene
  • Wall Street will remain closed for a second day, the first time that weather has forced a two day market shutdown since 1888
  • Asian markets opened higher, despite a weak industrial production number for September in Japan (-4.1%)
  • The Japanese market was hit following the news that the Bank of Japan are to expand its asset purchase fund by 11 trillion yen....
  • ....against market expectation of 10 trillion, a classic case of travelling and arriving
  • Vehicle production numbers in Japan fall heavily, which also weighed on sentiment
  • Property stocks continue weak in Hong Kong following the new property taxes announced last week
  • Earnings across Europe were, on balance, pretty encouraging, led by BP, Deutsche Bank, Erste Group, Allianz, as well as UBS up strongly on restructuring plans
  • Spanish GSP was slightly better than the Bank of Spain had indicated last week
  • The assorted confidence numbers in Europe were much in line with expectations
  • The latest bond auction in Italy went well, with solid demand and lower yields
  • Markets continue to move higher across Europe as the day progresses, but on weak volumes
  • Late afternoon rumours that the Greek coalition government is on the brink of collapse
  • Nonetheless, FTSE closed higher by 0.95%, with most of Europe rather better than that
  • And as we closed news from across the pond that New York markets will be open as usual tomorrow

Liontrust Dealer's Blog - 29/10/2012

“In making theories, always keep a window open so that you can throw one out if necessary” Bela Lugosi, Hungarian actor, best known for his frequent portrayal of Count Dracula, October 29th 1882 - August 16th 1956




  • Wall Street closed fractionally higher than the level at which it was trading as we closed on Friday
  • Investor sentiment was slightly negative in the Asian morning with regional equities and currencies trading weaker
  • Mixed macro data from Asia meant indices swung between gains and losses
  • Japan retail figures were weaker than expected....
  • ....whereas Chinese industrial companies’ profits rose 7.8 percent in September from a year earlier
  • Property companies tumbled as a new property tax on overseas property buyers in HK after officials attempt to slow speculative activity in the property market
  • German Finance Minister Schauble once again ruled out restructuring of Greek debt, contrary to the IMF’s suggestion....
  • ....and the and his counterpart in the Netherlands, de Jager, restated that they are against any additional aid for Greece
  • Following his tax fraud conviction, Berlusconi has added to European uncertainties by threatening to withdraw his party’s support for the Monti administration
  • European markets opened lower, with no catalyst to push stocks higher....
  • ....with Italy leading the way down, thanks to Berlusconi’s weekend pontificating (see below)
  • Very weak Spanish retail sales numbers for September, showing a 10.9% decline year-on-year
  • All American markets closed today on account of Hurricane Sandy (note we are only 4 hours in front of New York  this week)
  • ....the prospect of which sees European insurance stocks very weak
  • US macro data much as expected, although personal spending was higher than forecast
  • European markets continued to rally during the afternoon, despite no action across the pond and no obvious catalyst....
  • ....albeit in woefully thin trading
  • As the market closed, the first details of the proposed Spanish “bad” bank were starting to be released....more of that tomorrow!
  • FTSE ended the day lower by 0.2%, rather better than most of Europe which was led down by Spain, which closed lower by 1.51%

Jan Luthman, Macro-Thematic: Drawing parallels between tobacco and pharma

In the last few months, we have trimmed our exposure to the tobacco sector, partly to take some profits following a multi-year sector re-rating, but also to reflect the developing socio-political risks which the industry faces. Given the transformation of investor perceptions that the tobacco industry has enjoyed in recent years, it may be of interest to draw some parallels between the perception of the tobacco sector back in 2004 and of the pharmaceutical industry today.

Liontrust Dealer's Blog - 26/10/2012

“If I want to knock a story off the front page, I just change my hairstyle.” Hillary Clinton, US Secretary of State and former First Lady, born October 26th 1947




  • Wall Street rallied a little after Europe’s close yesterday
  • Apple reported after hours; despite a revenue beat EPS was lower than analyst expectations and the outlook was less positive than forecast
  • Amazon also came in light
  • Asia took its lead from the weak US earnings numbers, although Samsung delivered good results of their own
  • Hong Kong closed down 1.2%, ending its longest winning streak since 2006
  • Inflation in Japan came in higher than expected, paring hopes of monetary easing from the Bank of Japan next week....
  • ....although the Japanese government approved a £5.3bn stimulus package concentrated on a programme for rebuilding the earthquake-hit north-eastern region
  • IMF chief Lagarde said that resistance to new regulation and implementation delays have left the financial system no safer that it was before the crisis started
  • ....and her organisation have reported that Greek debt will top the target of 120% of GDP in 2020, suggesting 136% as a positive scenario
  • S&P cut ratings on a number of French banks, citing concern that France might be hurt by prolonged economic weakness in Europe, as well as a correction in the housing market (see below)
  • Europe opens weak, following the lead of others and not helped by the S&P downgrade or an article in the Wall Street Journal suggesting that 9 more banks have received subpoenaes in the ongoing LIBOR investigations
  • Tech stocks not helped by Ericsson missing sales numbers and gross margins
  • Spanish unemployment rose to a record high of 25.02%
  • US GDP for Q3 coming in slightly higher than expected at 2.0% against the consensus forecast of 1.8% (see below)
  • News from Italy that former PM Berlusconi has been sentenced to four years in prison in Mediaset TV rights case
  • A couple of comments from the ECB lent further support to rallying markets....
  • ....The ECB confirmed that the Spanish “bad” bank will be operational from December 1st ....
  • ....and that Spain is on track to correct problems with its banking sector
  • FTSE ended the day up by 0.03%, whilst most of Europe was rather stronger, except Spain and Switzerland which were both down small
  • The S&P meanwhile was down by 0.24% as we all headed off, in most cases I guess to watch the new Bond film!

Mark Williams, Asia: Debating the merits of China

The three presidential debates have given a revealing indication of the US public’s perception of China and the threat associated with it. Both presidential candidates have striven to project a tough stance on China, with trade relations at the forefront. The direct impact of the election for investors in China or the Asian region is – in our opinion – marginal, but it does serve to highlight the misperception of China as an export-led low-cost manufacturing growth story.

Liontrust Dealer's Blog - 25/10/2012

I am always doing that which I cannot do, in order that I may learn how to do it.” Pablo Picasso, Spanish painter, October 25th 1881 - April 8th 1973


  • Wall Street lost ground in the last hour or so of trading as the strong housing data was offset by a continuation of overall weak earnings
  • Not surprisingly the FOMC left monetary policy unchanged at the end of its two day meeting
  • Asian markets were mixed after a topsy-turvy trading session
  • The Yen was weak once again as investors scrabble to short the currency ahead of the Bank of Japan announcement next Tuesday
  • A Chinese official reported that industrial output growth will be higher in Q4 than Q3, which should help the economy achieve 7.5% growth
  • The Troika confirmed that while progress has been made in Greece, a final deal has yet to be thrashed out, contradicting the Greek finance minister’s remarks yesterday
  • European markets open flat, but slowly drift up over the course of the morning
  • Masses of European earnings statements today....
  • ....winners were Credit Suisse, BASF, Unliever and Sanofi....
  • ....losers were Daimler, France Telecom and WPP
  • UK economy sees GDP growth in Q3 better than expected (as very cleverly forecasted by the PM yesterday!) at 1.0% vs exp 0.6% (see below)
  • Big day for US earnings, with Proctor & Gamble (good), Colgate (OK), Hershey (good), Altria (in line), Sprint (good), Zimmer (miss), Royal Caribbean (good), Conoco (good), Colfax (miss) among others....
  • ....with Apple and Amazon coming after the close tonight
  • A mixed bag of macro data from the US economy today (see below)
  • ....but the overall relative health of today’s corporate earnings ensured a firm start for Wall Street....
  • ....although some disappointingly weak pending home sales numbers took a little gloss off it, but only briefly as this is a very volatile data series (see below)
  • Markets came back a little on vague rumours of a possible sovereign downgrade of the US by Fitch
  • FTSE ended the day almost exactly flat, whilst European markets were mixed
  • The S&P had all but given up the earlier gains, trading higher by just 0.06% as we called it a day

Liontrust Dealer's Blog - 24/10/2012

“I have no Napoleonic dream. I'm just hard-working and pragmatic.” Roman Abramovich, Russian tycoon and owner of Chelsea FC, born October 24th 1965


  • Post our close Wall Street moved sideways, with the S&P closing down by 1.44%
  • Apple announced the launch of the new mini Ipad, but the price ticket shocked investors and the shares fell by 2.6% post the announcement
  • Facebook rose sharply after hours on decent revenues and strong ad revenues from mobile
  • An initial tech markdown in the Far East post Apple was reversed by decent newsflow from Sharp and LG
  • Chinese PMI came in better than expected (see below)
  • The Yen continued to weaken ahead of anticipated monetary easing from the Bank of Japan meeting next Tuesday
  • In a speech last night Mervyn King said the MPC is ready to add stimulus if signs of the recovery fade....
  • ....but he also reignited concerns around bank capital, saying that they still have “insufficient capital” and that “just as in 2008 there is a deep reluctance to admit the extent of the undercapitalisation”
  • A raft of European earnings out today, which overall came up short....
  • ....with SEB, Volvo and Nordea the stand out laggards, with Telenor and SAP the clear earnings leaders
  • Macro data in Europe was of no help, with German Manufacturing PMI coming in at 45.7 against a forecast of 48.0...(see below)
  • ....and German IFO was also light, as was French Manufacturing PMI....
  • ....although French services PMI was slightly better than expected
  • European markets rally off lows to be trading up by up to 50bps by midday for no blindingly obvious reason!
  • The Greek media and Reuters reported that the Greek government and the troika have finally agreed on austerity measures....
  • ....which will lead, shortly, to the payment of EUR31.5bn to recapitalise the banks and cover state cash shortfalls
  • ....but later in the day Draghi stated that the Troika report is not finished yet!!
  • Draghi says that falling prices are currently a bigger risk than inflation....
  • ....which implies that, despite Germany’s complaints, we will see more inflationary action and looser ECB policy
  • US earnings announced before the opening bell were, overall, better than of late, with good numbers from Boeing, Lockheed-Martin and AT&T
  • The latest US data point on the housing market in the US, namely the New Home Sales number, was slightly better than expected and showed them running at their highest level since April 2010
  • Right at the end of the day the gold price fell below $1,700
  • FTSE ended the day up by 0.12%%, with Europe up rather more
  • The S&P was treading water, also up by 0.12% as we turned our screens off

Liontrust Dealer's Roar - 23/10/2012

“I know a man who gave up smoking, drinking, sex and rich food. He was healthy right up to the day he killed himself” Johnny Carson, American television host, October 23rd 1925 - January 23rd 2005




  • US stocks ended in the positive, recovering losses in the last hour of trade led by the technology stocks, notably Apple
  • After hours Yahoo rallied on numbers, Texas Instruments were flat, but Western Digital were weak on poor numbers and reduced guidance
  • President Obama was widely acknowledged as the winner of the third television debate
  • Asian markets generally lower on the weak corporate earnings story
  • Japan’s deputy finance minister said that the country may extend its dollar loan program beyond March 31st to address the strong yen
  • Suggestions that the Japanese government had been pressuring the Bank of Japan to expand monetary easing were denied
  • Moody’s has cut the ratings of 5 Spanish regions on the back of deterioration in their liquidity positions and significant reliance on short-term credit lines to fund operating needs
  • Press articles suggest the Spanish budget deficit continues to grow, with 7.3% of GDP being mentioned....
  • ....against an agreed limit of 6.3% of GDP
  • European markets opened in positive territory, but the gains were short-lived....
  • ....despite a satisfactory Spanish bond auction, 10 year yields there widened out to almost 5.5%
  • Disappointing earnings aplenty across Europe (eg Mulberry, Adva Optical, Alfa Laval) not helping....
  • ....nor did a comment from the German finance ministry saying that it is not certain if the Euro zone crisis has reached its peak yet
  • Commodity and metal (precious and base) all on the slide today as the markdown in risk assets continued
  • Wall Street added to the gloom by dropping more than 1.3% in the first fifteen minutes of trading
  • Markets being led down by the sectors that had led the charge north.......namely miners and financials
  • Euro-area October consumer confidence figures improves for the first time in five months, but still at levels not otherwise seen since 2009
  • The Richmond Fed Manufacturing Survey made grim reading, coming in at -7 against a forecast of +5, with new orders alarmingly weak
  • The New York Times revealed that Ben Bernanke will not stand for a third term at the Fed even if Obama wins the election
  • European peripheral bond yields continued to widen throughout the afternoon, putting further pressure on
    risk assets
  • FTSE ended a pretty ugly day down by 1.44%, rather better than the remainder of Europe
  • The S&P, meanwhile, was down by 1.6%

Liontrust Dealer's Blog - 22/10/2012

"You can always find excuses when you lose a game but, overall, you have to stand up and say Norwich wanted it more than us" Arsene Wenger, Arsenal football manager, born October 22nd 1949.........with apologies to all Gooner blog readers from a stunned Norwich City fan! Summary   US equities fell back post our departure on Friday, with the market having its worst day since June Poor earnings from GE (-3.4%), McDonalds (-4.5%), Microsoft (-2.9%) were chiefly responsible European leaders continue to discuss the banking union proposals, with introduction still targeted during 2013.... ....although Moody’s think that will prove challenging Spain and Greece were reported not to have been discussed at the Euro leader summit Spanish aid request looks more likely after Rajoy extended his majority in Galicia removing an obstacle to a European bailout.... .... however nationalist parties topped the polls in the Basque country, fuelling further calls for independence ...

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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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