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Liontrust Dealer's Roar - 30/11/2012

“You can always count on Americans to do the right thing—after they’ve tried everything else”
Sir Winston Churchill, British Prime Minister, November 30th 1874 - January 24th 1965




  • US market ended the day largely unchanged from the level when we shut up shop yesterday, although volatility remained....
  • ....caused by conflicting messages on the fiscal cliff discussions
  • First, Speaker of the House Boehner told reporters that "no substantive progress" has been made in the
    budget talks....
  • ....but then Senate Majority Leader Reid said that Democrats are all on the same page on budget talks, and Senator Schumer said there in fact had been progress in the discussions
  • Japanese October industrial production unexpectedly rose 1.8% mom, beating consensus of a fourth consecutive monthly decline of 2.0%..
  • ..whilst the government announced a second round of fiscal stimulus worth $10.7bn...
  • ....and in China the MNI business sentiment index rose sharply in November....
  • ....all of which helped markets in the Far East ended the week on a positive note
  • German retail numbers were significantly lower than expected (-2.8% vs exp -0.4%) in October and the September numbers were also subject to a downward revision
  • Italian unemployment rose once more last month to 11.1% (vs exp 10.9%)
  • German lawmakers approved the amended Greek aid package as expected
  • Volumes remain low across the continent, with most eyes focussed on the MSCI indices re-weightings at the end of the trading day
  • October US income data was flat and total personal spending was also lower than expected
  • The purchasing manufacturing index for Milwaukee showed an improvement over October, but was nonetheless still weaker than expected
  • ....and the Chicago purchasing managers survey turned out to be a virtual non-event, being bang in line with expectation, although the details of the report were slightly weaker
  • FTSE drifted off into the close and came out of the end of day auction lower by 0.06% and most of Europe behaved in a similar fashion
  • The S&P meanwhile was down by 0.3% as we headed off into a very chilly evening

Liontrust Dealer's Blog - 29/11/2012

  • Turnaround post comments from House Speak Boehner continued post our departure, S&P added a further 0.82%
  • Obama also said he think parties can agree a budget deal framework & hopes to get it done Christmas
  • Beige Book reports “economic activity expanded in recent weeks”..Goldman Beige Book tracker shows improvement
  • ..so not exactly conducive to more QE. Though Hilsenrath article suggests FED to continue buying long-term MBS & UST in 2013
  • Elsewhere Moody’s said Greek debt is unsustainable even after the deal, with high odds of a default on private debts
  • Asian markets traded higher tracking the US moves, with the Nikkei adding +1% despite weaker retail sales (-1.2% vs f/c -0.8%)..
  • ..as opposition leader Abe repeats call for unlimited easing until inflation hits 2% & Goldman release a bullish piece on the region
  •  All other markets up, despite China which once again can’t muster a positive close (SHCOMP at 1963 now)
  • Europe opens brighter, of note some Bloomberg research suggests 75% expect a short-term fiscal cliff deal (only 6% expect an impasse/recession)
  • German unemployment rises for the 8th month in a row but less than expected (+5k f/c +10k) while Swiss GDP beats estimates (+0.6% Q3 f/c +0.2%)
  • Mid morning Eurozone consumer confidence prints at -26.9 vs f/c -26.9, in line with what PMIs have been telling us (more below)
  • By midday we’re up 0.9%, big corporate stories include a positive investor day for Rio Tinto (+5%) dragging up mining shares...
  • ...company announce $5bn cost cuts. While Invensys (+9%) confirm selling their rail division to Siemens for pretty much their market cap (up 28% yesterday)
  • Moves on numbers include: Kingfisher -0.6%, Dixons -1.1%, Pennon +4.5%
  • Afternoon US data looks better  at first as Q3 GDP is revised up to 2.7% from 2% - (note f/c was +2.8% so somewhat expected) though on further inspection...
  • ...mostly from inventories so no great, & consumer spending was much weaker than expected at only +1.4% revised down from +2% (more below)
  • However Pending Home Sales +18% (vs f/c +8.9%) looks blowout for October
  • Late headlines VAN HOLLEN (?!) SAYS `WE'RE NOT CLOSE TO A DEAL'....we fall a bit
  • Interesting to note expiries likely to pin indices for next few days (more below)
  • Strong close in the end UK +1.15%, Eurostoxx +1.15%, S&P was up 0.65%
  • S&P is now flat!! More headline trading...plus ca change.

Liontrust Dealer's Roar - 28/11/2012

"Words east to be understood do often hit the mark; when high and learned ones do only pierce the air"
– John Bunyan, English Christian writer & clergyman, born 28th Nov 1628 – died 31st Aug




  • US markets drifted lower post our Euro close to finish lower on the day (S&P down another -0.37%)
  • Main story surround the fiscal cliff negotiations not quite going as well as hoped (& had been hinted at)
  • Senate Majority Leader Harry Reid said Democrats & Republicans had made “little progress” as the
    fiscal cliff looms
  • While the OECD cut their global growth forecasts, warning of a major global recession;
  • Corporate wise Corning +7% thanks to sales of glass into smart phones
  • Asian markets mixed overnight, China still sub 2000 at a 4 year low weighing on sentiment &
  • US Treasury also says although China doesn’t manipulate it’s currency...
  • ..it “remains significantly undervalued” and “needs to rise further”
  • Also market apparently thinking any near term stimulus unlikely thanks to recent better data
  • Europe opens a shade weaker (c 0.3%) led by Spain (-0.9%) & Italy (-0.9%) after fins take a hit on news..
  • ...Spanish resident bank deposits fell by 8% in October (YoY) also Reuters report several
    European parliaments
  • Namely German, Dutch, Finnish & French, will have to vote to approve this week’s Greek debt deal
  • Spanish retail sales -9.7% in Oct (f/c -9.4%) ..no surprise
  • Also we have quite a few placings, Celesio, Metro, Africa Oil, Megafon, Ranstand, Alliance Oil
  • & just out (post the close) Wood Group...insiders hitting the market?!
  • Italy sells €7.5bn 182 day bills yield 0.919% vs 1.347% last, good btc as well 1.65x vs 1.52x
  • Midday we’re still down c -0.3% but a few fireworks in the afternoon;
  • Disappointing US home sales number, first bad one in a while..
  • Someone called Bowles says US fiscal cliff deal “unlikely by end of this year”
  • IMF says a significant home price decline in Spain is possible (surely we know this!)
  • So we’re suddenly down about 1% in the UK, S&P down about 0.6%...however this headline
  • Boehner says optimistic a deal with Obama can be reached!!
  • Turns out the comments were made last week, but no-one cares, we rally back to flat.
  • After a topsy-turvy afternoon we close +0.06% in the UK, +0.11% in Europe, S&P currently +0.3%
  • Macro-headline driven markets the order of the day...

Liontrust Dealer's Roar - 27/11/2012

"A wise man can learn more from a foolish question that a fool can learn from a wise answer" – Bruce Lee, founder of Jeet Kune Do (The Way of the Intercepting Fist) & Chinese American actor, born Nov 27th 1940 – 20th July 1973




  • US markets recovered post our lows (S&P +0.49%) to close near the highs of the day, though still in negative territory
  • Ongoing concerns surrounding Greece the focus as the IMF / ECOFIN met, while fiscal cliff uncertainty remained an overhang
  • Black Friday shopping also received some attention, with Apple +3.2% leading tech names...
  • ...though overall the message was a bit mixed to be honest when you look through some of the headlines (more below)
  • In the early hours this morning Euro leaders revealed an accord had been reached over Greece...
  • ...includes cutting bailout loans, suspending interest payments, extending maturities & a bond buyback (more below)
  • Asian markets were generally better post these headlines, with a couple of standouts...
  • Korea +0.9% where they’ve tightened restrictions on currency forwards -> aimed at arresting Won appreciation
  • China A-Shares (-1.3%) breaks 2000 (first sub 2k close since 1995), a level which has previously “huge” support/intervention in previous months
  • Concern as 118 companies have share lock-ups that expire in December, totalling roughly RMB229bn ($36bn)
  • European opens higher (c +0.6%) mainly focussed on Greek headlines,
  • Schaeuble says finance ministers agreed on a Greek debt buyback program, to “significantly” lower the countries debt burden
  • While Largarde says IMF will recommend completion of first review (i.e. cash) once this buyback is complete (notice conditionality there!)
  • Mid-morning Spain sells €4.1bn 3/6m bills. 3m 1.25% vs 1.45% in October, 6m 1.669% vs 2.02% Oct & €4m was max target => better
  • In the UK ONS released 2nd estimate of Q3 GDP growth... still at 1% but YoY estimate falls a tad to -0.1% (0% previous)
  • Corporate +ves: Chemring +3.5% (no p.warning), Remy C +6.4% (Chinese sales), OC Oerlikon +4.3% (sells solar business)
  • Corporate –ves: Falkland Oil & Gas -48% (well plugged), Galp Energia -5.9% (ENI sell stake)
  • Afternoon starts reasonably well with US data looking mostly better
  • US durable goods orders 0% for October vs f/c of -0.7%, Case Shiller HP for Oct +3% vs f/c +2.95%
  • However as it wears on a few negative sounding Greek headlines take the gloss off
  • But into the close US consumer confidence prints better 73.7 f/c 73
  • & Deutsche highlight a Washington Post article suggesting fiscal cliff talks are progressing (more below)
  • So having moved back to near flat we close small up
  • FTSE +0.22%, Eurostoxx +0.3% & S&P currently +0.1%

Liontrust Dealers Roar - 26/11/2012

“Life is like a ten speed bicycle. Most of us have gears we never use”. Charles Schulz, American cartoonist (best known for Peanuts), November 26th 1922 - February 12th 2000




  • In the abbreviated Thanksgiving session on Friday, the S&P did move higher post our departure, on hopes of strong holiday retail trade
  • Asian markets generally better, as US data suggests a strong Thanksgiving holiday for retailers
  • Taiwan very strong on government plans a $10bn+ equity purchase programme
  • The Japanese market was helped once again by renewed Yen strength and dovish comments from the Bank of Japan
  • Chinese market weak on disappointing urban salary growth and rumours of the 2013 GDP growth forecast being set at 7.5%
  • Sunday’s elections in the Catalan area of Spain saw a significant boost for pr-independence party
  • Comments from leaders shortly after further discussion around the EU budget on Friday showed discord
    still exists....
  • ....Cameron said they were not good enough, Monti called them unacceptable, Van Rompuy said that leaders can go further in cutting the budget for the next seven years
  • ECB, IMF are pushing for far- reaching new debt write-off for Greece and believe such a move is inevitable if Greece is to be on its own feet in the foreseeable future, Der Spiegel reports
  • In the UK the Institute for Fiscal Studies conclude that Chancellor Osborne may have to extend his austerity program by another year to 2018 after a deterioration in Britain’s economic prospects
  • In the absence of any fresh catalysts to drive markets higher, Europe opens lower in thin trading
  • Headline of the day on FT Alphaville: “Eurogroup meets for third go at kicking can down the road”
  • Markets tried to squeeze higher in headlines that the Vice President of the ECB said that he expects Spain to ask for aid soon
  • But the rally proved short-lived as traders re-focussed on the latest meetings in Europe today  and the resumption (post Thanksgiving and Obama’s Far East trip) of the fiscal cliff negotiations
  • According to a survey from the National Retail Federation, US shoppers spent 13% more than last year during the Thanksgiving weekend
  • Barclays shares weak (-5.4%) on news of the Qataris converting their warrants and placing
    303.3 million shares
  • Limited macro data from the US today, although the Dallas Fed Manufacturing Activity survey was much weaker than expected
  • A surprise appointment as next Governor of the Bank of England in the form of the current head of the Canadian Central Bank, Mark Carney (see below)
  • FTSE ended a pretty turgid day lower by 0.56%, much in line with most of Europe
  • The S&P was lower by 0.69% as we called it a day

Liontrust Dealer's Blog - 23/11/2012

“A penny saved is not a penny earned if at the end of the day you still owe a quarter” Mary Landrieu, US Democratic senator, born November 23rd 1955




  • Wall Street closed for Thanksgiving yesterday and only open for a half day today
  • Far Eastern markets generally better (Tokyo closed)
  • The flash MNI China business sentiment index rose to 53.57 in November, up from 51.86 in October....
  • ....which bodes well for the November PMI (Nomura raised their estimate from 50.2 to 51.0)
  • EU leaders fail to agree on the next seven years budget, with Merkel predicting no resolution until the New Year
  • ....but Reuters report Eurozone and IMF close to agreement on debt reduction schedule which could allow the delayed release of €44b of loans as soon as next week
  • Europe opened flat, but drifted off over the morning
  • German IFO business climate survey saw an unexpected rise to 101.4 (consensus forecast was 99.5), having declined the previous five months in a row (see below)
  • French Business confidence increased from the lowest in more than 3 years this month
  • S&P cut their ratings on a number of Spanish banks as the economic risks increase
  • Markets tried to rally as Draghi said the ECB is ready to activate its government purchasing program
  • Volumes across Europe were very low, down by more than 40% against the average of the past month
  • And a tick-up in the S&P future saw equities move into positive territory across Europe
  • FTSE ended the week with a rise of 0.49% today, rather less than most of Europe
  • Meanwhile, the S&P was higher by 0.92%

Liontrust Dealers Roar - 22/11/2012

I have tried to lift France out of the mud. But she will return to her errors and vomitings.
I cannot prevent the French from being French” – Charles de Gaulle, French general & statesman,
born 22 Nov 1890 – died 9th Nov 1970




  • US markets closed a little higher post our departure in “extremely quiet, pre-holiday” trading
    (S&P up another 0.2%)
  • Disappointment around no final Greek deal was shaken off, as were come cautious leaning articles surrounding the fiscal cliff & a weaker UoM number
  • ..apparently as Merkel said lower interest rates & an expanded EFSF could fill Greece’s financing gap
  • Also the Fed’s Williams (dovish) reiterated need for $85bn bond-buying per month
  • Israeli defence minister said he expects cease-fire accord with Hamas to be respected, while President Abbas welcomed the agreement
  • Telcos +0.6%, Energy +0.6%, Tech +0.4% winners, Utils -0.4%, Hcare u/c, Fins +0.1% the laggards
  • Main action overnight therefore came from China, where flash HSBC flash PMI data rose above 50 for the first time in 13 months
  • Adds to signs that “economic growth is rebounding after a seven-quarter slowdown” (Barcap)
  • Interestingly region all better (MXAP+0.1%  Japan continues to rip +1.5%), bar China itself (-0.7%) which fell
  • Apparently better data signals an improving economy meaning an end to stimulus...which is bad
    for companies?!?
  • Europe opens brighter led up by the miners (+1%) post HSBC data, helped early by some better than expected November PMI data
  • France Manufacturing +44.7 f/c +44, France Services +46.1 f/c +45
  • German Manufacturing +46.8 f/c +46, German Services +48 g/c +48.3
  • EC Composite +45.8 f/c +45.7, EC Manufacturing +46.2 f/c +45.6, EC Services +46 f/c +45.7
  • However UK manufacturing is still struggling according to the CBI Industrial Trends for November
  • & Pimco’s Bradshaw says the UK is likely to lose its AAA rating
  • Mid-morning Spain sells €3.88bn vs €3.5bn max target 2017’s rate 4.477% vs 4.766% on Oct 4
  • Good news one would think...however slightly tempered by the fact they’re therefore a step further away from asking for a bailout
  • Stock wise movers: SAB +6.4% as #’s beat, Daily Mail +10% #’s fine + high short interest, Man Group +6% on performance of new fund
  • Afternoon sees Cameron rebuff the EU’s revised smaller budget after a meeting with Van Rompuy, he said...
  • ...”it’s a step in the right direction” but “did not go far enough”, with the UK being the main stumbling block on
    an new EU deal
  • However Euro rallies as apparently a Greek aid package is on the horizon, dragging up risk markets generally
  • Despite Eurozone consumer confidence printing at the lowest level since May -26.9 f/c -25.9
  • We close back near the levels seen before last week’s fiscal-cliff-worries selloff.
  • FTSE +0.68%, Eurostoxx +0.6% & the S&P is currently closed (Happy Thanksgiving)

Liontrust Dealer's Blog - 21/12/2012

“$200,000 is the largest sum I ever made in a day, though I’ve cleared more than that on single deals” ....in 1900, Hetty Green, nicknamed “The Witch of Wall Street”, American businesswoman, November 21st 1834 - July 3rd 1916




  • Wall Street closed broadly in line with the index level at the time of European market close yesterday
  • The Islamist group that controls the Gaza strip agreed to a ceasefire after much negotiating
  • Fed Chairman Ben Bernanke said little new in a speech at the Economic Club of New York....
  • ....but reminders that the fiscal cliff is an “imminent danger” to the US Economy weighed on markets
  • Hewlett Packard fell 12% after the writedown to cover alleged accounting irregularities at Autonomy
  • Euro leader announced in the wee small hours that there had been a postponement of discussions on the disbursement of aid to Greece until Monday
  • Juncker and Lagarde both commented, separately, that technical work still needed to be done....
  • ....and an EU official said that although Finance Ministers claim that there are only ‘technical’ differences, there is still no agreement on some key questions
  • The Euro slid sharply on the news and Asian markets followed the lead
  • Trade data from Japan offered little support, appearing mixed at best, with nominal exports falling by 6.5% year-on-year, against a forecast of -4.9%
  • No great surprises in the latest Bank of England minutes, other than one point “The Committee judged that it was unlikely to wish to reduce Bank Rate in the foreseeable future.” (See below)
  • The UK budget deficit widened unexpectedly in October as government spending surged and tax on corporate profits slumped
  • Market volumes ahead of the US Thanksgiving weekend were subdued
  • The latest US jobless claims data were in line with market expectations
  • ....but the University of Michigan confidence survey came in below expectations (82.7 vs exp 84.5)
  • Leading indicator data was slightly better than expected, but was counteracted by a small downgrade to last month’s number
  • FTSE ended a turgid day higher by just 0.07%, whilst most of Europe was similarly quiet
  • The S&P was higher by 0.03% as the wind-down to Thanksgiving gathered momentum
  • A final thought for the day.......in 1989, the average live weight of each turkey produced in the US was 9.55kg....
  • ....last year this had risen to 13.41kg. I wonder if they taste better or worse?

Liontrust Dealer's Roar - 20/11/2012

"One-fifth of the people are against everything all the time" Robert Kennedy, American politician born
Nov 20th 1925 – died June 6th 1968




  • Risk markets continued to push on all Monday, with the S&P adding another +0.47% post our departure
  • Shift in sentiment surround fiscal cliff after +ve reports from DC over the weekend
  • Better housing data & some hope today’s EU meeting should yield an approval for the Greek bailout also helped
  • As did the +7.2% rally in Apple after a bullish article in Barron’s halted an 8 week slide (overdue a bounce maybe!)
  • Technical’s also good as S&P regains 200DMA, decent earnings from Lowes & Tyson Foods, Crude rally helps Energy names.
  • Asian markets mainly better (MXAP +0.3%) led by IT names & the materials sector
  • Bank of Japan fails to ease further (expected) but more moves (another 1 trln Yen) are expected next month
  • PBOC governor Zhou says government will push ahead with financial reform, included ERM
  • RBA minutes revealed they discussed further easing but higher inflation stopped the cut
  • Overall though trading in the region described as “sluggish ahead of Thanksgiving”
  • Pre the open the bullish sentiment is tempered somewhat as Moody’s downgrade France (more below)..
  • ...only in line with S&P, but they also say will affect the rating of the ESM. We open small down (c20bps)
  • Financials (SX7P -0.5%) unsurprisingly lead the way lower as they also move negative on Italian banking;
  • Spain sells €4.94bn of 12/18Mo bills (target €3.5 - €4.5bn) so decent demand on basically unchanged yields
  • Mid-morning German Producer Prices bit lower than forecast (+1.5% YoY f/c +1.6%)
  • Swiss watch data better, high value watches the driver (Richemont +1.9%, Swatch +1.5%)
  • Stock stories; Easyjet +6% on very sold #’s, Credit Suisse -1.7% on re-org plan bit of a let-down, Lonmin +13% get away rights issue
  • Midday markets roughly unchanged...afternoon couple more big stories
  • Glencore +1.6%/Xstrata +3% voted through & Hewlett Packard -10% take an $8bn (!!!) impairment charge on their Autonomy acquisition
  • Heinz (-1.7%) also beat numbers, but thanks to only paying 9.7% tax, so a “low quality beat”
  • US housing starts & building permits both better than expected..Barcap nudge up Q4 GDP estimate to 2.2%
  • As afternoon nears to a close, headlines start to hit the tape from the Eurogroup meeting
  • Also Reuters report a truce to be announced this evening a 22:00 GMT in Gaza
  • We add small, most importantly holding onto yesterday’s gains...
  • FTSE +0.2%, Eurostoxx +0.3%, S&P currently +0.2%

Liontrust Dealer's Blog - 19/11/2012

“You can never quit. Winners never quit and quitters never win”. Ted Turner, American media mogul (founder of CNN), born November 19th 1938

  • Risk markets turned on Friday after House speaker John Boehner described talks with Obama and other congressional leaders as "constructive"
  • The S&P500, which was down 0.75% in the morning session before Boehner's comments hit newswires, rallied more than 1.2% from the lows to close 0.48% higher on the day
  • Boehner's comments helped US treasury yields sell off 3bp to close virtually unchanged at 1.580% and the VIX to drop 2pts to close 8.8% lower
  • A quiet week expected, with Thanksgiving on Thursday (US markets closed and open for just half of Friday, so likely to be very quiet)....
  • ....and president Obama in Asia for three days, so probably less fiscal cliff chatter
  • The main focus of the week will be the Eurogroup/ECOFIN meeting tomorrow, which will focus on the latest Greece disbursements and fresh attempts to address debt sustainability
  • The conciliatory tone from Washington has flowed through to Asian markets overnight....
  • .... with risk appetite also being helped by reports that an Egyptian-brokered Israel-Hamas ceasefire is being explored
  • The Nikkei (+1.43%) outperformed for the third session in a row, following opposition leader Shinzo Abe's dovish comments over the weekend
  • The bullish atmosphere fed through into European markets which opened the week in buoyant mood
  • Rightmove House Prices fell 2.6% month on month in October, reversing most of October’s 3.5% increase
  • Italian industrial orders and sales number both markedly weaker than expected....
  • ....as was the Europe-wide construction output data for September
  • News from Al-Arabiya that the Palestinians and Israelis have reached a draft ceasefire agreement....
  • ....but this seemed to do nothing to slow the advance of oil prices today, which were higher by about 2% by mid-afternoon
  • Decent US housing sales data for October and a very positive builders confidence survey propelled the market to new highs for the day
  • And yet another spur to the market with the following headline on Reuters....
  • FTSE ended a very risk-on day up by no less than 2.36%....
  • ....and, in the process, closed back above the 200 day moving average
  • European markets were equally full of beans, led up by Italy, up by more than 3%....
  • ....but, as one market scribe pointed out, markets are currently extremely skittish, as amply illustrated by the fact that the Eurostoxx Banks index has not had two consecutive up or down days in the last fortnight!
  • The S&P was also off to the races, up by 1.5% as we shut up shop for the day on this side of the pond

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