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Liontrust Dealer's Blog - 30/04/2013

“I got along without you before I met you and I’ll get along without you a long time after you’re gone.” Willie Nelson, American country singer, born April 30th 1933




  • The S&P closes at a new record overnight, albeit on low volume, with tech stocks leading the move up (Apple +3.0%), Microsoft (+2.6%), Intel and Cisco (both +1.5%)
  • Interestingly, the VIX also rose and the 10 year bond yield was unchanged on the day
  • Note that the Federal Reserve start their two day monthly meeting today
  • Chinese market remains closed for Golden Week, but the remainder of the Asia Pacific region follows the US lead....
  • ....but Japan ends down small, not helped by Honda falling 3% on light earnings
  • Europe opened firmer, but rapidly ran out of steam, although it did attempt to rally post a weak Eurozone inflation number, giving further impetus to the ECB rate cut bandwagon....
  • .....with market participants positioning themselves today ahead of the ECB decision on Thursday, as most markets closed for May day tomorrow
  • The inflation number also caused the euro to weaken, but it rallied during the afternoon
  • A mass of corporate earnings across Europe....
  • ....today’s Paul Lamberts: UBS (+5.7%), Lloyds (+1.5%), Deutsche Bank (+6.1%), Invensys (+5.5%), BP (+2.1%)....and most banks
  • ....today’s Paulo di Canios: Lonmin (-5.7%), Qiagen (-5.3%), Reed Elsevier (-4.1%)....and most miners
  • Consumer confidence number in the UK come in a shade light (see below)
  • Spanish GDP numbers look awful, but are in line with expectations
  • Unemployment data in Italy less awful than had been feared
  • European banking sector a major feature on a EUR2.8bn placing from Deutsche Bank and a positive reaction to UBS’s earnings....
  • ....with the other side of the coin visible in the mining sector
  • The major three macro data points from the US were the Chicago Purchasing Managers Survey, which came in below expectations (see below)....
  • ....but the US consumer confidence numbers were substantially better than forecast, with an upgrade to last month to boot (although how you can upgrade last month’s consumer confidence number this month sounds somewhat incongruous to me!)....
  • ....and the latest S&P CaseShiller housing numbers were perfectly respectable
  • Markets did not take the news all that well the detail of the number points to a possible unemployment uptick (see below)
  • The Eurostoxx ended the month in positive territory for the eleventh month in succession....the longest winning streak since 1997
  • FTSE ended the day down by 0.43%, whilst the S&P was almost exactly flat on the day as we called time

Liontrust Dealer's Blog - 29/04/2013

“There are two kinds of worries - those you can do something about and those you can't. Don't spend any time on the latter.”-
Duke Ellington, American musician, April 29th 1899 – May 24th 1974



  • Wall Street had a go at rallying post our departure but gave it all back to close small down (S&P -0.18%)
  • Disappointing Q1 GDP reading + a better Uni of Michigan Confidence # were the highlights
  • Earnings bit of a mixed bag once again, so far 77% of co’s have beat at EPS level but only 44% on the top line (Citi)
  • Weekend sees Letta sworn in as Italy’s PM after forming alliance with Bunga Bunga Berlusconi
  • & Ernest & Young reveal UK banks may be set to increase lending to Business for first time since 2009
  • Asian session pretty uneventful. Measure of Chinese Industrial Profit +12.1% Mar from +17% in Feb taken as
  • “another sign that the recovery might be losing steam” (Daiwa), but Chinese & Japanese markets closed.
  • Elsewhere markets generally up by small amount as stock specifics were main driver of price action.
  • Europe opens in positive territory with Italy leading the way post finally revealing a new government
  • Sovereign also gets away another successful sale of 5/10 yr paper, both yields lowest since Oct 2010
  • Macro relatively busy but mainly second tier; Hometrack say “London Homes Sell at Fastest Pace since 2007 as prices rise”
  • Italian Business Confidence 87.6 vs f/c 88.9 & 88.6 prev. Eurozone Consumer Confidence Mar -22.3 vs f/c -22.3
  • April German CPI -0.5% vs +0.5% but main focus is ECB/FOMC & Non-Farms to come this week. Corporate today;
  • Deontay Wilder: Aberdeen +8%, Swedish Match +6.7%, Ageas +4.8%, Galp +1.75%
  • Audley Harrison: Aker Solutions -21%, Balfour Beatty -9.5%, Carillion -6%, Atlas Copco -2%
  • BOAML report EPS beat ratio in Europe “still tracking around a paltry 33%” (US data above from Citi).
  • Worth mentioning placing by Russian govt of $3.3bn VTB into 3 SWF’s...stock up 14% above placing level.
  • By midday Europe is small up, all bar the UK due to resources -0.5%. VOLUMES AWFUL -30% v 30DMA (recall Asia shut)
  • Afternoon US Macro sees Mar Personal Income +0.2% vs f/c +0.4% & Core PCE inflation +0.0% vs f/c +0.1%
  • Pending Home Sales Mar +1.5% vs f/c +0.9% & Dallas Fed Manufacturing for Apr -15.6 vs f/c 5, interesting
  • But not much else to report I could see...S&P takes some heart from the Home Sales data
  • & rallies from the off (currently +0.71%), helping us into the close FTSE +0.5%, SXXP +0.5

Liontrust Dealers Blog - 26/04/2013

“I don’t know why we are here, but I’m pretty sure that it is not in order to enjoy ourselves.”
Ludwig Wittgenstein, Austrian philosopher, April 26th 1889 - April 29th 1951



  • Wall Street slipped back late in the day, but still closed in positive territory
  • A Handelsblatt article blamed for the pullback, which stated that the Bundesbank had voiced concerns over the OMT programme
  • After hours Amazon fell (-3.2%) on Q2 guidance and Starbucks also lower (-2.6%)
  • Asia traded lower, bar Hong Kong, which was up on decent earnings announcements (most notably China Life and PetroChina)
  • After the close in China a number of banks reported, all very solid numbers
  • Japan also weaker, despite the Bank of Japan reiterating its pledge to double the monetary base over the next two years
  • Europe inevitably followed the lead given by others and opened down, led by the miners
  • Today’s David Luiz’s: DNB (+5.2%) decent numbers, Rotork (+6.2%) ditto, BASF (+3.7%), ditto
  • Today’s Luis Suarez’s: YIT (-8.0%), weak numbers, PPR (-6.7%) ditto, Gjensidige Forsikring (-7.6%) impairment charge
  • Volumes across the continent were very light throughout morning trading
  • Lumpy placings in Ziggo and EADS (again!) absorbed by the market
  • Spain announced that they are delaying reaching the EU budget deficit target until 2016....
  • ....and revised their 2013 GDP forecast down once again, from -0.5% to -1.3%....
  • .... and also slashed their 2014 projection from 1.2% to 0.5%
  • US Q1 GDP came in much weaker than expected at 2.5% against an expected outturn of 3.0% (see below)....
  • ....whilst the latest Michigan confidence survey showed the good burghers of the Great Lakes State rather more upbeat than expected....
  • ....which helped push the S&P into positive territory
  • Another strong day for precious and base metals prices, but no impact on mining stocks which remained the day’s market laggards
  • FTSE ended the day lower by 0.25%, whilst most of Europe was down by between 0.5%-0.8%
  • Meanwhile the S&P had once again lost ground and was trading lower by 0.28% as we shuffled off home for the weekend

Liontrust Dealer's Blog - 25/04/2012

“It isn’t where you came from, it’s where you’re going that counts.” Ella Fitzgerald, American jazz singer, April 25th 1917 - June 15th 1996




  • The US market finished little changed in fairly uneventful trading
  • The major features were both to the downside on poor revenue numbers: AT&T (-5%) and Procter & Gamble (-6.6%)
  • Volume was in line with the recent average
  • Asian markets were generally better, buoyed by news that the PBOC have injected a whopping RMB124bn this week through bond purchases....
  • ....which, not surprisingly, ensured a good day for the banking sector in Hong Kong and China, although the Chinese market ended the day lower
  • Strong corporate earnings in Korea, as well as a GDP number that showed the fastest QonQ growth in two years were largely responsible for a strong session
  • Europe opened better, but soon gave up the gains as peripheral yields rose
  • A decent GDP print for Q1 in the UK helped markets to rally (see below)
  • £ had its biggest bounce for a month, gapping from $1.5275 to $1.54 in an instant
  • Spanish unemployment numbers were even more shocking than had been feared....
  • ....overall unemployment running at 27.2%, with 6.2 million people out of work....
  • ....and a terrifying youth unemployment rate of 57.2%
  • A huge day for earnings releases in Europe, with comfortably more bad news than good
  • Today’s Borussia Dortmunds: Elementis (+5.9%), Randstad (+7.8%), Technip (+5.6%), Oriflame (+4.4%), Electrolux (+3.7%),
    Nobel Biocare (+12.6%)
  • Today’s Real Madrids: Logitech (-7.4%), Societe Bic (-6.3%), TGS Nopec (-2.99%), Banco Santander (-2.3%), Astrazeneca (-1.9%), Unilever    (-2.99%)
  • Germany up their 2013 GDP forecast to 0.5% against previous expectation for 0.4%, but leaves 2014 number unchanged
  • As yesterday, the defensive sectors underperform across the continent
  • Also a big earnings day in the US, with numbers pre market from Hershey (positive), Colgate-Palmolive (neutral), Dow Chemical (mixed), Harley-Davidson (in line) and 3m (disappointing) the highlights
  • A total of 59 S&P500 companies announce results today!
  • Precious and base metal markets saw some big upwards moves today, notably in silver and copper
  • Goldman Sachs jump on the ever growing bandwagon of those expecting an ECB rate cut next week
  • The latest jobless claim data from the US looks fine, but the Labor department offer caveat on potential swings in unadjusted data
  • FTSE ended the day up by 0.17%, whilst European markets finished mixed
  • The S&P was up once again, by 0.7%, as we headed off to enjoy the late afternoon sunshine

Jan Luthman, Macro Thematic: Healthy outlook for Global Rebalancing theme

Although we have reduced the Macro Funds’ exposure to consumer goods stocks in 2013, this does not mean that the Global Rebalancing theme is running out of steam. The theme has a lot more legs, not only through the remaining consumer stocks in the Funds (including Unilever, Reckitt Benckiser, Kraft and Mondelez), but also due to the theme’s interaction and crossover with other portfolio holdings. For example, the pharmaceutical stocks we hold are most obviously associated with the Global Health theme, but also benefit substantially from the same drivers as our pure consumer stocks.

Liontrust Dealer's Blog - 24/04/2013

“The best way to get husbands to do something is to suggest that perhaps they are too old to do it.” Shirley MacLaine, American actress, born April 24th 1934




  • The S&P closed broadly where we left it yesterday, although the session had a five minute period of wild gyration....
  • ....caused by someone hacking Twitter and tweeting a story that the White House had been attacked and that President Obama had been injured
  • This was enough to see the market shed more than 1% in two minutes....
  • ....but as it became clear almost immediately that the story was groundless, all the losses were recovered within a further three minutes!
  • Apple unveiled the largest ever share buyback and results (and sales) were better than expected, whilst AT&T Q1 revenue missed estimates
  • Asia rose, led by Australia on the back of lower than expected inflation numbers, leading to renewed hope of central bank easing
  • China lead higher by the banks and with Golden week just around the corner, Macau and jewellery names were also strong
  • With renewed Yen weakness, the big Japanese exporters propelled the Nikkei to close higher by more than 2.3%
  • Europe caught the tailwind from Asia and the US on a big day for corporate earnings....
  • ....today’s Sprinter Sacres: Peugeot (+10.4%), Standard Life (+8%), DS Smith (+8%), Jeronimo Martins (+6.8%) and Storebrand (+6.5%), all on decent numbers....
  • ....today’s Al Zaroonis: Heineken (-5.8%), Wincor Nixdorf (-5.6%) and Finmeccanica (-5.5%), all on disappointing earnings statements
  • Markets suffered a small wobble post a disappointing German IFO print, but markets returned to the glass full view as it contemplates an increased likelihood of an  ECB rate cut next week (see below)
  • Defensive stocks take a back seat today as miners lead the uptick
  • The new Italian Prime Minister is announced and starts the process of forming a government (see below)
  • The UK manages to draw a veil over some disappointing CBI Q1 quarterly retail numbers, which showed a 1% decline against an expected upturn of 8%....
  • ....and some distinctly tepid durable goods and capital goods order numbers from the US also largely ignored
  • European govvie yields tick higher, but perhaps not surprising after the scale of yesterday’s moves
  • FTSXE ended the day up by 0.4%, with most of Europe faring rather better, led by France, higher by 1.58%
  • The S&P fluctuating around the unchanged level on the day, but was a fraction higher as we pulled down the shutters for the day

Liontrust Dealer's Blog - 23/04/2013

“To thine own self be true, and it must follow, as the night the day, thou canst not then be false to any man.” William Shakespeare, English poet and playwright, 23rd April 1564 - 23rd April 1616




  • Post our departure Wall Street rallied, helped by commodities bouncing
  • Treasuries climb and the VIX loses ground
  • The Chinese market very weak on disappointing PMI data, with a reading of 50.5 against consensus expectation of 51.5 (see below)
  • Standard & Poors say that there is a better than one in three chance that they will downgrade Japan’s credit rating
  • South Korea warned that the North could be ready for a nuclear test “at any moment” not helping sentiment either
  • Surprisingly Europe opens in a positive mindset and holds the gains over the morning
  • The latest European PMI numbers a mixed bag....France good, Germany bad, Eurozone in line
  • Peripheral bond yields in Europe fall very sharply helping to spur equities to higher levels....
  • ....with Italian 10 year bond yield dropping below 4% for the first time since November 2010....
  • ....and the Spanish 10 year yield falling by almost 25bps to below 4.35% (see below)
  • ....as speculation grows that an interest rate cut may be on the ECB’s agenda next week
  • Not all good news as ECB’s Noyer said that the pace of deficit reduction is slowing in the euro zone....
  • ....and in Italy the central bank warned that they see downside risk to the government’s growth forecasts
  • The new 87 year old President of Italy begins consultations on forming a government....at his age I hope he gets a shift on!
  • Latest Spanish bond auction certainly helped, selling EUR3.02bn of 3 and 9 month bills, against a target of EUR2-3 billion
  • ·         Tech stocks catch a bid in Europe, helped by very strong numbers from ARM (note Apple numbers out in the US Tonight)
  • And AB Foods up a startling 8% on excellent numbers, led by cheap clothing retailer, Primark
  • Despite the Euro losing ground, the equity rally across the Continent gathers momentum....
  • ....for reasons that are not entirely clear, but a number of brokers pass comment on (see below)
  • The latest April Markit PMI reading for the US comes in at 52.0, below the
    forecast 53.9....
  • ....and the Richmond Fed Manufacturing Survey also disappoints....
  • ....although the new home sales data for March does come in marginally ahead of expectation (although with a meaningful downgrade to the February number)
  • FTSE ended the day up by exactly 2%, rather less than most of Europe, which was led higher by Spain (+3.13%) and France (+3.58%)
  • Wall Street was also enjoying a positive day, trading up by just over 1%

Liontrust Dealer's Blog - 22/04/2013

The best way to destroy the capitalist system is to debauch the currency.” – Vladimir Lenin,  Russian communist revolutionary & former Premier of the Soviet Union, born 22nd April 1870 – died 21st Jan 1924



  • Solid am gains were consolidated post our close as the S&P added another 0.1%..
  • ..to close Friday +0.88% on decent vols (+24% over 3m av.).On the week the index fell -2.1%
  • Reasons for the bounce seemed to stem from China as US earnings were mixed & eco calendar light.
  • Dow lagged as heavyweights GE (-4%) & MacDonalds (-2%) both fell on in-line Q1 numbers.
  • Weekend headlines focused mainly on Japan which came through a G20 meeting unscathed..
  • ..as Kuroda reiterated the G20 had accepted Japan’s monetary easing & he was “emboldened”
  • ..to press ahead. He added they will still avoid “competitive devaluation” in defeating deflation.
  • Elsewhere Italy finally managed to elect a President as incumbent Napolitano accepted a..
  • ..last minute appeal from party leaders to run again saying, “I cannot shun my responsibility”.
  • The unprecedented 2nd term lasts 7 years, so given he’s 87 he’ll be 94 before he finally retires!!
  • Asian markets started the week in ebullient mood lead unsurprisingly by Japan +1.9%
  • Only China in the red -0.1% led down by insurers post the Sichuan earthquake which struck on Saturday
  • Taiwan +0.5% dragged up by Taiwan Semi +1.8% as buying continued post Friday’s limit-up day
  • European markets called up c 0.5% pre the open on the Italy news & Asian move ahead of a big week as..
  • ..about 1/3 of the S&P report this week & about 15% of Eurostoxx 600. This morning on the tape were:
  • +ves: Delhaize +10%, Hermes +1% on #’s. Vods +0.8% post a big Sunday article on cash return
  • -ves: Spirent +0.33% (opened -12%!!), Phillips -5%, Yara -4% on #’s. Kazakhyms -8% & ENRC -2.4% on boardroom turmoil
  • Macro wise very quiet, but Eurostat revealed the Euro Area Govt Debt is now through 90% of GDP
  • & a paper by the World Bank suggests that above 77%; each additional % of debt costs 0.017 % of annual real growth
  • By midday Europe’s up c1% led by Italy +2%, with Banks +1.85%, Autos +1.8% post Shanghai Auto Show
  • Pre US open numbers from Caterpillar (+0.4%) hit the tape, Q1 EPS at “about $7” vs consensus f/c $7.7,
  • Comment, “Conditions in the world economy seem relatively stable, and we continue to expect slow growth in 2013”
  • Others Halliburton (+4%) 67c vs cons f/c  57c & a bid for Power-One (+57% solar invertors) from ABB (-1.25%) for c $1bn
  • US market opens a touch higher (+0.3%) but begins to fall as Existing Home Sales for March come in at..
  • 4.92m vs f/c 5.00m & prev 4.98m. Not convinced this is the reason though, perhaps could be because..
  • ..Bernanke announced he wouldn’t be a Jackson Hole this year due to a scheduling conflict?!
  • Which will mark the first time in 25 years a Fed Chairman hasn’t attended he symposium (bit odd)
  • Anyway whatever the reason, markets lower into the close with plenty of numbers ahead of us this week.
  • On the day..FTSE -0.09%, Eurostoxx +0.13%, Italy +1.66% & S&P is currently -0.03%

Liontrust Dealer's Blog - 19/04/2013

“I haven't had that many women - only as many as I could lay my hands on.”
Dudley Moore, English actor and comedian, April 19th 1935 - March 27th 2002



  • The S&P closed broadly in line with the lower level at which it was trading when Europe shut up shop yesterday
  • Much earnings data released after hours for analysts to ruminate and ponder......some good, some not so good....
  • ....the good: Microsoft (+2.9% in after hours trading) and Google (+1.4%)....
  • ....the not so good, IBM (-4.3%) and Advanced Micro Devices (-4%, having been up by more than 4% pre-close)
  • China led Asia higher, helped by suggestions that moves are afoot to up the weighting of Chinese stocks within the MSCI (see below)
  • Sentiment was also helped by  the State Information Centre forecasting an economic rebound in Q2 and Q3
  • BofJ Governor Kuroda stated that he did not expect the G20 to caution Japan on the weakness of the Yen....
  • ....which, predictably enough, caused the Yen to weaken!
  • Europe took its lead from Asia and opened positively, led by the banks....
  • ....although London was notable for a number of profit warnings this morning (Cookson, Morgan Crucible and Spectris)
  • L’Oreal the big winner (+4.2%) in Europe on good revenue numbers, SAP the laggard (-4.2%) on lower than expected net income
  • Miners saw a small bounce, aided by a positive update from Anglo American and takeover speculation (a possible approach confirmed later) for ENRC helping sentiment....
  • ....as did improving sentiment in the metals markets, most notably iron ore
  • Bellweather US stock General Electric disappointed the market, largely as a result of the power and water division seeing margin pressure
  • Comments from the German Finance Minister promoting the idea of a reduction in liquidity in the Eurozone because there is “too much money” in the market saw the Euro rally and equities sell off a tad
  • FTSE ended the day higher by 0.69%, whilst most of Europe was rather firmer with the notable exception of Germany, which ended the day lower
  • Meanwhile the S&P was up on the day by 0.79%
  • Finally an interesting fact (at least, I think so!)........you can now buy a share of Apple for less than an iPad2....the shares have fallen in value by about 45% since mid September

Anthony Cross, Economic Advantage: Sector rotation no cause for fund turnover

In our blog “winning at a loser’s game” we noted the strength seen in the fourth quarter of 2012 in certain sectors which we do not own (or have very little exposure to). The lack of exposure to these sectors is due to the constituent companies not meeting our stock-level investment criteria rather than any macroeconomic call on our part. This strength was associated with a ‘risk-on’ environment which persisted through January, but the pattern of sector rotation has now eased off and since the beginning of March has shown signs of reversing. 

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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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