Reflect & Prepare

Friday, 16th August 2019 13:59 - by Reflect & Prepare

The question on everyone's lips now is whether the US is starting to blink, realising that levying tariffs on Chinese goods will start to bite on consumers back home.  Well, the decision to delay the tariffs imposed last week - on some of the items - would certainly so, to some degree at least, with the President open in stating that the moves would disrupt sales going into the Christmas period.  Whether this will develop into a pattern of backward steps seems unlikely, but it does reinforce the view that the current White House administration is ready to strike first and make an impact - asking questions later.

If there were any negative signs on consumer spending, we did not see them in the latest report, with July retail sales showing another bumper month despite some downward revisions in June.  Consumer spending has been the backbone of strong growth reports and will continue to cause policy headaches at the FOMC with the bond markets screaming for stronger action.  This week not only saw the 10yr Note in the US dipping under 1.50% but also the 30yr taking a peek under 2.00%, and for all the talk of recession signals from yield curve inversions, frantic flows in to Fixed Income should be signal enough that markets are concerned over the longer-term prospects of the global economy.  Equity markets continue to take it in their stride, with Wall Street still pushing back against negative sentiment. 

The data coming out of the UK this week was pretty positive, though naturally comes out against the backdrop of the contraction seen in Q2, which points to a possible recession if Q3 follows suit.  Judging by the early numbers in July, this does not look to be the case as the UK consumer is also in fine fettle.  Brexit fears do not seem to be having the same impact on spending, with strong numbers here coming off the back of another rise in wages in the employment report at the start of the week.  Inflation is picking up modestly as a result.

On Brexit, the standoff between the UK and the EU sees no change, as both sides stick to their red lines. Boris Johnson wants the Withdrawal Agreement opened and the backstop removed, but the continent still refuses this.  As we head towards September, the challenge to a no-deal is hotting up, and Jeremy Corbyn's proposal of a caretaker government (led by himself of course) after a vote of no confidence is said to have been received well by some pro-EU Tories - referred to as rebels in this instance.   This will really shake up parliament, with the next election set to be one of the most controversial in history.

Mover and Losers

Kaz Minerals -13%: The Co. reduced its dividend to $0.04 from $0.06 last time out. The company was more cautious on the short term copper market outlook due to pressures on world trade and concerns about China’s economic slowdown.

Tullow oil +10.6%: The Co. announced an oil discovery at the Jethro-1 exploration well in Guyana. The company said the well-encountered 55m of net oil pay which supports a recoverable oil resource estimate which exceeds Tullow's pre-drill forecast.

Balfour Beatty +8.9%: Balfour Beatty has been awarded a $167 million contract by the North Carolina Department of Transportation.

Next Week

Monday - Rightmove HPI, EU CPI, Japanese trade balance

AGM / EGM

Castleton Technology [CTP]

Richland Resources [RLD]

Interim Result

BATM Advanced Communications Ltd [BVC]

Final Result

BHP Group Plc [BHP]

Omega Diagnostics Group PLC [ODX]

Tuesday - RBA meeting minutes, UK CBI trends orders, NZ GDT, weekly oil API's

Interim Result

Jyske Bank AS [0MGD]

Empiric Student Property Plc [ESP]

Finablr PLC [FIN]

Kenmare Resources PLC [KMR]

Persimmon PLC [PSN]

TCS Group Holding Plc [TCS]

John Wood Group PLC [WG.]

AGM / EGM

Gail India Ltd [GAID]

Final Result

Scancell Holdings PLC [SCLP]

Wednesday - Canadian CPI, US home sales, DoE's, Fed meeting minutes

Interim Result

Charter Court Financial Services Group Plc [CCFS]

Costain Group PLC [COST]

Empresaria Group PLC [EMR]

Hansteen Holdings PLC [HSTN]

AGM / EGM

Tekmar Group Plc [TGP]

Thursday -PMI's from Australia, Japan, German, Europe, France and the US, ECB meeting minutes, NZ retail sales

Interim Result

Antofagasta PLC [ANTO]

Foresight Solar Fund Ltd [FSFL]

John Laing Group Plc [JLG]

Macfarlane Group PLC [MACF]

NMC Health PLC [NMC]

Premier Oil PLC [PMO]

Playtech Ltd [PTEC]

Sportech PLC [SPO]

Final Result

Rank Group (The) PLC [RNK]

AGM / EGM

Oakley Capital Investments Ltd [OCI]

Friday - Japanese CPI, Canadian CPI, US new home sales, Fed Chair Powell speaks, Jackson hole symposium, Baker Huges rig count

Interim Result

Henry Boot PLC [BOOT]

Computacenter PLC [CCC]

Glenveagh Properties Plc [GLV]

AGM / EGM

Ashmore Global Opportunities Ltd [AGOL]

Naspers Limited [NPSN]

Have a great weekend

Kind Regards

Rajan Dhall

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.