Reflect & Prepare

Friday, 20th September 2019 14:34 - by Reflect & Prepare

These are tough times for the Federal Reserve - faced with steady data which suggests a moderate stance, yet under fire from a US President screaming for further accommodation to keep the economic fire blazing as we get closer to election fever to in 2020 when Donald Trump will be seeking a second term in office.  Market pundits are also warning of a possible recession down the road, as the data has shown that the leading economy is not immune to external, global pressures which have seen other parts of the world suffering a slowdown.  Even so, the FOMC cut interest rates by 25bps this week, in a move designed to slowly ease financial conditions in response to some of the softening in the economy.  That said, the labour market remains strong and spending is holding up - as was acknowledged in the statement and press conference - so there is little sign the Fed chair Powell and Co are ready to bow to the White House any time soon.  

 

Fed policy was under further scrutiny this week after developments in the overnight repo markets, where on Tuesday, rates were ramped up from around 2.0% to as high as 10.0% in some quarters.  The combination of corporate tax deadlines and Treasury settlement requirement were said to be behind this latest funding crunch, but somewhat inevitably, the market has started to question whether there are some deeper issues which have caused the squeeze and whether they will resurface again later this year.  

 

On US-China trade talks, optimism is back in vogue, and reflected in buoyant stock markets, with the major US indices once again challenging record highs.  If the funding issues turn into a major crisis again, then we can expect market participants to draw parallels with the 2008 crisis, so some may view the apathy in the financial markets as yet another example of complacency.

 

This week saw the Supreme Court begin its hearing on whether the PM acted legally in proroguing parliament last week.  A ruling is expected next week at some point, but Boris Johnson has said that he will seek another recess if the vote goes against him.  The PM is clearly intent on sticking to his promise of taking the UK out of the EU at the end of October and continues to insist that he will not ask for another extension to the Brexit date.  

 

In the meantime, the UK and EU have had high-level talks this week with Mr. Johnson meeting up with the outgoing EU commissioner in Luxembourg along with the PM Bettel and chief negotiator Barnier.  Jean Claude Juncker made headlines on Thursday night as he talked up hopes of a deal by the end of October, and North American traders took this as a strong sign of progress, lifting the Sterling rate against the Dollar sharply through the psychological 1.2500 level.  The Pound remains the primary Brexit gauge, and UK stocks continue to show a clear negative correlation.  The hype was calmed on Friday morning, with the Pound retracing as a result. This came about as the EU insisted that the UK have yet to table a credible alternative to the Irish backstop, which remains the key obstacle to parliament agreeing on the withdrawal agreement as it currently stands.

 

Movers and Losers

 

Sirius Minerals -60%: The company was not able to secure financing for their project in North Yorkshire. The £500 mln bond sale had to be cancelled and it has been said the company are looking for more funding options.

 

Thomas Cook -25%: The holiday firm have been asked to put together £200 mln for contingency. If the firm collapses it would put 20,000 jobs at risk with 9,000 of them in the UK.

 

IG Group +8%: The company reported a 11% rise in revenues to reach £129.1 mln. The number of active clients rose 5% Y/Y to 92,300.

 

Next Week

 

Monday - Japanese public holiday, PMI readings from USA, Australia, France, Germany and the EZ, UK CBI industrial trends,

Interim Result

ASA International Group PLC [ASAI]

Billington Holdings PLC [BILN]

Deltex Medical Group PLC [DEMG]

Destiny Pharma Plc [DEST]

Faron Pharmaceuticals [FARN]

Gama Aviation Plc [GMAA]

Instem Plc [INS]

Keystone Law Group Plc [KEYS]

Marechale Capital PLC [MAC]

Microsaic Systems PLC [MSYS]

AGM / EGM

NB Private Equity Partners [NBPU]

Sosandar Plc [SOS]

Final Result

PureCircle Ltd [PURE]

Seeing Machines Ltd [SEE]

Trading Statement

Northgate PLC [NTG]

 

Tuesday - Japanese PMI’s, German IFO, UK CBI trends orders, US CB consumer confidence, weekly API’s and NZ trade balance

Interim Result

AA Plc [AA.]

Alliance Pharma [APHA]

Barr (A G) PLC [BAG]

Blancco Technology Group Plc [BLTG]

Card Factory Plc [CARD]

Digitalbox Plc [DBOX]

Elecosoft PLC [ELCO]

Moss Bros Group PLC [MOSB]

RockRose Energy Plc [RRE]

M&C Saatchi PLC [SAA]

Serica Energy PLC [SQZ]

Tremor International Ltd [TRMR]

Versarien PLC [VRS]

Final Result

Blancco Technology Group Plc [BLTG]

Close Brothers Group PLC [CBG]

Diurnal Group Plc [DNL]

InnovaDerma Plc [IDP]

Seeing Machines Ltd [SEE]

Town Centre Securities PLC [TOWN]

AGM / EGM

Kibo Energy PLC [KIBO]

Park Group Plc [PARK]

Versarien PLC [VRS]

 

Wednesday - RBNZ rate decision, German GFK consumer confidence, US new home sales, weekly DoE’s

AGM / EGM

AdEPT Telecom PLC [ADT]

Carclo PLC [CAR]

IMImobile PLC [IMO]

Joules Group Plc [JOUL]

Orient Telecoms Plc [ORNT]

PZ Cussons PLC [PZC]

Sophos Group Plc [SOPH]

Shearwater Group Plc [SWG]

Tavistock Investments Plc [TAVI]

Final Result

Allergy Therapeutics PLC [AGY]

PRS Reit Plc [PRSR]

Interim Result

Ergomed Plc [ERGO]

Mi-Pay Group Plc [MPAY]

Mission Marketing Group (The) PLC [TMMG]

WANdisco [WAND]

XLMedia Plc [XLM]

Trading Statement

Babcock International Group PLC [BAB]

Halma PLC [HLMA]

PZ Cussons PLC [PZC]

United Utilities Group PLC [UU.]

 

Thursday  - German GFK consumer climate, ECB economic bulletin, US GDP, US pending home sales

Interim Result

Allied Minds PLC [ALM]

Crawshaw Group PLC [CRAW]

Ebiquity PLC [EBQ]

Eve Sleep Plc [EVE]

Northbridge Industrial Services PLC [NBI]

Pelatro Plc [PTRO]

AGM / EGM

Alcentra European Floating Rate Income Fund Ltd [AEFS]

Argo Group Ltd [ARGO]

Kromek Group PLC [KMK]

Kainos Group Plc [KNOS]

Real Good Food Company (The) PLC [RGD]

Trading Statement

Mitchells & Butlers PLC [MAB]

MITIE Group PLC [MTO]

SSP Group Plc [SSPG]

 

Friday - UK GFK consumer confidence, Chinese industrial profit, US core durable goods orders, US core PCE

AGM / EGM

Bermele PLC [BERM]

Blockchain Worldwide PLC [BLOC]

San Leon Energy PLC [SLE]

Interim Result

ADES International Holding Ltd [ADES]

Final Result

Byotrol PLC [BYOT]

CVS Group PLC [CVSG]

Trading Statement

Pennon Group PLC [PNN]

 

 

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.