Reflect & Prepare

Friday, 29th March 2019 15:07 - by Reflect & Prepare

All the talk in the US is about the yield curve inversion, and how this may signal a recession down the line.  As it stands, the Fed has already reined in their policy stance, holding back on their tightening cycle, though by now, most market participants are ready to accept that normalisation is over.  This has been reinforced by comments from the Fed's Bullard, though he is a known dove, albeit proven correct at times when the rest of the Fed was still looking at further hikes.  The Fed has already indicated that it will end the reinvestment caps in September, so Wall Street stocks have stabilised in the meantime. 

On the trade negotiations with China, we have seen or heard of little progress, hearing only that talks are ongoing and that key issues remain.  However, both sides are trying to draw up an agreement in order to draw the talks towards a resolution soon. 

Data in the US continues to show clear signs of a slowdown and the Fed's key measure of core PCE prices is coming off better levels, which the Jan personal income and spending data was lower than expected.  None of this seems to be hurting stocks as yet, though earnings season will underline this dynamic in the coming weeks. 

UK PM Theresa May suffered another defeat in the House of Commons on Friday, when her withdrawal deal, which was put to the House without the political declaration was rejected yet again - this time by a majority of 58 votes.  She now has to concede that parliament will have to take over the process and decide on a consensus way forward, and to that end, Monday will see another round of indicative votes, with last week's proposals set to be whittled down.  The customs union was the closest to victory, but we expect more tactical voting, but the clock is now running down to the new exit date of 12 April.

Markets are now pricing in a greater likelihood of a no deal outcome, as this is effectively the default position, given the split parliament at present.  Over the weekend, we will also be hearing lots of speculation over when the PM will resign, if at all, but it is now clear that Theresa May is in her last days of tenureship, having navigated the government on a disastrous course of failures which leaves the UK no closer to finding a resolution in the manner in which it seeks to leave the EU.  It is, as many say, a mess!

Movers and Losers

Ocado +9.74%: The firm seems to be going from strength to strength at the moment as they signed another new deal. This time an Australian firm has paid Ocado GBP 81mln for their proprietary technology that is in serious demand. This is the 5th deal of its kind in the last 18 months. 

Debenhams +20%: Share in the Co. have been a rollercoaster this week as Sports Direct CEO Mike Ashley put in a bid to acquire the business. Then it turned out that the firm secured GBP 200mln in funding it desperately needed and can now afford to dismiss the bid from the High St. tycoon. Now this new deal could wipe out the shareholders so I am sitting back with my popcorn watching events unfold. 

Inmarsat 9%: The heads of the firm have now backed a £2.6billion takeover from the investment consortium Triton. This deal would give the Co. and its workers more certainty as it pumps investment into the fastest-growing parts of its business.

Week Ahead

Monday - Chinese manufacturing, Japanese manufacturing, German manufacturing, UK manufacturing, EU CPI, US retail sales, US manufacturing

Final Result

Globaltrans Investment Plc [GLTR]

Instem Plc [INS]

Tuesday - RBA statement, RBA interest rate decision, UK construction PMI, EU unemployment data, US core durable goods, weekly API's

Final Result

Belvoir Lettings PLC [BLV]

DP Eurasia [DPEU]

M.P. Evans Group PLC [MPE]

Next Fifteen Communications Group PLC [NFC]

Nucleus Financial Group Plc Ord 0.1p [NUC]

TP Group Plc [TPG]

Trinity Exploration & Production [TRIN]

AGM / EGM

Bank Of Montreal [0UKH]

Interim Result

James Halstead PLC [JHD]

Wednesday - AUD retail sales, EU PMI's, UK services PMI, US ADP NFP, US Non-ISM manufacturing data, DoE's 

Interim Result

Applied Graphene Materials [AGM]

Gattaca PLC [GATC]

Urban Exposure Plc Ord Gbp0.01 [UEX]

Trading Statement

CMC Markets Plc [CMCX]

Topps Tiles PLC [TPT]

Final Result

AA Plc [AA.]

Minds + Machines Group Ltd [MMX]

Shield Therapeutics Plc [STX]

AGM / EGM

Athelney Trust Plc [ATY]

Thursday - German factory orders, ECB minutes, CAD Ivey PMI

Lots of Ex-Divs

Final Result

Saga [SAGA]

Smart Metering Systems [SMS]

AGM / EGM

Leeds Building Society 13 3/8% [LBS]

Friday - German industrial production, UK Halifax HPI, US NFP, Canadian employment data

Final Result

Creo Medical Group Plc [CREO]

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.