Reflect & Prepare

Friday, 30th November 2018 15:46 - by Rajan Dhall

Fed policy has been in focus this week, with Fed chair Powell speaking in NY and revealing a somewhat cautious bias, and underlining data dependency to quell any expectations that the rate path is set in stone.  This gave US stock markets the green light to recover with stronger momentum than it had done in previous sessions, with the market now pricing in a shallower path of rate hikes into 2019.  Prior to this, the Fed Chair had come under some fresh criticism from the US President, who was 'not happy' with his choice of chairman, and naturally, this led to the obvious accusations once Powell had delivered his speech at the Economic Club midweek. The Fed minutes from the previous meeting were therefore redundant, with almost all policymakers seeing a rate hike warranted soon - so the Dec move is still on. 

Into the weekend, we now look to the G20 meeting where the US president will be locking horns with a number of his major counterparts.  Top of the priority list is China, and risk sentiment at the start of next week will be determined by the outcome of this weekend's talks. 

We are set for a 2-week period of 'will they, won't they' vote for the Brexit deal in parliament next month.  The meaningful vote is set for the week starting 10th Dec, and until that time, the uncertainty is set to heighten as the UK waits to see which way the Commons will prioritise their decisions.  There remains great mistrust over the backstop, which could see the UK locked into the customs union. Pro Brexiteers are clearly not prepared to take this risk and so we have a situation where upwards of 80 Tory MPs are set to vote against Theresa May's deal. 

The DUP is also dead set against the idea of aligning with any EU rules which diverge from the rest of the UK.  This almost certainly guarantees yet another 10 votes against the PM, while on the same side of the House, both Labour and the SNP will continue to argue for another referendum (and/or a general election), which by definition is also set to result in more naysayers to the deal.  All in all, the PM has an uphill task in getting the EU deal through parliament, and pundits are already considering the possibility of amendments.  As the EU's Tusk said on Friday, if this deal is rejected, then it is no deal or no Brexit.  However, such stoic positions have been compromised (on) in the past!

Winners & Losers

Intu Properties - 40%: Consortium bidding for the Co. pulled the offer. The group led by Peel Group and included Saudi Arabian firm Olayan and Canada's Brookfield Property abandoned bid and shares in the company sank.

Dignity -20%: Shares in the Co. sank after CMA launch a probe into the sector. 

Thomas Cook - 30% - Yet another earnings warning from the Co. as they say warmer weather in the UK led to more people staying at home. 

Pets at home +14%: half-year profits have tanked by 80.5% after the Co. said it would have to write-down on its veterinary business after an ill-fated rampant expansion.

Greggs +14%: The Co. lifted its outlook after impressive High Street beating sales figures (9%). the Co. is now expecting full-year pre-tax profits of at least £86m in 2018.

Week Ahead

Monday - Chinese Caixin manufacturing, German manufacturing, UK manufacturing, US ISM manufacturing, BoE's Haldane speaks, and Fed's Kaplan speaks

Mercia Technologies Plc [MERC]Plastics Capital PLC [PLA]

Mysale Group Plc [MYSL]UK Mortgages Ltd [UKML]

Schroder European Real Estate Investment Trust Plc [SERE]

Tuesday - RBA interest rate decision, BoE's Carney speaks, UK construction PMI and BoE's Vileghe speaks

DX Group Plc [DX.]London Finance & Investment Group PLC [LFI] Ruffer Investment Company Limited [RICA]

Iomart Group PLC [IOM]Park Group PLC [PKG]

Ferguson Plc [FERG]

Wednesday - AUD GDP, UK services PMI, US ADP NFP, ISM non-manufacturing PMI, BoC rate decision, Fed's Chair Powell speaks, DoE's

Ceres Power Holdings PLC [CWR]Gattaca PLC [GATC]MBL Group PLC [MUBL]

Joules Group Plc [JOUL]

Thursdays - UK RICS house price data, AUD retail sales, OPEC meeting, CAD Ivey PMI and Fed's Bostic speaks

Aeorema Communications [AEO] Bioventix Plc [BVXP]Gleeson (M J) Group PLC [GLE]UK Mortgages Ltd [UKML]

CareTech Holdings PLC [CTH]Impax Asset Management Plc [IPX]

Ted Baker Plc [TED]

Versarien PLC [VRS]

Friday - Halifax HPI, US employment data, CAD employment data, Fed's Brainard speaks

Akers Biosciences Inc [AKR] Green REIT Plc [GRN]SimiGon Ltd [SIM]

Have a great weekend,

Raj