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Contents
Click on the links below to get to the stuff you really really want.
USA – Oil up; Some positive corporate results; Stocks and bond yields up; Mortgages stabilise at new level
UK – Oil price rises and weak pound lift stocks; Inflation down with a cloudy outlook
Continental Europe – EU summit today; Stocks up; Peripheral countries having to offer high payments on borrowing
Elsewhere – Promises of more US stimulus lifted stocks further
WTF – Quackers
Links
Numbers
Ts & Cs
USA
Things got slightly less bad yesterday with oil prices nudging up to $15 per barrel in the US. Also, Chipotle and Snap posted earnings results that weren’t too awful. While waiting the next round of jobs data and further corporate results, that gave investors enough reason to be less negative. No one wants to miss out on the recovery, but that is making for over-enthusiasm in some quarters which isn’t necessarily supported by the actual data.
Nonetheless, stocks and bond yields were generally up. The S&P 500 recovered a chunky 2.3% while the yield on the benchmark 10-year Treasury (US government bond) nudged up. This happened despite the blonde president taking another plunge in his own stratospherically misguided ego: “shoot down and destroy any and all Iranian gunboats” that “harass” US ships at sea was his latest verbal defecation. The Iranians are being monumentally stupid in their approach to a much more serious killer (see WTF), but that is in part because of the trade restrictions that the US has placed on the country.
There was some less disturbing news. Mortgages seem to have established a new level of stability. Online broker, ADVFN, is reporting that refinance demand is remaining high while purchase demand has fallen to a five-year low. All fairly unremarkable under the circumstances.
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UK
Stocks recovered some of the previous day’s losses yesterday. The FTSE 100 and FTSE 250 added 2.3% and 1.2% respectively as oil prices recovered a touch and bargain-hunters were making the most of the low value of the pound to buy relatively cheap stocks. Bond yields also edged upwards as investors felt able to take on a little more risk (i.e. selling bonds and buying stocks).
Specific stocks of interest included building materials group CRH which reported a rise in sales over the first quarter of 2020 compared to the last quarter of 2019. This follows cost-cutting measures which enabled it to reaffirm its final dividend. Power group Drax also jumped after it announced that profits for 2020 should stay in line with expectations. Not so good for Centrica (British Gas owner) and Sage, both of which received broker downgrades.
Investors were also poring over the latest inflation data. The consumer price index fell to 1.5% growth from the previous month’s 1.7%. Fuel and clothing prices pulled the numbers down as they themselves fell in the run up to the lockdown. Where inflation goes from here is going to be interesting. Sales and prices have both slumped, but the Bank of England and the government are pouring new money into the system, both of which would normally push inflation up. The turbulence in financial markets is set to continue for a good deal longer than the lockdown.
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Continental Europe
E & D up 1.6%, Cac and Ibex up 1.2% ish
The big news might be generated by today’s EU summit. European leaders have to come up with a unified approach to support the households, businesses and healthcare systems of all member states. So far, this has proven to be illusive, and time is life at the moment, never mind money.
Meanwhile, stocks followed their US counterparts up yesterday to leave the Euro Stoxx 50 and German DAX 1.6% higher by the close of trading.
Things are getting spicy in the world of bonds. Governments across the world are issuing bonds to pay for the financial support packages during lockdown. That’s bad enough for the likes of Germany and the UK, but for countries with smaller economies its a bigger problem. Spain and Portugal are having to offer higher returns on the bonds that they issue because of the greater level of risk associated with those and similar “peripheral” European countries. They start off with less financial clout, then they have to pay more interest on the money they borrow to sustain themselves. This is significant because it could slow any recovery that those countries have as they carry a proportionally higher debt burden. And that’s without touching on the contagion effects of Italy’s situation.
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Elsewhere
Most stocks across the Asia Pacific region are up again this morning. They’re being lifted by further rises in the price of oil (which is still incredibly low though) and by knock-on benefits from promises of more financial stimulus in the US. This is a welcome if minor reprieve following the latest data showing that factory output has declined still further.
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WTF (What’s The Fact?)
Quackers
While being deprived of medicines and appropriate treatment partly due to the trade embargo placed on them by the US, Iranians are turning to quack medicine to ward off covid-19.
“Drench cotton wool in violet oil” is the instruction from Abbas Tabrizian, “then insert it…”. Can you guess where? Yep, where the sun don’t shine. That’s from the a report in The Economist, showing how desperate and backward some Iranian folk are.
Even with a near-full face covering, you can tell who has applied this unction, their unblinking eyes are wide open and they can’t bend their knees. I might have made that up.
But I have an alternative suppository (for that is what such an insertion is referred to as). How about lacerating a chilli and inserting that? I’d like to see Trump’s hairstyle after one of those treatments (assuming he could correctly identify the appropriate orifice).
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Links
Investopedia – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point
Guffipedia – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies
Guardian – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott)
Times of India – Why use five words when 37 will do?
Daily Mail – Click it. I dare you.
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IMPORTANT
This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my
opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you are too stupid to recognise the devil’s ear wax when you see it, then you’re on your own.
