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Contents Click on the links below to get to the stuff you really really want. USA – China deal still on; New home sales up; PMI data less bad; Stocks up (#USA) UK – PMI numbers beat expectations to send stocks up (#UK) Continental Europe – Same story (#Europe) Elsewhere – Fairly positive across much of the Asia Pacific region (#Elsewhere) WTF – Trump’s old dog has competition (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
There was a more positive feel to things yesterday. The panic that had followed White House adviser, James Navarro’s comment, that the preliminary trade deal with China was “over”, relented after Navarro claimed to have been taken “wildly out of context”. People really should replace random words in order to understand what he means when he says stuff. So when he says “it’s over”, what he really means is, “I like sausages”. It’s obvious.
Once that had been sorted out, folk could turn their attention to our locally friendly virus. It’s victim numbers have been climbing again in the US, with Texas Governor, Greg Abbott, saying that it was spreading at an unacceptable rate across the state. Applying the Navarro rule to this, it’s obvious that he was saying, “I love trapezoids but am ambivalent about squares”.
White House economic adviser, Larry Kudlow, chimed in with “my dog is succulent” (in Navarro speak that is, his actual words were: “there’s no second wave coming”). We hope he’s right (on the literal point, not so much the dog thing, that’s a bit icky).
Next on the shopping list of worries was the latest round of economic data. Business activity continued to fall, but the rate decline eased. The initial reading of the composite purchasing managers’ index from IHS Markit came in at 46.8, up from 37.0 a month earlier. The “composite” bit means that it applies to all industrial sectors and the number being below 50 indicates contraction. Though, in Navarro, this actually means, “Whoops matron, there go my trousers”.
Those numbers were high enough to reassure investors that things were picking up, but not so high that investors would worry about financial stimulus from the authorities being reduced.
Add in the jump in sales of new homes (albeit from a very low level) and you had a modestly positive mood among investors. That sent stocks up leaving the S&P 500 0.4% higher. Have a look at the Nasdaq Composite on the table at the foot of this email though. It’s up for the year. Those tech stocks have loved the lockdown.
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UK
Stocks in the UK also benefited from the reassurance that the US-China deal was still on. But the real boost came from PMI data.
The latest data for the manufacturing sector included a PMI number above 50 i.e. in growth territory, albeit only just. But 50.1 (which was the number) was well above the generally expected 45.0. Services also beat expectations. Their PMI number was expected to be 41.2, but came in at 47.0, still indicating a fall in output but at a much slower rate.
With lockdown restrictions being lifted from early July, the economic momentum could continue through the month. This is all quite a bit more positive than had been hoped for. Providing there’s no second wave of the virus, it could help to deliver a relatively swift recovery.
This gave investors plenty to be positive about, so up went the FTSE 100 by a solid 1.2%. Its large exporting companies were pleased to see prospects improving. The more domestically focused FTSE 250 only managed a 0.5% rise, but a rise it was nonetheless.
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Continental Europe
Once again it was much the same story on the continent. PMI numbers were better than expected and there was relief that the US-China deal was still on.
And if you’re interested, the basic materials sector was among the big gainers on the day after German chemical giant, Bayer, reported being close to a settlement over a legal case.
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Elsewhere
Stocks are generally up this morning as folk across the Asia Pacific region take heart that the US-China deal is still on, the economic data coming in are positive, and US stocks rose yesterday which often creates a follow-my-leader effect.
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WTF (What’s The Fact?)
Trump’s old dog has competition
(scroll down the page for the images – I’m struggling with IT today)
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Links
Investopedia (www.investopedia.com/dictionary/) – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point Guffipedia (ig.ft.com/sites/guffipedia/) – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies Guardian (www.theguardian.com) – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott) Times of India (timesofindia.indiatimes.com) – Why use five words when 37 will do? Daily Mail (www.theatlantic.com/magazine/archive/2016/07/the-war-on-stupid-people/485618) – 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.
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