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Contents Click on the links below to get to the stuff you really really want. USA – Stocks up Despite Rise in Virus Cases; Home sales and factory activity in Texas up (#USA) UK – Virus cases up; Pound down; Stocks up (#UK) Continental Europe – German virus cases down; Tui sales up; Stocks up, bond yields (#Europe) up Elsewhere – Chinese factory activity up, exports lagging; Japanese factory activity muted (#Elsewhere) WTF – Ineos (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Virus cases continued to rise over the weekend leading Texas to suspend the process of lifting lockdown measures. But… – There is a huge amount of financial stimulus supporting stock prices and economic recovery – There is little appetite for a return to full-on lockdown no matter what – Investors are desperate to avoid missing out on gains
So stock prices recovered the world over, no matter how little the underlying numbers might justify that.
The S&P 500 added 1.5% yesterday, not entirely recovering all of Friday’s losses but certainly demonstrating a different mood among investors.
The demand for and prices of lower-risk rated bonds also fell as folk continued to demonstrate how desperate they are to buy stocks and avoid missing out on any gains.
The glimmer of good news came in the form of an increase in home sales across the US as well as a rise in factory activity in Texas.
The voice of reason was also there for those who wanted to hear it; Federal Reserve Chairman, Jerome Powell, warned that the economic outlook remained “extraordinarily uncertain”.
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UK
Despite rising cases of the virus and the potential for a local lockdown in Leicester following a spike in cases, investors piled back into stocks in the UK on Monday.
The value of the pound also fell as investors worried about the outlook of the UK economy as worries grew over the ability for the government to deliver its spending plan (and not helped by the deadline for requesting a Brexit transition extension which expires today). And that gave an extra boost to the export-focused companies listed on the FTSE 100.
The FTSE 100 closed 1.1% higher, while the more domestically focused FTSE 250 added a more modest 0.5% on the day.
BP was one of the major movers. It has set a goal of selling $15 billion-worth of assets by next year. It might already have achieved that after agreeing to sell its petrochemicals business to Ineos (see WTF) for $5 billion. That sent BP’s share price up by 3.4% on the day.
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Continental Europe
Stocks rose across the continent as well, but with a slightly higher level of logic and reason.
Virus cases in Germany fell sharply over the weekend, while irritating-advert-producing-travel company, Tui, announced a 50% rise in sales in the UK and Ireland following the announcement of countries that UK citizens can visit without quarantine restrictions.
That sent the benchmark German DAX stock index up by 1.2% yesterday. The geographically broader Euro Stoxx 50 managed a 0.9% gain as well. The demand for and prices of benchmark German government bonds also fell a little as folk felt less need to park their money in what they considered to be “haven” investments i.e. less likely to fall in value.
Meanwhile, surveys on confidence among industrial and consumer communities showed improvements but came in below expectations.
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Elsewhere
Stocks have been generally recovering this morning across the Asia Pacific region. This is despite China confirming its suppression law of Hong Kong residents.
Over on the mainland, China’s factory activity has picked up… but exports haven’t kept up coz folk are dealing with the fall-out from the pandemic.
Over in Japan, folk there have finally acceded to reality and lowered themselves to buying food online – something that goes very much against the grain of their culture of inspecting and selecting food items carefully. It’s provided online food delivery companies with a nice-ish probleme of trying to cope with demand.
While that has happened, Japanese factory output has fallen. Oh, and it turned out that Argentina’s economy didn’t slump by 21.0% in April as I had suggested it might yesterday. It slumped by 26.4%. That’s a quarter of its entire economy. El blimeyo.
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WTF (What’s The Fact?)
Ineos
Ineos is the massive chemical and related conglomerate owned by gazillionaire, Jim Ratcliffe. He’s looking for stuff to do with all his money these days, and sponsoring sports events is one of them.
Hence he has (or rather Ineos has) taken over as sponsors of what was the Sky cycling team.
The name Ineos has an interesting derivation. It is partly an acronym from Inspec Ethylene Oxide Specialities. But it is also taken from a combination of Greek and Latin words meaning, “We never ever cheat at all, even if prescriptions are delivered in brown packages to our athletes and not recorded”.
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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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