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Contents Click on the links below to get to the stuff you really really want. USA – Twitter and Netflix lead stock declines; Defensive stocks (telecoms and utilities) up; Bond demand and prices up slightly (#USA) UK – Defensives up; Jobs data disappoint (#UK) Continental Europe – ECB keeps policies unchanged (#Europe) Elsewhere – Record virus cases in Tokyo again; Stocks elsewhere up (#Elsewhere) WTF – VP hell (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Stocks had plenty of reasons to fall yesterday, but the falls were fairly modest as folk continued to hang on to hopes of a virus vaccine being developed, distributed and administered in fantastically quick time.
China provided some of the negative influence after stocks there took a pounding once Beijing realised that their flawless idea of artificially stimulating stock prices might, actually, carry one or two flaws. US-China tensions also continued to bubble away in the background.
The headline-grabbing negative, though, was news that a bunch of very high profile Twitter accounts had been hacked and used as part of a scam to hoodwink immensely gullible people into giving away bitcoins. Twitter’s shares dropped by 1.1% as a result. They were kept company by fellow tech giant, Netflix. The online streaming service which, like Amazon Prime, offers naff-all films worth watching, dropped by 0.8% after posting a disappointing outlook.
Other companies taking hits included Bank of America whose profits halved during the second quarter of 2020, and American Airlines which noted air travel demand falling again. That lot left the broad S&P 500 down by just 0.3% while the tech-heavy Nasdaq lost 0.7% on the day. As was the case across much of the world, the falls were partly offset by folk moving money into lower-risk rated defensive stocks, notably utilities and telecoms. Those two sectors jumped by 1.3% and 1.1% respectively on the S&P 500.
Bond investors were watching from the sidelines with told-you-so looks on their faces. The demand for and prices of bonds rose as folk looked for lower-risk rated places to park money. That pushed the benchmark 10-year Treasury (government bond) yield down a touch, ever closer to the 0.60% level that bond investors seem reluctant to breach.
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UK
Sure enough, telecoms and utilities were the order of the day yesterday as folk moved money from higher- into lower-risk rated investments. Healthcare and technology stocks were very much out of favour, leaving the FTSE 100 and FTSE 250 both around 0.6% lower on the day.
From the domestic perspective, the latest round of jobs data sapped confidence further. The number of people on payrolls fell by almost 650,000 between March and June according to data from the Office for National Statistics. That left the unemployment rate at 3.9%, better than the 4.2% expected, but still pretty bad.
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Continental Europe
The pattern for stocks and bonds was the same across much of Continental Europe where the Euro Stoxx 50 and the German DAX both dropped by 0.4%. Airbus was a notable mover. It fell by 3.2% after rating agency Moody’s predicted the passenger slump in air travel to continue through to 2023.
Meanwhile, the European Central Bank kept its low interest rates and bond-buying programmes unchanged in its latest announcement. Questions remain over the efficacy of these policies though i.e. are they enough?
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Elsewhere
Tokyo recorded another record day of virus cases which helped to send the Nikkei 400 index down by 0.3%. The rest of the Asia Pacific region is in modestly positive mood this morning as folk recover from the Sino-US tensions and look for the next reason to get over-excited.
Here’s one: Taiwan Semiconductor Manufacturing Co. raised its 2020 spending and sales target, hence the Taiwan 50 Index posted a 0.4% gain on the day.
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WTF (What’s The Fact?)
VP hell
The race is on to see who will be Joe Biden’s running mate in the race for the White House. The list is headed by dynamic California Senator, Kamala Harris with boring diplomat, Susan Rice in second, and severely injured Iraq War helicopter pilot, Lieutenant Colonel Tammy Duckworth. But the name further down the list of likely contenders is Keisha Lance Bottoms. I kid you not. I can’t see her getting the nod, but wouldn’t it be great to see a situation generating headlines such as, “Trump stares down Bottoms” or “Trump leaves Bottoms licked” or “Trump probes Bottoms”. You can take it from here.
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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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