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Contents Click on the links below to get to the stuff you really really want. USA – Massive stimulus package in the offing; Gold and silver prices nudge down a touch; Stocks and bond yields up (#USA) UK – Virus concerns dominate sending financials and travel companies down; Miners up on stimulus hopes (#UK) Continental Europe – Banks battered; SAP up on sale of affiliate company (#Europe) Elsewhere – Australia and Japan down, rest up (#Elsewhere) WTF – In the stars (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
This is set to be a busy week for investors and analysts. US politicians are wrangling over a massive stimulus package, perhaps around $1 trillion ($1,000,000,000,000 i.e. 263,852,242,744 Big Macs), while the Fed (US equivalent to the Bank of England) is in line to continue its low interest rates and bond-buying programme.
On top of that, there will be a flood of quarterly earnings reports from companies. Folk in the know often get a sniff of what different companies are going to report, and that can lead to investors trying to get ahead of the falls or rises in respective share prices. The mood currently seems to be hopeful.
And then there’s the spat with China. The two super-powers have slapped each others’ wrists to absolutely no avail as usual. China continues to abuse its own people while the US tries forlornly to hang on to its position as the world’s largest economy. For now though, the noise has subsided and investor focus has shifted to stimulus and reports.
Folk have been piling into gold and silver as worries over geopolitics, virus cases and the diluting value of money through various stimulus programmes made the precious metals appealing. After moving towards record highs, both metals have receded a little as folk have decided to put money back into higher-risk rated investments such as company shares.
That left the S&P 500 0.7% higher yesterday, while the demand for low-risk rated bonds dropped, sending the benchmark 10-year Treasury (US government bond) yield up to 0.615% – above the 0.6% mark again.
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UK
No such positivity in the UK yesterday where investors were still weighing the implications of the lockdown and further concerns such as the US-China spat and uncertainties over a no-deal Brexit.
That let the FTSE 100 and FTSE 250 0.3% and 0.6% lower respectively on the day. Travel and leisure companies were worst hit with financials close behind. The former continue to be battered by lockdown measures and lingering concerns among travellers about being held in a metal box with a bunch of strangers for a sustained period of time.
Financials are suffering as more cases of the virus are recorded. If households and businesses are struggling then the entire customer base of a bank is in trouble. Add to that the incredibly low interest rates and one of the banks main sources of income (lending) has the profit more or less squeezed out.
However, mining companies had a pretty good day. The potential for a new financial stimulus programme in the US and continued support elsewhere gave metal prices a lift. That’s really good news for miners whose costs stay steady, so a higher price of the metal they sell means a bigger profit margin. This made the basic materials sectors on both the FTSE 100 and FTSE 250 the highest rising industrial sectors with gains of around 2.0%.
Travel and leisure companies continue to be hammered though. Tui, IAG (British Airways), Carnival and easyJet all got slammed by concerns over more virus cases and the reimposition of some travel restriction.
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Continental Europe
Banks were the victims on the continent. The likes of Soc Gen, Santander and BBVA were slapped down by between 2.4% and 3.8% on the day leaving the Euro Stoxx 50 and Spanish Ibex 35 down by 0.2% and 1.7% respectively.
Germany’s DAX managed to close at much the same price it started the day thanks to a 2.7% gain in SAP. The software giant is selling one of its companies which will generate a big cash injection, just what any company could do with right now.
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Elsewhere
Australia continues to struggle with the virus while Japan’s exports are on an unpleasant downward trend. That sent both the S&P/ASX 200 and the Nikkei 400 down by around 0.4%.
The rest of the region seems to be more focused on further financial stimulus on the way. Stocks are up fairly robustly from China to India with benchmark stock index gains of between 0.9% and 1.8% at the time of writing.
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WTF (What’s The Fact?)
In the stars
Have you seen the Indian match-making series on Netflix? I have. It’s a bit crap. Essentially it’s just another version of Big Brother in which hapless folk put themselves on TV in the hope of winning some sort of reward. In this instance, the reward is a culturally like-minded spouse.
The producers have merrily persuaded a handful of hyper-privileged individuals to go on dates, sometimes without their mothers. There’s attractive Nadia who is so desperate to couple up that she’ll date some thoroughly odd individuals.
But wait until you see, or rather hear from, Aparna. If ever a person needed counselling, it was her. After driving a couple of dates away by her general disapproval of everything, she is pointed in the direction of Dilip. Dilip’s essential skill? Astrology.
According to Dilip, Lord Jupiter has been dominating Aparna’s path for many years. But this is all about to change as Lord Venus is about to take over. And when that happens, Lord helpus will guide her to the ATM machine where Lord Fool will part ways with Lord Money.
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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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