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Contents Click on the links below to get to the stuff you really really want. USA – Fed continues to provide financial support; Stocks up on largely positive results; Bond investors not convinced (#USA) UK – Mixed corporate results left indices flat overall; House builders and banks down; Bonds increasingly in demand (#UK) Continental Europe – As UK (#Europe) Elsewhere – Mixed response to US developments (#Elsewhere) WTF – Basket Case (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Everyone was on tenterhooks awaiting the Fed’s latest interest rate and bond buying policy update. In the end, much as expected, the US central bank pledged to maintain the status quo i.e. continue to support the economy as is currently the case. Fed chair, Jerome Powell, noted that the outlook is “extraordinarily uncertain”, indicating that the financial stimulus is likely to be maintained for a fair while yet. This provided some reassurance insofar as it didn’t provide a nasty shock.
Investor sentiment was also boosted by the balance of corporate results that came in being relatively positive. Advanced Micro Drives, Starbucks, Eastman Kodak and Tesla were among those on the up. Things were more mixed for the likes of Boeing (delaying its newest plane), General Motors (first quarterly loss for years), General Electric (lockdown effects) and ebay (disappointing outlook).
What it largely boils down to is that the lockdown has battered most companies; there have been some winners (tech and pharmaceutical); companies that were struggling before the lockdown are royally buggered now.
The S&P 500 had a good day though, closing 1.2% higher. Interestingly, bond investors weren’t persuaded, the demand for and prices of lower-risk rated bonds increased, suggesting that bond investors see more problems ahead before things get better. That sent the yield on the benchmark 10-year Treasury (US government bond) down further below the 0.6% mark.
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UK
UK stocks had a more neutral day driven by mixed corporate results. The FTSE 100 closed at much the same price it had started the day while the FTSE 250 just about nudged up by 0.2%.
Investors were waiting to hear what the Fed had to say for itself and markets closed before that happened. So stocks were driven up by results from the likes of Next and Smurfit Kappa (maker of packaging not small blue men), and down by the likes of Taylor Wimpey and Barclays.
Those last two took a hammering and dragged their respective house-building and banking sectors down. Taylor Wimpey posted a loss for the first half of 2020, while Barclays reported its profits being halved and a tough outlook.
A quick look at the yield on 10-year Gilts (very low risk UK government bonds) shows that people have been pouring more and more money into them fairly steadily since the beginning of April. If anything, that’s accelerated during July, taking the yield down from over 0.3% at the end of March to its current level of just below 0.1%. Bond investors aren’t optimistic just yet, that’s for sure.
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Continental Europe
Much the same as the UK: folk waiting for the Fed decision and relying heavily on financial support to see them through to an economic recovery. The Euro Stoxx 50 and German DAX both inched down by 0.1% on the day.
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Elsewhere
Another mixed day across the Asia Pacific region as folk grapple with domestic economic anti-bliss while hoping for a vaccine. Japan and China are today’s losers while Australia, Korea and Taiwan are up. The Taiwan 50 had another spectacular day as it responded to the jump in sales an profits reported by US chipmaker, Advanced Micro (Taiwan 50 is dominated by chip-type-folk).
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WTF (What’s The Fact?)
Basket case
The NBA, the US basketball league competition thing, is completing its season in Disneyland. Yes the New York Nobs are facing down the Milwakee Morons to see who can stay awake longest during the advert-peppered metronome that is basketball.
Mickey Mouse, guest coach of the Philadelphia Pharquits, was overheard saying, “Who’s my pal, who’s my pal?”. He added, “Gee, Donald, I didn’t understand a word you just said”. That met with broad approval.
Meanwhile, Peter Pan, coaching the Richmond Rednecks, had quoted himself by saying, “now think of the happiest things. It’s the same as having wings.” He’s currently recuperating in Accident and Emergency.
But all eyes are on rookie coach, Snow White. Her team has yet to score, largely because they’re all the same height as the ball. But she always draws a big crowd thanks to her cheerleading routine in which she was going to use an apple, but they’d all been surreptitiously replaced with bananas by the estranged eighth dwarf, Randy.
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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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