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Contents Click on the links below to get to the stuff you really really want. USA – Stocks and bond yields jump on trade talks and vaccine hopes; Oil prices up on hurricane worries (#USA) UK – Rising dollar adds to upward momentum for FTSE 100; BT up on takeover rumours (#UK) Continental Europe – As US and UK (#Europe) Elsewhere – Japan catching up with gains, rest more muted (#Elsewhere) WTF – TikTokToe (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Investors across the globe were in positive mood yesterday. Indications that the Chinese and Americans might be burying the hatchet (not in each others’ heads) at least as far as trade negotiations are concerned helped. But the major cause for the “risk-on” attitude (moving from lower-risk stuff like government bonds to higher-risk stuff like company shares) was the enthusiasm over treatments for Covid-19.
The White House is desperate to get a vaccine in play before November’s general election, so it has fast-tracked an experimental one developed in the UK for use and distribution in the US. The efficacy of the treatment has yet to be proven, but the efficacy for voting preferences seems to be in no doubt.
Either way, investors were jumping on the potential benefits of trade- and virus-related positives. That sent stocks to yet higher records despite the economic reality (lower output and jobs, much higher government debt).
Stocks most likely to benefit from an economic recovery rebounded the sharpest, things like travel, leisure, financials and exports. Oil stocks also rose but for a different reason: the potential disruption to oil supplies across the southern states of the US from the approaching hurricane Laura sent oil prices up.
The S&P 500 closed 1.0% higher, for once leaving the tech-heavy Nasdaq in its wake.
The demand for and prices of bonds also eased off a touch. That sent yields on lower-risk rated bonds up (price up = yields down on bonds). The yield on the benchmark 10-year Treasury (US government bond) is trading at around 0.67%, up from the 0.63% a day or two ago.
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UK
With confidence rallying in the US, the value of the dollar also rose. That added to the virus and trade positives to give the FTSE 100 a 1.7% lift yesterday. Every industrial sector rose with oil-related stocks leading the way.
The big riser of note was British Telecom. Its share price jumped by 7.1% after the company reportedly asked Goldman Sachs (the bully boy bank of Wall Street) to help it defend against takeover attempts. In other words, BT reckons that other folk might want to take it over after it cut its dividend and generally looked a bit weaker than in recent weeks. Plus there’s loads of cheap borrowing to be had at the moment with super-low interest rates. So someone might think it noice to take the company over and grab market share. That kicked off a rumour mill, sending speculation of takeover potential and, therefore, BT’s share price up (the potential of someone offering to buy out the stocks always pushes the stock price up because they have to offer a high enough price to persuade enough shareholders to sell).
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Continental Europe
Carbon copy of US and UK. Oil stocks, leisure and exporters led gains sending the Euro Stoxx 50 and German DAX up by 2.2% and 2.4% respectively on the day.
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Elsewhere
Japan caught up with everyone else’s gains today (theirs had been pretty modest yesterday). But the rest of the Asia Pacific region is up in more muted fashion.
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WTF (What’s The Fact?)
TikTokToe
I had my first experience of TikTok yesterday evening. I was persuaded, against my better judgement, to participate in a 20-second dance routine. Very wisely, the only other male on the dance lesson had turned his camera off.
After stiffly limping through the routine (which, it must be said, was taught well by a young professional dancer), I drew a couple of conclusions.
1. TikTok users will be delighted that I’ll not return to the app 2. There has to be a point at which folk switch off electronic devices, leave their X-factor-driven obsession with fame behind and go out into the real world.
On a more serious note, there is a sinister potential in the software. All Chinese companies are obliged by Chinese law to provide any and all data that the government requests from them. What’s more, the TikTok app, on installation, attempts to establish access to a huge number of data and network sources.
Remember the 2016 US election joke? What’s the difference between the US and the Russian presidential elections? The Russian president was elected without Russian support.
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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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