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Contents Click on the links below to get to the stuff you really really want. USA – Stocks up on Chinese data, M&A activity and financial support hopes; Employment concerns remain (#USA) UK – Banks and Diageo lead stocks up; Bookmakers lose some of their recent gains; Pound up on Brexit talks resuming (#UK) Continental Europe – Stocks leap but losses still pretty big for the year (#Europe) Elsewhere – Chinese factory profits up suggesting continued rebound (#Elsewhere) WTF – BTS members to become millionaires (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
After a rotten week for global stocks, investors were in buying mood. This was helped by the latest round of Chinese data which suggested that the Chinese recovery continues to press ahead.
On top of that, there were rumours that the Democrats were putting a proposal together for $2.4 trillion of government spending to support households in financial trouble. This is below the $3 trillion that they were set on, above the $2 trillion that the Republicans were happy with, but would appear to be a compromise that won’t make them look like party poopers in the run up to the election, while Trump will doubtless claim that he pressed the deal through and then misquote Churchill, Gandhi, Santa Claus and whoever else he compares himself to in the process.
The concerns over jobs growth remain. Friday will bring another monthly non-farm payrolls report, and if that confirms employment growth slowing further, there’ll be a serious sense of worry about the strength and speed of the economic rebound.
Meanwhile, as interest rates and stock prices are so low, various companies are dabbling in a bit of merger and acquisition activity (i.e. it’s cheap to borrow the money you need to buy someone else’s company stocks, and the stocks themselves are relatively cheap).
This pushed a bunch of companies up in price, but it has little to do with the underlying health of the respective companies.
Nonetheless, the S&P 500 closed a solid 1.6% higher yesterday, while the demand for and prices of low-risk rated bonds didn’t move much: folk are still cautious.
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UK
Banks were up from record lows in the UK. This follows the largest shareholder in HSBC boosting its stake in the bank and investors seemingly taking this as the trigger to pile in at the bottom (so to speak). Consumer goods and exporters were led up by drinks giant, Diageo, which provided an improved outlook for the next year or so.
The negative was provided by gaming companies which had spiked yesterday on news of a takeover bid for William Hill. Caeser’s, the US company making the bid, has said that the bid already made is the highest it’s going to go, so euphoric hopes of mega rises were deflated, bringing prices of William Hill, GVC and Flutter down.
Aside from Rolls Royce losing 3.6% on the day (it is bouncing around like crazy at the moment), the trend for stocks was well and truly up with the FTSE 100 and FTSE 250 closing 1.5% and 1.9% higher respectively on the day. The FTSE 100 was held back slightly by the rise in the value of the pound as Brexit talks resume and folk hope that a deal can be struck between the UK and the EU (higher hopes > higher demand for UK investment opportunities > higher demand for the pound > higher value to the pound > higher prices of UK exports > FTSE 100 is dominated by exporters)
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Continental Europe
Rises were even more pronounced on the continent where the Euro Stoxx 50 and German DAX jumped by 2.7% and 3.2% respectively. Every sector of both indices rose with industrials, financials and basic materials all posting big gains.
While these rises are chunky, they are just chipping away at the massive losses that stocks have experienced this year. We’re in a second phase of falls as folk come to terms with the harsh reality of the virus, the potential need for further lockdown restrictions and the bleak outlook for economic and employment recoveries.
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Elsewhere
Industrial profits in China rose by 19.1% in August compared to one year earlier. That’s down from July’s 19.6%, but still very solid and the fourth consecutive month of profit growth as companies continue to reopen following the lockdown.
This morning, stocks are moving in rather more circumspect manner. Chinese and Korean stocks are up, but other regions’ stocks are down. Yesterday’s euphoria is over and reality is back. We await some real news now before another burst of misery or exuberance.
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WTF (What’s The Fact?)
BTS members to become millionaires
You can probably guessed how thrilled I am about this. Those hard-pressed (well, pampered), instrumentalist (OK, they can’t play any instruments), creative (to be fair, a couple of the band’s members have what appear to be genuine writing credits, but they’re the rappers, so does it really count?), performers come from a wide variety of beautiful, privileged, sophisticated teenagers.
Anyway, the BTS boys are going to become multimillionaires (weren’t they already?) because the record label that they themselves without any help at all have come up with has gone public, leading to eager fans buying shares and sending the value up loads.
It just goes to show how awfully clever they are. Interestingly, by coincidence, the boss of the label, Bang Si-hyuk, owns 43% of the label. He’s going to become a billionaire. In August, the band members very cleverly received a bunch of shares from Mr. Bang (seriously, that’s his name). How sly of them to suggest in any way that it might not have been their idea in the first place.
Now we know what a Bang gang looks like.
And for my next trick, I’ll come up with what BTS stands for…
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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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