Behind him the hotdogs split and drizzled
On the public grills, and the ochreous salt flats,
Gas tanks, factory stacks- that landscape
Of imperfections his bowels were part of-
Rippled and pulsed in the glassy updraught.
Sun struck the water like a damnation.
No pit of shadow to crawl into,
And his blood beating the old tattoo
I am, I am, I am. Children
Were squealing where combers broke and the spindrift
Raveled wind-ripped from the crest of the wave.
A mongrel working his legs to a gallop
Hustled a gull flock to flap off the sandspit.

He smouldered, as if stone-deaf, blindfold,
His body beached with the sea's garbage,
A machine to breathe and beat forever.
Flies filing in through a dead skate's eyehole
Buzzed and assailed the vaulted brain chamber.
The words in his book wormed off the pages.
Everything glittered like blank paper.

Everything shrank in the sun's corrosive
Ray but Egg Rock on the blue wastage.
He heard when he walked into the water

The forgetful surf creaming on those ledges.”


Sylvia Plath – Poet – 1932-1963


Four of the best seats at the Royal Opera House at Covent Garden to see ‘La Boheme’ plus dinner there would cost £1200. By any standards that is not a working man’s price and is certainly out of sight for me! It is still possible at a cheaper level, but to all intents and purposes, corporate entertainment rules the roost at Covent Garden.

However, £22 a head at the Odeon Putney, accompanied by a couple of decent bottles of ‘Montagny’ and some ‘home-made’ sandwiches and chocolate cake has much to recommend it! Last Wednesday, accompanied by two good friends, we saw one of the best performances of Puccini’s ‘La Boheme’, I have ever seen. Sonya Yoncheva’s portrayal of ‘Mimi’ and Charles Castronova’s of Rodolfo were sublime.

Friday was a momentous day, signalling part one of the UK’S departure from the EU, with the tricky trade negotiations to follow. I felt that any signs of triumphalism would have been inappropriate. The occasion should have been marked with controlled pride, by those who voted to ‘leave!’ The last 3 years have been socially divisive! We must heal this terrible rift! The HoC hasn’t covered itself in glory by its activity which failed to deliver Brexit without rancour. Very few of those ‘promised boxes’ were ticked!



27th January 2019

31st January 2020

% loss/profit

FTSE 100
















S&P 500





















I think the Chinese authorities have handled this fearful outbreak of Coronavirus deftly by ‘closing down’ 50 million people by preventing them from moving from where they currently are. Some might say that this virus is more virulent than the Chinese authorities have let on.  However, with 360 now dead and over 17000 people affected and evidence that it has filtered to other parts of the world, who can blame investors for getting rather nervous, resulting in some risk being taken off the table.

It has taken a few days for the rotten economic apples to be well and truly shaken from the trees. Even soothing words from the FED’s Jay Powell about the US economy, in response to the FOMC seeming unlikely to cut rates for the time being, failed to abate the level of fear. The FED’s stance was also followed by almost upbeat comments from the Bank of England at Thursday’s MPC meeting, where it was announced that rates would remain unchanged by 7-2.  These decisions sadly failed to sooth investors’ frayed nerves. So, on Friday, many traders finally vented their spleens in the wake of some relatively soft and uncommitted equity trading sessions earlier in the week, which saw markets quietly oscillate in a downward trend.

As you can see from the tables above, the net result was not good for investors. The problem with a human crisis of this nature is that it can have a domino negative effect on the world’s economy. If China’s plight were to take its GDP down in the first quarter from an estimated 6% to 5%, it is unlikely that the world’s economy would escape unscathed. Though it is difficult to forecast, many economists believe that, if this crisis is sustained, it could affect global GDP by 0.4%.  Europe’s bourses seem to suffer more than US equities did last week. It should not be forgotten that last year parts of Europe escaped recession by a whisker. Therefore, it might not take very much adverse news to tip it over the precipice into recession. The Hang Seng in Hong Kong was larupped by over 9% and many expect that when China returns from its New Year holiday, a double-digit loss for the period, during which the Shanghai Composite has not been actively trading, could be posted.

The US posted a 2.3% increase in GDP, somewhat lower than the 2.9% estimated for 2019. The last quarter saw the economy grow by a mere 2.1%. The UK’s MPC listened to the markets’ concern about lowering rates when the data for the UK’s economy was showing signs of improving. If the Coronavirus were to come under control, given a bit of luck and a following wind, there are grounds for optimism, provided the trade negotiations with the EU make some progress. Many felt it would be better to wait a few months to see if the green shoots of recovery are there, before attempting to cut rates from 0.75%. Some anxiety was expressed over no growth in the French and Italian economy for the last quarter of 2019.

Panmure Gordon’s chief economist posted a couple of interesting nuggets of economic data. Firstly, UK car production down 14.2% YoY in 2019. Production globally levelled off in 2016, so it is tempting to make this a Brexit story - it is not (at least not the inflection point). However, the scale of the subsequent 3Y decline has been more acute in UK compared to RoW. Secondly, he further commented that there were ‘Increasing signs that growth in UK unsecured credit has stabilised around 6% YoY in Dec data. Alongside signs of a pick-up in mortgage lending data the BoE will be comfortable with total credit growth (+3.7% YoY) around NGDP levels, which may have given credence to the decision not to cut Bank rate.’ In the past twelve days to 3rd February Brent crude has fallen sharply by 13.5% from $65.00 to $56.25 a barrel. Gold has rallied by 2.5% to £1587 an ounce in the same period.

In the US, according to FactSet, up to and including 31st January 2020, 45% of the companies in the S&P 500 have reported actual results for Q4 2019. In terms of earnings, the percentage of companies reporting actual EPS above estimates (69%) is below the five-year average. McDonald’s excelled and Exxon Mobil and Chevron disappointed, hardly surprising with the price of crude oil dipping quite sharply.   The tech sector, however, was largely on fire, with exceptional results from Apple, with revenues up 9% for the last quarter to $91.8 billion, with sales of iPhone 11 excelling. Apple shares have gained 91% in the past year. Amazon had a bumper Christmas, with its shares initially bouncing by 11% on Thursday, before settling down, up 7% on the day. Both companies’ capital valuation has breached the $1 trillion mark, despite the former surrendering 4.4% in the global sell-off on Friday. Microsoft continues to go from strength to strength with sales up 14% in the last quarter – shares up 61% in the past year   Facebook’s efforts were solid even though expenditure increased by 50%. Tesla posted stellar numbers with revenues of $7.4 billion and sales ahead of expectation. Over the last 2 days of last week, its shares were up 12% to $650 – up an eyewatering 108% in the past year.

Boeing has been forced to take $12 billion of financial aid to see it through the 737MAX crisis which cost the lives of 346 people. The plane remains grounded and may remain so until July. However, the 777X comes into production soon, costing $420 million a plane. Boeing posted a quarterly loss of $636 million, the first for decades. Surprisingly, Boeing shares have only dipped 5% in the last year. 

Here in Old Blighty, Royal Dutch Shell disappointed with a 36% drop in quarterly profits. Diageo’s efforts were solid, though shares dipped 3% on the week due to adverse market sentiment. Unilever saw annual profits ease by 33% to £7 billion. PG tips tea brand is likely to be sold. BT shares fell 7.4% to 162p down from 479p just over 4 years ago. CEO Philip Jansen said the cap on Huawei equipment would add £1 billion to its cost of 5G, Profits were down from £2.1 billion to £1.9 billion. AG Barr’s sales rose like a ‘phoenix from the ashes’, resulting in its shares adding 11% in value on Wednesday.

Though retail seems to be suffering across Europe, luxury goods titan LVMH and its powerful owner/benefactor Bernard Arnaut just seem to march on. The owners Moet & Chandon, Dior and Vuitton amongst many other global brands, saw profits up by 13% to £6.1 billion. Many were sad to see the demise of Norton Motor bikes, as they were to see Aston Martin get out the begging bowl to the tune of £500 million to keep its ailing show on the road. Baroness Shriti Vadera, Gordon Brown’s senior advisor during the banking crisis, has been appointed Chairman of Prudential. Many believe that had Labour won the General Election, she might have been chosen to succeed Mark Carney, as Governor of the Bank of England. 

In closing the Sunday Times tells us that St James Place will bow to pressure to review its remuneration and perks policy. RBS’s new CEO Alison Rose will be based in London. The Sunday Telegraph tells us that President Macron will try and block China’s Jingye from buying British Steel, which may see India’s Liberty House or Germany’s Saarstahl muscle in on the deal. Turkey’s Cengiz continues to remain in the mix. It also appears that Greybull is considering an approach for the French Steel operation.

 It will be interesting to see if growth is going to rebound post BREXIT, as appeared to be the case pre-Coronavirus!

UK companies posting results this week – Tuesday – BP, Ocado, Glencore, Micro-Focus, Numis, Electrocomponents, Wednesday – Barratt Development, GSK, Redrow, Domino Pizza, Grainger, Vodafone, Thursday – Ashmore, Tate & Lyle, Compass, Royal Mail, Friday – Bellway, CVS

US companies posting results this week – Monday – Alphabet, Tuesday – Pitney Bowes, Ralph Lauren, Snap, Walt Disney, Wednesday – Boston Scientific, Carlyle Group, General Motors, Humana, Knoll, Match, Metlife, New York Times, Zynga, Thursday – Estee Lauder, Expedia, Kellogg, Mattel, PixelWorks, Twitter, Tyson Foods, Yum Brands!, Friday – Coty, Goodyear, Hasbro, News Corp

Economic data to be posted this week – Monday – UK & US PMI Manufacturing, US ISM Manufacturing, Tuesday - UK PMI Construction, US Factory Orders & Durable Gods, Wednesday – UK PMI Services, UK New Car Registrations, US ADP Employment data, Thursday – US productivity, Friday – German Industrial Production, US Non-Farm payrolls 7 Employment data ( Unemployment EST: 3.5%, December EST +156k – hourly earnings EST: 3%)

 David Buik

Core Spreads

Core Spreads is financial trading as it should be. No noise – just tight spreads on thousands of markets.

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