Weekly Newsletters
08 May 2020 | William Buckhurst
That Was The Week That Was
Macro
- The oil price rallied somewhat with a barrel of WTI recovering from around $18 to $25
- Credit markets showed that they are still functioning healthily as Apple issued $7bn of bonds at very cheap rates, their first debt issuance since 2017
- Frailties in the Eurozone continue to bubble below the surface as Germany’s highest court ruled that the ECB’s 2015 bond-buying program could be illegal under German law
- The UK government announced that both it and the US had started negotiating a US-UK Free Trade Agreement (FTA). Robert Lighthizer, the US Trade Representative and Liz Truss, the UK’s International Trade Secretary launched the negotiations via video conference to ensure that talks can progress during the Covid-19 pandemic
Statistic of the week
With BT joining the list of heavyweight dividend cuts this week, a UK broker showed us that, so far this year, we have seen dividend cuts or deferrals amounting to £37.7bn across the UK market.
Company news
A further insight into the disruption caused by Covid-19 as Disney, Smith & Nephew and Xylem all reported quarterly earnings:
- Melrose highlighted that despite its high level of balance sheet gearing and difficult trading conditions over the last few weeks, there is a first-class management team that continue to excel on financial prudence with £1bn of headroom on their debt facilities and £200m of cash
- Smith & Nephew saw a 7.6% drop in revenue for the first quarter mainly driven by the orthopedics and the sports medicine & ENT divisions. They warned that performance could be substantially lower for the second quarter as revenue almost halved in April
- Xylem released poor numbers, their fourth earnings report in a row to miss consensus estimates
- Novo Nordisk announced very robust numbers. Its GLP-1 diabetes drug Semaglutide has racked up some encouraging clinical results that take it one step closer to the finish line.
- Disney figures showed that Disney+ subscription numbers have grown well and churn has not been too high; but ESPN has still got no sports to show, the film studios are shut down and the parks are closed (although the Shanghai park will re-open next week)
Small-cap news
It was interesting to note a declarable addition to the M&C Saatchi register with Vin Murria OBE and family noted as owning 13.25%. Vin has a strong tech-based CV and investors have previously made very good returns with her as CEO at Advanced Computer Software Group and more latterly on the board at Sophos (both were taken over).
Funds
A leading US equities manager, with a hugely impressive long-term track record, showed us that the advance of the large US technology stocks over recent years means that, on average, many of them now trade on free cash flow margins of more than 20% showing how resilient they can be in times of crisis. Particularly when it takes the likes of Walmart on average nearly three days to receive payment for goods after its paid its suppliers, whereas Amazon receives payment about 18 days before its paid its suppliers.
This week in history
1886: Coca-Cola was first sold to the general public at the Jacobs Pharmacy soda fountain in Atlanta for 5 cents a glass. It sold on average around 9 glasses a day. Coke now produce more than 1.9 billion drinks a day.
1945: Victory in Europe. The news was largely already priced into markets. The Dow Jones was up only a fraction of a percent on the day, and down a bit the next. However, over the previous 12 months prior to Germany’s surrender, the Dow had gained 26.7%.
Lockdown lowdown
Unexpected stock market winners in the UK include: Halfords who have seen a spike in sales in cycling equipment as people explore new ways to keep healthy and avoid public transport; Loopup, a London-based software company operating in the global conferencing services market which has benefitted from more people working from home; and Plus500 the CFD trading provider has seen heightened volatility across global markets leading to a significant uptick in customers trading from home.
Market Data
|
% returns |
1 Week |
1 Month |
1 Year |
5 Years |
|
UK Equities (% return GBP) |
3.12 |
4.44 |
-15.94 |
0.55 |
|
World Equities (% return GBP) |
3.65 |
5.83 |
2.85 |
56.69 |
|
10 Year US Treasury Yield (%) |
0.64 |
0.76 |
2.49 |
1.75 |
|
GBP / USD (fx rate) |
1.24 |
1.25 |
1.30 |
1.54 |
as at 8th May 2020. Source: Financial Express
This publication has been produced by Vermeer Investment Management Limited (VIM) trading as Vermeer Partners. It is provided for information purposes only. VIM makes no express or implied warranties and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any data included in this publication. VIM will not treat unauthorised recipients of this publication as its clients. Prices shown are indicative and VIM is not offering to buy or sell or soliciting offers to buy or sell any financial instrument. Without limiting any of the foregoing and to the extent permitted by law, in no event shall VIM, nor any of its officers, directors, partners, or employees, have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss of anticipated savings or loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this publication or its contents. Other than disclosures relating to VIM, the information contained in this publication has been obtained from sources that VIM believes to be reliable, but VIM does not represent or warrant that it is accurate or complete. VIM is not responsible for, and makes no warranties whatsoever as to, the content of any third-party website referred to herein or accessed via a hyperlink in this publication and such information is not incorporated by reference. The views in this publication are those of the author(s) and are subject to change. VIM has no obligation to update its opinions or the information in this publication. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the client who receives it. Any securities discussed herein may not be suitable for all investors. VIM recommends that investors independently evaluate each issuer, security or instrument discussed herein and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results. This material has been issued and approved for distribution in the UK and European Economic Area by VIM.
©2019 Vermeer Investment Management Limited. All rights reserved. No part of this publication may be reproduced or redistributed in any manner without the prior written permission of VIM. VIM is authorised and regulated by the Financial Conduct Authority (FRN: 710280) and is incorporated in England and Wales (company number: 09081916).
Other Recent Weekly Newsletters
That Was The Week That Was
26 November 2021
That Was The Week That Was
19 November 2021
That Was the Week That Was
12 November 2021
That Was The Week That Was
05 November 2021
That Was The Week That Was
29 October 2021
That Was The Week That Was
22 October 2021
That Was The Week That Was
15 October 2021
That Was The Week That Was
08 October 2021
That Was The Week That Was
01 October 2021
That Was The Week That Was
24 September 2021
That Was The Week That Was
17 September 2021
That Was The Week That Was
10 September 2021
That Was The Week That Was
03 September 2021
That Was The Week That Was
27 August 2021
That Was The Week That Was
20 August 2021
That Was The Week That Was
06 August 2021
That Was The Week That Was
30 July 2021
That Was The Week That Was
23 July 2021
That was The Week That Was
16 July 2021
That Was The Week That Was
09 July 2021
That Was The Week That Was
02 July 2021
That Was The Week That Was
25 June 2021
That Was The Week That Was
18 June 2021
That Was The Week That Was
11 June 2021
That Was The Week That Was
04 June 2021
That Was The Week That Was
28 May 2021
That Was The Week That Was
21 May 2021
That Was The Week That Was
14 May 2021
That Was The Week That Was
07 May 2021
That Was The Week That Was
30 April 2021
That Was The Week That Was
23 April 2021
That Was The Week That Was
16 April 2021
That Was The Week That Was
09 April 2021
That Was The Week That Was
02 April 2021
That Was The Week That Was
26 March 2021
That Was The Week That Was
19 March 2021
That Was The Week That Was
12 March 2021
That Was The Week That Was
05 March 2021
That Was The Week That Was
26 February 2021
That Was The Week That Was
19 February 2021
That Was The Week That Was
12 February 2021
That Was The Week That Was
05 February 2021
That Was The Week That Was
29 January 2021
That Was The Week That Was
22 January 2021
That Was The Week That Was
15 January 2021
That Was The Week That Was
08 January 2021
That Was The Week That Was
18 December 2020
That Was The Week That Was
11 December 2020
That Was The Week That Was
04 December 2020
That Was The Week That Was
27 November 2020
That Was The Week That Was
20 November 2020
That Was The Week That Was
13 November 2020
That Was The Week That Was
06 November 2020
That Was The Week That Was
30 October 2020
That Was The Week That Was
23 October 2020
That Was The Week That Was
16 October 2020
That Was The Week That Was
09 October 2020
That Was The Week That Was
02 October 2020
That Was The Week That Was
25 September 2020
That Was The Week That Was
18 September 2020
That Was The Week That Was
11 September 2020
That Was The Week That Was
04 September 2020
That Was The Week That Was
28 August 2020
That Was The Week That Was
21 August 2020
That Was The Week That Was
14 August 2020
That Was The Week That Was
07 August 2020
That Was The Week That Was
31 July 2020
That Was The Week That Was
24 July 2020
That Was The Week That Was
17 July 2020
That Was The Week That Was
10 July 2020
That Was The Week That Was
03 July 2020
That Was The Week That Was
26 June 2020
That Was The Week That Was
19 June 2020
That Was The Week That Was
12 June 2020
That Was The Week That Was
05 June 2020
That Was The Week That Was
29 May 2020
That Was The Week That Was
22 May 2020
That Was The Week That Was
15 May 2020
That Was The Week That Was
08 May 2020
That Was The Week That Was
01 May 2020