Ready for the rollover?
Tentative evidence of slowing economic momentum
Despite buoyant global asset markets, we are seeing increasing evidence of slowing economic momentum. In the US, bank loan growth has slowed significantly since Q4 16 and the Atlanta Fed’s GDP nowcast is only indicating 1.2% US growth for the current quarter, compared to over 2.5% as recently as early February. In the UK, the services PMI peaked in January and is now declining while in Europe - a bright spot in terms of economic surprise – disappointing German factory orders cast some doubt on the durability of any recovery. China’s M2 money supply growth has also ebbed since Q1 16, suggesting an easing of basic materials prices, should prior correlations still hold.
Read more...US budget battles
End of 2017 Continuing Resolution looks likely as focus turns to Trump’s first budget
We are firmly in budget season. On this side of the pond Mr Hammond had his moment in the spotlight, but I was watching the news from the US because a few hours later the US House of Representatives approved the $584bn 2017 Defense Spending bill. This sets in motion the process to end the current Continuing Resolution (CR) that is only established until 28 April. The previous day, President Trump outlined his intent to spend $54bn (+3%) more than the Obama administration had planned to on defence in 2018. So what do we know so far and what can we expect?
Read more...Market Commentary - Housing, Infrastructure, Construction and Services 13th March 2017
Galliford, Redrow and Bovis have all made announcements this morning in a bid/merger battle that may take a while to play out. Our belief is that Bovis will be asked by shareholders to get back to the table with both parties as a deal will be the best and quickest way of restoring much eroded value in the shares. As both approaches are indicated to be mergers shareholders will have difficulty in choosing, if they wish to retain sector exposure in any combined entity.
Read more...Market Commentary - Housing, Infrastructure, Construction and Services 10th March 2017
There is limited newsflow today. The OFCOM decision that Openreach will remain part of BT but on an arm’s length basis should be treated as positive for Carillion in particular but also the utility supply segment in general. Capita saw some support yesterday, rising 4.6% to 549p as investors struggle to work out whether the current level is a great buying opportunity or not.
Read more...Is it a car or is it a plane?
Airbus looks to appoint car expert to its board
It seems my prophecy that 2017 could be the year of the flying car may not have been as implausible as it initially seemed. Last week Airbus proposed Lord Drayson, a self-confessed “car-nut” as an independent non-executive director.
Read more...Market Commentary - Housing, Infrastructure, Construction and Services 9th March 2017
There is no directly relevant news from companies this morning. The Budget yesterday made few changes that will affect the industry other than the change in NICs which is bad news for the sector, which has a high level of self-employment.
Read more...Enterprise AI – IBM and Salesforce
Microsoft to Facebook could be what IBM is to Salesforce
Read more...Market Commentary - Housing, Infrastructure, Construction and Services 8th March 2017
G4S, Breedon and Tyman provide news this morning. G4S has produced excellent numbers with revenue at CER up 6% and PBITA by 10% at CER. The management is signalling that after four tough years it has turned the business around and is now on a growth path with an organisation that has strong foundations. Breedon’s march to glory continues with a 43% rise in revenue to £455m and a 58% rise in EBIT to £60m. Tyman ‘s revenue rose by 1% L4L last year and the underlying operating profit increased by 5%.
Read more...