Sunday, 22 July 2018

Paint it black...

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  • Black Friday

We clearly live in political times. This was evidenced this morning as, while I was munching my constitutional two slices of toast and catching up with some of the overnight news on CNBC, the first 15 minutes of Squawk Box were taken up exclusively by the issues concerning Turkey and Russia. The main take-away was firstly that the political temperature is rising while financial don’t seem to care and secondly, Thanksgiving or no Thanksgiving, roast turkey or lame duck, US President Barak O’Bama is notable by his absence. The Americans are still trying to work out how to use two flat feet to dance in three camps at the same time.

While all the rest of the talk is of “Black Friday” – today the Beeb was on the button when explaining that the name comes from this traditionally being the beginning of the Christmas shopping season in the US and the point when retailers’ P&Ls for the year go into positive territory and hence into the black – the question is whether it is really relevant in a world where on-line discount shopping is a 365/356 phenomenon? The UK seems to have embraced this all-American Black Friday malarkey as it has Mother’s Day (as opposed to our own Mothering Sunday), Father’s Day and of course Halloween. July 4th next?

I was tickled by a bit of the otherwise first class reporting out of Commerzbank this morning which read: “*Black Friday: Online sales are “good but not great” according to consumer research group Customer Growth Partners.” Sorry guys, but Black Friday is about foot-fall; the on-line thing is supposed to be “Cyber Monday” in three days’ time.

More to the point, I received the item at 06:28 am GMT which makes it 01:28 am EST while on the West Coast it is still Thursday. How come those people have access to tomorrow’s news today? I wonder whether the same guys at CGP can tell me where the Dow will have closed this evening, New York time?

In terms of actual retailing, Black Friday is dwarfed by the Chinese “Singles Day” shopping phenomenon and doubts over its value persist. Many believe that prices are pushed higher earlier in the month so that “discounts” can be legitimately advertised. There are also questions as to whether it adds to incremental sales of whether is simply bunches up activity to the detriment of other days. Could it be developing into a case of a hype too far?

It was ASDA, the UK arm of Wal-Mart, which introduced Black Friday to the UK but it, for one, has announced that it is doing nothing special today. I shall wait and see but my guess is that numbers will be down on last year, even in the US where retailers traditionally desisted from doing the Christmas decorations until today. My little spies tell me that there is no sign of that restraint any longer and that the country has already been snowed under, to coin a phrase, with Santas and red-nosed reindeer for weeks.

Scattered stats

Back here in Europe we were yesterday treated to two very contrary indicators. Spain produced its final Q3 GDP figures which confirmed its QoQ at 0.8% and its YoY at 3.4% which is, by all measures, pretty punchy. On the flip-side of the coin, France reported at the close of business some very poor October employment figures. The benchmark there is the figure for jobseekers which rose from 3,547.800 to 3,589,800, an increase of 42,000 as opposed to the forecast for a fall of 1,000.

As noted above, we live in political times now and the meeting of the Presidents, that’s Francois “Qui? Moi?” Hollande and Vladimir “put-me-in” Putin (the other one of note was busily recovering from the strenuous act of pardoning two turkeys”) very much pushed the poor economic news off the front pages, even those of the financial press. These numbers reflect the state of the nation before the events of two weeks ago today and I think it might be a tad on the optimistic side to expect any rebound in November.

Even weighed down by this news as the CAC40 should have been, it rallied 1.08%, only marginally less that the DAX at 1.35%. The big mover in Germany was Infineon, up by over 12% on suggestions that it might be the next candidate due on stage in the M&A space. Eat lunch or be lunch.

For a Thanksgiving it was quite a busy day in Europe, albeit mainly in the new issue space. Though announced on Wednesday, Solvay took centre stage with a five-tranche deal, two of which were junior subordinated hybrids at €500mm each. Not only did the deal fly to an immediate premium but, from what I gather, the paper was more equitably distributed amongst subscribers than is usually the case – we were sadly not amongst the lucky ones. The deal lent the European credit markets a decent tone throughout the day. All credit indices ended the day tighter with the Xover S24 4¼ points better at 292½ points. It is now within just 4 points of a contract low which flies in the face of all the news of how the high yield market is dying on its feet. That said, all the traders I know, who have more than 10 years experience and who have not yet been fired for being too old and/or too expensive still don’t like the feel of things. The markets remain thin and skittish and most prices, when tested, don’t hold up.

I heard yesterday of an investor who saw a bid, tried to hit it only to be told that the bid was wrong and should have been 15 cents lower. When then trying to hit the bid said 15 cents lower down he was promptly advised the trader was anyhow not axed to bid. Thank you and good-bye. The screen price, incidentally, remained unchanged. I rest my case.


Alas, it is that time of the week again and all that remains is for me to wish you and yours a happy and peaceful week-end. I shall be off a bit earlier today as I am heading for Norfolk, home of British turkey farming, for a delayed Thanksgiving dinner.

Today also marks a sad day for me as John Mastrini, the brave and indulgent fellow who has edited my column for republication in the International Financing Review for a number of years departs the Thomson Reuters fold for pastures new. He is moving to Prague to rejoin the geo-political side of journalism just as it is becoming truly interesting again. Please join me in wishing him and his family all the best in their new and old home – he came to London from a posting in Prague - and equally in welcoming the poor sod who takes over from him here in London in trying to work out what I actually meant to say. Na shledanou, Jan.

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