GLOOM
GLOOM, DOOM DOOM.
Last month
it was fuel prices. Now it’s indebtedness and houseprices. There’s lots going
on out there. How does one plot the future from here? Anecdotal stories abound
that gazundering is back with a vengeance. The upshot is that house sellers
will not get the price they ask. Is the long expected collapse here NOW. The
annual rise in houseprices has fallen to 8% and is still falling from it’s peak
in January of 22%. That is a pretty hairy fall and at this rate prices will
actually be falling year on year before August. Confidence is shot and here we
are, the most indebted nation in the world. Household liabilities stand at 120
% of disposable income in the US, but 140% in the UK. Perversely new home sales
in the US beat expectations last week but don’t put your shirt on that.
Other
moves. Oil stubbornly holds around $50, even though crude futures fell 7% this
week, and gold is a touch higher at $436. China is thought to be near to a
revaluation against the dollar which would help the US. Other currencies would
readjust in their turn. Some of these indicators are encouraging but one can’t
help feeling that the oil price is continuing to tax economies, leading to
customer aversion to retailers blandishments, just as interest rates seem
poised to rise a little further to halt inflation in it’s tracks, in turn
leading to further slides in economic activity. Will falling energy prices
rescue us? Anybody’s guess, but one might hope so.
Markets
around the world are showing the strain and are back where they were a few
months ago. The FTSE 100 winners this week were mainly defensive.
Pharmaceuticals, utilities and tobacco. The losers led by Kingfisher, were beers, leisure and steel. Interestingly pharmaceuticals
have been the biggest risers since Jan 1st, probably a case of
investors making for the medicine cabinet in stressful times. Much of that rise
is recent news from Glaxo. I wrote
last month about retailers reeling and they are still off balance. Will the
election change things? Doubtful, on poll forecasts, but a hung parliament
would definitely be a disaster.
Biggest
losers over four months are IT hardware, Household goods, Steel, IT and
retailers. Housebuilders have taken a
battering too but by no means the worst sector and Persimmon directors dipped in their pockets when they saw a bargain
a week ago. They were definitely holding up until a month ago. Probably be many
more cheap shares around before too long. Last months quote from Tony Jackson
in this newsletter with my added comments did seem to hint at tribulations due
even if I did not agree with all his arguments.
AIM stocks have had a sticky period
recently with a lot of weakness and pundits suggesting that bigger stocks are
safer. 52 AIM stocks hit new lows this week and many of them were minor oil or
mining stocks. Radstone too was hit.
Along with the weakness amongst tiddler miners was a continuing slide in a major like BHP Billiton. Down from £8 to nearly £6 since February. Time to buy
for mobius perhaps or should we wait awhile!!
Our portfolio
seems relatively unscathed at present although individuals need watching. Some
stocks steady while others wobble a little.
Airpartner
has been strong of late following the results while Arla has been moving narrowly. C&W
broke it’s S/L but immediately bounced back to remain in touch. Looking dodgy
for next week though. MITIE has had a
torrid time of late and is by no means safe. Radstone as mentioned above is in a critical position. 256p against
257 S/L
General market weakness has led to
some shares (C&W and Radstone) treading on dangerous ground.
Hopefully Tuesday 3rd will
see a modest rebound to save their bacon.
My radar picked up on a share which
I never bother with now. For those of you who remember internet share offerings
of 99/2000 e.g. lastminute.com. Stepstone came to market and I received
my handful. Just as well I couldn’t go a bundle. Anyway this share made a new
high this week at 45 Norwegian Kronor. I will have to check my certificate.
Warren Buffet will have addressed
the faithful (i.e. those willing to invest a minimum of $84,400 per share!)
this weekend. It will be interesting to find out what he had to say about the
World economy and the US in particular. I might even surf the net
ML May 1st 2005