St Patrick’s day was earlier this week with the wild celebrations over the w/e to celebrate worldwide if you’re Irish…

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while Irish Taoiseach Leo Varadkar seemed to be getting on well with Nancy Pelosi at a “Friends of Ireland” lunch at Capitol Hill while DUP leader Arlene Foster is seen having a quiet word with President Trump…

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St Patrick, a saint from the 5th century AD, was credited with driving out snakes from the island of Ireland and UK PM Theresa May would dearly love for her to be given similar mystical powers to drive out her enemies and see her Brexit deal through the House of Commons this week.  Ironically, it’s the northern Irish who she will have to woo this week ahead of meaningful vote number three tomorrow night in London…now known as MV3, (sounds like a character from Star Wars) while we could still have MV4 next week as the interminable Brexit saga grinds to its conclusion.

Meanwhile UK attorney general Geoffrey Cox (he of the baritone voice) is inevitably managing to grate and irritate EU negotiators in equal measure but his advice moves centre stage as he opines on whether to accept the legalese that may allow London and Brussels to reach a compromise to exit the customs union and single market before end of 2020.

Back in London it was budget week last week and UK chancellor Philip Hammond presented to Parliament his annual budget with an embarrassment of riches as Britain swings into balance…
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This week attention switches to central banks in Washington as Jerome Powell chairs the Federal Open Markets Committee (FOMC) on Tuesday and Wednesday. The focus will be on the Fed’s comments on the balance sheet and how many rate rises remain in 2019; market consensus is for one…

For now, the market is getting behind this idea and “riskier assets” are very much in vogue with investors driving equity indices sharply higher last week and the Nasdaq coming to within 3% of an all-time high again…

It’s the 10th anniversary of the bull market this month which started in 2009 and is now the longest in history

Bull

Bears point to a host of reasons for their caution majoring on the point that markets are expensive but economies while sluggish are not that sluggish and plenty of companies are saying things are not that bad…

Eg I met the CFO of MASCO last week. MASCO is the world’s biggest distributor of faucets and biggest supplier of paint to HOME DEPOT and life’s really not that bad for them, business is ok and volumes and pricing resilient…

MI-CD508_MASCO_P_20140617140356

In Asia, China has cut taxes aggressively and the National People’s Congress last month in Beijing gave it a one two punch with a VAT cut of $90bn and then a follow up $220bn income tax follow up…

China rising…China’s weight in equity indices is forecast to rise…MSCI’s weighting goes to 3% as of this summer from 0.7%… this is very interesting…longer term we like China a lot but the market’s overbought short term and we are taking some short-term profit here having been well exposed to this market…

While on trade China is turning to Europe with a visit by President Xi Jinping to Paris and Rome this week…

https://www.straitstimes.com/asia/east-asia/chinas-xi-jinping-to-visit-italy-france-as-rome-joins-belt-and-road

And global merger activity is supportive and has already started off in 2019 strongly…

Today alone there are US$75bn worth of deals in the global banking sector either in the planning stage as in the case of DEUTSCHE BANK and COMMERZBANK

https://www.bbc.co.uk/news/business-47602571

…or having been confirmed as in the case of FIDELITY NATIONAL buying WORLDPAY

http://www.cityam.com/274810/us-based-fis-buys-worldpay-43bn-valuation-creating-payments

While dividends are also supportive…

With generous amounts of income being paid out (globally it’s estimated dividends totalled US$1.37 trillion in 2018, uo 8.5% on 2017 (source Morningstar). This beats the yield available on deposit and is also better than inflation…

Sector wise we are cautious on the tech sector and believe FAANG’s may be challenged going forward…we stay selective and while we like cybersecurity and infrastructure related tech, defence electronics and related, we believe social media may become more highly regulated meaning returns will revert to the mean…

While in 5G the Brits and Europeans have been more equivocal than the Americans about banning Huawei. The operators in Europe have been more reliant than the Americans on Chinese telecom suppliers and are likely to be more lenient than the Americans.  There is considerable capital raising going on too in the industry with VODAFONE fresh this month from raising large sums to fund its capex programme via a huge convertible issue to raise £3bn with a thin coupon of 2%) source Bloomberg

On matters related to the contentious subjects of security and privacy in the tech world, my colleague Amanda Van Dyke gave me “The Age of Surveillance Capitalism” to read by Shoshana Zuboff…this is a rewarding if difficult read but sums up the ley challenges we are confronted with by this ever consuming technological leviathan that is becoming “big data…”

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