Swiss watches, Swiss holiday, Swiss banks

Swiss watches, Swiss holiday, Swiss banks

New Year surprise from the Swiss Central Bank caused an earthquake in the financial market.  It did the reverse of the Russian Ruble and Swiss Francs was up 20% then 40% against the Euro.  Currency brokers were right in the middle of it and some could not withstand the shock.  Alpari went under and FXCM needed a white knight.  Most banks were hurt with a scratch but the Swiss banks have a bigger problem which I will explain later.  The Swiss stock market dropped thru a crack and was down 14% at one point on 15 January.  It was not funny at all.

Most people think a currency from a developed country like Swiss Franc moved by 20% is a very very big Black Swan with tabby pattern.  It really is beyond imagination and certainly falls into the same category of rare events like England Soccer team winning World Cup.  Agree.  Looking at historical data, CHF last big move was in 2011.  It was EUR 1 to CHF 1.23 in July 2011, then CHF strengthened to EUR 1 to CHF 1.03.  Then the Swiss Central Bank declared brotherhood with the Euro and told the world they would sell CHF for EUR at 1.20.  People stopped going long CHF and short EUR.  That was a small Black Swan move.  So, looking back, we should have known it.  It is simple physics.  You can have a very strong container, like the will power of the Swiss Central Bank to be on the same boat as Euro.  But if you keep pumping gas into the container, eventually, this very strong container will explore in a very powerful way.  The weak Euro against USD had been a trend in second half of 2014 but this may not be the trigger of the event.  If I were a Swiss Central Banker, I probably could live with a weakening CHF which is just dragged down by EUR.  EUR, in any case, is still a very big currency backed by the European Union.  My biggest fear would be what if my assumptions were wrong which is not unheard for Central Bankers.  For example, the concept of EUR being the currency for European Union or the concept of European Union.  The recent political movement in Greece that revived the thought of Greece leaving EU or the EUR currency might have caused Butterfly Effect to Swiss Central Bank decision.  (Just to kill the speculation, I was not, am not and mostly likely will not be a Swiss Central Banker). 

Bang!  Everyone woke up with CHF rocketed against other currency.  Selfishly, first thing came to my mind was to change my ski trip from Davos to St Anton in Austria.  Then I thought maybe I should buy a Rolex before they increase the price in GBP due to labor cost in CHF.  Then I heard about Currency Brokers suffering from potential bad debt from client’s trading losses.  Logically, those Swiss companies who report earnings in CHF but make money in EUR or USD are in tears as their revenue is now taking a 20% discount when it converts to CHF.  Swiss banks, exporters like drug makers, engineering companies, luxury sectors are all making money offshore and reporting earnings in CHF.  Unlucky.  Swiss companies who borrow in EUR or USD are laughing.  I wish I had taken a EUR or GBP loan to buy Rolex.  As Swiss Franc deposit was not paying any interest, it is almost illogical to be investing in Swiss deposit or Swiss government bonds except for the big money manager who manages billions and need to diversify their currency exposure.  Or the hedge funds or traders who have patiently waiting for the container to explore.  A bit like Soros winning in the GBP in the 80’s.  History does repeat.

CHF will eventually clam down but there are casualties already.  Swiss Central Bank has said they would step into the currency market again if they think CHF is too strong.  Of course they would, they just did it.  But they have already set negative interest rate for CHF and perhaps they could make it even more negative.  This would be very interesting if one day Swiss Banks pay borrowers interest to borrow Swiss Francs.  One could earn credit from swiping their Swiss credit card.  Hard to imagine right?  That very big Black Swan in tabby pattern may have a friend around the corner.

Where would the Grinch invest his money?

Where would the Grinch invest his money?

A quick snap shot on Christmas Eve. US market using S&P 500 Index as benchmark is up 16% year to date.  Nasdaq Composite Index that represents the technology sector is also up 16% year to date. The US market has been going up since Global Financial Crisis in 2008.  The bull market looked as if it was going to end with the Quantitative Easing in October this year but no, it came back like Iron Man 3 with more power.  The US market is definitely the super economic power in the world with a very cripple Euro zone.  Very cripple is a lot better than a total collapse which could be the case if Greece or even Italy and Spain had gone under.  Now that the Euro zone is intact but the broken economy is still the reality.  Euro Stoxx 50 has gone up 6% year to date which may give investors a good feeling.  EURUSD (how many USD to EUR 1) has dropped 12% from 1.39 in March to 1.22 level in December which has helped exporters in the Eurozone.  2015 could be a recovery year for the Euro zone if Euro could further weaken against USD and the lower oil price is also good news for manufacturers in general.

Oil at below USD 60 dollar is the cheapest in 5 years and it is a game changer.  Cost of living is lower and inflation pressure has gone down.  This means less reason for Central Banks in UK, US or Europe to increase interest rate.  Low interest is good for the stock market in general and could prolong the bull market in US stock market.  Russia and Venezuela are on the wrong end of the trades with the oil price correction.  Crude oil makes up 95% of Venezuela’s exports and analysts are talking about Venezuela potential default in 2015.  Venezuelan bonds were the worst-performing in emerging markets in 2014 and lost 30% in December.  The benchmark bonds due in 2027 were trading at 40 cents to a dollar.  Russian faced sanction from US and Europe over Ukraine issue and oil price collapse ruined Russia’s winning formula.  Russia Ruble collapsed in a perfect storm.  Russian Ruble was at USD 1 equals RUB 33 level in the beginning of January and USD-RUB depreciated from 44.8 on 24 November, 2014 to 67.9 on 16 December.  Followed by a sharp rebound back to 54 level as of Christmas Eve.  Russian stock market, represented by the MICEX Index, managed to show only 2.5% down year to date.  Russia interest rate was lifted from 10.5% to 17% in December to stabilize the Ruble and to increase the cost for hedge funds to go short Ruble.  Russia economy will probably still be in bad shape in 2015 as it is heavily depending on oil exports.  However, both the currency and some bonds have taken the hit and some brave investors may want to repeat their success in bargain hunting Italian and Spanish bonds.

Among the emerging markets, China is struggling to maintain 7% GDP growth.  To most people surprise, the Chinese stock market turned to a mighty bull in November and the Shanghai Shenzhen CSI300 Index was up 42.5% year to date as of 24 December.  Considering the index is still at 57% of its high in 2007, the China stock market is in a very different cycle when compared against the US stock market.  CSI300 index last had a similar rally was 2 years ago and it went through a very sleepy period while local investors focused on the smaller capitalization stocks.  Chinese stock market is very policy driven and after 2 years of tight monetary policy, the market is expecting government to use policy and their influence in State Owned Enterprises to drive GDP growth.

The UK stock market had an average year with FTSE100 only gaining 1.5% year to date and the last quarter of 2014 was a real roller coaster with FTSE100 making 10% dip twice.  GBP reversed its strong trend against the USD in July and GBP-USD dropped from 1.72 in July to 1.55 in December.  Blame it on the weak Euro zone and Ukraine crisis.  Banking and Resources sectors are likely to continue to be weak in 2015.  Perhaps a weaker GBP and low oil prices could simulate UK export, tourism and local spending.  2015 could be a stock picking year for UK stock market.

British stock market got talents

British stock market got talents

 

Coming to the end of 2014 and it has been an exciting year in terms of investment.  US stock market is still in bull cycle.  Russia Ruble has finally rebounded after depreciated by 40% against the USD since July.  China cut 1 year benchmark borrowing rate from 6% to 5.6% to simulate the slowing economy.  Japan Abenomics turbo charged the money printing machine and sent Japanese Yen to 7 years old against the US Dollar.

 

The global markets have some big swings and looking at the UK stock market, it may look bored from the surface as the FTSE100 is almost unchanged for the year.  However, it is actually a sweet and sour dish with a few star performers and disappointment from some counters.  The talents are Shire Plc, Dixons Carphone, Ashtead Group, United Utilities Group, Astrazeneca and London Stock Exchange Group all showing over 30% year to date return as of 21 November, 2014.　The laggards are IMI, Standard Chartered, Rolls-Royce, Tullow oil and Tesco who dropped 30% to 42% year to date over the same period of time. 

 

The UK supermarkets are have a price war and killing each other.  Sainsbury and WM Morrison are also down 29% year to date.  Grocery sales fell by 0.2% in the 12 weeks to 9 November and it is the first fall since records began two decades ago according to Kantar Worldpanel data.  It looks like the supermarket chains have passed the part of the growth curve where more shops mean more profit.  Rolls Royce and Standard Chartered may have little in common in their business but both enjoy strong growth in emerging markets.  Rolls Royce gets more order as emerging markets build more airports and their airlines buy more planes.  Standard Chartered is viewed as a global player with strong presence in emerging markets.  Russian economy is getting colder by the day.  China economy is still slowing down.  Latin American has Argentina, Venezuela and even Brazil with red light flashing.  The emerging market opportunities have become threats.  For Rolls Royce, it could mean less new orders and existing purchase getting delayed.  For Standard Chartered, it could be a double punch in less revenue and potentially more bad debt.

 

Let’s look at the bright side of life.  Dixons Carphone is up 52.5% in one year as of 21 November, 2014.  It is a GBP 4.8 billion market capitalization company and it is the largest UK electronics retailer.  It is experiencing strong growth in earnings.  According to Bloomberg data, its earnings in 2014/2015 financial year is expected to be over 2.5 times the previous year.  Dixons has really done well in a business that looks simple.  Selling mobile phones, tablets and laptops look easy.  Well, last year Comet collapsed and currently, Phones 4u is looking for buyer to save itself from liquidation.

 

Shire is a health care company in the biotech and pharma sector based in Dublin.  It is GBP 26 billion market capitalization and is up 58.6% in the past 12 months.  Worth noting that was an acquisition play with Chicago based AbbVie trying to buy Shire then move the combined company’s legal address to the UK for a lower tax bill.  The US Treasury Department stepped in and made tax inversion deals more difficult.  AbbVie probably could even sense the heat in Chicago and pulled this deal.  Without the merger story, Shire share price skydived in October from 5200 GBp to GBp 3500 level.  For the shareholders who survived the free fall or the brave ones who bargain hunt, they would be pleased that Shire has climbed back to GBp 4500 level in November.  For this kind of global merger, hedge funds will participate in two ways.  Some hedge fund managers would believe the deal would go through and try to accumulate Shire at a lower price than what AbbVie would pay for.  As the share price of Shire climbed to above GBp 5000 level in September, some hedge fund managers might think the deal may not go through and decide to short the stock.  Thus when the stock dropped in October, the hedge fund managers who shorted the stocks could be buying back.  The bounced back in Shire share price in November could reflect two things.  The real valuation of the company on its own and the fact that it is ready to be sold, it may demands some premium in valuation as it is a “ready to be served” takeover target.

 

Happy Christmas to everyone and always good to have a more profitable 2015.

Stormy weather across all markets

Stormy weather across all markets

Ebola, weak economic data in Europe and China, US leading the fight against IS, Occupy Central in Hong Kong…  So much happening and we all know negative stories get more “likes” and “share” in general.  The more important ingredients should be Euro zone is still weak as expected and higher steroid dosage has limited effect.  US economy is strong or at least stronger than other continents but quantitative easing is tapering off.  Emerging markets are trouble, not the global economy drivers.  Stick to the simple supply demand, bulls versus bears concept.  The bears have the perfect storm to attack and they managed.  What was amazing was the fact that the storm was not just in equities market but spread to other capital market instruments, meaning currency and bonds.

Let’s look at scale of the wave.  S&P 500 index closed at historical high on 18 September at 2,019.36 and within a month, it has corrected 7.8% to close at 1,862.76 on 16 October.  It has rebounded to 1,925 level on 21 October.  In the past year, there were two significant corrections in the S&P 500 index bull run.  A 3.9% correction in July / August and a 5.6% correction in January / February.  So a 7.8% correction is a big deal.  Is this a good time to get in?  Let’s look at some areas where got hit even more severely by the storm.

Eurostoxx 50 Index fell 12.1% in the same period from 3271.37 to 2874.65.  The index rebounded to 2980 level on 21 October but the damage was made.  The close on 16 October, 2874.65, was 1 year low hence created a dip based on the past 12 months performance.  The UK’s FTSE 100 Index also dropped 9.1% in the same period from 6819.29 to 6195.91.  If trend is your friend, Eurostoxx 50 and FTSE100 Indices are friends of the bear camp.

GBP’s weakness continued and the rebound after the Scottish roller coaster was wiped out and even USD 1.6 to GBP 1 was broken a few times in October.  All the gain in GBP against USD in the past 12 months has gone.  The winners are those who went to US for summer holiday. EUR against USD is down 7% in the past 12 months.  EUR has been weak since July like GBP but EUR never enjoyed a rally against USD in the first half of 2014.

The US Treasury market has also gone yoyo as money ran away from risky asset like equities or high yield bonds to safe asset like government bonds.  iShares 10-20 year Treasury Bond ETF listed in US tracks the investment results of a basket of US Treasury Bonds with 10 to 20 years remaining life.  The ETF price had a big spike in October as its price rallied from USD 130 in the beginning of October to USD 137.7 on 15 October and came back to USD 133.6 level on 21 October.  Compared to a steady uptrend since January 2014 from USD 125 to USD 130 at the end of September, the spike in October is like the Shard in the City.  While US Treasury is getting money in, High Yield Corporate Bond funds see money running away.  iShares Euro High Yield Corporate Bond ETF had a bungee jump in October.  Its price dropped from EUR 108.5 level EUR 105.13 on 16 October then rebounded back to EUR 107.5 level on 21 October.  Considering the ETF has been crawling up and down between EUR 108 and EUR 111 in 2014，paying average 5.3% dividend a year. The dip in October looks like Moses crossing the Red Sea on the price chart.

Gold put on a dead cat bounce in October after breaking the psychological support of USD 1200 per ounce on 6 October.  The last time Gold prices went below USD 1200 was in 31 December, 2013.  Coupled with the fear in equity markets, gold got some love and bounced back to USD 1250 level on 21 October.  Gold rallied from USD 1200 level in January 2014 to almost touching USD 1400 level in March.  Then Gold prices have been treading downward since.  Why Gold prices could be just having a dead cat bounce?  Look at Crude Oil prices which has been falling and falling since end of June from USD 103.66 to below USD 80 at USD 79.1 on 16 October.  Oil was once called Liquid Gold.  With Emerging Markets losing growth momentum and US using more and more shale gas, if oil is liquid gold then gold prices would find it hard to decouple from falling oil prices.  No fear of inflation and no sight of gold replacing USD, mean less reason for gold prices to rally.

GBP went through a Scottish roller coaster

GBP went through a Scottish roller coaster

 

3 big events in September and they happen on the same day.  1) Scotland independence referendum; 2) listing of Alibaba in New York； 3）Apple iPhone 6 launch.

 

The Scotland independence referendum was “the” global event and made a big impact to the currency world.  The British Pounds with the threat of losing an arm and a leg, dropped like a rock against USD in the first week of September from 1.661 level on 2 September to 1.605 on 10 September.  It then rebounded and spiked to 1.653 on 19 September when “No” won the race.  EUR was also struggling with weak economic data and cold response from economic simulation plan.  EUR continued its weakening against the GBP that started at 1.200 level in April and it was EUR 1.2804 to GBP 1 on 19 September.  Considered it was EUR 1.24 to GBP 1 on 10 September, the 3% weakening in EUR in 9 days is a roller coaster.　 Imagine UK becomes a mini Euro zone.  With England taking the leadership role like Germany while Scotland, Wales and Northern Ireland pick their choices of being Italy, Spain and France.   England controls the GBP money printing machine.  Not a pretty picture.  The UK stock market was relatively calm with the whole event with the FTSE 100 index range bounded between 6750 and 6900 level in most of September but it snapped on 23 September with geo-conflict to 6650 level.  In Sterling terms, UK FTSE100 Index is down 1.1%, Eurostoxx 50 is down 2.7% and S&P is up 8.6% year to 233 September.

 

Alibaba is kind of an Amazon plus PayPal in China and it is USD 215 billion market capitalization.  It operates the biggest online shopping sites in China.  www.taobao.com is like eBay where anyone could open their own online stores but a shop may need to pay a few thousand pounds a month for marketing packages to get eyeballs.  There is naturally thousands of anything you can imagine.  You type “Rainbow Loom” and there are 8,675 items found.  There is www.tmall.com that only allows selected merchants to list their products.  So brands like Prada and Louis Vuitton are available in Tmall.  Alibaba’s PayPal equivalent is called AliPay which is the biggest online payment gateway in China.  Alibaba is same size as Amazon and eBay combined.  Amazon is USD 150 billion market capitalization, still in heavy investment stage expect to report losses.  Year to date share price performance is down 19% as of 23 September.  eBay is USD 65 billion market capitalization, making good money and trading at 18 times estimated profit to earnings ratio.  The stock is down 4% year to date as of 23 September.

 

Apple launched iPhone 6 and its share price has been rallying since April from USD 75 a share to USD 102.64 as of 23 September.  Not bad at all considering it is losing market share to Samsung and other Android phones.  Basic iPhone 6 16GB are offered at GBP 539 and the bigger iPhone 6 Plus 128 GB at GBP 789.  The price tag can pay for a nice holiday.  But what’s the point of going on a holiday if you cannot have the latest iPhone 6 to take selfies, checking facebook , Instagram, Pinterest.  When iPhone 5 was launched, it marked a peak in Apple share price.  Hard to say whether iPhone 6 would bring the same fate as Apple’s pricing strategy on iPhone has been pricing it on a premium to competitors.  It was also announced that iPhone 6 sold over 10 million units over the first weekend which is a new record for Apple.

 

A smaller event in September.  GlaxoSmithKline (“GSK”) suffered a massive fine of GBP 300m from the Chinese government for bribery.  At least it is done and dusted after a year of investigation accusing the company paying as much as GBP 30m in bribes to doctors in China.  With the dark cloud hanging in the past year, GSK share price has been suffering and it has come off from GBp 1700 level in February to as low as GBp 1365 on 8 August.  It has been paying more than 5% dividend yield since 2010.  It is back to GBp 1400-1450 level as of 23 September.  GSK is a blue chip company and the current price is back to 2013 level.  Worth taking a look if it is worth bargain hunting.

It is a Bulls eat Bears world in the stock market, for now.

It is a Bulls eat Bears world in the stock market, for now.

US stock market put on a good show in August.  The S&P 500 index that represents the US stock market failed to test 2,000 in July and slid to touch 1,900 in the first week of August.  That is a 5% correction and got the bears very excited.  The bears have been saying the US stock market was too strong for too long and the bubble has to burst.  The Tapering measure means less money is pumped to the system every month and the bears are convinced that gravitational force should apply to US stock market.  The bears had their best week in watching the market fall since January when the S&P500 corrected from 1850 level to 1750 level.

The 100 moving average, which is the average number of the past 100 trading days closing prices of the index, turned out to be a magical number.  As S&P500 touched 1,900 level at the time when it was also the 100 days moving average, magic happened and the market rebound all the way to 1,994.76 on 21 August.  Considering S&P500 was at 1,627.47 on 28 August, 2013 which is also the lowest print in the past year, US investors have done well with 22.6% return in USD in just under a year.

The technology sector in US is harder to read although there are probably more people reading their Apple iPhone screens than reading the Oxford Dictionary.  Nasdaq Composite Index which represents the high tech stocks in US has had an awesome run in the past year.  Its low point in the past year was 3,573.6 on 27 August, 2013 and the high point was 4,534.1 on 21 August, 2014.  This means a 26.9% return in USD in under a year.  This is impressive.  If we consider there are more ups and downs in Nasdaq and the tech sector is more fashionable than the boarder index like S&P500, S&P500 index fund is perhaps a more stable investment target than Nasdaq index fund.  What is more significant for the Nasdaq Composite Index is that it has captured the 4,500 level and new high in 14 years.  For those who participated in the Tech Bubble in year2000, they would remember Nasdaq Composite index shot up from 3,000 at the end of 1999 to 5,132.5 on 31 March, 2000 and dived to almost touch 3,000 again.  Then rebounded to reconquered 4,000 level before heading south all the way to 2,000.  In short, Nasdaq at 4,500 level is a very high and happy level for investors if one removed the spike in year 2000.

There are some amazing performers in the tech sector.  We all know Tesla, ran by Elon Musk the Iron Man in real life.  Tesla is up 69% year to date as of 21 August.  Sandisk (maker of memory cards) and Facebook are up 38% and 36% respectively.  Mighty Amazon.com is down 16.5% year to date.  These high tech counters could swing widely and buy and hold strategy could give you a roller coaster ride.

The European stock market has done a bungee jump in August.  Eurostoxx 50 Index, started near 3200 level in August, dropped through 3,000 level and bounced back to 3,124.6 on 22 August.  UK stock market had similar fate.  FTSE100 started at 6,800 level in August and was slammed to below 6,550 level and rebounded to 6,780 level on 22 August.  The dropped in European and UK stock markets in the first week of August was scary.  Combined with weak economic data and the tension in Ukraine, the bears really thought they could have the last laugh.  However, the market believes weak economy means potentially more money printing exercise hence asset appreciation.  The bears win again.

The British Pound dropped like a rock against the USD in August, erasing all the gain since April.  The drop started in mid-July after a high print of GBP 1 to USD 1.719 on 15 July and fell to 1.657 on 22 August.  That is a 3.6% drop in over a month.  The scary thing is that the GBP movement is like a whole month of landslide without much rebound.  GBP against the USD dropped though 50 days moving average at 1.69 level near the end of July, then the 100 days moving average at 1.68 in the first week of August and 200 days moving average at 1.67 after mid-August.  The momentum and magnitude of the movement has not been seen for a year.  GBP has broken many technical support and hopefully, 1.65 level could give Sterling a breathing space.  The EUR is falling against the USD even faster than GBP.  EUR has fallen 5% since May from EUR 1 to USD 1.399 to 1.328 on 22 August.  EUR is not far from its one year low at 1.311 on 6 September, 2013.

Cannot find the straw that broke the camel’s back?

Cannot find the straw that broke the camel’s back?

The UK stock market has some exciting moments in July.  Banco Espirito Santo SA, Portugal’s second largest bank by market value, gave the market a cold shower as some of Grupo Espirito Santo’s units missed commercial paper payments.  FTSE 100 Index first rallied to 6850 level then broke the 200 days moving average support for the first time since April and tested 6650 level.  It then bounced back to 6800 which was the supporting level in May and June.  For the past year, it has been a good strategy to buy FTSE100 when it dips below its 200 days moving average (the average price of the past 200 trading days’ closing prices) and sell a month later.  6900 level has been challenged in May, June and July and with the continuous bullish sentiment in US stock market, there is still a chance for FTSE100 to be above 6900 level in 2014.

While the FTSE100 has had an uptrend in the past year, the index has only gone up 3.5% from 25 July, 2013 to 24 July, 2014.  Buy and hold investors have done better than bank deposit and inflation.  The US stock market represented by S&P500 index has gone up 17.6% in price but only 6.1% in GBP terms in the same 12 months period.  GBP has been strong against the USD strengthening from a low of GBP 1 to USD 1.4814 on 9 July, 2013 to GBP 1 to USD 1.7192 on 15 July, 2014.  This makes the S&P500 index gain in USD much less lower in GBP terms.  It is still great to be up 6.1% in 12 months for those invested in US S&P500 Index Funds.

The Euro stock market has been as bullish as US.  It may sound illogical as US has recovery written all over it while Europe only has managed to pick up World Cup in Brazil.  Eurostoxx 50 Index is up 17.5% in the past year and was up 20% until the Banco Espirito credit issue emerged.  GBP has also gained against EUR in the past year and the 17.5% gain in Eurostoxx 50 in EUR terms would become 7.9% gain in GBP terms.  So sticking to the big index funds in US, Europe and UK have been fairy fruitful investments in the past 12 months.

Zooming into the individual stocks in FTSE100, there are a lot of dramas.  2014 top performers are Shire Plc which is up 75% year to date as of 24 July.  United Utilities and Randgold Resources are up 34% to 35%.  Weir Group, Ashtead Group, Next Plc, Fresnillo Plc, Smith & Nephew, AstraZeneca and Glencore are up 23% to 27%.  There are a lot of household names in the worst ten performers.  Tesco, Pearson, Vodafone, Kingfisher, Coca-Cola HBC, Hargreaves Lansdown, Barclays, ARM Holdings, Royal Mail are down 18% to 21%.  At the bottom of the list is WM Morrison that is down 33.5% year to date.

Shire Plc is a biopharmaceutical company with over 5,000 staff and it is bought by its US rival AbbVie Inc for about GBP 32 billion.  AbbVie can lower its tax rate as the new combined company will be a UK domiciled company.  After the AbbVie Shire merger, AstraZeneca shareholders are hoping for a better bid from Pfizer after the last bid was rejected in May.  However, its share price at 4,300-4,400p level has already priced in a merger premium.

While UK pharmaceutical companies enjoy bidding interest from US rivals, the UK supermarkets are beaten up.  WM Morrison is struggling to find breathing space between the 3 giants (Tesco, Asda and Sainsbury) and the 2 rangers (Aldi and Lidl).  Morrisons are not really big in online or in physical convenience stores.  Even Tesco is down 18% year to date which shows how tough it is in the supermarket space.

Post Office is not supposed to be a roller coaster business but Royal Mail share price have been swinging like high tech stock share price.  Royal Mail, the 500-year-old institution, came to the stock market at 330p to close at 455p on the first day of trading and peaked at 615p on 15 January which made every investor very happy.  But the share price has been heading South since March with a one month rebound in mid-April.  It closed at 441.1p on 25 July.  Amazon is withdrawing its entire business from Royal Mail.  Amazon has expanded its own delivery network and introduces a GBP10 minimum spend for free delivery.  Amazon scrapped free “super-saver” delivery on items worth less than GBP10 in January which resulted in less business for Royal Mail.  New entrants like TNT are also cannibalizing Royal Mail’s business.

The third quarter is going to be interesting for stock investors with the Russian Ukarine situation as a potential catalyst and the US unstoppable bull market could be waiting for the straw that broke the camel’s back.