GG now spends rainy days trading equities and currencies. He likes to use a combination of technical analysis and news flow to make trading decisions.
Debenhams and JP Morgan Chase
Debenhams kicks off a busy week for the UK retail sector as the earnings season gets into full swing. In the US the banks will be key, although over 200 companies are reporting this week.
Debenhams is one of several retailers reporting on Tuesday-though not the largest it will attract attention as it is the most indebted. A trading statement in March alluded to tough trading conditions and although debt was forecast to be slightly lower than anticipated, it is still likely to be about £950m-£1bn.
H1 pre-tax results are likely to come in at around £92m. Like-for-like sales are expected to be modestly negative-though the company suggests that it is growing market share. The store refit programme will be scrutinised to see if it gives any indications as to how confident the group is feeling.
The shares are trading at about one-third the price of a year ago and were not helped when a key investor recently sold 6% of the company for 60p. Perhaps that’s testament to fears about the company being able to service its debt mountain and declining consumer confidence.
US bank JP Morgan Chase gets its first opportunity to update the market since its rescue of Bear Stearns when it reports before the market opens on Wednesday. Analysts expect the company to report a small profit and earnings of about 66 cents, almost half the number it reported a year ago.
However, it is still expected to take a hit of about $2.8bn on further write-downs though this is a fraction of the losses expected at Merrill Lynch and Citigroup-both of whom report later in the week.
The market will be looking for an integration update on Bear Stearns, particularly the level of cost savings that might be achieved and how much of the business can be retained before key staff are recruited by other firms.
April 15th, 2008 at 11:25 am
Stupid question - but will other retailers follow suit?
April 15th, 2008 at 11:29 am
Well several other retailers have reported similar figures already.
April 15th, 2008 at 11:45 am
A tolerable fist of things from Debs in difficult circumstances-l-f-l down 0.7%, debt down to £979m and ptp of £94m was probably as good as one might have expected.
Company has given away 20bps in gross margin to get sales, and whilst comparables get easier (flooding last year) personally, I feel they will have to run hard to stand still in the current environment. Look what Tesco has done to PCW and DSG/Kesa in terms of consumer electronics-and Tesco want to improve their clothing offer.
BRC figures earlier today failed to inspire me it has to be said-possibly retailers as a recovery play, but too early for me.
April 15th, 2008 at 5:06 pm
DB/John
Thanks for your contributions-I missed DB’s intentional pun about retailers and suits earlier!
As John correctly points out, several retailers have already reported disappointing results, yet others (e.g Tesco today) have delivered quite decent ones.
In terms of investment timing, now is quite a tricky period-on the one hand consumer confidence is low and people are cutting back on spending, (which will equal another round of dismal results from many retailers) whilst on the other the stockmarket tends to look forward and may start to see a potential recovery in sales and earnings over the next 12-18 months.
Very tricky-and it the answer really is ‘it depends’-not all retailers will produce awful results-e.g. if Debenhams is gaining market share then somebody else is losing it. Some areas of retailing (sofas, fridges, plasma tv’s) might be more susceptible to see spending deferred, but if you need a new pair of pants or some food, then you just have to bite the bullet (or go commando!)
April 16th, 2008 at 1:03 pm
Woke up with a strange feeling this morning — I’d gone all long. No, no, I mean on equities. Well, apart from retailers.
So I’ve opened longs on SIG and Prudential.
GG’s spot, SIG, has pulled back from the 900 level it reached after breaking out the old trading range. It’s bounced at or just above the old trading range support, so we may be looking at a higher-lows/higher-highs uptrend forming, which means this could run back up to and over 900, where I have my target. If it falls to 725 then it’s all gone pear shaped and I’m out. For now, I’m in at 784.
I’ve liked Insurers for a while. Toyed with L&G, made some cash from Aviva but both are in no-man’s land for now. But Prudential looks tasty for a push up to a new high somewhere over 700. Tight stop on this one at 648. In at 667.
But just as a reality check, I’ve also sold some of the Friday-expiring FTSE calls. CYA or each-way bet (or how to lose money in both directions at the same time)?
April 16th, 2008 at 1:27 pm
Afternoon all- well knock me down with a feather………the FX markets have stuck 2 fingers up at the communique from the G7 on rapid rises in FX rates and whizzed the Euro up to another all time high-again.
Happy days are here again-despite sh*ite results from State Street and Wachovia we’ll just look at the regional banks and Intel they are Ok then. Oh and plenty of people are suggesting that 2% is as low as the Fed should go-and LEH CEO says we are passed the worst. Have I been like Snow White asleep for the last month? Must be all that testosterone in the City!
Joking apart, JPM stock +2.6% (and Wells Fargo +7%) came in with some tolerable figures, both slightly better the Street’s forecasts. Other US companies reporting today all produced earnings ahead of expectations.
JPM net income of $2.4bn was down from $4.8bn a year ago. Earnings squeaked in ahead at 68 cents and the write-down was broadly in-line though a bit of a fudge on this one I feel- adding $2.6bn to allowances for credit losses as well as $2.6bn in ‘ordinary’ write-downs.
April 16th, 2008 at 1:39 pm
Hi Ken
Short of the 6050’s? Or braver than that? I’ve just been hunting around trying to get some premuim in May, but failing miserably.
Still long of SIG (’investment’ now rather than trade!) and remain relatively positive on engineers (weak sterling, emerging market/China growth & some bid spec (FKI etc).
Being a gardening type of fellow I have been keeping an eye on fertilizer prices-one US stock that has caught my eye has been POT-which has just put through a $400 per tonne price increase for potash.
April 16th, 2008 at 1:46 pm
Forgot to add look at MOS and AGU in the fertilisers too
April 16th, 2008 at 4:27 pm
Forget 6050. Forget even 6025. I’ve got 6000. Which is now looking not so much brave as foolhardy.
But I’ve capped it at 6075 and managed to pick up a few points on a long FTSE spread bet. Plus SIG and Pru have done nicely. So we’ll see what tomorrow brings, with the Dow holding steady for now.
Yeah, I like POT, MOS and AGU. Had them on a watchlist for a while but haven’t pounced — but missed that nice price increase for POT’s pot. There’s also Uralkali (or Uralkaly) but they may be a bit dodgy. Also like Bayer, Syngenta and Nutreco as ways to exploit the coming food crisis. Coincidentally, I finally got round round to sticking some LLST into my SIPP this morning. I think this whole area could be very interesting over the coming months, especially if the weather kicks off (and doesn’t it always somwhere).
Must be all this country air.
April 16th, 2008 at 5:00 pm
Taste the pain ****, I think is the urban slang for moments like this!
Least you had the sense to cap it and you also get a bit back on the straight equity holdings.
Some very nasty whispers out there that the LIBOR rate has been manipulated by a couple of houses-(shock horror!) with the ‘unofficial’ rate 20pips under for class acts. Unlucky for B&B/A&L and well done BARC/LLOY/HS BA some might allegedly suggest.
Think this story might run tomorrow-along with the BOE ‘helping out’ under the capable and watchful eyes (all 3 of them!) of AD & GB! Might explain why HBOS and a few others in the riskier camp have been jacking mortgage rates up, yet err lets see (no names HSBC) can match or indeed better some existing rates!
Sniff of a story that somebody has got hold of the IBM numbers a tad early & surprise Cilla they are better than expected, ditto thoughts eBay might possibly be a bit better-guess we will see at 9 then!
On the ag front, there is a US IPO due soon which might be worth a glance. Intriguing name—-Intrepid Potash!! I can honestly say that I have done a site vist to one of their mines-I got lost on a 4×4 trail in the desert near Moab Utah and ended up in the mine!
Nice work if you can get it: take the water out the Colorado, flush it through the mine, stick it in a holding pond and let the baking desert sun do the rest. End result is that you get about 1000 tonnes a day, which at almost $600 a tonne ain’t a bad return!
April 17th, 2008 at 1:58 pm
Cor blimey, feel I’m missing out here. All this talk of equities with silly names. head down writing about oil this morning, but still had time to lose a bit on FTSE. Took what looked like a justifiable hit covering my 6050 Calls, but dumped the positions early as the market dropped below ‘50. The noose round the testicles got too tight so I closed the 6050s out at 9p for 11p profit. Am I bullish? Not a chance, but there’s too many minutes before 10.10 tomorrow and I’m obviously outta touch with the market. Watch that market collapse now. First Puts in danger, 5300!
April 17th, 2008 at 9:41 pm
Hi,
Sorry, this post is not really in response to any of the previous posts but I’m hoping someone out there will be able to provide me with some answers.
I’ve been spreadbetting on the Indices (FTSE, DAX, DOW, S&P) for about 4 years now, not very successfully in the beginning as I was learning the ropes but having learnt many harsh lessons along the way the last 15 months have been extremely profitable. So much so that I’ve been seriously considering giving up work to do this full time from home with the dreams of financial freedom and a better way of life. Even more so as my company announced today that there’s a chance of voluntary redundancy. (Complete mercenary, having worked here for god knows how many years I’d like to go with something).
Anyway, what I would like to know, as there must be people out there who are doing exactly this, is what are the tax implications? I realise that spreadbetting is not subject to CGT but are you liable to pay income tax on proceeds from betting. Also, if you need to fill in a tax return would you need to declare any profits made on spreadbetting.
So far I haven’t been able to find the definitive answer so, if there’s someone out there who knows please pass it on. People I speak to about what I’m doing cannot believe that it’s possible to make that sort of money tax free.
Gary
April 18th, 2008 at 10:41 am
Hi Gary,
I must admit, the temptation to be your own boss has to be one of the biggest attractions to spreadbetting for a living.
These days, you just couldn’t put anything past companies when it comes to cutting costs.
With regards to your tax query, as you’ve quite rightly said there is no CGT to pay. As Tax laws are subject to change, the only concrete way to get reliable information is to talk to a financial professional.
If you decide to take the plunge, I wish you the best of luck. Here’s hoping for a generous redundancy package to get you off to a good start!
April 18th, 2008 at 1:45 pm
Hi Gary,
first off, good luck if you decide to take the plunge. On the subject of tax NKC is bang on. It’s such a grey area that the best bet is to speak to a pro (and if she’s no help talk to a tax adviser). When I first made the break I went to a UK seminar where this question was discussed. There was no clear answer; yes betting is free,BUT there was a concern that Her Majesty’s pilferers might try and tax it as your main source of income.At that time, 2 years ago, there had been 2 court cases, with decisions going both ways (that’s our legal system for you). It’ll be interesting to hear from a few experienced traders. What I decided was to by-pass the problem by having a declarable income, whether it was from writing articles, doing a part time job or donating sperm ( something that I could genuinely put on a form, but without getting in the way of my trading). Consultancy always loks a good wheeze!
April 18th, 2008 at 2:09 pm
Hi Gary
Not much help here as I’ve had a ‘it depends’ letter from HMRC.
The intimation in the letter suggested that if ill gotten gains from spread betting were my only source of income then HMRC would tax it as such. If it was ’secondary’ then it could be treated as a spread bet-i.e no tax to pay guv.
Now I’m not going to encourage avoidance, rather some steps to possible mitigation! Personally, I’d suggest getting a job as a paperboy for an hour a week or as a shelf-stacker etc. somewhere to help alleviate the issue.
However I endorse what NKC suggests-you need to get something in writing from HMRC FIRST or have specialist advice that might have to stand up in court if push comes to shove.
Good luck-I’m in a similar position-redundancy a couple of years back and have been trading on my wits & lump sum since.
Happy to exchange ideas and methods if you are up for it; one downside I do find from trading from home is the lack of interaction with colleagues to discuss potential opportunities & setups with. That may suit some, but I always like a 2nd opinion even if I don’t take it!
April 18th, 2008 at 2:51 pm
Thanks Chaps,
Regarding the second job, in January I got a contract as a swimming instructor, which I get paid for, so hopefully that would sort out the job situation.
On the spreadbetting front, was getting hit with this uptrend (silly me, recession, inflation, banks getting hammered - I thought would be a negative) in the markets so decided to end it all, open positions that is, with my current spreadbetting company, and take the money. A few mixed feelings really as a few days ago it was worth considerably more but on the plus side I can now pay off the mortgage and use the remainder to open a Paddy Power account.
My spreadbetting company has changed its conditions so much that they were making it almost impossible to trade. I like to place orders on the markets in able to catch the market when it’s moving in my chosen direction. In the beginning the nearest you could place an order was 10 points on the FTSE. That moved to 20 and is currently now 40 points!!!!!!!!!. The DOW is only 35?????? That also applies to limts and stops.
So, the cheque is in the post, I already have a demo account at PP, time to open one for real. Certainly is a good website for info and the spreads and NTR/IMR are as good as anyone.
Look forward to ’speaking’ again.
Gary
April 18th, 2008 at 3:57 pm
Hi Gary,
I was in the same position as you and GG ( seems it generally needs a push from a ‘cost-cutting’ company to make us think about trading full time). Just to echo GG. we’re here most of the time to chat about the markets; i prefer forex, FTSE and the occasional big company. GG is an ex-ferret and enjoys kickin the tyres of smaller companies, though he does flippin well at forex, commodities and indexes. If you want any pointers on setting up at home you won’t get any from reading this http://www.paddypowertrader.com/blog/index.php/2007/12/21/an-office-inspired-by-noah/ but it might be wortha read.