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Seasonal rules regarding the stock market, such as “Sell in May” or the “Santa Rally”, tend to be most useful only in hindsight, and are not usually on a par with those relating to real life, such as never wearing white after Labor Day!

But, with the Labor day holiday fast approaching in the US next week, it seems fair to add a “new rule” to this time of the year: “Do not make a major decision regarding the financial markets before Labor Day”.

Of course, this new “Zak Mir rule” has a good chance of working this year because of the ongoing crisis in Syria, and which may result in intervention and airstrikes from the US and its allies (just not Britain!). The financial markets, being as they are, hate uncertainty over this conflict, and coupled with possible QE tapering in the US, potentially as soon as September, this makes for a potentially dismal time.

In fact, this may be the position in the UK as well. In his first major speech at the University of Nottingham, the Bank of England Governor Mark Carney addressed the conundrum facing our central bank by introducing the idea that the 7% unemployment interest rate hike trigger should only be regarded as an indication that interest rates should “have to go up”, rather than the automatic signal they are “going to go up”.

However, while householders and businesses may rely on the assumption that interest rates will stay ultra-low for the longest time, it is clear that anyone associated with the financial markets will not be relying on the Carney “promise” implied by “forward guidance”.

Finally, while we fret over the macro economic issues, it is perhaps worth noting the recent activity of Gold and the mining sector. Clearly, it has been a “long hot summer” as far as a rebound for the yellow metal is concerned, and also given that many stocks associated with this market have rallied by more than 50% – something that was flagged here by our former editor Richard Jennings, now running the Titan funds in the run upto the rally.

While it is probably the case that some of the momentum associated with Gold has been provided by the likes of “Gold bull” John Paulson ironically exiting his big long holding,and the Middle East “fear factor”, there is more to the yellow metal’s rise towards $1,400 an ounce from my perspective and I expect further gains as the summer ends.


US Gross Domestic Product (GDP) was calculated to have grown at an annualised rate of 2.5%, ahead of the 2.2% growth analysts were expecting. The overall index on consumer sentiment, according to Thomson Reuters/University of Michigan’s final reading slipped to 82.1 in August from 85.1 in July.

The British Chambers of Commerce (BCC) revised its Gross Domestic Product (GDP) forecasts to predict growth of 1.3% in 2013 and 2.2% in 2014. This was a 0.3-0.4 percentage upgrade as compared to the previous forecast.

Data released by the Ifo Institute for Economic Research showed the German Ifo Business Climate index in August rose to 107.5, up from a July reading of 106.2 and slightly above the 107.0 estimated.

Japan’s consumer price index rose 0.7% in July from a year earlier, while the CPI rose 0.2% in June. The Ministry of Economy, Trade and Industry said industrial output was 1.6% up from a year earlier.

The new Governor of the Bank of England shed some more light on his new “forward guidance” strategy at his first major speech at Nottingham University. Prior to this speech, he signalled that interest rates would be on hold until late 2016. However, traders doubted this and have brought their forecasts for a first rate rise forward to mid-2015.

In his speech, Carney was consistent though, and warned that the UK needs a prolonged period of low interest rates to make up the ground lost during the recession. The City was left unimpressed by the renewed commitment to leave interest rates at their record low of 0.5% and to maintain the level of assets purchased under the Bank’s quantitative easing programme at £375bn, according to the Guardian. He said: “We have a recovery that’s just beginning. It’s a very long way back. We are lagging just about everybody else in the advanced world. There’s a lot of spare capacity.”


The S&P 500 index endured its worst monthly drop since May 2012 this week, ahead of Labor Day and concerns over U.S. military intervention in the Syrian crisis. Secretary of State John Kerry, said that Syria’s government had used poison gas against its own people.

Gold touched $1,433 per ounce this week, a 3½-month high, on demand for jewellery in China and India, and due to the Syrian conflict. However, the precious metal did come “off the boil” after key government votes against direct military action in the UK and U.S. and stronger-than-expected US GDP data.

Sterling/dollar: The pair remains at or above its key 200-day moving average around $1.55  despite the initial “thumbs down” reaction to the “forward guidance” policy change.

Euro/dollar: The single currency continued to back off recent highs of $1.34 plus and what seem to be now “bull trap” levels in the run up to the German General Election next month. Disappointing German unemployment numbers (driven by job losses in manufacturing) surprised the financial markets.

Crude Oil was at its best mid-week, when the chemical attacks in Syria were seen as triggering an imminent allied attack. However, a distinctly yellow streak emerged by the end of the week among lawmakers, and the commodity backed off the best $112 front month peaks relatively quickly.


Telecoms giant Vodafone (VOD) confirmed that it had restarted talks with partner Verizon, regarding the possibility of selling its stake in their US joint venture, Verizon Wireless. Vodafone would net as much as $130bn from the sale.

Security solutions group G4S (GFS) – my monthly tip in Spreadbet Magazine at 245p – announced plans to sell assets to reduce its debt pile and issue new shares. Ending the week at 260p, JPMorgan Cazenove kept an “Overweight” rating on the stock saying that there could be upside to current forecasts, due to the company’s revenue growth potential and new business opportunities.

Outsourcer Serco (SRP) said it is under investigation by the City of London police with regards to a “misreporting of data”. The company will forgo any past and future profits on the £285m contract to escort prisoners to and from court.

Salamander Energy (SMDR) posted a flat first-half pre-tax profit of $15.9 million, although revenue was up 19% to $214.3 million, from $179.4 million. The full-year 2013 average daily production forecast at 12,500-15,500 boepd was maintained with further development to take place at Greater Bualuang during the second-half of 2013.

Online gambling company (BPTY) warned of a sharp full-year revenue fall of as much as 17% as it refocuses the business, especially via expansion in the U.S. However, the market took this revelation badly, with the shares falling nearly 20% by the end of the week.


It is the “Big One” once again, as far as the financial markets are concerned, with the release of the non-farm payrolls data. Perhaps this month, we shall see particular sharp gyrations for the likes of the Dow, FTSE 100 and bond prices given the way that a “wrong” figure here – a surprise to the upside, could be taken as the beginning of tapering in the U.S. Analysts non-farm payrolls forecast 160,000 – just a couple of thousand below July’s figure.

As far as UK companies reporting, we have financial services provider Hargreaves Lansdowne (HL.). On the agenda for the group, is how to dovetail itself to the Retail Distribution Review (RDR) regulatory requirements, which were essentially the last “sting in the tail” from the now defunct Financial Services Authority (FSA).

It looks like a “happy outcome” will be maintained at electronic retailer Dixons (DXNS) with its rising share price due to the continued tablet computer boom. This point was underlined in June, when full year like-for-like sales were revealed to be up 4%. Indeed, it should also be the case that the shares are underpinned ahead of the likely September 10th announcement from Apple regarding a new iPhone.

Equipment rental group, Ashtead (AHT) is coming “off the back” of record pre-tax profits drive by the success of it US operation Sunbelt, which makes up 85% of revenues. Profits being up 23% in the fourth-quarter will be a hard act to follow.

From a personal perspective, we are not in such a robust part of the economic cycle that we can “walk away” from any “half decent” takeover. This is especially the case for Betfair (BET); given tax rise risks for the sector, competition fears, and the way that the group is trading on a P/E of 20 for the next 3 years. The gaming group certainly has questions to answer, and a new strategy to outline.

In the run up to its latest update, analysts at Deutsche Bank reaffirmed its “Hold” rating for house builder Berkeley Group Holdings (BKG). In its last update in June, the company revealed revenue of £1.38bn, with an operating margin of over 20% which appears modest. With its latest set of results, it will be interesting to see how the group addresses the issue of a possible “housing bubble.”



Too much good news has been factored into ARM’s share price since the start of the technology boom at the beginning of this decade. The charting position for this “tech stock favourite” has been intriguing to say the least. If one is brutally honest, there is a conundrum in terms of whether we are looking at a chart which is displaying a consolidation before a new leg to the upside, or indeed the start of some material downside.

However, given the overall uptrend here over the past couple of years, it would appear we should be giving the benefit of the doubt to ARM, and thus assuming a continuation of the progress within a rising December price channel based at the 50-day moving average level of 875p. At least while there is no end of day close back below the August 857p floor, the upside here could be towards the late May resistance zone at 1,000p plus by the end of October.


August 30th: Deutsche Bank reckons that fears over rising competition from Intel have been overdone. Analysts have upgraded its rating by two notches from “Sell” to “buy”. The bank has more than doubled its target price for the shares from 470p to 1,080p.

It said that market share losses to Intel would only have a limited impact on ARM’s earnings per share and concerns about slowing high-end smartphone growth are already in the price.

August 29th: Imagination Technologies (IMG) will release a new CPU design next year for low-power servers. That will mean increased competition for ARM. ARM is the dominant designer of CPUs for smartphones and tablets, and is also going for a bigger slice of Imagination’s graphics business.

August 23rd: ARM is smaller than Intel, and its revenues were just $708 million in 2012. But ARM was able to turn 23% of its revenues into profit compared to Intel’s 20%. Although Intel is trying to penetrate the mobile market (Intel’s chips will be in the new Samsung Galaxy Tab 3 tablet), ARM is too established for Intel to be a serious threat. ARM’s reach is great, and the company figures to have the dominant share in a rapidly expanding market for years to come.


ARM holds a dominant position in its sector and market. The company’s future is bright in terms of new developments and demand. Competition from Intel and Imagination Technologies may be an understandable source of worry for the bulls, but it is also worth noting that ARM is very much a niche player and this focus should give it an edge.

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