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Bull and Bear – an optimistic and pessimistic view of investment news. Today’s stories include:  FTSE 100 moves closer to all-time high. Nationwide announces mobile phone payment. More retail winners emerge. Has the housing boom peaked?

FTSE 100 moves closer to all-time high

May 22 2013 was an important date in the story of the FTSE 100. On that day the index closed at 6,840, its highest level since the dotcom crash. It fell back afterwards from then on, and May 22 stands as the best day for this index since the heady days of the late 1990s. Last night, however, January 15 2014, the FTSE closed at 6,819.86, only the third time it had finished the day over 6,800 since the dotcom crash. You may recall that the index hit its all-time day on the penultimate day of the last millennium with a closing price of 6,930. It went close in 2007, passing 6,700 and then crashed. So right now the index is just 110 points shy of its record.

At the time of writing it was up another ten points. This is exciting stuff, like watching the football results come in live. It may even pass the record today; keep a beady eye on this one.

Drilling down, Tullow Oil did well. And still on the subject of drilling down, 2013 was year of drilling disappointments for the company, but it has since emerged as a possible bid target for Statoil. It has been predicted here that 2014 should be a good year for mergers and acquisitions.

But yesterday also saw the World Bank raising its forecast for growth for the world economy. It seems unlikely that had the effect of giving much of a boost, however. The World Bank, like most forecasters at the moment, is behind the curve (whatever the curve is). The markets had surely already priced in the forecasts that the World Bank has now come up with – these institutions rarely give us surprises.

In the US, the Dow hit another high, with yesterday being a good day for Bank of America, which announced better than expected profits.

Comment:          Many think that the big theme of 2014 will be when central banks start tightening monetary policy.

Bear:     US unemployment is 6.7 per cent, UK unemployment 7.4 per cent; in both countries it is approaching the level that the respective central banks said may trigger a rate increase. But in the US, the fall in unemployed is partly due to millions pulling out of the jobs market, whereas unemployment may be falling in the UK, but underemployment (that is to say the number of people working part time or fewer hours than they want) is still too high.

Bull:        Both the Fed and the Bank of England get this. Janet Yellen appears to be in no hurry to up rates, and Mark Carney appears to be in the mood for changing targets just as we get close to them.

Besides as today’s Thought for the Day pointed out, there is a real danger of deflation across the global economy. In other countries, central banks are more likely to loosen, so would the Bank of England dare up rates, or if it does by more than a tiny amount, in such an environment?

Nationwide announces mobile phone payment

Getting your bank card out of your wallet or purse, having to lift it all the way to the terminal in a shop, and then having to make your aching fingers type in a password is such a hassle. Don’t you feel tired just thinking about it?

Never fear, out of respect for our aching joints, the Nationwide has rushed to the rescue. It has partnered up with the equally thoughtful Zapp (did you know there used to be a computer games magazine called Zapp?).

Zapp will enable people to make real-time payments from their smart phones to retailers via their existing Nationwide mobile banking app. Payments will be made using QR codes and pass codes.

Here is how it may work. You are at the till, and your bill is printed out. You open the Nationwide mobile banking app on your phone, you scan the QR code at the bottom of the bill and then you pay your money.

Nationwide said that it was the first financial services provider to launch the V.me by Visa digital wallet and Zapp highlights the building society’s continued drive to make it easier for its customers to manage their finances. It said that other Nationwide innovations “include a £1bn new banking platform, one of the UK’s highest rated mobile banking apps and Remote Expert, technology that allows customers to ‘meet’ a mortgage consultant through a high definition video link.”

Tony Prestedge, Nationwide’s chief operating officer, said: “By using Zapp, consumers will be able to make quick and secure payments directly from their existing mobile banking app. This announcement follows our launch of V.me by Visa and the deployment of a suite of best rated mobile banking and mortgage apps, showing our commitment to delivering innovative payments and online services. We will continue to invest in new technologies that will make our customers’ lives easier and give them more control of their money.”

But what are the longer term implications? If we pay by phone, will we need cash?

And what about this money thing anyway? If we pay by mobile phone the whole process of managing loyalty schemes becomes easier. Maybe we will be able to pay for goods by data minutes of kilojoules of energy.

What we mean by money may change.

More retail winners emerge

The hall of smiles is looking longer.

While M&S frowned, as did Debenhams, the smiles across the faces of other retailers have been growing.

But before we turn to the smiles, what expression do you think Debenhams will have when Mike Ashley gets his claws into the business? The latest, by the way, is that Ashley’s Sports Direct – the company with a very simple returns policy (the policy is that it doesn’t like them) – is to take a 7 per cent stake in the retailer.

But it turns out that among the supermarkets the last few weeks were good for Aldi, Lidl and Waitrose. According to the latest Kantar report, of the big four Sainsbury’s did best but its 3.1 per cent year on year growth, was positively sluggish compared to growth at Aldi, up 29.4 per cent, Lidl at 17.5 per cent, and Waitrose at 17.5 per cent. That’s according to Kantar.

Now we know that Argos and Dixons had good ones too. Sales at Argos stores open more than a year were up 3.8 per cent. Dixons saw like for like sales jump 5 per cent.

Tablets, smart phones and video games were the big sellers at Argos. Dixons did pretty well out of tablets and smart phones too. Well it was predicted here that it was going to be a tablet Christmas.

Argos is that place where you queue up to grab a manual, queue up to pay and then queue up to collect. For those who love queuing, it is a kind of heaven.

But the company had bad news for lovers of queuing, but maybe good news for everyone else. At one point over Christmas, sales using tablets and phones accounted for almost 30 per cent of its business.

Argos is a classic example of how online and off-line can work. It has even done a deal with Amazon, so that Amazon customers can collect their products from a local Argos.

The bad news for those who love to queue is that this practice may be dying out in Argos, but for the balance sheet, that may well be good news.

Has the housing boom peaked?

One month’s data does not make a trend. And the headline proclaimed more boom. Look a little deeper, and it appears things may have peaked.

The headline relating to the latest RICS residential market survey is that the number of homes sold per chartered surveyor reached its highest point since March 2008 last month. RICS talked about the nation’s property sector continuing to move “full steam ahead.”

But the headline index that tracks price changes in the weeks prior to the survey publication was down.

Okay it wasn’t down by much – from 58 to 56 – but the new buyer enquiries index dropped too.

But then again, the reading of 56 was still one of the highest scores ever for the index. The new buyers enquiries index fell from 63 to 49, which may seem like  a big drop, but the new instructions index – which relates to supply – stood at just plus 4.

If you are a regular reader here, you will know that these RICS scores are created by taking percentage differences, for example the percentage number of surveyors who said prices fell, subtracted from the percentage number who said they rose.

So scores of 56 for prices rises and 49 for buyer enquiries are exceptionally high.

Besides, the index tracking price expectations rose to 60.8, which was the highest reading since 2009, although what it was doing being so high in 2009 is a puzzle.

 

These views and comments are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees


Showing 1 comment

  1. Another feature of high peaks is that they make some people very nervous.
    At the bottom of a pinnacle people feel reasonably secure, but perched close to the summit, it only takes one sniff of wind to start a panic, a shouts of avalanche, and even the ones sat quietly in the valley sipping schnapps shtart running.

    What I mean of course, is that we are punished more severely for complacency when times look good.

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