Morning, today was busier than
planned purely because of Marks and Spencer (MKS).
Today's results were better than expected, albeit being short (they're a lot
better than I expected). So on opening it was rude not to quadruple up. Merely
on a technical basis, almost an admittance of being wrong but to cover those
potential losses by trading on it. It could have been worse for the
shorts and MKS had it not been for the covering early trading that
enabled a temporary pause (trading opportunity) and to for me to reduce short
losses.
For those closing yesterday or going
long, congrats. H/Y Results for 26 weeks ended 27th September 2014 show
margin improvement and profit improvements, certainly without the significant
declines that were expected. With guidance being upped the city long only
investors will follow the positives (so they should). For myself it’s an
opportunity to short on opportunity. Technically, 420/440 is significant,
so MKS needs to stay above it...with Christmas and caution being
given by the management the Food & Clothing giant may just improve
its Food LFL over the festive period but clothing
struggle to perform near the margin improvements that have been given today and
revisions upwards (Discounting is already happening with other
retailers.)
In summary, food better than
expected, online only 6% down (could have been worse) and clothing (at one
point was ahead in womenswear) was still down. It's a very brave call to raise
guidance but follow it with a sit on the fence with a statement...Despite
some improvement in consumer confidence, market conditions continue to be
challenging. As a result, we remain cautious about the outlook for the
remainder of the year. However, we are confident that we are well set up for
the key Christmas trading period.
As was discussed yesterday in a
conference call, with food prices being challenged (pricing and competition
pressures) retail could benefit from the savings made in the food aisles of the
big four. MKS has led a premium brand akin to Waitrose, so
there's no reason why it shouldn't exponentially gain by
people treating themselves to MKS instead of their standard
fayre.
To avoid disappointing, I remain
negative on MKS, the share price rally does not validate the
changes in the company but will trade the technical elements, currently long
waiting the 440 level. There
are glimmers of hope with the guidance revisions but the market is getting
ahead of itself. There's pressure on to perform and this has been slow coming
so far, history is an indicator of the future.
Precious metals, with yet again a glimmer but disappearance of support. The targets,
including mine (as mentioned the other day), are being revised due to the total
lack of interest and support in the precious metals markets. Asia was absent of
almost all support for gold and America wasn't fairing much
better. Critically $1,146.80/oz. is no-man's land and
the technical traders can subscribe no confidence to the
price. Silver appears to be the lead with gold reducing its
ratio, gold's ratio to silver is now
approaching 74.6: 1. That must surely, without looking, be near the all-time
high from 2009 (I should look but do not have the time). Technically something
has to give, and gold, with this trade, one would be wise to keep an eye on any
significant support for the long' in silver as this is likely
to appreciate the most...Platinum Group Metals (PGM's) not exactly
being loved with the Jo'burg physical on platinum being stressed (negatively).
Iron Ore, with the price being trashed and the economic data not looking so
rosy, it was no surprise that the minor (I know) iron
companies got trashed further. Atlas Iron (ASX: AGO) has been
trashed, further than I imagined after that last update. Fortescue
Metals (ASX: FMG) still having some safety but for how long? Over to
GLEN for a piece of iron they do not really want but may have to.
What are Centamin Egypt
(CEY) playing at, their guidance not so long ago was maintained with
420K/oz.'s, less than a full calendar month ago. Today, there's a Sukari Update that advises a downwards revision
in guidance due to lower monthly plant productivity during October
and lower expected average grades for the fourth quarter from underground
development ore. When should this update have come forth? Never mind, CEY kicked
themselves two fold with the price of gold. If CEY's management have
today only realised guidance and production will be lower, then who is
hands on? Yes you could argue the % decrease until today did not require an
update, but where there is a trend you'd be hard pushed to justify not updating
earlier.
Today's no news award goes to EMED,
with an unsurprising extension (three months) to approve the
Mining Permit for the Rio Tinto Copper Project, the Company confirms
that it still expects to receive the final permitting before the end of the
year. Now if there's a 3 month extension, the permit may come in time, but
without removing ones socks 3 months takes us beyond the end of the year. Perhaps
this update is due to the level of stale enquirers holding the stock.
Not one comment on the wires of the
lack of support for copper, off just over 4¢ a lb continuing the
trend. It would appear someone is walking away with a health profit from some
hefty trades. There's a few long faces over at the weald...after the last
update would you have been a holder? As I type, in the left corner of my eye I
note MKS is on the move positively again...nearing the 440
level (in between the top and bottom of this post I now have no
position in MKS currently awaiting the 440 test).
Oil/Saudi Arabia if this momentum continues will
not help many economies, stability in the oil price and gradual appreciation
promotes growth. The declines in the short-term are a benefit to most economies
but not the longer term. With oil under significant pressure the trading houses
now have to realistically consider a lower
hedge, those trading houses a head of the curve should benefit from this significantly
(You're welcome). The bounce is expected (albeit short-lived) but it’s
more a case of when.
No time sadly to cover the JD
Wetherspoon (JDW) like-for-like miss which the market is
punishing...interim management statement.
Was unexpected from MKS Fraser having been short for awhile I took my smaller profit & sulked today. It looks as though the tide has turned for them so will not be so defiant as you. A few good trades to be had on MKS today & 440 is critical well spotted. Good spot on the gold 2009 was 82 to 1 gold silver. The horse neighed today. Riding HOC as it broke the £1 thanks Clive.
ReplyDeleteshows why you should not short stocks mks. you all manipulate the market and cost us good money. wednesday is much better knowing the likes of you lost on mks. go get a job that contributes to your something more than your bank balance low life. you cost me a fortune in iof an enrc but not mks im down only 10% now.
ReplyDeleteDear Anonymous:
DeleteI fear that Fraser is really not omnipotent. Neither facts nor events are all entirely under his control.
I came across some writings from a chap in the US who said 'In the short term the markets are a voting machine, in the long term they are a weighing machine' (Benjamin Graham - apparently his methods have gained some traction).
Are you a voter or a 'weigh-er'?
roddy
Fraser- Hi- v interesting day today, with metals and oil still volatile and traders no doubt biting nails.An interesting piece from SP Angel re low grade iron ore gathering weeds at Chinese ports here- not great for Fortescue- unfortunately I cant cut and paste it or send it on whole. The gist is that much of the port inventory and hence the Chinese stocks are v low grade (57%) from Fortescue and/or India and that at Tainjin port it can be seen with grass and weeds growing on it, its been there so long. In the meantime, the 63% I/o is being loaded directly on to the steel mills, with no storage needed. Hence much of the Chinese stocks is likely to be v low grade. I will forward email to you later.
ReplyDeleteCheers. The Leggie
Outlaw pointed me to the following article on Zara (following a Lex Live where I mentioned Zara):
ReplyDeletehttp://www.nytimes.com/2012/11/11/magazine/how-zara-grew-into-the-worlds-largest-fashion-retailer.html?pagewanted=1&adxnnlx=1415196050-fpXvpe/3g%20jtkqqDRERc6Q&_r=0
I love the following:
Zara to me is a European store for European style; it’s very fashion forward. And what is the problem in America? They don’t fit in the clothes. So why do it? Having to make larger sizes makes production so much more complex.
Key issue for M&S is that it is competing with Zara, H&M, Next, River Island, FCUK etc and is not really differentiated on clothes
roddy
Roddy- MKS have some good ideas (nice range of colours in cashmere currently, which is selling well apparently) but they have too many ranges in store and so they are trying to target everyone in the UK individually by the look of it, which is crazy. They need to bite the bullet and thin out their brands (some of which are of negative value) and concentrate on 3 or 4 core lines, targeting specific types of customer. My old contacts at NXT know within 5 years how old the purchasers of each item will be and they develop their ranges accordingly. The old fashioned scattergun approach of MKS isn't good enough. They even have buyers for each range and they force up the price of materials by bidding against each other in a fairly obvious fashion-- completely crazy but they do it and the board is very much aware and they don't interfere. Still they have had a good day given the dire expectations.
ReplyDeleteCheers. The Leggie