bill.jpgDespite volatile conditions, both London and New York stock markets advanced since our last report on March 28, with the DJ Industrials adding 109 points to 12,325 and the FTSE 100 up 203 to 5,895. This column, however, finds it barely credible that these indices will be up when next reporting on April 25, given the worsening auguries. On April 11, Wall Street was rocked by shocking news that America’s bell weather company, General Electric, saw its first quarterly profit drop in five years. Its shares fell 12.8%, the biggest drop in 21 years. Other bell weather stocks, like UPS and Fedex, also found the going tough. The former predicted that profits would fall as a domestic slowdown took effect and rising energy prices raised costs. Fedex reported earnings of $1.26 per diluted share for the third quarter ending February 29, down from $1.35 in the comparable quarter of 2007, again citing similar reasons.

Sentiment was not helped by the concomitant news that US consumer confidence hit a 26-year low. Not to be outdone, the IMF forecast that the US economy would slip into “mild recession” this year, with a chance that the global economy would follow suit.

In response, the Fed has been cutting interest rates aggressively, just as it did following the dot com bust, and thus sowed the seedDespite volatile conditions, both London and New York stock markets advanced since our last report on March 28, with the DJ Industrials adding 109 points to 12,325 and the FTSE 100 up 203 to 5,895. This column, however, finds it barely credible that these indices will be up when next reporting on April 25, given the worsening auguries.

On April 11, Wall Street was rocked by shocking news that America’s bell weather company, General Electric, saw its first quarterly profit drop in five years. Its shares fell 12.8%, the biggest drop in 21 years. Other bell weather stocks, like UPS and Fedex, also found the going tough. The former predicted that profits would fall as a domestic slowdown took effect and rising energy prices raised costs. Fedex reported earnings of $1.26 per diluted share for the third quarter ending February 29, down from $1.35 in the comparable quarter of 2007, again citing similar reasons.

Sentiment was not helped by the concomitant news that US consumer confidence hit a 26-year low. Not to be outdone, the IMF forecast that the US economy would slip into “mild recession” this year, with a chance that the global economy would follow suit.

In response, the Fed has been cutting interest rates aggressively, just as it did following the dot com bust, and thus sowed the seeds for today’s global credit fiasco. The BoE also cut rates in early April by the expected quarter point to 5% having, it seems, replaced its core concerns over rising inflation with concerns for the implications of a credit crunch. Their logic seems to be that although inflation is rising it will be moderated by the weakening global economy.

Such rate tinkering, however, will fail to prevent similar, market mayhem without more, longer-term legislative action to prevent greed from taking over. Belatedly, the banks now admit blame for the losses they have taken and the misery to come for all mortgagees but their notion that self regulation is the best regulation to improve defence mechanisms is about as desirable as an enema.

Our own list of stocks showed rises outnumber falls 16 to 12 since our last report. Leading the risers was Geodis, up 84.3% following a takeover bid approach from SNCF, the state-owned French rail operator, which already holds a 42% stake in Geodis. Basking, perhaps, in the after glow of 3PL merger activity, Norbert Denstressangle added 5.3%. FKI, Britain’s biggest materials handling systems provider, added 8.6% to 75p on talk that Melrose was finalising a full offer for the engineering group, reportedly raised from 75p to 85p, valuing the firm at around £500m. This value almost exactly matched the sum FKI paid to acquire the materials handling companies grouped under the Logistex banner over seven years ago and which has proved a serious disappointment ever since.

Business Post added a few pence on upbeat news that its sales had risen 10% in the year to March 31, 2008, as the parcels and mail delivery group almost doubled its share of Britain’s postal market. Underlying revenue growth, however, was up 16.5% for the full year.

A newcomer to our list is Fedex, one of the world’s leading, third party distribution companies, which is currently struggling with a US economic downturn and rising costs, particularly fuel.

Leading the fallers was data capture specialist Intermec, down 10.3%. Forklift producers, Junheinrich and Manitou fell 6.3% and 4.3% respectively but Nacco Industries (Hyster and Yale) strengthened further with a 6.5% gain. Despite bid discussions with Laxey Partners, TDG continued to fall, down by 4.7%, and UPS shed 2.44%.

Bill Redmonds for today’s global credit fiasco. The BoE also cut rates in early April by the expected quarter point to 5% having, it seems, replaced its core concerns over rising inflation with concerns for the implications of a credit crunch. Their logic seems to be that although inflation is rising it will be moderated by the weakening global economy. Such rate tinkering, however, will fail to prevent similar, market mayhem without more, longer-term legislative action to prevent greed from taking over. Belatedly, the banks now admit blame for the losses they have taken and the misery to come for all mortgagees but their notion that self regulation is the best regulation to improve defence mechanisms is about as desirable as an enema.

Our own list of stocks showed rises outnumber falls 16 to 12 since our last report. Leading the risers was Geodis, up 84.3% following a takeover bid approach from SNCF, the state-owned French rail operator, which already holds a 42% stake in Geodis. Basking, perhaps, in the after glow of 3PL merger activity, Norbert Denstressangle added 5.3%. FKI, Britain’s biggest materials handling systems provider, added 8.6% to 75p on talk that Melrose was finalising a full offer for the engineering group, reportedly raised from 75p to 85p, valuing the firm at around £500m. This value almost exactly matched the sum FKI paid to acquire the materials handling companies grouped under the Logistex banner over seven years ago and which has proved a serious disappointment ever since.

Business Post added a few pence on upbeat news that its sales had risen 10% in the year to March 31, 2008, as the parcels and mail delivery group almost doubled its share of Britain’s postal market. Underlying revenue growth, however, was up 16.5% for the full year.

A newcomer to our list is Fedex, one of the world’s leading, third party distribution companies, which is currently struggling with a US economic downturn and rising costs, particularly fuel.

Leading the fallers was data capture specialist Intermec, down 10.3%. Forklift producers, Junheinrich and Manitou fell 6.3% and 4.3% respectively but Nacco Industries (Hyster and Yale) strengthened further with a 6.5% gain. Despite bid discussions with Laxey Partners, TDG continued to fall, down by 4.7%, and UPS shed 2.44%.

Bill Redmond

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