Friday Email: 25 October 2013
Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:
The stock market has gone pretty much as we thought it would this time last week and has resumed the bull run with the FTSE 100 now above 6700 having risen over 6% since the US budget mini crisis. The next target is the years high of 6803, which we believe will be achieved, certainly by the year end, but it could come sooner than that. The big worry of 'the end of QE' seems to have gone for now at least and so the main hurdle for the bulls effectively went with the US jobs numbers this past week. We are expecting a new all time high for the FTSE 100 by the end of the year, but, as always, it will not go up in a straight line.
The past week saw a little more news although not too much excitement on the dividend front, with only Whitbread providing us with a dividend increase in double digit percentage figures. Glaxo gave us exactly what we expected, Home Retail continued its miserly streak paying only 1p at the interim stage when it has a third of its market cap in cash. We are now approaching its most cash generative part of the year and a decent dividend increase at the finals stage should be on the cards.
Next week sees us ambling along with another quiet-ish week that is dominated by the oil majors BP and Royal Dutch Shell and also BG Group reporting to the market. We also have BT, recent dividend of the week Asta Zeneca and Royal bank of Scotland who will not be paying a dividend. The number of companies going ex-dividend is the smallest for some weeks now with only four companies that we cover going ex this Wednesday.
So, at the moment, it looks like a clear run for the bulls, but there is still a long way to go before the year-end and mini corrections will occur. The major issues that worry us are still lurking and we do know that the US debt ceiling will raise its head again early in the new year.
This week, we released multiple portfolios, which has been by far the most requested enhancement from our clients as many people want to keep ISA's, SIPPS, etc in separate portfolios. The response so far has been very positive.
The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.
It’s included as part of the free DividendMax trial.
Read next: 18 October 2013
As always, the stock market continues to baffle and defy logic and the last few weeks has shown how the fear factor in the market can work before eventually giving way to the inevitable; A deal in the US that 'kicks the can down the road' again! Moreover, the same woes will be back again come February next year. Expect further brinkmanship with the inevitable rise in volatility and fluctuations in the market in the new year. Taking this further, you should actually plan for it! Back to the present and what of the worlds stock markets from here? We think that they are too high, but we suspect they will go higher with a strong run towards the end of the year as the 'euphoria' stage of the current bull market takes hold. We are fundamentalists (obviously), but when you are running out of value ideas, you start to listen more to the technical analysts. As always, they can see different scenarions in their 'tea leaves', but I was quite impressed with a chartist the other day who pointed to 'triple tops' ahead of the sharp market falls seen over the past few decades. He could have a point, but we think the sharp fall will come in the new year. If the strong run continues, it will not be in a straight line, so expect a fairly bumpy ride.
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