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Golf can be bad for your career. Just ask Phil Hogan, the now ex-EU trade commissioner, who’s resigned after a golf dinner in Kildare which fell foul of Ireland’s coronavirus restrictions. Maybe he was testing his eyesight – ‘ah yes, I can see that prawn. I’m safe to go to Claridge’s now’.  Golf hasn’t been this newsworthy since Tiger Woods went for a joy ride.

Global stocks hit a record high as the FTSE All World Index beat its peak set in February. The only word we can use to describe this is ‘liquidity’. It’s simply a result of a huge injection of stimulus and money that has needed to find a home. The S&P 500 and Nasdaq also both notched fresh record highs.

For the most part the path of least resistance is upwards – for global stocks led by the US that is probably true when there is so much liquidity and so little yield. But for the UK market, the path of least resistance seems to be sideways – the FTSE 100 remains anchored to 6,000 and it may take a move in the FX markets to drastically alter its range-bound price action.

Will Powell’s speech live up to expectations?

European indices were flat to slightly negative in early trade on Thursday ahead of Jay Powell’s speech at 14:10 London time. Investors are waiting for the substance of the speech amid expectation he will detail the outcome of the monetary policy framework review (that is the title of today’s speech).

The Fed chair is expected to tee up a new monetary policy framework based around average inflation targeting (AIT), which would let the Fed run the economy as hot as it likes for a longer period. Of course, he may skirt round the details and prefer to use the September FOMC meeting to make a formal announcement.

Expectations are rather high ahead of this speech – there is a potential to underwhelm.

WPP and Hays earnings hopeful, Rolls Royce dives towards one-year low

WPP shares rose 5% after the company reported a 15% drop in life-for-like revenues less pass-through costs in the second quarter but signalled the worst is over for the advertising market. The company also said it is on course to achieve the upper end of the £700-800m cost savings target and declared an interim dividend of 10p.

Trading is improving but lumpy. In July, the LFL revenue less pass-through costs of -9.2% was a steady improvement on Q2 but the performance across markets remains volatile.

Another good bellwether Hays said it’s seen some stabilisation in fees since May and ‘modest’ signs of improvement in permanent hiring. Net fees were down –11% for the year to the end of June, whilst pre-tax profits were –63% lower as a result of a collapse in recruitment due to the pandemic. Shares ticked up 1%.

Even worse news for Rolls Royce; shares slumped over 7% and neared the 52-week low after the engineer reported a £5.4bn loss due to the crippling of civil aviation during the pandemic. It also included a £2.6bn loss from FX hedges. Underlying revenues were down by a quarter. CFO Stepehen Daintith has resigned.

Hurricane Laura in focus for oil markets

Oil prices were steady as Hurricane Laura makes landfall in the US amid significant amount of production and refinery shut ins. The hurricane is at risk of strengthening to a category 5 storm. WTI (Oct) maintained the $43 handle but backed off from a 5-month high.

Yesterday the Energy Information Administration noted a draw of 4.7 million barrels last week, but oil inventories remain 15% above the average for this time of year.

The market reaction has been rather muted by the fact inventories are unseasonably high and demand is down compared to last year. Whilst more than 80% of Gulf of Mexico crude production has been shut in, stocks at Cushing at 25% above the five-year average, and distillates are 24% above average.

One further note on yesterday’s inventory data relating to travel and the airlines – over the four weeks to Aug 21st jet fuel product supplied was down 45.7% compared with the same four-week period last year.

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