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News Shorts for January

1)     A severe cold snap in the US and repeated flooding in Britain were expected to impact on retail sales performances and productivity in both countries. The cost in the US was estimated at $5-10 billion; in Britain, meanwhile, insurance claims from flooded properties rose above £500 million. But a new ONS report claimed that bad weather has ‘virtually no effect’ on retail spending patterns.

 

2)     UK unemployment dipped to 7.1%, barely a whisker above the 7% level at which Bank of England governor Mark Carney had previously said he would consider raising interest rates. Sensibly, Mr Carney backpedalled on the prospects for an imminent rate rise.

 

3)      Apple saw its share price plummet by 9% in two hours after a poor set of results that showed ‘only’ a $13.1 billion profit during the final quarter of 2013. The news came at an awkward time for the tech giant, particularly since an independent research survey had just reported that worldwide sales on smartphones had grown by 38% during 2013, to just over one billion handsets. This was more than double the 494 million sold in 2011.

 

4)     The Bitcoin saga rumbled on, with US prosecutors charging the operators of two bitcoin exchanges with money laundering, in connection with the banned Silk Road website, which had been closed for facilitating drugs transactions. One of the arrested was said to be a founder member of the Bitcoin Foundation. Meanwhile the value of bitcoins continued to yo-yo, ending a turbulent January at about $950.

 

5)     Source, Europe’s sixth biggest ETF provider, succumbed to an offer from US private equity firm Warburg Pincus for a majority stake in the asset manager. The deal, which values Source at $300 million, was brokered by Warburg’s ‘executive in residence’ Lee Kranefuss, formerly chief executive of iShares, and it marks a further stage in a boom of American interest in European ETF providers.

 

6)    UK house price growth slowed in January to 0.7%,  from an abnormally high 1.4% in December, the Nationwide said. The rise left the average UK house costing £176,491, 8.8% more than a year earlier.

 

7)      Deutsche Bank announced a shock $1.4 billion loss in the final quarter of 2013, citing poor results at the corporate banking and securities divisions. The news came on top of a substantial outflow of dbX’s ETF deposits, which had prompted the surprise release of a new series of physical funds – see page 33.

 

8)     Barclays Bank announced that it was to close a quarter of its UK branches, replacing many with outlets in Asda superstores.  The bank also announced a further staff shrinkage on top of last year’s 3,700 layoffs, mainly in the investment banking division. Meanwhile Lloyds said it planned to lose another 1,080 wealth management jobs – as part of the 15,000 job cuts planned in 2011 during the run-up to a government share sale.

 

9)     China’s economy proved stronger than expected in 2013, with a 7.7% growth that outstripped the target of 7.5%. But analysts warned that the new economic policy agreed in November – basically, less foreign borrowing and more focus on China’s domestic market – could yet disappoint foreign investors in 2014.

 

 

10) Cofunds reported that Mixed Investment 20-60% funds had been its top sellers during 2013, followed by Global Equity Income. But that Property funds had made a strong showing in the final two quarters.

 

11)      40% of UK consumers paid for Christmas by borrowing from credit cards, loan providers or overdrafts, a survey by Which? found. And only three in ten said they expected an improvement in their families’ situation during 2014. Meanwhile the Institute of Public Policy Research (IPPR) warned that the year’s economic recovery would come at the cost of increased consumer borrowing.

12)   The platform price war intensified, as Aviva reduced its Isa and investment portfolio fees to 0.15% for investors with at least £400,000. (0.25% for others.) Fidelity unveiled a plan for a 0.35% platform charge, falling to 0.2% for portfolios above £250,000 and 0% above £1 million. Hargreaves Lansdown, which charges 0.45% for up to £250,000, was considering its response.

 

13)   Ford Motor Group recorded its best profit in a decade, returning an $8.6 billion pre-tax figure for calendar 2013. Meanwhile Chrysler, now a subdivision of Fiat, also reported a healthy $2.8 billion and said it was aiming for $3/7 billion in 2014. General Motors was not due to report until mid-February, but said its volume sales projection for 2014 was around 2%. 

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