E The Ignorance Of Crowds

This is the last blog for February as I am off to a family celebration tomorrow for my youngest grandchild. Normally I would have kept some of the results for tomorrow's blog but there won't be one.

It didn't take long for the correction to hit despite a nice 111,000 drop in unemployment last week offset by renewed rises in bond yields, to over 1.5%, reversing yesterday's late rally. The jobless numbers may have been lowered because of winter storms rather than new hires. Both the Fed and the European Central Bank may intervene to hold down bond yields, according to one Japanese brokerage.

But once again we have too many results to write up for me to pontificate about market trends and the ignorance of crowds. Once again the mob are buying into GameStop GME which rose by a third today. One of our shares is affected, Nokia NOK of Finland, which for some reason draws them in. It is up 6% today. And bitcoin is again the flavor of the day. The DJIA is down 400 points.

Hong Kong has raised its fees for trading stocks from 1% to 1.3%, which may hurt our shares there. Tech is dreck again.

Business newspaper article

image source

But we have much news:

*BAE Systems BAESY, the British maker of military and civilian hardware and software, reported sales of £19.28 bn in 2020, about $27.25 bn, vs a mere £18.31 bn in 2019. Adding in revenue from equity-accounted investments brought the total to £20.86 bn, beating the consensus forecast of £20.19 bn and the corresponding level in 2019 of £20.11. Pre-tax earnings at £2.13 bn beat consensus by 4%. But eps at 40.7 pence/sh missed the forecast of 46.4 pence although net cash flow from operations hit £1.166 bn beating the forecast of £1.597 bn.

However, the arms market profit was lower than expected with pretax profit at £1.6 bn, below the 2019 level of £1.63 bn. In case you are not aware of it, civil aviation has fallen into a slump over the virus and therefore the gains were from military products. It expects commercial aviation to remain weak but defense is hot, and it already has 80% of the orders it expects this year in its backlog. Free cash flow this year is expected at £1 bn, £45.2 bn, slightly lower than last year. It expects the backlog to rise to over £4 bn by 2023. Its largest market is Britain's former colony, the USA, and the Biden Administration is expected to grow its defense spending with about 3-5% rises in the current year, at constant exchange rates. (Sterling is rising.) The ADR rose 0.41% to $28.48-28.65. There are not many other shares doing well.

*Mexican multinational bakery giant Grupo Bimbo reported income of NMP9.11 bn ($443 mn) in 2020. up 13% from 2019. Sales were 331 bn ($16 bn) also up 13%. It upped its profits from outside Mexico to 58% from the prior-year level of 49% and its operating income soared 30% and the margin by 300 basis points. Income in pesos rose 58% and the profit margin by 3.4%. It cut its debt to MXN 2.8 bn to MXN 19.95 bn despite the peso rise. It plans to boost its investments this year for digitization, renewable energy, and electric vehicles by $1 bn in 2021 according to Eduardo Garcia of sentidocomun.mx.co with which we trade news. He doesn't convert earnings into US money, however.

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