UBS’s disappointing performance
So UBS reported a particularly poor performance from its investment bank in the second quarter, perpetuating a losing streak that is ratcheting up the pressure on this traditionally strong division.
Revenues from equity, fixed income and currency trading were all weaker but the performance of its retail banking and asset management businesses mitigated this to a small extent – as did its improving advisory and capital markets businesses.
The bank blamed tough market conditions for the sluggish performance overall and there will be more pressure for it to have a reorganisation.
Sergio Ermotti, UBS chief executive, also added to the gloom by announcing a rather downbeat outlook.
Given all the political and economic uncertainty in Europe at the moment, it is not surprising that many banks are suffering.
On the other hand, I do think that there is a degree of pent-up demand building up in the background – and if things like Brexit, the US-China trade negotiations and European stimulus get cleared up – there will be a business activity bonanza in my opinion.
I think that any US-China and European stimulus announcements will probably have an immediate effect when they are made, but I suspect that Brexit will not be clarified in one go, so this could take some of the shine off.
Fever-Tree losing its fizz
The second thing I wanted to mention today was that premium tonic maker Fevertree has warned that investors who have become used to a stellar rate of sales growth from the company could be disappointed due to recent wet UK weather weakening sales.
The company’s share price fell to around the £22 mark versus the £39 level it was at in September last year.
Although momentum appears to be slowing in the UK, its US sales were up by a quite healthy 24%.
I just wonder whether we’ve now reached “peak gin” as there are now so many gins out there, drinkers will probably get bored and start looking for the next drink.
If they do, I fear for Fevertree because the company’s other products include lemonades, ginger ales and colas – not what you’d call a niche market.
If everyone moves from gin to rum, for instance, Fever Tree could be in trouble in my opinion as I think that is in the rather unfortunate position of being at the mercy of the popularity of gin, which they don’t make themselves and have little control over.