Debutant Simon French, Chief Economist for Panmure Gordon, joined Zak Mir, technical analyst for Zak’s Traders Café, and Mike Ingram, Strategist for BGC Partners, on the Tip TV Finance Show to discuss the growing problem of dividends, a target for the FTSE 100 and the US interest rate rise.
Key Points:
French highlighted a theme of lack of dividend cover across the FTSE All-Share, with a series of companies already cutting their dividend including Glencore (L:GLEN), Tesco (L:TSCO) and Anglo American (L:AAL).
He added that Morrisons could be in trouble with a 6.5% dividend, however, smaller caps with strong balance sheets and progressive dividends are more likely to be safer investments.
In terms of the FTSE 100, French believed that the index will fall to 5800 based on earnings revisions being down 14% y/y.
He outlined that in times of rate tightening, technology and consumer services stocks often perform well.
French finished by commenting that a US interest rate hike is tightening for the main street, and is not due to Wall Street.