“Between my finger and my thumb
The squat pen rests; as snug as a gun.
Under my window a clean rasping sound
When the spade sinks into gravelly ground:
My father, digging. I look down
Till his straining rump among the flowerbeds
Bends low, comes up twenty years away
Stooping in rhythm through potato drills
Where he was digging.
The coarse boot nestled on the lug, the shaft
Against the inside knee was levered firmly.
He rooted out tall tops, buried the bright edge deep
To scatter new potatoes that we picked
Loving their cool hardness in our hands.
By God, the old man could handle a spade, Just like his old man.
My grandfather could cut more turf in a day
Than any other man on Toner’s bog.
Once I carried him milk in a bottle
Corked sloppily with paper.
He straightened up To drink it, then fell to right away
Nicking and slicing neatly, heaving sods
Over his shoulder, digging down and down
For the good turf. Digging.
The cold smell of potato mold, the squelch and slap
Of soggy peat, the curt cuts of an edge
Through living roots awaken in my head.
But I’ve no spade to follow men like them.
Between my finger and my thumb
The squat pen rests. I’ll dig with it.”
Seamus Heaney – poet – 1939-2013
I understand that a ‘white paper’ on Scottish Independence will be circulated next Wednesday 27th November 2013. Any thought of Scotland leaving would be insane, economically and politically. I am very surprised that Alistair Darling has been the only major standard bearer from Labour’s senior ranks to openly support Scotland remaining in the Union. The one consolation those people living in England and for that matter the rest of the UK, who do not support Labour, is that they would be very unlucky to see another Labour government in their life time! Also any thought that Scotland could raise money through the gilt-edged market or keep Sterling as their currency clearly have not thought this out! Independence means independence. If you live by the sword; then you must be prepared to die buy it. Of course the residue of the UK would be happy to trade with Scotland if terms were mutually agreeable. I hope Mr Alex Salmond checks out EU/Euro membership or membership of EFTA with its own currency before stitching the Scottish electorate up! “We have rights, as individuals, to give as much of our own money as we please to charity, but as members of Congress we have no right so to appropriate a dollar of public money.” – Davy Crockett, Member of Congress, 1827-31, 1832-1835. If there is one issue that makes my blood boil; it is the idea of the EU/Brussels interfering with the free enterprise system, as suggested on the front page of the FT on Saturday. For the men in grey suits to suggest that they want to control the distribution of pay-TV is ludicrous and counterproductive – go away! Whatever happened to the free market? Allow companies to charge what the traffic will bear; otherwise the anti-EU brigade will continue to mass their troops and who can blame them? Excessive bureaucracy and red tape irrevocably damages competition and the ability to compete. I suspect Jamie Dimon and the management of JP Morgan Chase will regret the rather vulgar bash it hosted at Buckingham Palace last week in the wake of all its scandals. It will have been like water off a duck’s back to ‘Teflon Tone!’ Unfortunately the glittering occasion was booked months ago; so difficult to pull out, though embarrassing the Duke of York will have been the least of JPM’s concerns.
The Coop scandal is becoming messier by the day. Len Wardle and Peter Marks, chairman and CEO of the Coop movement should never have allowed Rev Flowers in the front door of the building, let alone be appointed chairman of the bank. Graeme Hardie has been vilified by the FCA for allowing Flowers to be appointed. Regardless of any political persuasion, to use the collapse of the Cooperative Bank as a political football strikes me as very short sighted. Neither parties comes out of this debacle with much credit. Maybe Ed Balls did encourage the purchase of Britannia Building Society in 2006. Labour have been associated with the movement virtually from its inception. I have no doubt the Coop Bank was George Osborne’s and Vince Cable preferred choice to buy 632 branches of Lloyds Banking Group, which the EU was forcing the ‘Black Horse’ to sell, rather than allow Lord Levine’s embryonic NBNK to buy them. That was understandable. With the best will in the world Metro Bank and NBNK will take years to compete with the main four on the high street. The government needed the assistance of a well-known brand to kick start the competition process in a meaningful manner. However any acquisition or deal was always going to be down to the regulator’s due diligence. Were the capital and regulatory requirements going to be met? That was always was going to be the case. What seems very hard to fathom is the fact that the FSA repeatedly warned the Cooperative Bank that it had a capital black hole about 5 months before the official approach to buy Lloyds Banking Group’s 632 branches. It was only last November that CEO Barry Tootell and FD James Mack owned up to the Cooperative Banks’s capital shortcomings.
The recapitalisation of Cooperative Bank – debt for equity – is far from guaranteed. Some of the bond holders may well be reluctant to take the haircut that is required for the hedge and fund managers to come on board. Understandably they want 70% of the bank to come on board. There is also the matter of £500 million having to be spent upgrading its computer system. It should not be forgotten but there are only 300 branches. We are not talking about HSBC in terms of size and influence. What is the alternative? Perhaps the Nationwide could be the knight in white shining armour? Again Graham Beale is too intelligent to be hoodwinked with a bad deal, for the sake of a face saving exercise. However perhaps the branches – clean from this mess – could be dissolved in to the Nationwide. Of course the other alternative is for Virgin Money to scavenge the good parts of Coop, as it did with Northern Rock or conveniently tuck them into TSB’s forthcoming IPO – the irony!
Last week Janet Yellen was all but confirmed as the next chairman of the FED. Whether she is more dovish that Bernanke remains to be seen. However improving economic data which may be endorsed this coming Friday, when November’s Non-farm- payrolls are posted, is likely to trigger the implementation of tapering of QE either in December or early in the New Year. I still believe that it more likely to be March, when the effect of hopefully a really upbeat Thanksgiving & Christmas holiday shopping spree can be felt. The recovery process seems to be wildly different from what is being experienced in Europe, where more stimulus packages may be required to electrocute the economy back to life. People assure me that life in Ireland, Spain and Greece is improving measurably! I think it is in Ireland but as for the rest – ‘inshallah!’ As for France, make no mistake President Hollande is deeply unpopular and the French economy is not just suffering the slings and arrows of outrageous fortune, civil unrest waits in the wings! There is still, of course, the question of the recapitalisation of the banks and EU bank unity. German IFO numbers did improve last week, but EU GDP numbers for the 3rd quarter was nothing to be proud of!
Last week’s market machinations were reflective of the year end appearing even earlier than usual over the horizon. The S&P has added 24% this year and the FTSE about 19%. Banks and fund managers are reluctant to surrender such gains; so volumes are derisory. There has been quite an expansion of IPO business in 2013. Royal Mail and Merlin have done well, as have many small caps and AIM companies. However there is a bit of indigestion, resulting in investors being reluctant to still back the truck up until next year unless there is a another market snip. RMG heads for the FTSE 100 and Merlin for the 250. Foxtons was also a success but we must remember a further tranche of Lloyds, TSB, possibly the Coop plus Poundland are up for grabs – many of them in the first half of 2014.
Last week the DOW added 0.7%, the S&P 0.19%, the NASDAQ 0.1%, with the FTSE 100 easing by 0.29%. European stocks were flat and the NIKKEI was up 1.4%. The Street of Dreams was quite volatile in thin trading. Comcast may buy Time Warner Cable (+10%), Intel was down 5.4%, Biogen Idec was up 13% on a new multiple sclerosis drug and Tyson Foods rallied by 10%. There were some big losers also – Tesla Motors -10%, Intel -5.4%, Ross Stores -5.7% and Dollar Tree. Exchanges were popular on news that Euronext may be up for sale – ICE +7.4%, NADAQ +6.8% and CME +5.4%. In London, Whitbread was popular at the end of the week, as was ARM Holdings. Tui failed to pass muster losing 7.8%.
Next week company results are thin on the ground – UK – Monday Aberdeen Asset Management (TS), EASSAR ENERGY, Tuesday – MITCHELL & BUTLERS, BRITVIC, Wednesday – COMPASS GROUP, RMG, UNITED UTILITIES, PUNCH TAVERNS (TS), Thursday – MARSTON’S, THOS COOK, PENNON, JUST RETIREMENT (TS), KINGFISHER & WOLSELEY. Companies next week. These are David Buik’s personal views trade
Twitter – @truemagic68
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