Monthly Archives: December 2013

OUTLOOK FOR 2014 by Patric Johnson & David Buik


DAY’S FAYRE – Friday 20th December 2013

“Twas the night before Christmas, and all through the house
Not a creature was stirring, not even a mouse.
The exhibit binders were sacked on the trial table with care,
In hopes that the jury would soon reappear.
The judge and her clerk, to their chambers they fled,
While visions of case law danced in their heads.
And co-counsel in her suit, and I, in my tie,
Had just settled our brains for an award that was sky high.
When out on in the jury room there arose such a clatter,
I sprang from the seat to see what was the matter.
Away to the room, the clerk flew in a flash,
Tore open the door and threw up the sash.
The foreman came forward, with his hair white as snow
Gave the lustre of hope that we would soon be able go.
When, what to my wondering eyes should appear,
But a miniature note, with an answer I may fear.
The Clerk took the note and moved so lively and quick,
I knew in a moment it must be the verdict.
More rapid than eagles, the jury they came,
And the judge emerged and called out each of their names!
“Now Foreman, Now Juror 2, 3 and 4!
On,Jury 5 and 6 and the alternates galore!
To the top of the jury box! To the top of the wall!
Now hurry to get seated! Hurry you all!”
The Foreman was chubby and plump, a right jolly old elf,
And I laughed when I saw him, in spite of myself!
A wink of his eye and a twist of his head,
Soon gave me to know I had nothing to dread.
Upon speaking a few words, he went straight to his work,
And read the answers on the verdict sheet, then turned with a jerk.
And laying his finger aside of his nose,
And giving a nod, up the jury all rose!
The Judge thanked the jury, and she sprang up from the bench,
And away they all flew out the courtroom then went.
But I heard the Judge exclaim, as her robe disappeared out of sight,
“Happy Christmas to all, and to all a good-night!”
Clement Clarke Moore – poet – 1799 – 1863

Christmas spirit has obviously reached the Kremlin these days. I am almost suffering from cardiac arrest at the prospect of Mikhail Kordokovsky, the former oligarch, once the richest man in Russia, being pardoned and enetually released after over a decade in prison. Mr Kordokovsky used to own billions of Dollars/Rubles in the oil company Yukos, which the government seized. Kordokovsky was sufficiently ill-judged to go ‘head to head’ with Putin and was found guilty of fraud, embezzlement and money laundering. He will be released next August. Let’s hope at the age of 50 he survives another eight months in a Siberian prison. Also the two members of the punk band Pussy Riot – also still in prison – and Greenpeace activists detained for their protest at a Russian oil rig in the Arctic may will shortly be set free.

As just stated it is Christmas; so this note will be brevity personified! Markets are still coming to terms with tapering QE in the US. The fact that rates will remain close to zero indefinitely could mean that bank shares become attractive as the cost of borrowing remains indecently cheap, whilst at the same time the yield curve steepens for those wishing to borrow. There are many who believe that quantitative easing could prove to be a poisoned chalice, which could eventually hamper growth. Every time growth starts to flag and unemployment starts to increase, more money and stimulus will be just poured in to the system. The omens for the US economy next year are positive, but I wonder that when tapering is increased above the current $10 billion a month withdrawal, the US economy will be robust enough to keep growing? Time alone will tell.

BAE System shares may come under the cosh today, as news broke that UAE withdrew their £10 billion contract to provide 60 Eurofighter Typhoon jets. It also transpires that BAE Systems may also be under duress, as to whether it can secure its recently negotiated deal to provide Eurofighters to Saudi Arabia.

The Indian government is claiming $604 million from Vodafone as back tax after it secured Hutcheson Lampoa’s operation in India. Vodafone, needless to say will be appealing.

Astra Zeneca has agreed to pay Bristol Myers Squibb £2.5 billion for its share in the partnership to manufacture and distribute diabetes drugs.

Finally a comment on Gordon Brown’s speech yesterday at Huffington Post convention, when he warned of another imminent financial collapse as the world had not learned sufficient lessons from the 2008 banking crisis. Is the market really interested in his views on this subject? I don’t think so. We have continued to listen to Greenspan pontificate after his litany of errors at the FED, when he should have spent his time attempting to improve his golf handicap and his skiing! It is rather like asking Ronnie Biggs, a few years ago, to lecture a convention of burglars on how robbing people is wrong and immoral! The Former UK PM would be better advised sticking to the excellent job he is doing with charitable work in Africa, which is essential and I am sure rewarding!

Merry Christmas to one and all!

These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

+44 (0)20 7886 2775
Panmure Gordon & Co

One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

TODAY’S FAYRE – Thursday 19th December 2013

“She had looked for his coming as warriors come,
With the clash of arms and the bugle’s call;
But he came instead with a stealthy tread,
Which she did not hear at all.

She had thought how his armor would blaze in the sun,
As he rode like a prince to claim his bride:
In the sweet dim light of the falling night
She found him at her side.

She had dreamed how the gaze of his strange, bold eye
Would wake her heart to a sudden glow:
She found in his face the familiar grace
Of a friend she used to know.

She had dreamed how his coming would stir her soul,
As the ocean is stirred by the wild storm’s strife:
He brought her the balm of a heavenly calm,
And a peace which crowned her life.

Ella Wheeler Wilcox – poet – 1850-1919

I saw on the front page of the Evening Standard last night a picture of Tom Hiddlestone, who has taken the lead role in Coriolanus at the Donmar Theatre. Playing opposite him is Birgitte Sorensen as his wife Virgilia. Of course Birgitte is better known as the very salacious TV presenter in the Danish political thriller ‘Borgen!’ I am seeing the play in January and look forward to seeing how she gets on. The reviews are great! Certainly this production is a far cry from when I last saw ‘Coriolanus’ in 1959 at Stratford – Laurence Olivier, Edith Evans, Mary Ure, Diana Rigg and Harry Andrews – very traditional as well as classical!

So the waiting is over. The uncertainty is blown away! – FOR NOW! Ben Bernanke’s valedictory piece of fiscal/monetary policy was laid to rest last night. The scaling back of bond purchasing by $10 billion out of the $85 billion facility will start in January and if the US economy continues to rally with unemployment falling significantly below the current level of 7%, then the tapering could be finished by September 2014. Some economic geeks think unemployment in the US could fall as low as 6.4% by the end of 2014. Again Chairman Bernanke said 6.5% unemployment was little more than symbolic – not a hard and fast threshold to react to. There are quite a number of imponderables to consider before QE disappears from the financial agenda. Growth around the world will need to come in its spring coat. If Inflation or should I say a lack of it (currently circa 1%) does not rally to create margins and competition, the FED will be forced to rethink its strategy. The contraction of QE will be eagerly watched by the rest of the world. These are uncharted waters. Can the banking sector take the strain, as wholesale money markets are far from fully functional? The withdrawal of QE in its entirety will trigger a proper interest rate structure in the future, though Bernanke insists that rates will remain as close to zero indefinitely. I wonder?

However the market was firmly left with the impression that the FED was prepared to be very flexible by reversing policy if that was deemed necessary. Janet Yellen will be installed as FED chairman in January and she is expected to have Stanley Fischer as her deputy. They are expected to adopt an initially dovish approach to the FED’s operations.

Mark Carney will be amongst those most eager to see what the outcome will be from the US QE initiative. The BOE had more good news on the economic front yesterday. The fall in unemployment from 7.6% to 7.4% with 99,000 being removed from the dole queue leaving 2.39 million unemployed, though admittedly far too many of them – 1 million + 16-15 years old a very moderate rate. Carney’s 7% unemployment threshold is being flirted with. However he maintains that 7% is purely a guideline and that rates need to remain low whilst the country recovers its poise with growth expanding at what is forecasted to be at a very moderate pace. Some think rates could rise at the end of 2014. Carney will be keen to keep the lid on speculation.

Yesterday there was a substantial relief rally with the DOW adding 1.84% (292 points) with S&P 500 grabbing 1.66% and the NASDAQ 1.15%. The rally was across the spectrum with the likes of JP Morgan, 3Ms and Exxon Mobil adding over 2.7% respectively. This rally followed a very dull session in London where the FTSE closed up just 6 points at 6494. Interest centred around retail stocks and mainly M&S and the supermarkets. Sainsbury lost 3.5% and M&S 2.5%. It is becoming clear that the sale of clothes is a problem and the only winners in what looks like a very tough cost conscious consumer environment are the discounters or cheap shops – Aldi, Lidl, Primark, Top Shop, Dunelm, ASOS. The ‘Big’ brigade are losing custom and the level of discounting is at almost obscene levels. Wages are rising at 0.9%. Inflation is falling but is still above 2% – something has to give. We all have less disposable income. House of Fraser could float next July if talks with Gallerie Lafayette are inconclusive. Plastic money will be introduced by BOE in 2016. Speculators in Bitcoin may get their fingers burnt as China turns up the heat on regulating trading.

Asia enjoyed a mixed session this morning with only the NIKKEI joining in Wall Street’s celebrations – up 1.74% at the close. There were 5 IPOS in Hong Kong today with Fu Shou Yuan grabbing the yellow jersey – up 49% on its 1st day’s trading. We may enjoy a marked ‘Santa Rally’ in Europe this morning; but can it be sustained?

The EU has more or less agreed a procedure for failing banks with Germany still insisting that the E500 million EU sovereign debt facility should not be used to bail banks out. A bank union agreement is expected to be agreed in January. How watered down and revised will it be?

These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

+44 (0)20 7886 2775
Panmure Gordon & Co

One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

“If questioning would make us wise
No eyes would ever gaze in eyes;
If all our tale were told in speech
No mouths would wander each to each.

Were spirits free from mortal mesh
And love not bound in hearts of flesh
No aching breasts would yearn to meet
And find their ecstasy complete.

For who is there that lives and knows
The secret powers by which he grows?
Were knowledge all, what were our need
To thrill and faint and sweetly bleed?

Then seek not, sweet, the “If” and “Why”
I love you now until I die.
For I must love because I live
And life in me is what you give.”

Christopher Brennan – poet – 1870-1932

‘Out-batted’, ‘out-bowled’ and ‘out-fielded by the Australians! – It’s as simple as that! I am not sure that ‘man-for-man’ there is little to choose between the 2 sides. The issue with England’s cricketers is all about psychological damage, application to building an innings and an inability to stop Australia’s momentum. I am not sure wholesale changes will improve the team’s performance. Maybe replacing Graham Gooch as batting coach might help. Who could replace him? Someone muttered Geoff Boycott to me. He talks a great deal of common sense, but he’s 73 years of age! Roll on the Boxing Day test match at the MCG!

“My colleagues, they study artificial intelligence; me, I study natural stupidity.” -Amos Tversky, Stanford psychologist and a founding father of behavioural economics “My colleagues, they study artificial intelligence; me, I study natural stupidity.” -Amos Tversky, Stanford psychologist and a founding father of the economics of behaviour.

Our TV channels are saturated with the death of Ronnie Biggs at the age of 84. The outpouring of sympathy for this robber, who sadly suffered from dementia, was extremely prominent. I cannot quite recall the same sympathy being accorded to the train driver, Jack Mills who was bashed over the head and never really recovered!

So FED watch finally reaches a crescendo today! The market, particularly equities, bonds and FX, will be taken out of their misery as to whether gentle symbolic tapering is introduced thus month – say $5-10 billion or whether we wait until January, when Janet Yellen gets her feet under the table. Equities have been neurotic. Apart from Friday’s good news on Industrial Production – up by over 3% last month – investors refuse to gird up their loins, until they know their fate! This evening all will be revealed. However the Street of Dreams never even whimpered, let alone purred, yesterday. The DOW eased a smidgen by 0.06%, the S&P 500 ducked by 0.31% and the NASDAQ closed just below the Plimsoll line down 0.14%.

AMC Entertainment Holdings priced its initial public offering at $18 a share on Tuesday as the movie theater chain prepares for its premiere on the stock market. That price was at the low end of the company’s estimated price range and values AMC at roughly $1.7 billion. By contrast, its bigger rival, Regal, is valued at $3 billion. Talking of IPO’s Australia’s coal mining titan, Linc Energy decided to issue its shares in Singapore rather than Australia at Sing$1.20, valuing the operation at Sing$34 billion.

Yesterday the financial news here in Old Blighty was mixed. On the housing front prices have risen on Y/O/Y basis by 5% in the last year from October – 12% in London. This news accompanied the facile speech by Ed Miliband, viscerally attacking house building companies for the unacceptable amount of money that has been made by executives and shareholders. He just doesn’t understand the economics of the country one iota. House builders are only responsible for an infinitesimal amount of the housing market; but without their contribution to the housing market, there would be no momentum!

BOE Governor Mark Carney made it clear that even though inflation is beginning to look benign at 2.1%, despite this data not including recent gargantuan energy prices, and the likelihood that unemployment is expected to fall a small amount in today’s figure below the current 7.6% level, the outlook for growth remains cautious. That tells me rates will remain unchanged in the foreseeable future even if the 7% threshold of unemployment is flirted with! QE will continue to rule OK! Mr Carney’s caution is understandable if one looks at retail. The initial signs for Christmas are not that encouraging. The demand by the public for measurable discounts has triggered similar requests by retailers of their suppliers. Debenhams is purported to have demanded a 2.5% discount from their suppliers. Let’s hope that there is a surge the consumer, as that he/she comes under a wet sale at the business end of the run up to Christmas.

The return of the Prodigal Son! Bob Diamond announced the arrival of his Atlas Mara – a shell company that will be used to make banking purchases in Africa, a country dear to his heart. The company raised $325 million against expectations of $200. Mr Diamond has put in $16 million of his own money. Ashish Thakkar has contributed $70 million. Despite Lord King and his coterie seeing Mr Diamond off the Barclays Park, the Chelsea and Boston Sox fanatic has plenty of following! It was interesting to note that once the bean counters had finished totting up the part-Lloyds sale, the government actually lost £200 million. Interest on borrowed money had not been accounted for.

On the European front Greece tells us that it will grow in 2014 – hope so but doubt it on a measurable basis. It seems that, not for the first time, the EU is making a total pig’s ear in agreeing terms for banking union. Germany seems incapable of bringing the EU back on the bridle. Throughout the talks, Germany and other rich euro-zone countries such as Finland made clear that they didn’t want their taxpayers to pay for problems that had developed in other countries’ banks in the past. If the resolution funds prove too small to deal with a big bank’s failure, taxpayers in the lender’s home country should pick up the bill, they argued. France and some Southern European countries, meanwhile, have been pushing to use the euro-zone government bailout fund, the European Stability Mechanism, as the common backstop.

These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

+44 (0)20 7886 2775
Panmure Gordon & Co

One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.


“The darkness crumbles away
It is the same old druid Time as ever,
Only a live thing leaps my hand,
A queer sardonic rat,
As I pull the parapet’s poppy
To stick behind my ear.
Droll rat, they would shoot you if they knew
Your cosmopolitan sympathies,
Now you have touched this English hand
You will do the same to a German
Soon, no doubt, if it be your pleasure
To cross the sleeping green between.
It seems you inwardly grin as you pass
Strong eyes, fine limbs, haughty athletes,
Less chanced than you for life,
Bonds to the whims of murder,
Sprawled in the bowels of the earth,
The torn fields of France.
What do you see in our eyes
At the shrieking iron and flame
Hurled through still heavens?
What quaver -what heart aghast?
Poppies whose roots are in men’s veins
Drop, and are ever dropping;
But mine in my ear is safe,
Just a little white with the dust.”

Isaac Rosenberg – poet & soldier – 1890-1918

Yesterday at Mandela’s Memorial gathering in Johannesburg President Obama was provided with another fabulous chance to extol the virtues of amazing powers of rhetoric and he grabbed it eagerly with both hands. He gave another masterful speech – very eloquently delivered. However what I don’t understand is why, despite the audience being a mixed South African one, he had to deliver it in ‘hillbilly accent’ from the Ozark and Ouachita mountains. The President of the USA is a cultured man from Illinois. He should speak as he is and not get sucked in to bad habits used by the likes of Tony Blair, who slipped ineloquently in to an Estuary accent if the occasion suited! There is no need to patronise the audience! It just dilutes the office of President!

Many like me will have been massively disappointed to see the EU lift sanctions in Zimbabwe, thus allowing huge amounts of diamonds to be sold in Belgium! – Absolutely sickening! Mugabe is a despot and Zimbabwe is not, by any stretch of the imagination, a democratic country!

There was potentially some good news emanating from Washington over night. The headlines read “US Congress cross-party agreement reached!” Oh really? Well why haven’t the US futures and European markets selected another gear this morning? Well Speaker John Boehner’s luke-warm comment that ‘modest’ agreement has been reached in principal tells all we need to know. If a $24 billion reduction in the Federal deficit has been reached; then all well and good. This deal could also include the $63 billion military and domestic cuts, which were in gridlock a few months ago. The whole issue is still very much up in the air with little comment about Obamacare being thrown in to the melting pot! In fairness Paul Ryan is a formidable negotiator for the Republicans but there are more draconian members of his party! I venture to suggest that Congress has some way to go to sign off on the US budget.

The Street of Dreams failed dismally to capitalise on Friday’s employment data. The cumuli nimbus clouds surrounding the deficit and tapering forced investors to keep their hand in their pockets – fully zipped up! The DOW and the S&P 500 closed down 0.3%, the NASDAQ by 0.2%. There was encouraging news on the jobless claim front, but investors were ambivalent. The only good news came on the back of confirmation that GM would go it alone with the government selling off its final tranche of shares – That was the appointment of Marry Barra to succeed Dan Akerson as CEO. M/S Barra has been a GM ‘lady and girl’ since she was 18 years of age – her father was also with e company for 39 years. She has been involved at the heart of all GM’s operations and comes highly recommended. It looks like a great appointment. There are also other wholesale changes. Mr Akerson will also relinquish his position as chairman due to suffering from advanced cancer! – Very sad, after GM’s miraculous recovery from its $50 billion US Government bail-out!

So the Volcker rule was finally endorsed by regulators and the FED. In 2015 proprietary trading in the US becomes a distant memory; but does it? This decision will mean that a mass of liquidity will be taken out of the market and the emphasis of trading will just be passed on to hedge funds and money funds, which will become omnipotent and hugely influential and potentially dangerous. I think the Bank of England understands this, but I am less than convinced about the FED. Such is the power of fund managers that the US Treasury market moves with a $250 million position. 5 years ago that was unthinkable. The wholesale money markets have improved a touch but there are still more or less moribund! So as we enter uncharted waters over the tapering of QE, we still have to consider an inefficient money market and the Volcker Rule! This could be a very toxic cocktail to cope with. Also it may be a naïve comment; will the authorities have the ability to police the difference between genuine hedging and trading? There are some smart people out there. I suggest it is impossible.

Nathan Bostock clearly was not looking for a career move for financial gain in packing his bags, leaving RBS as FD after 10 weeks to go to Santander to help with 2015 IPO of its UK business. I venture to suggest that Mr Bostock was a ‘Hester clan man’ and he may well have found difficulty in coping with the gospel according to George Osborne and the UKFI. So it is the return of the prodigal son – back to his routes in mortgage lending and retail banking. The Santander IPO is far from ‘nailed-on’ in the wake of potential competition from Lloyds, TSB, Williams & Glyns and maybe even the Co-op! RBS is years behind, I fear!

The FTSE is still flat lining today – absolutely without inspiration – up 2 points as I speak. Good results from Stagecoach were forthcoming this morning! Concern from leading shareholder about First Group – That it should sell its stake in Greyhound to help ease the financial burden. The board declined. Royal Mail and Ashtead are set to replace Vedanta and Croda in the FTSE 100.

These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.


“Fame, wisdom, love, and power were mine,
And health and youth possess’d me;
My goblets blush’d from every vine,
And lovely forms caress’d me;
I sunn’d my heart in beauty’s eyes,
And felt my soul grow tender:
All earth can give, or mortal prize,
Was mine of regal splendour.

I strive to number o’er what days
Remembrance can discover,
Which all that life or earth displays
Would lure me to live over.
There rose no day, there roll’d no hour
Of pleasure unembitter’d;
And not a trapping deck’d my power
That gall’d not while it glitter’d.

The serpent of the field, by art
And spells, is won from harming;
But that which coils around the heart,
Oh! who hath power of charming?
It will not list to wisdom’s lore,
Nor music’s voice can lure it;
But there it stings for evermore
The soul that must endure it.”

George Gordon, Lord Byron – poet – 1788-1824

The Prince of Wales will represent the Queen at Mr Mandela’s funeral in Qunu on Sunday. He will be accompanied by his wife, the Duchess of Cornwall. They will not, however, attend the memorial service today. Four PMs – Sir John Major, Tony Blair, Gordon Brown and David Cameron – will also make the journey to Johannesburg. Nick Clegg and Ed Miliband are amongst those who will make up the UK political bandwagon. US President Barack Obama, UN Secretary General Ban Ki-moon, former US presidents George W Bush, Bill Clinton and Jimmy Carter, and the new Iranian president Hassan Rouhani will all be putting in an appearance as a mark of respect and esteem that Nelson Mandela was held in.

The WACCA – What a daunting prospect of a pitch for England to bat on! When you get rolled out on a flat track in Adelaide for less than 200 in their first innings, confidence is shot to ribbons. No doubt Johnson, Siddle and Harris will produce a few rib-ticklers for our very ‘out of nick’ batsmen. This is when some fortitude, courage and application are required.

Considering the brouhaha that accompanied the exceptional set of US employment data posted on Friday, market activity on the Street of Dreams and in Europe yesterday could only be described as apologetic. Until the market is happy in its own mind about the implementation of QE – This month, January or March – and the ink is dry on the US debt ceiling and budget agreements, equities are likely to remain nervous or drowning in inertia. The Street of Dreams closed just above the Plimsoll line with the DOW up 0.03%, the S&P 500 by 0.18% and the NASDAQ by +0.15%. There was hardly any gossip let alone a decent story to get one’s teeth in to. The US government announced that its final holding in GM will be sold – there again that was hardly news. Comments on falling sales at McDonald’s in existing restaurants the last 13 months fell by 0.8% against expectations of a +0.3% rise, will not have been well received.

Today is the day the market will be told whether the Volcker Rule is adopted as law, whereby US banks and those trading in the US may be precluded from proprietary trading – in other words using the bank’s capital to trade, rather than having clients’ orders behind deals. Banks will also be restricted in using hedge funds to trade their positions. There is no doubt that liquidity will be withdrawn from all markets if Volcker’s Rule is adopted in full – not good news! However I expect banks to adopt an innovative approach to avoid a major drop in activity and profits.

Yesterday the FTSE 100 was moribund closing down 7 at 6559 with miners dragging the index lower. The FTSE 250 faired rather better. There is rather more positive news to get one’s teeth in to this morning. Prudential is expected to generate £10 billion more capital in the next 4 years. Panmure’s Barrie Cornes reiterates it as a buy. Lloyds Banking Group confirmed yesterday that it will unload its remaining 21% stake in St James’s Place at a 2% discount at 630p. The outlook for this operation remains bright. There were excellent numbers from Tui Travel, which posted a 20% increase in profits. Ashtead posted a stellar set of numbers. Whitbread again pleased its acolytes but Panmure’s Simon French believes that a 20x P/E is becoming rather rich and a £35 share price is not for him! Alex de Groote is comfortable with the idea that ITV will greatly increase its advertising revenue next year and also the World Cup will help to drive profits. Panmure remains a very committed buyer of this once trashed operation.

Lloyds Banking Group also unloaded a £90 million property portfolio on Cerebus. Espirito Santo’s Raikundlia poured scorn on the suggestion that HSBC were seriously considering having an IPO for its London operation. He suggested that the rest of HSBS’s business would have to be ring-fenced in HK. Why not? It was there before. No doubt we will have Mr Raikundlia’s reasons in the fullness of time. EADS is to release 5800 employees by 2018.

It was reassuring to hear Mark Carney from his speech to US Economy Club in New York, reiterate that rates would remain low for some time and even if 7% unemployment were to be reached it would not necessarily trigger a rate increase unless inflation threatened. He also was aware of the threat of a property bubble, but felt that international Knightsbridge styled property scoops were not representative of the normal market climate.

Finally good old Albermarle & Bond – the pawnbroker – stock down 93% this year sees its retiring CEO take £331k out of the ring! – OK for some! It is thought that H&T Group or Apollo are obvious candidates to be in the mix to take over, though EZCorp the US pawnbroker must be a t the head of affairs, having prevented the £5 million rights issue.

China’s retail sales rose by 13% last month – Was that strength driven by cars, more pollution or fewer sales ahead. Who knows?

These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.


TODAY’S FAYRE – Monday 9th December 2013

“The golden gates of Sleep unbar
Where Strength and Beauty, met together,
Kindle their image like a star
In a sea of glassy weather!
Night, with all thy stars look down,–
Darkness, weep thy holiest dew,–
Never smiled the inconstant moon
On a pair so true.
Let eyes not see their own delight;–
Haste, swift Hour, and thy flight
Oft renew.

Fairies, sprites, and angels, keep her!
Holy stars, permit no wrong!
And return to wake the sleeper,
Dawn,—ere it be long!
O joy! O fear! what will be done
In the absence of the sun!
Come along!”

Percy Bysshe Shelley – poet – 1792-1822

In terms of my visits to Craven Cottage this season, I have had little to crow about until yesterday. Fulham played its best football this season by a country mile. Had the score been 5-0 against Aston Villa; it would not have been unjust. Rene Meulensteen, the new manager, seems to have put a spring in the players’ heals and a sense of belief. Above all else there looks as if there is a game plan. Dimitar Berbatov was the outstanding player on the field. In fact his close control must be the best in the Premiership. Let’s hope he can be persuaded to stay in the January window, if he is going to perform at that level of excellence!

The FT’s Patrick Jenkins’s headline on the front page, which suggested HSBC is considering a high-profile multi-billion pound IPO of its lucrative UK high street operation, will have grabbed the market’s imagination this morning. I doubt very much that Douglas Flint, Chairman and CEO Stuart Gulliver will be concerning themselves with the potential bottle neck of financial IPOS that could manifest themselves in 2014 – 10-15% of Lloyds, TSB, Williams & Glyns and possibly the Coop in the UK early next year.

HSBC – the ‘local bank’ – is considered by most to be the best run bank in the world, with more than ‘toe-holds’ all over the world. Its great strength is obviously China, HK and Asia, but its operations in UK and Europe are hardly shabby with also a strong presence in the US, South America, the Middle East and Africa.

That old adage ‘too big to fail’ rings in everyone’s ears. In the wake of HSBC’s money laundering problems in the US, Mexico and South America, which will have devastated Stuart Gulliver. It resulted in David Bagley, the Head of Regulation falling on his sword. However what will be concerning HSBC more is ‘TOO BIG TO MANAGE!’ Regulation of so many differing cultures and languages in this competitive modern world makes water-tight regulation almost impossible.

HSBC’s US sub-prime operation lost $50 billion in the banking crisis, but in fairness to its management HSBC was the first bank to flag up sub-prime lending issues and the credit crisis. An attractive UK based IPO of its UK high street and retail operations, makes sense. Not only could HSBC regroup and build a separate European operation, cherry picking banks in the process of recovery. There are far too many of them and as we know EU banks may well need between €100 billion and €300 billion fresh capital. It would also provide HSBC’S management with the opportunity of implementing greater management and regulatory controls across the global spectrum. What I like about Mr Gulliver is the touch of confidence and gentle arrogance that he exudes. Therefore whatever is in the pipeline in terms of banking IPOS will only be of passing concern to HSBC. They see themselves at the head of affairs in UK banking. So Chancellor Osborne and Dr Cable may have to wait for the spoils of war, if the IPO route is the chosen path!

These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

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TODAY’S FAYRE – Sunday 8th December 2013

“By the rude bridge that arched the flood,
Their flag to April’s breeze unfurled,
Here once the embattled farmers stood,
And fired the shot heard round the world.

The foe long since in silence slept;
Alike the conqueror silent sleeps;
And Time the ruined bridge has swept

Down the dark stream which seaward creeps.

On this green bank, by this soft stream,
We set to-day a votive stone;
That memory may their uickdeed redeem,
When, like our sires, our sons are gone.

Spirit, that made those heroes dare
To die, and leave their children free,
Bid Time and Nature gently spare
The shaft we raise to them and thee.”


Ralph Waldo Emerson – poet – 1803-1882

Mitchell Johnson! – What a transformation! A few months ago he was just a ‘help-yourself-four-an-over’, erratic ‘hairy-quicky.’ Today he is a lethal exterminator of England’s rather brittle batting. He just seems to have risen like a phoenix from the ashes! The Adelaide Oval isn’t even a bouncy quick track.  Sadly England’s batsmen have filled his cup with over-flowing confidence and have made him look better than he really is! There are shades of Frank Tyson – Typhoon – in his performances for England back in 1954. Tin hats at the WACCA!

So England have drawn Uruguay, Italy and Costa Rica in the World Cup and will have to travel prodigious distances.  Well, if this side aspires to win there should be no complaints. However in mitigating circumstances every time I see the face or effigy of Sepp Blatter or Michel Platini, I cringe! In the case of Blatter; he just should not be there.  He is an average advert for football at best.  As for Platini; he just seems to want to make every competition British football is involved in a minefield; all down to his abject dislike of our country. If there are protestations to the contrary, he has a strange way of expressing himself.


This past week equity, bond and foreign exchange markets been rather surreal for market participators, economists, politicians and observers alike.  There has so much in the way of important economic data and political machinations on both sides of the pond to deal with, sorting out the financial corn from the chaff has not been that simple. Here in Old Blighty many of our brain cells have been taken up analysing George Osborne’s pre-budget report, which included huge upgrades in GDP in the next 5 years (2.4% from 1.8% in 2014) plus the suggestion that there could be a budget surplus in 2019.  Much of his Pre-Budget report contains a huge leap of faith and assumes that the EU will recover its equilibrium rather than put the brakes on the recovery process and I for one am a non-believer! However I do believe that the UK’s quest to trade and do business with countries such as China, where the PM has just completed a superficially successful visit, is where it should be headed.

‘Uncle Sam’ really does seem to have its show back on the road.  Consumer Sentiment bounced last month; Initial Jobless Claims fell sharply; the ADP private sector employment data was better than expected; there was huge upgrade of 3rd quarter GDP from 2.8% to 3.6%. Finally the ‘Big Daddy’ of them all – Non-Farm Payrolls – last Friday produced some stellar numbers – 207k jobs were created in November and the unemployment rate fell sharply from 7.3% to 7% – its lowest point since 2005.  Needless to say speculation for the implementation of tapering of QE in the US flew to the top of the agenda.  At the moment it is no longer ‘if’ but ‘when!’ There may well be a symbolic start this month but I still favour March, when Janet Yellen has her feet under the table at the FED and there is some decent ‘follow-through-data’ to accompany the improving economic landscape.  However all this news may good for the economic recovery, but it could temporarily take the wind out of the sales for equities, though they did have a decent run on the rails on Friday.  Bond markets remain an enigma with yields rising.  Interest rates unofficially are supposed to be sedentary, but the markets tell us that they are going up unofficially and will be up officially sooner rather than later in the US. The Dollar may well be on the climb before too long.  Gold remains an anathema – $1229.10 and once and oil has started to creep up – Nymex $97.65 and Brent $111.61 per barrel.

As for the ECB, there is little likelihood of any advance in rates; inflation is unhealthily low.  In fact Draghi may have to deal with negative bank interest rates or other stimulus packages. In the UK the MPC were happy with rates as they were leaving the £375 billion QE facility in place.

After a long, confusing nad frustrating week, where volumes remained irritatingly light, the S&P ended the week down -0.13%, the FTSE 100 was easier by 1.4%, European stocks by 2.66% and the NIKKEI by 2.3%, despite a strong rally on the Street of Dreams on Friday in response to the positive employment data. On Friday the DOW grabbed 1.3%, the S&P 500 1.1% and the NASDAQ 0.7%. Some retail stocks were under the cosh – JC Penney -8.6%, Big Lots -12%, American Eagle Outfitters -8% and Sears down 3.8%. Keep an eye on Apple.  Its relationship with China Mobile may prove to be very productive in the months to come with China’s gargantuan distribution possibilities.


It was a lack-lustre week in London.  Dealers seemed to be on the back foot until Friday.  The stench of fear from tapering caused dealers to give up the ghost and a Christmas rally looks like a 5/1 shot rather than an odds on shot! There were some good performances from Shell – not before time – on Friday with the LSE and Petrofac also putting in eye catching performances. Barclays are up before the beak again facing allegations in a civil court from Guardian care homes.  It is alleged that profits of £130 million on derivatives was squirreled away by Barclays in to an offshore fund called Ricardo.  Bob Diamond may be called to give evidence. Talking of Bob Diamond.  He is purring the final touches to a £150 million float for a shell company called Atlas Mara with aspirations of becoming an African bank backed by Ashish Thakkar.


Unconnected there is also the possibility that the Volcker rule could restrict proprietary trading for banks outside the US. I am none too sure how effective the WTO agreement will be.  There seem to be too many imponderable, though the UK may stand to gain £1 billion is business deals with poorer emerging nations. Finally good news from China. Exports in November topped 12.7% against expectations of 7%.


These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

+44 (0)20 7886 2775

Panmure Gordon & Co

One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.


So many more erudite people will write reams on the Pre-Budget Report.  So there is little intellectual capacity that I can offer to this august annual bun fight! In passing it is such a pity that the House of Commons is such a bear pit these days.  The behaviour and contempt on both sides of the House leaves a great deal to be desired.


I thought the only valid point that Ed Balls made was that living standards had dropped and there was scant evidence that much was being done about it.  I am not sure until the Government has finished with its good house-keeping goals and that is not around the corner that there is much that can be done! In passing I have not heard a politician speaking in the House sound like a demented screech owl since George Brown, then Deputy PM, did in 1964! What I find dispiriting about Ed Balls is that he lacks humility and cannot spell ‘mea culpa’ – extraordinary for such an intellect!

The growth targets and borrowing and debt targets were ambitious – 2013 from 0.8% to 1.4%, 2014 from 1.8% to 2.4%, 2012 2.2%, 2016 2.6%, 2017 2.7%, 2018 2.7%. If those growth forecasts are accurate, higher interest rates are inevitable.

As for the borrowing requirement – 2008 £158 billion, 2012 £111 billion, 2014 £96 billion est, 2015, £96 billion est, 2016 £79 billion Est, 2017 £21 billion Est, 2018 £23 billion – 2019 small surplus – interesting. The OBR forecasts that in 2015/6 debt will be at its peak – 80% of GDP.

What do I like about the autumn statement –

1)      Cap welfare spending – save £19 billion

2)      To save £7 billion in next 2 years from Whitehall departments protecting NHS and education.

3)      £900 million reduction in military spending post Afghanistan

4)      £100 million LIBOR fines to go to military and ambulance & fire service charities.

5)      Osborne confirmed that the rich were paying the most in taxation. 30% of income tax is paid by 1% of the population.

6)      Clamping down on tax evasion and avoidance will save £9 billion over 3years.

7)      Bank levy increased to 0.0156% reaping £2.7 billion in 2014 and £2.9 billion in 2015

8)      Infrastructure capital spending to increase on roads railways (HS2) plus expenditure on shale gas and onshore wind energy as against off shore.

9)      Increase house building

10)  Virgin Money to join funding for lending.

11)  Schools to get free meals.  It annoyed me that it was the Lib-Dems’ idea which Michael Gove initially rejected.  I hate the idea of Lib-Dems having political credibility.

12)  Enterprise allowance for 50,000 extra people.

13)  30,000 extra student places.

14)  Tax relief for film makers

15)  Business rates capped at 2% – it should have been more.

16)  Recuperation for empty shop premises valued at £50k + – £1000 off rates to encourage local activity.

17)  NIS for those under-21 years of age exempted.

18)  Fuel duty increase for next year cancelled

19)  CGT for non-residents on property sales to be charged.


Dislikes –

1)      £50 saving for each family from a cap on energy prices until 2015 – rubbish, irrelevant and political posturing!

2)      Not enough done to close the gap between the wealthy in the South and the impoverished in a large number of places in the north.

Many of the points in the budget were a little timid, but Chancellor Osborne has two more bights at the cherry; so needs to keep his powder dry.


WARNING – Though I thought George Osborne’s presentation was balanced there is a HUGE LEAP OF FAITH TAKEN THAT GROWTH WILL PICK UP IN EUROPE, US & ASIA.  I HAVE EXTREME DOUBTS ABOUT EUROPE.  In fact I just DON’T BELIEVE IT! Spain and France worry the living daylights out of me!


These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

+44 (0)20 7886 2775

Panmure Gordon & Co

One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential and may be legally privileged. It is intended solely for the addressee(s). If you are not an intended recipient, please delete the message and any attachments and notify the sender of mis-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.


Have you forgotten yet?... 
For the world's events have rumbled on since those gagged days, 
Like traffic checked while at the crossing of city-ways: 
And the haunted gap in your mind has filled with thoughts that flow 
Like clouds in the lit heaven of life; and you're a man reprieved to go, 
Taking your peaceful share of Time, with joy to spare. 
But the past is just the same--and War's a bloody game... 
Have you forgotten yet?... 
Look down, and swear by the slain of the War that you'll never forget. 

Do you remember the dark months you held the sector at Mametz-- 
The nights you watched and wired and dug and piled sandbags on parapets? 
Do you remember the rats; and the stench 
Of corpses rotting in front of the front-line trench-- 
And dawn coming, dirty-white, and chill with a hopeless rain? 
Do you ever stop and ask, 'Is it all going to happen again?' 

Do you remember that hour of din before the attack-- 
And the anger, the blind compassion that seized and shook you then 
As you peered at the doomed and haggard faces of your men? 
Do you remember the stretcher-cases lurching back 
With dying eyes and lolling heads--those ashen-grey 
Masks of the lads who once were keen and kind and gay? 

Have you forgotten yet?... 
Look up, and swear by the green of the spring that you'll never forget.

Siegfried Sassoon – poet & classical scholar – 1886-1867


There was Nigella Lawson, domestic goddess at large, daughter of Lord Nigel, brother of Dominic; a fine looking filly as well as feisty trout, giving it ‘plenty’ in court yesterday, defending her honour against Charles Saatchi – well sort of! What I heard of it sounded like great theatre! Though probably emotionally damaged her forthright approach may well see her more popular than ever with her acolytes and disciples!

Today’s autumn statement or Pre-Budget Report looks more unorthodox than usual. Rescheduled from yesterday due to “Dave’s” successful visit to China to today, so that the PM can be standard bearer to the shrill roars of the OBR’s growth upgrading of UK PLC’s and its purported recovery – similar to Lazarus picking up his bed and walking! 2013 from 0.8% to circa 1.4% and in 2014 from 1.8% to 2.8%! Chancellor Osborne’s speech is at 11.15am, also breaking, I think, from tradition.

These statements are always the worst kept secrets. Hard-nosed disciplinarians like me are keen to know what more is going to be done about cutting the budget deficit and the borrowing requirement which we hear rumoured will be cut by £12 billion thanks to the improving economy down to £120 billion.

There will be platitudes about HS2 and its astronomical cost £50-£80 billion. There will be pats on the back for reducing high rate of tax from 50% to 45%.  Small businesses employing less than 200 people will have their rates cut by about 2/3rds.  There will be further roars of approval as the Chancellor tells the House that cuts in Corporation tax from 28% to 20% will generate an extra £10 billion of revenue.

There will be three things that concern the public at large. Firstly savings have seen the biggest drop for 40 years. £23 billion has been lost in recent times – about £900 per family in the last year. Also the lack of inward investment on a pro-rata basis is at its lowest level since 1955. The greatest concern of all to voters will ‘the widening gap’ between growth and wealth in London and SE England and the activity in the rest of the country. What is being done? Presumably there will be news of the sale of a further tranche of Lloyds Banking Group (10-15%), following in the wake of the intention to sell the government’s 40% stake in Eurostar.

So we are all going to have to work until we are 70! So tell me something new! Chancellor Osborne will titillate the electorate with a few little titbits such as larger ISAS and something for working families, but he still has 2 more budgets until the election; so he has to keep his powder dry!


Yesterday was rather a lack-lustre session for equities, thanks to persistent concerns over the threat of tapering by the US early in the New Year rather than this month. The FTSE fell by 0.4%.  Despite decent ADP numbers – 215k jobs created in the private sector in November, which could augur well for Non-Farm Payrolls tomorrow (EST: +1`80k with unemployment at 7.2%), the Street of Dreams in a rather enigmatic manner closing more or less flat – DOW -0.16%, S&P 500 -0.13% and the NASDAQ +0.02%.  Also it is fair to say that some of these indices look fairly fully valued. ISM Non-Manufacturing data drifted down in November, but there was good news on the US trade deficit.  It shrank by 5.4% to $40.6 billion. There may be good news for Apple soon; hopefully China Mobile will start to distribute iPhones before too long!

In London news from Standard Chartered Bank’s trading statement yesterday was dispiriting.  There will be a fall in profits.  Consumer banking may fall by 10% thanks mainly to business in South Korea.  The shares fell by 6% yesterday.  This has not been a good year for Peter Sands to date. Vodafone announced that it will spend $3 billion on upgrading its Indian operations. Alibaba is considering holding its $15 billion IPO in London next year, thanks to pressure and support from PM Cameron rather than on the NASDAQ. We were all pleased to hear that the government will support BP in its attempt to expand its operations in the US post the Gulf catastrophe. Tesco’s tale of woe on losing market share was not good; but comments from CEO Phil Clarke about recovery were encouraging. Shares were up 1%.  Market share is as follows – Tesco 29.8%, ASDA 17.2%, Sainsbury 16.8%, Morrison 11.5%, Coop 6.3%, Waitrose 4.8%, Aldi 3.9%, Lidl 3% – so dismiss Tesco with contempt would be folly!

The ECB and the MPC post their findings today.  No change is expected from neither Central Bank; nor little in the way of change in their respective stimulus packages. 6 banks were fine €1.7 billion for LIBOR manipulation plus RP Martin & Co – RBS, UBS, Deutsche Bank, Societe Generale and JP Morgan Chase.

Asia saw most of its indices lower today looking for guidance from US Payroll data.  Mulberry disappointed with its results today but AG Barr, recently a target of Britvic, pleased their acolytes.


These are David Buik’s personal views

Twitter – @truemagic68

David Buik

Market Commentator

+44 (0)20 7886 2775

Panmure Gordon & Co
One New Change | London | EC4M 9AF | United Kingdom – The information in this e-mail and any attachments is confidential