TODAY’S FAYRE

“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

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