Monthly Archives: January 2014

MARKET UPDATE – IS THERE ONE?

Panmure Gordon colleague Keith Baird reminded me of ex-US Treasury Secretary’s comment – US Dollar? – Our currency! – Your problem! – Surely that says it all!

Tapering – uncertainty – emerging countries currency furore – extreme volatility – no volumes – What a toxic cocktail! – the bane of every investor’s life! – We have it in spades here! It is as dead as a witch’s tit here in terms of activity! Mary Magdalene would not have felt uncomfortable in this environment in beautiful down town EC2/3/4/14!

Just to give you an idea of the solemnity of the market. GREATLAND announced some positive drilling news – no business – stock down 20% at the stroke of a pen! – crazy! EGDON RESOURCES – a recent market favourite – no news – down 8% this morning at 29.25p

The heavy duty brigade will have been very frustrated with the market’s machinations this morning. The FED’S Janet Yellen rules OK and emerging countries can go whistle for the time being!

At 11.35am the FTSE 100 is down 14 points at 6529. FTSE 250 is down 0.25%. US futures look methodically positive – not exciting – +0.2%. Not even Facebook’s decent numbers on the back of increased mobile advertising last night could stir the market out of its slumber. Diageo’s efforts did not pass muster – down 6.5%. 888 Holdings is off its best levels and is up 0.3%. BskyB was up over 4% at the opening but is now just 3.2% to the good. Good numbers but BT’s results and plans due tomorrow will provide evidence of comparative progress. The Pru was easier by 2.5%. Most insurance companies will be under the cosh. The weather claims will not have helped. Better news from Royal Dutch Shell has seen both A&B shares 2.5% better. Hats off to Panmure’s Alex de Groote! He thought Trinity Mirror was a snip – up 8% this morning. He also likes DMGT with Zoopla not hindering progress – up 0.6%
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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TODAY’S FAYRE – 30th January 2014 – TAPERING, CARNEY, MARKETS

“I visited the place where we last met.
Nothing was changed, the gardens were well-tended,
The fountains sprayed their usual steady jet;
There was no sign that anything had ended
And nothing to instruct me to forget.

The thoughtless birds that shook out of the trees,
Singing an ecstasy I could not share,
Played cunning in my thoughts. Surely in these
Pleasures there could not be a pain to bear
Or any discord shake the level breeze.

It was because the place was just the same
That made your absence seem a savage force,
For under all the gentleness there came
An earthquake tremor: Fountain, birds and grass
Were shaken by my thinking of your name.”

Elizabeth Jennings – poet – 1926-2001

So its 3 babies sired by Hugh Grant to 3 different fillies and no marriage! I see! And he has the effrontery to hold himself up as a paragon of ethical virtue, slamming the press and receiving more attention than even the press’s defence has been allowed! – He jests!

There is certainly plenty of dough in the South of England! It’s standing room only in first class on the ‘Haslemere flyer’ and there is a 9-year waiting list to get into the No: 1 station car park. 5 years ago the waiting time was 6 months!

In all honesty, I think those market protagonists, who thought that Ben Bernanke or the majority of the FED would have mercy on emerging countries’ economies and would thus be prepared to hold back on further tapering, deluded themselves, despite it being Bernanke’s valedictory meeting. The FOMC voted UNANIMOUSLY to taper another $10 billion off QE, leaving only a $65 billion facility. There was no mention by Bernanke of emerging markets coming under the cosh. He might well have said – “Who are they?” The US remains isolationist and seems ambivalent to the world’s concerns unless it affects them pragmatically. Why would they change the habit of a lifetime?

We can only hope that the perception that Janet Yellen, who becomes FED chairman on 1st February, has a more dovish approach to global monetary policy. Maybe she will be prepared to reconsider the US’s stance towards tapering if emerging countries threatening to fall off a cliff. Certainly, after a very brief rally, the punters went in the ring, metaphorically ripping the skin off the face of the Lira, the Rand, the Peso et all! It was not a pretty sight with images of a potential Passchendaele styled rout! We have now entered uncharted waters and the level of volatility in the next few months should come as no surprise. Markets don’t do uncertainty!

Yesterday the Street of Dreams was finally underwhelmed by the introduction of further tapering. After the bell all three main indices had fallen by just over 1%. We have now seen nearly 6% off the DOW so far this month. 77% of companies from the S&P 500 have so far reported. Profits are up by an average of 6.6% and sales by a parsimonious 2.6%. Boeing sales did not pass muster – down 5.3%, Shares in Yahoo! despite good profits were tonked! – Sales were light – -7.8%. AT&T are still rumoured to be ruminating over Vodafone – -1.2%. Good news from Dow Chemicals and DuPont saw their stock rise 3.9% and 1.9% respectively.

This morning the tapering news brought nothing to Asia’s party and more to the point nor did China’s PMI number which fell below 50 for the first time in 6 months to 49.5. It is Chinese New Year next week from the Snake to the Horse. So today ahead of holidays next week markets in Shanghai and Hong Kong were sepulchral and easier at the close – ASX -0.8%, Shanghai Composite -0.48%, Hang Seng -0.82% and the NIKKEI -2.45%. There is still massive concern about the threat of a Chinese credit crisis. That won’t go way ain a great hurry.

The overly ebullient and cocky Alex Salmond and his band of merry men and women would not have expected the nuances from a speech made by a civil servant – though a very serious one in the name of Governor Mark Carney, who visited Scotland yesterday – to tell them how it was if they gained independence – well, how it might be. If Scotland leaves the union but wants to keep the Pound, there are clear risks. Scotland would undoubtedly have to surrender some sovereignty and the same would apply if it joined the Euro. Mr Carney was charm personified! I wish he had said – Independence? So be it! No Sterling; no access to gilt market and no BOE regulation! You want out! You have it! Of course, he can’t say that! As time goes by I hope good sense prevails and that Scotland remains in the Union, where it belongs. Scotland has been warned unambiguously.

That ‘fisheries’ man – Michel Barnier – reincarnated as EU Commissioner for regulation is determined to step on UK banking corns, insisting that by 2017 proprietary trading in banks in London will be banned, as it will in the EU. Apparently Germany, France (surprisingly) and UK want this initiative watered down. We need George Osborne to put his hob-nailed boots on and boot the UK out of any binding regulatory agreement. This obsession with EU regulation has to stop; if not, the City will bury itself as the major global financial centre.

This morning the FTSE eased by a further 29 points at 6514 at 9.15am. Confidence is shot to ribbons and until there is further clarification on emerging markets, the level of uncertainty will dictate the market’s reluctance to take on further risk. Diageo’s numbers disappointed -4%. BSKYB saw revenues up by 6.3% to £3.76 billion with record SKY-HD subscribers. The dividend has been increased by 9%. In isolation Panmure’s Alex de Groote thinks the headline numbers are good. However BT, which posts numbers tomorrow, has yet to put its buying boots on. So competition will be fierce and BSKYB (+3%) will have to invest heavily to stay up with the pace on football and sport in general. The long-term issue is that the cost to the consumer from both camps will increase. How much can the subscriber eventually afford? Alex also pointed out that Trinity Mirror may have been over-trashed and this might be a buying opportunity. He was quite sweet on DMGT as well, as its investment in Zoopla may eventually prove to be a decent little ‘Arfur Daley!’ 888 Holdings posted good numbers with Panmure remaining supportive.

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
http://www.panmure.com – 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.

4th QUATER UK GDP – WELL DONE!

At 9.30am this morning 4th quarter GDP data for the UK was posted accompanied by confirmation that UK GDP for 2013 grew at 1.9%, way above expectations at the start of the year (1%) at 1.9%. The UK economy grew by 0.7% for the quarter – just a smidgen below expectations (0.8%), but it was probably down to the poor weather, which affected construction, which is often a cyclical sector. Construction fell by 0.3%. However the service sector performed with aplomb – +0.8% which included hotels and restaurants up just 0.5% and transport a parsimonious 0.2%. However within that figure business and financial services were on fire and grew in total by 1.2%.

Folks, overall this was more than just a very credible effort. The economy is more balanced than it has been a decade ago, when the UK relied almost exclusively on the service sector. The growth was much wider spread. 10 years ago we ignored manufacturing output and industrial production, which was criminal. Just look what has been achieved by Honda in Swindon and Nissan in Sunderland. Now the UK realises that there is a great big world to trade with, out there including Europe, which is currently hanging in rags. China, Africa, South America and our beloved Commonwealth offer brilliant opportunities. The efforts made by the PM, the Chancellor Vince Cable, Michael Fallon, Lord Green and more recently Lord Livingstone, an inspired appointment as BIS and FCO minister, to sell UK PLC in the last couple of years is beginning to pay handsome dividends.

Providing the property market does not choose to be a bubble and I don’t think it will as the BOE is on the case and the real issues are in London, where most of the transactions at the higher end of the market are cash based and not first-time-buyer driven. Unemployment has fallen to 7.1% from its high of just above 8% in 2009.

It is as well to reflect that, after the banking and credit crisis in 2009 GDP came in at minus 5.2%. In 2010 it was 1.7%, in 2011 1.1% and in 2012 0.1%. It is just too easy to be critical and say that we are still 1.3% below where we were before the crisis. In the same breath, everyone opposed to the Government’s austerity programme and the tough cuts in public expenditure, are in denial and they refuse to admit that GDP peaked on the back of what was unequivocally unsustainable credit! Despite dire numbers from RBS, banks are in much better shape than they were. Regulation is far tighter. If, and it is a big ask, Europe fails to fall in to the vortex of economic despair, 2.4% UK GDP could be on the cards in 2014. It would be great if the country at large could just acknowledge what has been achieved and that it is a great start. Those who have suffered and put their shoulder to the wheel deserve a massive pat on the back for their efforts!

The gap between rich and poor is still totally unacceptable. Therefore providing incentive to those entrepreneurs, who will back their own judgement, is fundamental to creating jobs and wealth.

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
http://www.panmure.com – 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 – Tuesday 28th January 2014

“When we two parted
In silence and tears,
Half broken-hearted
To sever for years,
Pale grew thy cheek and cold,
Colder thy kiss;
Truly that hour foretold
Sorrow to this.

The dew of the morning
Sunk chill on my brow–
It felt like the warning
Of what I feel now.
Thy vows are all broken,
And light is thy fame:
I hear thy name spoken,
And share in its shame.

They name thee before me,
A knell to mine ear;
A shudder comes o’er me–
Why wert thou so dear?
They know not I knew thee,
Who knew thee too well:
Lond, long shall I rue thee,
Too deeply to tell.

I secret we met–
I silence I grieve,
That thy heart could forget,
Thy spirit deceive.
If I should meet thee
After long years,
How should I greet thee?
With silence and tears.

George Gordon, Lord Byron – poet – 1788-1824

In recent days Ed Miliband, Ed Balls and Chuka Umunna have trotted out their economic gobbledygook with cheap, though eye-catching political shots, on tax and banks, clearly endorsing the perception that they are not fit to govern this country. Apparently they have learnt nothing from the financial meltdown that followed in Labour’s wake 5 years ago, rarely showing even a modicum of contrition. Perhaps I am not always the most objective person in the world, but Mr Balls comes across as financially innumerate and illiterate. I know he’s not, but his policies, if only the naïve electorate knew it, have a scorpion’s sting in their tail. Anyway the 5-6% consistent Labour lead in the polls has started to narrow. YouGov has Labour in the lead 37% to 35% in today’s poll for The Sun. I am beginning to believe there is a financial God up there!

The PM, Dr Vince Cable, Michael Fallon, Lord Livingstone have been out there, making hay whilst the sun shines, strutting their Gospel according to the Coalition on business development, ahead of today’s 4th quarter GDP data, which should show that the UK’s economy grew by 0.8% and by 1.9% in 2013. The OBR and the IMF believe that the UK will grow by 2.4%, if Europe does not drag ‘Old Blighty’ down in to the vortex of despair with its collective incompetence. Huge amounts of ‘Red Tape’ and bureaucracy have been cut in 3 years and let’s hope that Lord Livingstone’s infectious enthusiasm helps a concerted export driven recovery.

In the past 2 weeks it has been all about the realisation that emerging markets are struggling with their currencies coming under extreme duress since the announcement of tapering by the US Fed starting this month. Access to cheap funding through Dollars has now disappeared, leaving the likes of Argentina, Turkey and Indonesia very vulnerable. BGC’s Mike Ingram put the situation very succinctly yesterday – “The implied increase in funding costs has caused capital flight in a number of vulnerable EM economies, hammering bonds and currencies. Many countries feel obliged to raise rates in response, further slowing economic growth.” It is also fair to state that many global indices seem fully valued with the quality 4th quarter earning failing to set the investors’ hearts a flutter!

A huge amount of overseas capital has been withdrawn from many emerging countries, with some fairly substantial profits banked and losses as well, for those late in on the scene. The process of globalisation between mature and emerging nations may have slowed, or even rolled back in some respects over the last few years. But the linkages through trade, financial flows and asset pricing remain strong and are likely to strengthen anew in the years ahead. However whilst this uncomfortable situation prevails, it would be folly to think that mature equity markets will not suffer. Yesterday was another ‘Bad Day at Black Rock’ with US markets falling between 0.5% and 1.1%. I am normally quite a sporting supporter of the bonus system. However JP Morgan’s Jamie Dimon taking $20 million out of the ring considering JPM paid out over $10 billion in fines and losses for misdemeanours, seemed a little rich for even my blood!

After hours Apple posted results for 1st quarter. They did not pass muster, despite revenues of $57 billion and a profit of $13 billion. 51 million units were sold but the sale of iPhones was disappointing. Over the year there was a 6.7% jump in sales. Apple currently sits on a cash pile of $157 billion. Tim Cook must do something about that, even if it is to return some cash to shareholders. The Street of Dreams was underwhelmed by these numbers and larruped the shares – down 9%. Samsung are still hot to trot pus other alternatives like androids.

The FTSE 100 also had a shocker losing 113 points to 6550, with BG Group posting a profits warning, thanks to the fall in US gas prices and trouble with their operation in Egypt. It appears profits will fall to about £1.4 billion. Shareholders vented their spleen, taking BG’s shares lower by nearly 14%. Colonial Investment Trust, owned by the Bank of Montreal, has served notice to take over F&C for £700 million. Vodafone had a bit of a setback yesterday when AT&T surrendered its option to make a bid. The shares were 3.9% lower. Vodafone has pots of cash since pouching £36 billion net from Verizon. Come on Vittorio surely BSKYB would be a good fit! ‘Uncle Ru’ will be reluctant, but have a go! Mobiles and media – let’s dance! ARM Holdings announced that Stuart Chambers, chairman of Rexam, will replace Sir John Buchanan as ARM’s next chairman.

Finally we can’t let the despairing news about RBS go under the radar without comment. A loss for the year of £8 billion expected, exacerbated by extra provisions totalling £3.1 billion – £1.9 billion for US issues over mortgages – £500 million for swap issues – £465 million for further PPI claims and £200 million legal costs. Many are understandably frustrated that these poor numbers keep pouring out. No! This is not Stephen Hester’s fault. He knew the issues. I suspect that he profoundly disagreed with George Osborne about even contemplating selling RBS back to the public, when this complex bank was clearly not in remission. One forgets but the number of times banks, after 2008, adjusted their provisions for bad debts more realistically, were immeasurable. Had the banks written all their provisions down fully at the start of the crisis – i.e. to zero – the world’s banking system would have been irreparable! CEO Ross McEwan thinks that most of the skeletons are out of RBS’S cupboard and that the show is almost back on the road. I think the taxpayer can kiss goodbye to any flotation for another 5 years. No doubt the politicians will have their way and cut this operation to ribbons. Citizens Bank may be sold by way of an IPO in the summer subject to stable conditions for £8 billion. The executive board have waved any bonus but it is folly to think RBS can compete globally without a bonus system.

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
http://www.panmure.com – 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.

MARKET UPDATE – NOTHING TO SHOUT ABOUT EITHER….!

It’s the end of the 3rd week of January and the Christmas holiday is still with us. There are no IPOs – not even small ones to speak of. As I said in my earlier note this will change come March. Even though the quality of the economic data, apart from China is exemplary, However, these indices are looking fully priced; so the market needs something to titillate its taste buds.

Before the Street of Dreams had finishes yawning from the previous evening’s machinations some great Jobless Claim numbers were posted – falling all the time. However US stock futures decided to slip gently in to reverse, indicating that the Standard & Poor’s 500 Index will drop for the first time in three days. Punters were underwhelmed by China’s manufacturing contracting and investors receding appetite for some indifferent corporate earnings.

Alcoa Inc. and Cliffs Natural Resources Inc. slipped at least 1.4%, following European commodity producers lower. EBay Inc. added 1.9% after activist investor Carl Icahn proposed spinning off the company’s PayPal unit. Netflix surged 17% as it projected customer growth that topped analysts’ estimates. Union Pacific Corp. climbed 1.5% as the railroad’s profit beat forecasts. At 3.50pm GMT the DOW was down 160 points, S&P was down 0.7% with the NASDAQ easier by the same amount.

The FTSE 100 saw dire levels of trade. At 3.00pm it was down 50 points at 6775. Fresnillo had a bit of a run on the rails – up 3.3%. M&S was vogue – not sure why but it rallied by 2.4%. Randgold tried to join the party adding 1.3% as did Barclays. Amongst the losers was Pearson. The education& publishing titan’s net restructuring charges amounted to £130m for 2013, comprising £170m expensed and £40m of savings. Including this, EPS would have been just 70p, compared with Investec’s forecast for 72.1p. Pearson is restructuring aggressively for growth though. This is costly and net expenses are higher than we expected

Operating profit totaled £865m before restructuring charges, down from £936m the previous year and the broker’s £890m estimate, due to the accounting impact of the merger of its Penguin division with Random House, as well as lower underlying margins in the North American Higher Education unit. EasyJet has had a brilliant run so profit takers waded in to the ring and left the shares 3.2% light. Admiral also had little to say for itself and was down 2.4%.

Away from London it was interesting to note that Nokia’s sales fell 29% in the last quarter and a few tech geeks were concerned that Facebook’s users could drop by as much as 80% by 2017. There was much binding in the marshes over RBS’s outstanding bonus issue. Should the UKFI defer to the EU by saying no more than 100% or are there mitigating circumstances for a bank that is trying to cut the size of its balance sheet but remain competitive globally.

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
http://www.panmure.com – 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.

TOAY’S FAYRE – Thursday 23rd January 014

“When colour goes home into the eyes,
And lights that shine are shut again,
With dancing girls and sweet birds’ cries
Behind the gateways of the brain;
And that no-place which gave them birth, shall close
The rainbow and the rose: —

Still may Time hold some golden space
Where I’ll unpack that scented store
Of song and flower and sky and face,
And count, and touch, and turn them o’er,
Musing upon them: as a mother, who
Has watched her children all the rich day through,
Sits, quiet-handed, in the fading light,
When children sleep, ere night.”

Rupert Brooke – poet & soldier – 1887-1915

Every time ‘La Cohue’ and that includes me writes Roger Federer off, he rises like the Phoenix from the Ashes. This time he saw Andy Murray off in 4 sets. He is by a country mile my favourite tennis player – full of power, subtlety and versatility and the epitome of the way every sportsman should behave! To me he is an icon! Even though he is 32 years of age, aided and abetted with guidance from his new coach Paul Annacone, who used keep Pete Sampras up to his work, he had just too much in the tank for Murray to cope with yesterday! Could there be another grand-slam in the making?

Talking of greatness, yesterday my wife and I were privileged to see ‘Giselle’, a ballet written to the blissfully melodic music of Adolphe Adam with Natalia Osipova, the Russian prima-ballerina as Giselle and Carlos Acosta as Albrecht at the Royal Opera House. I would not exactly describe myself as a doyen of this kind of artistic presentation, but what a treat it was. In terms of graceful charm coupled unparalleled levels of athleticism for ballet dancers, I have never seen anything like it in my life – Fonteyn & Nureyev, Sibley & Dowell, Makarov & Baryshnikov or more recently Alana Cojocaru & Johan Kobborg – would all have been left gasping. These performances were in a different league! It was a huge privilege to be present.

Mohamed El-Erian Pimco’s CEO and CIO for the last 15 years will be leaving. Bill Gross will remain in situ. Pimco is owned by Allianz. Andrew Balls will step up as a CIO. One must assume that his financial judgement is better than his brother’s!

The growth update by the IMF was wearing thin by the time the Street of Dreams cranked itself up for action yesterday. It was all about the earnings. Of the 86 companies from the S&P to have posted results so far 70% have beaten profit forecast and 65% sales forecast. The trouble is that the percentage increase in profitability is hardly earth shattering – up an average of 6%. Yesterday Northern Trust, eBay and Netflix seemed to please their supporters. However there was some disappointment over the quarterly achievements of Coach -6%, IBM -3.3% on the day, AMD -11% and Motorola easier by 3.9%. Blackberry gained 8.6%, having agreed to dispense with property assets. Today JUNIPER NETWORKS, LOCKHGEED MARTIN, MCDONALD’S, MICROSOFT, STARBUCKS & ALTERA are amongst a slew of companies to post results today.

So it was very much a mixed bag yesterday resulting in the DOW losing 0.25%, though the S&P 500 gained a miniscule 0.06% and the NASDAQ a measurable 0.41%. Again volumes were light. The longer this level of inertia prevails in global stock markets, the more one fears the possibility of a correction, unless the news on the corporate front becomes very positive.

Carl Icahn has joined the board of eBay to see the business can be split or streamlined. VM Ware has made a $1.54 billion bid for Airwatch, whilst Lenovo confirmed that a bid of between $2 and $2.5 billion for IBM’S server operation will be made.

The amount of ‘guff’ written on the vastly improved UK employment data will certainly help unemployment in the rain forests thanks to the amount written by every political and economic hack in the Kingdom. In conclusion no one can be certain of the quality of jobs that have been filled. Also there is a danger that the EU will remain in the sick bay, possibly damaging the speed of our recovery! Making predictions is a dangerous occupational hazard. Yes, of course rates must go up at some time; BUT I would be very surprised if the MPC reacted before May 2015! A precipitated increase could severely damage not only business’ ability to service debt, but also the consumer’s personal balance sheet! Timing is of the essence!

The FTSE 100 lost 7 points yesterday. The session was balls-achingly dull. What is also interesting is that having seen so much IPO activity at the end of 2013, virtually no bank or broker has a deal on the stocks for completion in January or February, though order books for March onwards look healthy – thank goodness!

Asia was bothered by poor Chinese PMI and factory data – the former the worst for 6 months. Consequently most bourses closed below the Plimsoll line – The NIKKEI closed down 0.8%. At lunch the Hang Seng was 1.46% lower and the Shanghai Composite -0.53%. Toyota’s sales for 2013 beat both GM and VW – 9.98 million units. This morning Europe opened in a very slightly negative frame of mind. easyJet posted a trading statement in line with expectations. However the shares have performed brilliantly in recent months so investors took some risk off the table down 2.5%. Pearson slightly disappointed its acolytes and lost 3.5%. AG Barr and the LSE were 0.5% easier. Susan Kilby an investment banker was appointed chairman of Shire Pharma. In the US United Rentals posted great numbers, which should augur well for Ashtead Group, where Panmure reiterate their ‘buy’ recommendation.

The Davos bun fight is under a wet sail. I thought the Daily Mail’s Hugo Duncan came up with the best scoop. Axel Weber, UBS chairman and former head honcho at the Bundesbank believes that the Euro could have been a catastrophic mistake and that it would not surprise him if a few banks failed the forthcoming stress test. Ironically unemployment in Spain went up fractionally from 25.98% to 26.03%. So the Spanish economy is on the mend eh? Oh really. I saw former PM Blair was putting himself about in Davos. Speaking to Bloomberg’s Francine Lacqua TB said “the downside risks for Europe are probably more political than economic!” In the immortal words of Mandy Rice-Davies – “He would say that wouldn’t he” – Deeply wedded to the EU’s cause.

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
http://www.panmure.com – 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.

A POEN & A THOUGHT!

“Flow down, cold rivulet, to the sea,
Thy tribute wave deliver:
No more by thee my steps shall be,
For ever and for ever.

Flow, softly flow, by lawn and lea,
A rivulet then a river:
Nowhere by thee my steps shall be
For ever and for ever.

But here will sigh thine alder tree
And here thine aspen shiver;
And here by thee will hum the bee,
For ever and for ever.

A thousand suns will stream on thee,
A thousand moons will quiver;
But not by thee my steps shall be,
For ever and for ever.”

Alfred, Lord Tennyson – poet – 1809-1892

Considering this country put all its economic eggs in one basket for over a decade – that of the service sector, I think David Cameron has been inspired in appointing Lord Stephen Green and more recently Lord Ian Livingstone as trade and industry ministers. They certainly did not take up these challenges for money. However we are now starting to benefit from the fruits of their labours, rather than be at the ‘beck and call’ of the EU for all of this country’s exports. In the past 3 years the UK’s export trade with China has doubled admittedly from a very low level and in the same period they are up 40% with Russia. At least these two business moguls realise that there is a great big wide-world out there and they both want a piece of the action for UK PLC!

Lord Livingstone spoke with infectious enthusiasm on WUTM and the Today programme this morning about medium sized companies – nearly 9,000 in with a turnover of between £25m and £250m – where this country’s future is dependent upon their growth. His interpersonal skills and business savvy are bound to prove to be more than useful. Here is a man who in a previous life not only brought Freeserve to the market in conjunction with Dixons and more recently as CEO of BT Group, brought this telecom giant back from the dead – share price as low as 70p to 381p!

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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TODAY’S FAYRE – Tuesday 21st January 2014

“Tears, idle tears, I know not what they mean,
Tears from the depth of some divine despair
Rise in the heart, and gather to the eyes,
In looking on the happy Autumn-fields,
And thinking of the days that are no more.

Fresh as the first beam glittering on a sail,
That brings our friends up from the underworld,
Sad as the last which reddens over one
That sinks with all we love below the verge;
So sad, so fresh, the days that are no more.

Ah, sad and strange as in dark summer dawns
The earliest pipe of half-awakened birds
To dying ears, when unto dying eyes
The casement slowly grows a glimmering square;
So sad, so strange, the days that are no more.

Dear as remembered kisses after death,
And sweet as those by hopeless fancy feigned
On lips that are for others; deep as love,
Deep as first love, and wild with all regret;
O Death in Life, the days that are no more.”

Alfred, Lord Tennyson – poet – 1809-1892

You would have thought that a film which included Colin Firth and Nicole Kidman, would have been a major box office draw. In the case of “The Railway Man” this may sadly not be the case. This melodrama based on a true story of atrocities in a Japanese POW camp on the Burma railway, had such a disappointing script, written by award winning Frank Cottrell Boyce. The final half hour, when Firth confronts his sadistic jailor, totally lacks credibility. For such a strong story, a ‘schmaltzy’ Hollywood ending left the audience bereft of any true emotions. If you miss this film, despite excellent performances by Nicole Kidman and the young ‘Lomax’, played by Jeremy Irvine, you will survive!

Mayor Boris Johnson is entitled to disagree with Sir Howard Davies over airways/runways, though perhaps he might have waited to consider Davies’s recommendations. However, I find Sir Howard comments that he is above Boris Johnson’s ‘vulgar abuse’ totally unnecessary rhetoric!

With the Street of Dreams shut yesterday, celebrating Martin Luther King Day, other bourses, especially those in Europe, were having difficulty finding inspiration! Yesterday Asia was not very helpful as traders ruminated over China posting the worst growth rate in recent years, though 7.7% is not exactly shabby. The FTSE 100, after a nebulous start girded up its loins – no thanks to Ed Miliband’s jingoistic claptrap on banking reform, which caused the likes of Barclays and RBS to surrender unnecessary value. “Old Millie” has done a great job trashing two sectors; initially energy/utilities, which have lost at least 10% in value, since he ‘gobbed off’ and now he has vented his spleen on the banks. Despite the infliction of modest carnage, the FTSE has done well to keep its equilibrium, possibly helped yesterday by the IMF, in the wake of the World Bank’s prognosis, indicating that it ready to upgrade UK growth above its peers in Europe. Conversely, investors in DAX stocks were less than enthralled with Deutsche Bank’s quarterly loss of €1.2 billion, which triggered a 5% drop in the share price.

Some mining stocks, having been larruped for much of last year have been making up lost ground in January. Yesterday Fresnillo and Randgold put in stellar performances – much of it probably down to a stronger dollar and the thought that base metal prices will improve this year.

There has been idle gossip that UKFI in conjunction with the Treasury may see the need to speed up the sale of the remaining 32% taxpayers’ stake in Lloyds, valued at approximately £20 billion. In the wake of Miliband’s perceived injudicious comments as far as investors are concerned, punters may be a tad diffident about filling their boots, unless the shares are offered at a really competitive price. How much negative momentum will affect the sale of TSB and Williams & Glyns Bank remains to be seen.

Many suspect that M&A activity and particularly IPOS will play a very considerable role in financial activity this year. Apart from the financial sector and exciting opportunities that may be provided by Saga, Just-Eat and Tomkins, there are a slew of retail operators, many of them owned by private equity that will be looking to cash in – Poundland, Pets at Home, McColl’s, The Card Factory, Fat Face (Sir Stuart Rose supported) and a regurgitated Game Group. It’s quite like old times at the turn of the century. The only difference is investors are more savvy and cynical than there were. They will be looking for bargains.

Royal Mail Group’s Moya Greene’s remuneration, which currently stands at £1.25 million will come under scrutiny if the Government and shareholders feel they are in danger of losing her services. RMG is now a FTSE 100 company and M/S Greene is far from over-paid! For her services, her rewards are somewhat parsimonious! I can hear the howls of anguish across the media! RMG shares have risen from 330p to close to 600p; so there is a strong case for reward, even though RMG’s issue price may have been a snip!
This morning Unilever pleased its acolytes after what amounted to a profits warning in 3rd quarter. In 4th quarter like for like sales were up 4.1% against expectations of 3.8%. Revenues for the year were down 3%. – Shares were up 4% in early trading

Carphone Warehouse reported revenues for the last quarter of 2013 down 6.9% year-on-year to £922m, damaged by fewer stores, negative currency effects and a slower postpaid market. The number of connections sold in the 13 weeks to 28 December fell by 12.7% to 2.360 million. Like-for-like sales edged 0.7% higher from a year ago. The market accepted the explanation – shares up 1.3% in early skirmishes.

Cairn Energy posted a bland though moderately encouraging trading statements. Asia had a decent session, thanks to a fillip provided by the PBOC providing greater liquidity stimulus. The Nikkei closed up 1% and the Shanghai Composite and Hang Seng were up 1% and 0.5% just after lunch. Lenovo has upped its interest in buying IBM’s low-end-server business.

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
http://www.panmure.com – 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 – 20th January 2014 – JUST A FEW THOUGHTS IN PASSING

“Lying apart now, each in a separate bed,
He with a book, keeping the light on late,
She like a girl dreaming of childhood,
All men elsewhere – it is as if they wait
Some new event: the book he holds unread,
Her eyes fixed on the shadows overhead.

Tossed up like flotsam from a former passion,
How cool they lie. They hardly ever touch,
Or if they do it is like a confession
Of having little feeling – or too much.
Chastity faces them, a destination
For which their whole lives were a preparation.

Strangely apart, yet strangely close together,
Silence between them like a thread to hold
And not wind in. And time itself’s a feather
Touching them gently. Do they know they’re old,
These two who are my father and mother
Whose fire from which I came, has now grown cold?”

Elizabeth Jennings – poet – 1830-1894

Anyone who knew Komla Dumor, the Ghanaian BBC broadcaster will be crestfallen to hear of his death from a heart attack at the tender age of 41. He was a brilliant broadcaster as well as being a colossus of a presenter and inquisitor. You could travel the earth for 100 years and you would never find a more delightful, charming and entertaining person. My heart goes out to his wife, family and friends. He was tall, imposing, challenging and never ever stopped smiling – what a tragic loss!

Many will be very sad to hear of the death of Lord Alistair McAlpine, aged only 71 – champagne cheer leader and party chairman for Baroness Thatcher. Some may not have agreed with his politics, but surely he did not deserve the damage inflicted on him by false and damaging allegations of paedophilia, which many say took a huge toll on his life, from which he probably never recovered! I greatly admired the dignified manner he attempted to obtain retribution without excessive litigation or publicity over these false and unsavoury accusations.

So sad, also, to hear of the death of Sir Christopher Chataway – wonderfully successful athlete, broadcaster and politician, at the age of 82. Sir Christopher has always been associated with helping Sir Roger Bannister break the 4 minute mile. He also helped Chris Brasher CBE win his Olympic gold medal for the steeplechase in Melbourne in 1956. He used to trudge up and down Highgate West Hill/Hillway for months on end selflessly in his quest to help his fellow friend and athlete achieve his goal. Chris Brasher was, of course, the pioneer of the London Marathon.

The quaffing of Cristal and Dom Perpignan, a pastime, which many of the 2000 representatives of the good and the great which congregates in Davos annually, enjoy, starts on Wednesday of this week. It is seen as a great opportunity for Presidents, Prime Ministers, finance minister and the captains of industry and commerce to ‘press the flesh’ and ‘shoot the breeze’ over world issues. I am sure some good has come out of these pointless exercises; however it certainly is not obvious. Klaus Schwab, the founder of the WEF has enjoyed the support of delegates since 1971. It would be really great of something meaningful could manifest itself from these glittering parties. With the world in turmoil, it does not look good to be seen partying without a care in the world. It says little for optics and credibility. How about dealing with inequality? Trade imbalances – US’s deficit and China’s/Germany’s surplus could be a place to start.

To start the week there is a compendium of financial nuggets for dealers and analysts to get their teeth in to. Saga, which has 2.7 million mature customers, is considering a £3 billion IPO. Acromas the holding company and CEO Andrew Goodsell suggest that 155k members may be prepared to apply for shares totalling £777,000.

Metro Bank has raised another £400 million capital from the likes of Moore Capital and Fidelity.

The Stelios inspired ‘Just-Eat’ is considering an IPO. Anheuser Busch/InBev intend to buy the Korean company Oriental Brewery for $5.8 billion. China’s growth fell to 7.7%, but came in just above expectations of 7.6%.

This morning it came as no surprise that Deutsche Bank posted a loss of E1.2 billion for the last quarter – though the size of the loss, much of it down to a 31% drop in trading profits in FX and bonds – was greater than expected. There are also substantial litigation claims with the SEC to agree on, not forgetting allegations of FX rigging to come. Restructuring charges are also incomplete. It may be 2015 before Deutsche Bank is out of the woods.

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
http://www.panmure.com – 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 – Sunday 19th January 2014 & ED MILIBAND’S RECKLESS INITIATIVE

“My heart is like a singing bird
Whose nest is in a water’d shoot;
My heart is like an apple-tree
Whose boughs are bent with thick-set fruit;
My heart is like a rainbow shell
That paddles in a halcyon sea;
My heart is gladder than all these,

Raise me a daïs of silk and down;
Hang it with vair and purple dyes;
Carve it in doves and pomegranates,
And peacocks with a hundred eyes;
Work it in gold and silver grapes,
In leaves and silver fleurs-de-lys;
Because the birthday of my life
Is come, my love is come to me.”

Christina Rossetti – poet – 1830-1894

‘The Wolf on Wall Street’ – decadence in liberal supply, light pornography – well perhaps not that soft – Cristal flowing like table water and cocaine as liberal as salt available in the mines of Krakow, was pure escapism. However much those who loath banks and the excesses of financial sector, felt vindicated in watching this highly dramatized twaddle, it is not representative of the excesses on Wall Street in the ‘90s. This stockbroker was ‘Mickey Mouse’ in the grand scheme of activity on the Street of Dreams.

Being a knee-jerk-reaction politician, I suspect Mr Miliband may have been inspired by the hysterical indulgence in this Hollywood extravaganza prior to writing his withering attack on UK banks and the service they provide. From his beautiful mansion in Regent’s Park and despite his left-wing doctrine, he surely had no right to knock £500 million off the value of Lloyds Banking Group and RBS shares? This ill-thought-out and reckless proposal may well precipitate an early sale of a further tranches of Lloyds Banking Group shares maybe as early as March. With Labour 5-9% in the lead at the polls why would any investor be that encouraged to buy shares in Lloyds & RBS, let alone shares in other forthcoming IPOS in TSB, rumoured to be set for June and Williams & Glyns Bank? Also finally these trashed shares in Lloyds and RBS are owned by the taxpayer, partly courtesy of the previous government’s incompetence and pension funds. They are worthy of better treatment. Mr M! You are a liability that I don’t think the UK can afford to have as Prime Minister.

Hilary Mantel has written two brilliant historical novels in the recent times – “Wolf Hall” and “Bring up the Bodies” – both won Booker prizes. They have currently been dramatised for the theatre at Stratford-upon-Avon to much significant acclaim. We can forgive M/S Mantel’s socialist leanings; it’s a free and almost democratic society we live in. However is there any need for her to write a new visceral novel “The Assassination of Margaret Thatcher” when the former PM has not even been laid to rest for a year? – Tasteless!

Share valuations and the quality of 4th quarter results were beginning to gnaw away at investors’ resolve. Was the S&P 500 P/E ratio in the US becoming a little rich at 15.6 times earnings with profits from the 52 companies that have already reported only increasing by an average of 6%? Yes, 62% beat profit expectations and 63% revenue expectations. This is far from a spectacular achievement. Yes the World Bank had increased its global growth forecast from 2.6% to 3.2% for 2014; yes industrial production in the US rose for the 5th month running by 0.3% plus a revision up to 1% in November, but investors were wholly unconvinced..

Last week earnings from the Street of Dreams were dominated by the banks, with only American Express (+5%) and Morgan Stanley (+4%) excelling themselves. Citi and CSX lost 4.4%. BONY eased by 2.9%, Intel surrendered 3%, as did GE. Best Buy had a horror story losing 35% of its value after an unsatisfactory sales trading statement over the holiday period. JC Penney got trolleyed losing 11%. Friday’s bright note came from Visa – up 5%.

Last week the DOW eased by 0.1% and the S&P 500 by 0.2%. The NASDAQ added 1% with Apple putting in a decent performance. The FTSE 100 added 1.12%, European stocks 1.8%, though the NIKKEI went in to reverse easing by 1.12%%, thanks to the Yen remaining too strong until the end of the week. Bond yields continued to drift with little sign of interest rates being hiked in the immediate future.

Here in Old Blighty Retail Sales over the holiday period were ebullient – 2.6% up in December against expectations of +0.4%. Over the Christmas week they were up 5.3% on last year. Ocado, the outstanding share of 2013 suffered a downgrade from Nomura on margin and future sale concerns – down 3.5%. There was a great effort from Burberry and commendable performances from Dixons, Halfords and Home Retail. Shell told the market that results for the last quarter would be sharply down with its ‘B’ shares suffering the most losing 3.5% on Thursday. Glencore added 3.3% leading many mining stocks higher. The bookmakers suffered on the threat of legislation on slot machines – William Hill down 3% and Ladbrokes -5%. Next week the following post updates – Monday – AFRICAN BARRICK GOLD, Tuesday – UNILEVER, CAIRN ENERGY (TS), CARPHONE WAREHOUSE (TS) – Wednesday – BHP BILITON (TS), LAND SECURITIES (TS), SAGE GROUP (TS), JD WETHERSPOON (TS), WH SMITH (TS), Thursday – AG BARR (TS), EASYJET (TS), LSE (TS), PEARSON (TS), PETROPAVLOVSK.

M&A activity continues to select another gear. There was much talk about Charter Comms $37 billion bid for Time Warner, Suntory’s $16 billion acquisition of Beam and Google snaffling up Nest for 43.2 billion. Activity is picking up in China with New Valve making a brave showing.

The IPO of Orange and T-Mobile, possibly valued at £10 billion may be postponed until 4G is readily available, which could enhance the value of the company. The Sunday Times tells us that BskyB is in strategic talks with Vodafone to stop BT’s broadband drive. Tesco is putting Mothercare under close scrutiny to see if purchasing this children’s outfitters has any synergy with their existing business. Blackstone and PAI may be looking to unload United Biscuits owners of Jaffa Cakes, McVitie’s etc in a £2 billion sale later in the year. The Sunday Telegraph tells us that L&G have warned the government that the ‘Help to Buy Scheme’ is fraught with dangers, fuelling prices of houses. This insurance titan may announce plans to build 5 new towns in the UK over the next decade.

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
http://www.panmure.com – 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.