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
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