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
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