TODAY’S FAYRE – Tuesday 11th February 2014

“It is summer, and we are in a house
That is not ours, sitting at a table
Enjoying minutes of a rented silence,
The upstairs people gone. The pigeons lull
To sleep the under-tens and invalids,
The tree shakes out its shadows to the grass,
The roses rove through the wilds of my neglect.
Our lives flap, and we have no hope of better
Happiness than this, not much to show for love
Than how we are, or how this evening is,
Unpeopled, silent, and where we are alive
In a domestic love, seemingly alone,
All other lives worn down to trees and sunlight,
Looking forward to a visit from the cat.”

Douglas Dunn – poet – 1912-1991

When Darren Bent headed the equaliser for Fulham in the 94th minute to salvage an undeserved draw against Man Utd, I had to smile wryly, if not a little embarrassed. Fulham defended resolutely against a wave of red shirts, which came with seismic proportions at the lanky 6 foot 7 inches tall Dan Burn and the indefatigable Johnny Haitinga, recently signed from Everton, at the heart of the defence, for most of the 94 minutes – no room for Brede Hangeland! Manchester United were just too predictable. However Fulham may well have gained a lucky point, but playing in that manner, without craft or creative skill for the rest of the season, will see the Cottagers relegated. It will be interesting to see how the ‘whites’ get on against Liverpool at home of Wednesday – Suarez, Gerrard ET all! Though Uncle Bob Crow may cause the game to be postponed!

“There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.” -John Kenneth Galbraith

I read with interest and alarm that Sir Richard Lambert, the chairman of the Banking Standards & Ethics Committee is insistent that his colleagues are not professional bankers – conflict of interest and all that malarkey. This committee, before it even meets, is a total waste of time. We already have the Vickers ICB, the FCA, the Bank of England, The Parliamentary Banking Standards Committee, the Treasury Select Committee, the Parliamentary Banking Standards Committee, the Treasury Select Committee and M Barnier’s EU regulatory body – all with their respective noses in the trough of banking behaviour! We do not need another! If those revered bodies cannot sort out the ethics and morals of bank employees, then God help us. This is not a stain on Sir Richard Lambert’s exemplary character. If he brings something to the banking party, put him on an existing committee! The fact that bankers, understandably, would not be welcome on his committee ventures to suggest that the banks will be reluctant to pay for their services. I am sure Sir Richard has the full backing of the BOE/FCA and many of the major banks’ officials; let’s face it, it’s in their interest to be seen to be cleaning their act up! A trade association, I get! Another quango is just more money, just watering down the authority of the existing committees.

And so to the eagerly awaited Barclays results, whose headlines were released yesterday due to that ‘low-life’ individual, who sold customer data in to unscrupulous hands, which may have included Barclays’ results. Anyway reams will have been written on these numbers by more erudite people than me. However to say the bonus pool increased by 10% to £2.38 billion won’t have gone down well. BUT New York employees would have benefitted more than most. Total compensation for the bank is down 1% to just over £9 billion. Everyone should focus on the fact that bonuses are an idiosyncratic fact of life that irritates millions, benefits a few, but necessary to remain globally competitive. Also they are mainly paid in recoverable share incentive schemes.

With Barclays looking to cut back its balance sheet on investment banking activities by perhaps as much as $150 billion to placate the authorities, this policy may trigger redundancies of around 10,000 in the next few years. We must hope that it this action does not adversely affect Barclays’ bottom line. Tier One capital came in at 9.3%. For comfort’s sake I hope it breaches 10% before too long. The pre-tax profit was down 32% and investment banking was down 9%.

Yesterday the Street of Dreams had a rather nondescript session with the DOW & S&P 500 closing just above the Plimsoll line with the NASDAQ 0.54% to the good. The mood in Asia turned very positive with the Chinese New Year receding in importance. The ASX closed up 0.68%, the Shanghai Composite up 0.84%, the Hang Seng +1.78% and the NIKKEI +1.77%. This rally gave some impetus to the FTSE 100 this morning gaining 53 points at 6641 at 9.30am. Miners, Prudential and Sports Direct led the charge. Barclays lost 1.8% after investors finished having the drain sup post their results. Results were posted also for Dunelm, Thos Cook – what a great job Harriet Green has done – and a decent production update from Glencore/Xstrata. Bellway and C&W also threw their ‘two-penny’s worth’ in to the pot. Panmure reiterated buy recommendations for McBride, Filtronics, WANdisco, and Britvic.

Politicians should heed the warning made by the CBI over its concern that inflammatory rhetoric by those parties aggressively electioneering ahead of 2015 election could seriously damage the desperately needed investment programme to boost the recovery. At present another coalition – maybe Labour led – looks a likely outcome. Though the CBI never said as much, I am not shy in interpreting what was implied. Any vitriolic policies from the likes of Balls, Miliband, Umunna and Reeves are unhelpful.

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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