“A little Learning is a dang’rous Thing;
Drink deep, or taste not the Pierian Spring:
There shallow Draughts intoxicate the Brain,
And drinking largely sobers us again.
Fir’d at first Sight with what the Muse imparts,
In fearless Youth we tempt the Heights of Arts,
While from the bounded Level of our Mind,
Short Views we take, nor see the lengths behind,
But more advanc’d, behold with strange Surprize
New, distant Scenes of endless Science rise!
So pleas’d at first, the towring Alps we try,
Mount o’er the Vales, and seem to tread the Sky;
Th’ Eternal Snows appear already past,
And the first Clouds and Mountains seem the last:
But those attain’d, we tremble to survey
The growing Labours of the lengthen’d Way,
Th’ increasing Prospect tires our wandering Eyes,
Hills peep o’er Hills, and Alps on Alps arise!”

Alexander Pope – poet & author – 1688-1744

The controversial chairman of the ECB, Giles Clarke, who is unlikely to ever get a first-class honours degree in interpersonal skills, has enjoyed ruffling the feathers of the ICC, in suggesting a radical overhaul of its financial security. I will take his word for it that it was justified.

However for Mr Clarke to have a pop at Shane Warne’s cricket commentary on Sky about England’s decision to ‘bin’ Kevin Pietersen, in telling the World’s greatest spinner that he was biased in favour of Australia and that his comments about Pietersen were irrelevant is an absolute insult and grossly discourteous. Mr Warne is better qualified to have an opinion on players’ ability and contribution than Mr Clarke will have in a month of Sundays.

Though the Ralph Fiennes directed film ‘The Invisible Woman’ was hugely enjoyable with great performances from Fiennes, Felicity Jones, Kristin Scott-Thomas, Tom Hollander and Joanna Scanlon all of whom made their mark in this historical adaptation of Charles Dickens complicated life, the script seemed rather glib and shallow. Also Dickens only came across as a literary and thespian genius, who was utterly selfish and self-indulgent. It should be remembered that he was a robust and radical critic of the appalling conditions suffered by the poor and under-privileged during the evolution of the industrial revolution. His concerns were of course often expressed in some of his novels.

In the opening scene if that was the beach at Margate then I am the man in the moon. I venture to suggest that was Lady Anne Beach at Holkham in Norfolk, near Brancaster.

Yesterday we heard Scotland’s senior shop steward, Alex Salmond, filling his SNP supporters full of bile and vitriol, blaming Westminster’s politicians for using bullying tactics. Going back to basics it is as well to remember that Scotland is about 80% blue collar worker of whom a large group think no further than xenophobic hatred of the English. The persuasive powers of the SNP and Scottish Socialists will play a crucial role because what Cameron represents is anathema and revives memories of Thatcher – sadly still a figure of revulsion north of Hadrian’s wall. Many are becoming increasingly worried that the unthinkable is slowly becoming a realistic possibility.

It was President’s Day in the US yesterday – one of their copious 15 public holidays in their calendar; so there was no divine guidance on offer during Europe’s session. The FTSE 100, despite a slew of rather suspect US economic data last week, decided to select another gear in adding 1.15% at 6736. Of course the ISA season is gathering momentum and this tax free concession has to be dealt with by the end of March. However the euphoria and enthusiasm to buy stocks and for markets to crack on personally escapes me. Equities remain the only decent asset class but valuations are being challenged in places. However it is fair to say that there are huge order books for IPOS and ‘placings’ by small and medium sized companies in March and many large IPOS – banks and retail operation in particular will also manifest themselves in the spring. So the appetite for sound long-term investments is indisputably there!

This morning Tokyo’s NIKKEI was given a fabulous boot injection by Abe-san who opened the stimulus doors and dealt with credit issues sending Japan’s premier index up by a monster amount – 3.3%. Just buying time in my opinion, but the market loves Dr Abe’s medicine. As for today there were decent result from BHP, Drax and an acceptable effort from IHG. Essar’s trading statement was disappointing and the shares fell a further 1.8% to 66.9p. John Wood posted great numbers and the shares were up 4%. I will leave detailed comment on these stocks to the more erudite in the community. Insurance companies will be very much in the front line for the next 3 months. What of the cost of these awful floods – £425m up until 23rd December? The total cost now is loosely calculated at about £1.2 billion, which could mean between 9-12% cut in profits for Aviva, RSA and Direct Line.

It is UK inflation day today. I suspect, inflation which has dropped from 2.9% last June to 2% in December will remain at 2% at 9.30am though I think it to fall to 1.9% next month. Why? Oil prices have come down and surprisingly food prices have only been increasing at 1.5% in recent months. For reasons quite difficult to comprehend house prices have been kept out of the inflation calculations and the threat of any bubble is now the responsibility of the Financial Policy Committee, which apparently has plenty in its armour to blunt house prices. One supposes higher deposits and a smaller multiplier on salary being amongst the tools in the box. This news on inflation is a two edged sword. It’s great for low interest rates, BUT deflation, threatened in the EU, must not rear its ugly head!

Looking at the threat of this awful EU transaction tax which could cost the UK as much as £3.6 billion in terms of savings and the damage done to bond markets, equities and pension funds and to Germany, it maybe as much as €150 billion, the UK government, regardless of the Treaty of Lisbon, should have no part of it. It is UTTER MADNESS. A banking levy, such as introduced by George Osborne should be introduced instead of this debilitating tax, which could wreck the service industry and damage these countries economy irreparably. A levy can easily be measured and quantified.

It will be great when Barclays no longer attracts bad headlines. Today we heard news that post the 2012 admission by Barclays to malpractices in LIBOR, where a fine of £294 million was paid, made public by Bob Diamond, 3 employees out of allegedly 100 interviewed will shortly be charged with manipulating LIBOR. Let’s hope that these indictments are heard at the instigation of the SFO and not the DOJ in the US, whom we hear also want a chat on the subject. I suspect this story will run like “Eastenders.” Also other indictments are likely to pop up in the future within other banks.

We hear that Sir David Walker will be replaced as chairman of Barclays next year and that Sir Mike Rake will also be relieved from being Deputy Chairman. Everyone speaks highly of Sir David as a member of the human race. He was a necessary political appointment to restore the ‘Bald Eagle’s’ reputation. However he has run his race and were he to stay any longer he could be seen as a chairman lacking inspiration. Barclays needs a dynamic chairman, who can not only oversee the adoption of the bank’s policy, but can also introduce business and be an proactive spokesman. I cannot remember the last time Sir David made profound and regular comments. It would be great if someone like Bill Winters could be appointed or a great communicator such as Sir Terry Leahy, who understands the retail business. Sir Nigel Rudd wouldn’t be a shabby idea and nor would Lord Paul Myners, if he could be released by the Co-op!

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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