Monthly Archives: March 2014

TODAY’S FAYRE – Sunday 30th March 2014

TODAY’S FAYRE – Sunday 30th March 2014

“When I was born, you waited
behind a pile of linen in the nursery,
and when we were alone, you lay down
on top of me, pressing
the bile of desolation into every pore.

And from that day on
everything under the sun and moon
made me sad — even the yellow
wooden beads that slid and spun
along a spindle on my crib.

You taught me to exist without gratitude.
You ruined my manners toward God:
“We’re here simply to wait for death;
the pleasures of earth are overrated.”

I only appeared to belong to my mother,
to live among blocks and cotton undershirts
with snaps; among red tin lunch boxes
and report cards in ugly brown slipcases.
I was already yours — the anti-urge,
the mutilator of souls.”

Jane Kenyon – poet – 1947 –

I know I have been a lonely, uninspiring, disconsolate and irritating voice in the wilderness, complaining about the lack of quality diplomacy in finding any kind of meaningful resolution to this international spat in Ukraine and the Crimea. So if Putin has called Obama to find that key to a solution, let’s hope the rather arrogant President Obama responds with some kind of token olive branch! It would make a pleasant change. Oh and by the way sending Secretary of State Kerry to negotiate is not an adequate response. The world wants the engine drivers to deal with the problem; not their oily rags! It would be fantastic if the world could see just a tad more from President Obama’s Presidency than just being a brilliant orator. To date there is little to eulogise over his dynasty. Talk about flatter to deceive.

I am not sure I really want to read about the orderly dismantling of Gwyneth Paltrow’s marriage to Chris Martin. That is a matter for their lawyers, children, family and her publicists. Though Chris Martin certainly maintains his status as an ‘A’ listed pop star, I fear M/S Paltrow may have drifted down in to the ‘B’ category of Hollywood legends, however concerned she may be about maintaining her status in the higher echelons of ‘celluloid society!’

“Still one thing more, fellow-citizens – a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.” – Thomas Jefferson – 3rd President of USA – 1743-1826

Last week saw a choppy rudderless session in global stock markets, created by an environment of uncertainty – a touch of the ‘good, the bad and the ugly!’ The Good came in the form of possible extra stimulus packages to re-ignite the flagging Chinese economy, some stellar retail numbers in the UK (+1.7% for February and Y/O/Y +3.7%, though some of this may have come at the expense of a drop in savings) and benign UK inflation data (1.7%). There was also a ground swell of opinion that the ECB may have to ‘digitum extractum’ next week, to save the EU from the threat of deflation. Such initiatives as negative interest rates and the ECB buying in commercial paper was muttered in dispatches. The ‘Bad’ actually was not that awful. It came in form of rudderless diplomatic inertia towards Russia from the West, slightly soft data in the US on housing, factory orders and Consumer Confidence. The ugly was of course the treatment meted out by the government and the FCA on UK insurance companies plus the coalition and opposition parties duplicitous behaviour on energy policy, which looks highly toxic to me with horrible ramifications for the future – like the lights going out by 2016. More of that anon.

The net result on the week was that the S&P 500 lost 0.5%, with Europe responding rather more positively to its plight – FTSE 100 +0.9%, European bourses by an average of 1.9% with Japan’s NIKKEI up by 3.3%. Gold plunged $42 on the week to $1292 an ounce and the Dollar made modest gains – +0.3% against the Euro. Bond yields in most countries dropped a few basis points. On the Street of Dreams King Digital Entertainment had a disastrous debut falling by 16% on the first day’s trading by 16% (about $1 billion in value). Blackberry believes it is in sight of halting terrible losses. The shares fell by only 2% on news that 1.3 million smart phones had been sold in the 4th quarter. Shares in Tesla rallied by 4%. Facebook had a week to forget as its shares fell by nearly 6% on the week. Zynga was up 4% on the week once Steve Cohen of SAC Capital announced a passive stake of 5.3% in the company had been accumulated.

In London the insurance sector took a beating for the second week in succession. The previous week it was the government’s approach to annuities. This week the FCA served notice that it would be having the drains up over the servicing of long-term insurance annuity and pension policies. This put the cat amongst the pigeons. Resolution was down 7%, Aviva by as much as 5% and L&G by 6%, before recovering some poise. Even the mighty ‘Pru’ suffered initially, losing 3%. The threat of an investigation in to 30 million policies was enough to wipe £3 billion in value off the sector’s value. The FCA has a right to investigate as well as to protect the consumer but frankly its initial handling of this initiative was dangerously insensitive. No body, however powerful, has the right to trash a sector’s value without some consultation, prior warning or negotiation. There will probably be repercussions and quite rightly so. Martin Wheatley, the head of the FCA, will be severely under the cosh, with many calling for his head on a charger a la John the Baptist for his overly-zealous aproach.

Most investors felt that House of Fraser would be taking its bow as another IPO later in the year. It now transpires that Sanpower, a Chinese conglomerate is in advanced talks about a takeover. Card Factory, advised by UBS and Morgan Stanley and currently owned by Charterhouse, is expected to go public in an IPO, valuing the company at £700 million.

It was suggested that the Government and Mark Carney were considering some ‘rinky dinks’ as to how the UK’s borrowing and gilt holdings could be accounted for in the future. This level of creative accountancy may require a little more clarification. Morrison’s CEO, Dalton Phillips, felt discretion was the better part of valour in waving his £375k bonus, in the face of 2 profits warnings and a sharp fall in the share price. It was also noticed that Peter Sands and the senior directors at Standard Chartered Bank saw a cut in their bonuses after a less than stellar performance, though they were hardly suffering penury in sharing £9.5 million.

The following companies post results this week – Monday – SKYE PHARMACEUTICAL, Tuesday – ABERDEEN ASSET MANAGEMENT, ICAP, Wednesday ASOS, DOMINO PIZZA, Thursday – BOOKER, THORNTONS, DUNELM and TATE & LYLE, Friday – EASYJET traffic. Watch for Non-Farm Payrolls this coming Friday 4th April 2014. Though Janet Yellen has played down its importance in terms of influencing the tapering of QE, most investors will want to know whether the appalling weather has stunted growth in the US.

These are David Buik 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 – Friday 28th March 2014 – LSE & MAN UTD

TODAY’S FAYRE – Friday 28th March 2014

“NO, no! go not to Lethe, neither twist
Wolf’s-bane, tight-rooted, for its poisonous wine;
Nor suffer thy pale forehead to be kist
By nightshade, ruby grape of Proserpine;
Make not your rosary of yew-berries,
Nor let the beetle, nor the death-moth be
Your mournful Psyche, nor the downy owl
A partner in your sorrow’s mysteries;
For shade to shade will come too drowsily,
And drown the wakeful anguish of the soul.

But when the melancholy fit shall fall
Sudden from heaven like a weeping cloud,
That fosters the droop-headed flowers all,
And hides the green hill in an April shroud;
Then glut thy sorrow on a morning rose,
Or on the rainbow of the salt sand-wave,
Or on the wealth of globèd peonies;
Or if thy mistress some rich anger shows,
Emprison her soft hand, and let her rave,
And feed deep, deep upon her peerless eyes.

She dwells with Beauty—Beauty that must die;
And Joy, whose hand is ever at his lips
Bidding adieu; and aching Pleasure nigh,
Turning to poison while the bee-mouth sips:
Ay, in the very temple of Delight
Veil’d Melancholy has her sovran shrine,
Though seen of none save him whose strenuous tongue
Can burst Joy’s grape against his palate fine;
His soul shall taste the sadness of her might,
And be among her cloudy trophies hung”

John Keats – poet – 1795-1821

Barry Manilow, the eccentric American crooner well known for that song ‘Cocacabana’, is 70 years of age. He comes to London to sing in concert in May at Wembley Stadium. From the advertising boards you can see he has had so much facial plastic surgery that were he to smile naturally his face would shatter! So if you are going to one of his gigs, don’t make him laugh
I salute Alex Hale for his brilliant 116 against Sri Lanka yesterday – the first hundred by an Englishman in a 20/20 international. However special praise should be heaped on Eoin Morgan whose 57 was the backbone of English innings. In recent times he has been shabbily treated by the selectors and the England management. I beseech the next manager to persevere with Morgan. Give h I’m a chance! His name is Morgan. It starts with an ‘M.’ It comes after ‘L’ and I will spell it – M-O-R-G-A-N!

When Xavier Rolet succeeded Dame Clara Furse as CEO of the LSE, many observers felt he had collected a ‘hospital pass’ as the LSE had been surrendering market share for some years thanks to parochial management and its attitude towards global markets. Not only was the LSE expensive to trade on but in the same breath the LSE failed to aggressively take London to rest of the world and the world felt there were other choices apart from London. Considering what happened I think M Rolet has done a remarkable job restoring the LSE’s reputation as a major centre to do business thanks to technology and more to the point by attracting capital raising projects. In the eleven months to the end of February £28 billion had been raised on the LSE – that’s an increase of 91% on the same quarter last year. IN that period IPOS have gone up from 107 to 162.

The surge in IPO business started last autumn with the controversial Royal Mail Group sale. The City knew, at the same time, that much of the £30+ billion gleaned from Vodafone’s sale of its stake in Verizon, would have to be reinvested. Most of the UK IPOS have been very successful this year – Poundland, AO.com, Boohoo and copious SMES. The taxpayer’s holding in Lloyds Banking Group has also dropped about £10 billion of stock on the market. Only Pets at Home has been mildly disappointing.

However there will also be tranches of shares in TSB and Williams & Glyns to look forward to, plus and most important of all the possibility of a slew of bank rights issues by those European banks that may be undercapitalised. So there is plenty of choice and investors should not think the next few months will be plain sailing for these banks or the likes of Just Eat, Saga and House of Fraser. Sentiment needs to remain positive in stock markets. So well done to all for UK Retail Sales +1.7% last month and +3.7% on an annual basis. That kind of data is very helpful. Political jingoism, average 2nd quarter results and economic issues in China would be considered unhelpful. Nor was the US missing marginally on GDP at 2.6% and a decline in Consumer Confidence what the Doctor ordered. However all in all a great effort by the LSE. Let’s hope sentiment and confidence remains positive. SME IPOS and capital raising are going very well as it provides variety and long term investment planning – witness the success of Panmure’s Horizon Discovery Group – up from 180p to 214p – +19% yesterday on the first day of trading.

As we head to the weekend, the media will be full of corporate stories and market movement. I was amused by the front page of the Sun, suggesting that the purchase of Salford City by the Neville Brothers, Giggs, Scholes and Butt might be a precursor to a full scale bid for Manchester United. Man Utd shares went up 5% yesterday and have risen from $14.50 to $17.01 since 19th February, the initial impetus coming from a 24% stake bought by Baron Capital. When asked by Nick Ferrari on LBC this morning what I thought of the rumour, I told him I thought it was drivel. Of course he did not tell me that he had the Editor of the Sun in the studio, reviewing the papers. He told me that there was evidence to back up a supposition of that nature apart the Salford City acquisition.

Unless these “Likely 1992 Lads” are working with Baron Capital, which seems unlikely, I find it hard to fathom, unless the Glazer family, who together with Baron Capital own 80% of the club, feel it is time to cash in on Man Utd, who are unlikely to qualify for the Champions League next year; even the Europa Cup may be beyond their grasp.

Having dismissed the idea with derision, I had a re-think. Man Utd is still heavily in debt – circa £350 million and the Glazers seem to have used Man Utd as a cash cow to service their other business and sporting ventures in Florida to date. May be the idea of a $2 billion price tag on a deal has some appeal. Greater business brains than the “Beckham Boys” such as Jim O’Neil have attempted to mount a bid, but with respect these boys are a far more influential brand. I still find it very unlikely. The Beckham Boys are rich but spend probably a billion of their own or borrowed money on Man Utd? I cannot see it, but what a great story! Having ruminated again, I can’t have that idea at any price. Maybe I am wrong! Time alone will tell!

A peaceful weekend!

These are David Buik 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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Please refer to http://www.panmure.com/emaildisclaimer.aspx for additional important disclaimers and legal information.

TODAY’S FAYRE – 27th March 2014

TODAY’S FAYRE – Thursday 27th March 2014

“Somewhere or other there must surely be
The face not seen, the voice not heard,
The heart that not yet—never yet—ah me!
Made answer to my word.

Somewhere or other, may be near or far;
Past land and sea, clean out of sight;
Beyond the wandering moon, beyond the star
That tracks her night by night.

Somewhere or other, may be far or near;
With just a wall, a hedge, between;
With just the last leaves of the dying year
Fallen on a turf grown green.

Christina Rossetti – poet – 1830-1894

I heard several extracts from Rev Paul Flowers’s interview with Jeremy Paxman on ‘BBC Newsnight’ and I must confess I was singularly underwhelmed. The fact that he was looking for sympathy was bizarre when most sane-minded people would have known that professionally he did not tick any of the boxes of experience required to be chairman of a major bank. What were Len Wardle and Peter Marks thinking of in appointing a ‘doubtful member of the cloth’ as chairman of an aspiring bank with billions of pounds of liabilities and doubtful assets, post the acquisition of Britannia Building Society. Rev Flowers knows as much about banking, as I know about non-ferrous welding! Just because he is a fully-paid up member of the Labour party does not entitle him to hold hugely influential executive posts.

I care not a jot for his shrouded and murky private life. ‘There’s now’t as queer as folk! For Rev Flowers to suggest that Messrs Osborne & Hoban were acting in bad faith in attempting to persuade the Coop to buy the 632 branches of Lloyds Bank is just nonsense. Politically it made sense to encourage a Northern based operation to have a stronger toe-hold in a geographically broader based bank. What the Chancellor and the City Minister did not know was the fact that the Coop was a can of banking worms. Clearly the regulators were not on top of their game 5 years ago. To maintain its 30% stake in the Cooperative Bank the Society is going to have to stump up another £125 million as its share of a £400 million provision for poor advice.

The politicians and great leaders of our world were still ‘pressing the flesh’ in Europe yesterday and raising the political temperature on Putin rather than raising their diplomatic game at the negotiating table. Such is life! Global market operators are becoming wearisome of the jingoistic rhetoric and decided to take some risk off the table. Also markets feel very heavy and the enthusiasm to buy stocks has waned in recent weeks. Global indices seem to have a bad dose of indigestion and seem in need of an enema; maybe the ‘Rennies’ will do!

The Street of Dreams had a forgettable session yesterday with the DOW easing by 0.6%, and the S&P 500 by 0.7%, their performances not being helped by average or slightly sub-standard factory orders for February. The NASDAQ by a very measurable 1.43%, which was down to Facebook losing 6.5% and other top tech spots tottering under the weight of scrutiny. Also enter stage left; King Digital Entertainment’s IPO. This on-line games company came to the market on the back of euphoric interest in ‘Candy Crush Saga’ for $500 million at $22.50 a share – middle of the range of $21-$24, which would have valued the company at $7.2 billion. Sadly the issue price may have made investors sceptical as to whether the appetite to support this company was there. Had the shares been issued at $24, then support for the IPO would have been unequivocal. As it was the shares fell 16% on the first day of trading and the company lost about £1 billion in value. I suppose investors had memories like elephants, bringing Zynga’s inauspicious debut in 2011 back in to play. It would appear that Citigroup failed the FED’s capital stress test and will have to regroup. Bank of America finally agreed to settle $9.5 billion on Fannie Mae and Freddie Mac for losses incurred during the housing crisis over 5 years ago.

The FTSE 100 closed flat yesterday at 6604, though the DAX and the CAC added the best part of an average of 1%. I fear much of that may be surrendered today as sentiment looks temporarily negative. Asia this morning offered little solace, having taken its lead from New York. However many of their bourses had impaired some losses. The ASX closed down 0.50%. The NIKKEI was up 1% as we headed for the close and the Shanghai Composite was up 0.1% with the Hang Seng flat at lunchtime.

The Murdoch Empire indulged itself in a dose of nepotism – almost certainly justified. Rupert made his son Lachlan joint chairman of News Corporation and Fox with James assuming the role of COO of Fox TV and films. Lloyds of London saw its chairman John Nelson post a profit of £3 billion. Great to see after the debacle in 1989, when so many people were financially ruined. Credit goes to David Rowland, Ron Sandler, Hugh Stevenson and others, who gave Lloyds a platform to recover. After the ruinous day for annuities last week, it was good to see L&G win a £3 billion contract to look after Akzo Nobel/ICI pensions. The second tranche of 5.2 billion of Lloyds Bank shares went at a 5% discount at the end of the day. Retail investors were disappointed and an overhang has been created.
There was a warning from the OBR’s economist Stephen Nickell about a house price bubble. He felt house prices across the country would rise by 5% (I suspect a great deal more in London) in the next year. This phenomenon would continue until more houses were built. Governor Carney and the government are more than aware of the possible dangers.

Finally I think SSE’s decision to freeze energy prices will prove folly regardless of the smiles it brings to the politicians and the consumer. It will damage competition with profits falling. The government’s energy policy is questionable, with nothing like enough credence being given to the importance of gas and fracking and too much to nonsense green ideas. I will never win that battle! If the lights went out in 2016, I would not be remotely surprised.

COMPASS, DMGT, THOS COOK and SKYE PHARMCEUTICALS post numbers today.

These are David Buik 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.

Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.
Please refer to http://www.panmure.com/emaildisclaimer.aspx for additional important disclaimers and legal information.

TODAY’S FAYRE – Wednesday 26th March 2014 – LLOYDS BANK DISPOSAL

TODAY’S FAYRE – Tuesday 25th March 2014

“If questioning would make us wise
No eyes would ever gaze in eyes;
If all our tale were told in speech
No mouths would wander each to each.

Were spirits free from mortal mesh
And love not bound in hearts of flesh
No aching breasts would yearn to meet
And find their ecstasy complete.

For who is there that lives and knows
The secret powers by which he grows?
Were knowledge all, what were our need
To thrill and faint and sweetly bleed?

Then seek not, sweet, the “If” and “Why”
I love you now until I die.
For I must love because I live
And life in me is what you give.”

Christopher Brennan – poet –1870-1932

“It is generally agreed that casinos should, in the public interest, be inaccessible and expensive. And perhaps the same is true of Stock Exchanges.” -John Maynard Keynes” – economist – 1883-1946

American economist Hyman Minsky died in 1996, but his theories offer one of the most compelling explanations of the 2008 financial crisis. His key idea is simple enough to be a t-shirt slogan: “Stability is destabilising”. But TUC senior economist Duncan Weldon argues it’s a radical challenge to mainstream economic theory. While the mainstream view has been that markets tend towards equilibrium and the role of banks and finance can largely be ignored, Minsky argued that in the good times the seeds of the next crisis are sown as the financial sector engages in riskier and riskier lending in pursuit of profit. In the aftermath of the financial crisis, this might seem obvious – so why did Minsky die an outsider? What do his ideas say about the response to the 2008 crisis and current policies like Help to Buy? And has mainstream economics done enough to respond to its own failure to predict the crisis and the challenge posed by Minsky’s ideas? – Duncan Weldon – TUC economist – 1983 –
“There was a time when a fool and his money were soon parted, but now it happens to everybody.” -Adlai Stevenson – US Secretary of State – 1900-1965

Marcus Wareing has completely revamped his restaurant at the Berkeley Hotel, calling it just ‘Marcus.’ It reopened on Monday. Without qualification, I had the best lunch I have had in living memory – absolutely superb

RBS, Lloyds, Coop, Kingfisher, US Housing, Inflation, Carnival, Wolseley

Tuesday saw equity markets regain some poise. Markets were grateful to much improved Consumer Confidence data in the US. However Europe and particularly London had already selected another gear with the FTSE 100 adding 84 points at the close to 6604 with the likes of Kingfisher, after good results, +5.9%, SAB Miller +5%, Anglo American +4%, EasyJet +3.6% and Wolseley +3% (encouraging results) leading the charge. Investors have learned to live with Uncle Vlad’s intransigence and the jingoistic response from Obama and his European cohorts. We may even crack on today, as the Street of Dreams started to purr towards the end of the session with the 3 main indices adding an average of 0.3%. However some of the market’s more perceptive people are concerned that equities may have become too range bound and with the P/E ratios looking quite rich in some mature markets against a background of untested 2nd quarter results, a shake-out cannot be ruled out, despite better quality economic data in the US and encouraging CPI data in UK (down to 1.7% in February).

My little missive will be all about the ‘BLACK HORSE’, alias Lloyds Banking Group today! The sale of another 5.4 billion shares in Lloyds at 79.1p, which put back £4.2 billion back in to the taxpayers’ coffers, brought the public’s investment/commitment in Lloyds Banking down from 33% to 25%.

I make no apology for re-stating my original position. Handled deftly and sensitively Lloyds could have been sold back – £21 billion in one job lot! Admittedly it is a great deal of money, but selling this bank piece-meal is a dangerous occupational hazard for a number of reasons. Firstly it creates a share overhang inviting shrewd investors to by-pass the sale in the hope that there will be better pickings towards the end of the total dispersal/disposal. Secondly I thought it was mean-spirited of the authorities to leave the retail investor (taxpayer), who was forced to ante-up £21 billion, to be left out of the early pickings. That is one of the reasons why the share price has dipped 4% today to 75.9p.

There is also enormous competition out there for bank shares. Soon TSB and Williams & Glyns will be setting down their stall. Other banks in Europe are short of capital and may need rights issues. Like it or not that affects the sector’s performance overall. Finally equity markets feel very flaky indeed. Forget Putin, China and tapering, equities have been range bound for weeks with no real momentum. Investors are fickle. It would not take much for a rush to the door! So prenez-garde!

These are David Buik 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.

Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.
Please refer to http://www.panmure.com/emaildisclaimer.aspx for additional important disclaimers and legal information.

TODAY’S FAYRE – Sunday 23rd March 2014

TODAY’S FAYRE – Sunday 23rd March 2014

“As virtuous men pass mildly away,
And whisper to their souls to go,
Whilst some of their sad friends do say,
“Now his breath goes,” and some say, “No.”

So let us melt, and make no noise,
No tear-floods, nor sigh-tempests move;
‘Twere profanation of our joys
To tell the laity our love.

Moving of th’ earth brings harms and fears;
Men reckon what it did, and meant;
But trepidation of the spheres,
Though greater far, is innocent.

Dull sublunary lovers’ love
—Whose soul is sense—cannot admit
Of absence, ’cause it doth remove
The thing which elemented it.

But we by a love so much refined,
That ourselves know not what it is,
Inter-assurèd of the mind,
Care less, eyes, lips and hands to miss.

Our two souls therefore, which are one,
Though I must go, endure not yet
A breach, but an expansion,
Like gold to aery thinness beat.”

John Donne – poet –1571-1632

Even though I understand that the electorate has little or no personal empathy with David Cameron and George Osborne, I find it hard to digest that Labour is considered by about 35% of voters (all they require to form a majority government is 38%), to be fit for purpose. Like them or not Cameron and Osborne have done a decent job in the economic circumstances, considering that they should never ever have countenanced the Lib-Dems as political bed/coalition partners in the first place. Frankly the PM and the Chancellor are not the sort of approachable people that I would feel comfortable engaging in conversation with at the bar of my local ‘Dog & Duck!’ However, you don’t have to like your leaders, but it does help, as long as you respect them.

Despite their inability to win over the voters to date, there are signs of their messages getting across, The Tories were languishing behind in the polls, but the most recent polls suggest the gap is closing. How the country could remotely believe that Labour has learned its lesson and is now sufficiently contrite to take the keys to the Treasury back in 2015, escapes me. Labour needs at least another 5 years in the political wilderness to rebuild its credibility.

Whilst banks look to restore their tarnished reputations, skeletons keep crawling out of the woodwork. The allegations of foreign exchange rate rigging could be the greatest scandal of the lot, leaving PPI and LIBOR misdemeanours in the shade. Until someone ends up in jail for transgression of this nature, there will continue to be a sufficient number of financial vagabonds to spoil the banking sector’s quest to improve their standing in society.

I went to see ‘The Book of Mormon’ on Friday night against my better judgement? I absolutely loved it. It is slick, irreverent and funny. I have not seen an audience respond so enthusiastically and with such verve towards a show, since Joan Sutherland last performed in Lucia Di Lammermoor at the Royal Opera House, Covent Garden back in 1976! Mind you the cast included Luciano Pavarotti and Sherill Milnes as well!

The markets – equities, bonds and foreign exchange – behaved with a good deal more maturity and pragmatism towards the Crimean crisis and the ‘Yellen Wobble’ over the continuation of QE tapering than can be said for some of the world’s global politicians. Our political ‘Lords and Masters’ kept huffing and puffing all week at Putin’s outrageous behaviour as they implemented sanctions on travel whilst attempting to freeze oligarch’s assets. I wonder if the authorities have been more successful than they were when failing to stop the Russians getting their money out of Greece a few months ago. Of course Putin’s behaviour is unacceptable. However I am just absolutely astonished and mystified at the lack of diplomatic will to find a solution. I feel the world is going to suffer economically at the hands of political intransigence.

As for M/S Yellen’s handling of ‘tapering’ and guestimates at higher interest rates – 1% by the end of 2015 and 2.25% by the end of 2016; her language was intemperate, but she will grow in to the job, no doubt creating her own style of ‘Bletchley Park’ code language. Yellen has played down Non-Farm payroll data as not being pivotal. We shall watch the FED’s reaction on Friday week – 4th April – when the next set of employment numbers are posted. My big worry and that of many observers is the rather brittle state of retail in the US. It is understandable that shopping down at the malls should pause during such alarming weather experienced this winter, particularly on the East coast, but it is alarming that internet sales should have been so adversely affected.
Last week the US shrugged off many of these issues, though conditions were volatile. The S&P gained 1.96%, the FTSE 100 +0.45% and European bourses 1.78%. Life was perhaps not quite so rosy in Asia. The Hang Seng was down by 0.48% and Tokyo looked softer as investors started to challenge the credibility of Abenomics. Having been larruped the week before last to the tune of 13%, Russia’s Micex added 2.4% last week. Oil increased a tad in response to sanctions and gold was up 3.4% last week as hedgers floundered in instability – $1337 an ounce. The Greenback improved by 0.8% against the Yen and by 0.9% against the Euro.

On the Street of Dreams Symantec hosed is CEO and it lost 14% in value. Visa enjoyed a decent run on the rails on Friday adding 3%. In London the Budget caused more turmoil in equities than has been seen for many a year. The dramatic change in legislation for annuities and pensions in favour of choice saw specialist operators’ share prices trashed on the day of the budget with Partnership losing 55% in value. I cannot remember if a government has ever affected a share price so adversely in the UK at the stroke of a pen! Just Retirement lost about 40%, Resolution 13% and even Aviva initially felt the wheels of pain on its back – down 8% on Wednesday. Ladbrokes and William Hill also suffered badly on increased taxation on their machines – down 12% and 6% respectively. Despite turmoil amongst the supermarkets it was grand seeing NEXT putting up a stellar performance when announcing its numbers.

We have seen a slew of IPOS in the last few weeks, but they may all pale in to insignificance when Alibaba, China’s answer to Amazon & eBay takes its bow in New York in the spring. Details of the IPO are likely to be posted this Tuesday 25th March 2014. This IPO may be looking to raise $16 billion and most of the major investment banks – Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc – can expect to share $200 million in fees, though Barclays, through a conflict of interest in advising on Sprint may miss out. Alibaba can legitimately claim to be the world’s leading e-commerce business. Reports suggest that Alibaba handled total sales of $170 billion in 2012 – which is more than the transaction value handled by Amazon ($96bn) and eBay ($75bn) combined! IG INDEX have indicated that the share capital value could reach $250 billion!
After more than eight years of effort, Amazon has less than 1 per cent of China’s $196bn e-commerce market. Alibaba is estimated to have a market share of nearer 75 per cent. China’s e-commerce market is already the largest in the world and by 2020 is forecast to be bigger than the existing markets in the USA, UK, Japan, Germany and France combined. So Alibaba’s market share of over 70% makes it a very big player indeed.

Alibaba was founded by Jack Ma, a former English teacher. As he has led and developed Alibaba, Jack Ma has become one of the best-known Chinese entrepreneurs. He is the first mainland Chinese entrepreneur to appear on the cover of Forbes Magazine and ranks as one of the world’s billionaires. In 1995, Ma founded China Yellow-pages, widely believed to be China’s first Internet-based company. Ma founded Alibaba in 1999. As Alibaba developed, it sold a 40% stake to Yahoo, although this stake has recently been reduced to 24% as Alibaba had become sufficiently profitable to buy some of the shares back from Yahoo. Alibaba already makes real profits and will not be beholden to hope and expectation. China’s Softbank is purported to own 37% of Alibaba.

The EU may well have agreed on its charter for closing failed banks and the US seems some way down the line agreeing capital requirements. However the UK’s obsession with trashing investment banking operations in London may have serious consequences for the City of London’s future.

Finally we hear that energy companies are in danger of being broken up – an absolute tragedy and it will cost the UK economy dearly as fresh competition will not help. With capital needs for new power stations required, some may be pushed out of business. We all wait with bated breath for Sir Philip Green’s BHS food shops undercut Tesco by 10%! Bring it on!

UK Companies reporting results next week – Tuesday – AG BARR, 888 HOLDINGS, KINGFIHER PLC, TOPPS TILES, CARNIVAL, Wednesday – TUI TRAVEL, BELWAY, Thursday – COMPASS, DMGT, SKYE PHARMA, THOS COOK & LSE.

These are David Buik 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 – Pensions & annuities

TODAY’S FAYRE – Thursday 20th March 2014

“The shine on her buckle took precedence in sun
Her shine, I should say, could take me anywhere
It feels right to be up this close in tight wind
It feels right to notice all the shiny things about you
About you there is nothing I wouldn’t want to know
With you nothing is simple yet nothing is simpler
About you many good things come into relation
I think of proofs and grammar, vowel sounds, like
A is for knee socks, E for panties
I is for buttondown, O the blouse you wear
U is for hair clip, and Y your tight skirt
The music picks up again, I am the man I hope to be
The bright air hangs freely near your newly cut hair
It is so easy now to see gravity at work in your face
Easy to understand time, that dark process
To accept it as a beautiful process, your face”

Peter Gizzi – poet – 1959 –

Having trawled around various radio studios and the odd TV station this morning this piece will be redundant by the time it reaches you. Anyway a few observations may just capture the imagination.

The general consensus about the Budget if you are, like me old and infirmed, an aspiring business entrepreneur or a saver, it was a good budget. I have to confess that there is a huge leap of faith in thinking in the government’s thought process that its borrowing requirement can be cut from £108 billion this year to zero in five years, whilst at the same time expenditure this year is going up from £715 billion to £765 billion. The Chancellor must assume that that tax revenues from all aspects of life will pour in. I hope he is right. However the geopolitical climate makes me very nervous. For a start I simply do not believe that the Europe’s recovery will resemble the Phoenix rising from the ashes.

The investment allowance being doubled to £500k is great news as is the ISA allowance being increased annually. The one conundrum or cumuli nimbus cloud out of this budget is the treatment of annuities and pensions.

Having spoken to Panmure’s insurance/pensions expert Barrie Cornes and his colleagues; they are of the opinion that it will take 18 months to 2 years before we really know how this legislation will affect the annuity market. They believe that writing new business could be cut by as much as 80% in that period – hence the damage to the likes of Partnership and Just Retirement in the last 24 hours – down another 10% and 5% respectively this morning, though their businesses have considerable residual value. People would like to be given the option of choice. Also choice of shares and yields could be improved by taking the pension pot rather than buying an annuity. That assumes a fair wind. As we all know the financial trade winds are often not that fair. The other major plus point for using the pension pot rather than annuity is that the residual value is surrendered on death whereas a personal pot can be inherited by the next of kin. Reducing the market capital of a company in 24 hours at the stroke of Chancellor’s pen is unprecedented! Other institutions such as banks and brokers will benefit from pension business they may not have seen.

Markets are suffering from a large dose of ‘Yellen, Putin, China and UK Pension’ pip! For the uninitiated the PIP is a chicken disease! Regrettably some of these imponderables may be on going for some weeks to come.

That grand lady from Brooklyn – Janet Yellen, the chairman of the FED – probably used intemperate language in announcing that she hoped tapering would be finished by the autumn and that her best guess is that rates would hit 1% by the end of 2015 and 2.25% by the end of 2016. That may prove to be a very optimistic assessment. I believe she may well have to back track as there is some evidence that the US economy may not be as robust as she thinks it is. The retail data was worrying. Blame bad weather on shop sales but not internet sales – They were disappointing last month. Also the damage to emerging markets from tapering QE is very hard to equate. M/S Yellen does not give the impression that she would like to cut off her nose to spite her face. Let’s hope the flexibility is there, if required. At 1216pm the FTSE was down 67 points at 6500 and the Street of Dreams may not offer much solace today. There was a splendid set of numbers from Next, thanks to great Directory sales – shares up 1.6% so far today.

These are David Buik 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 FEW COMMENTS ON BUDGET – ANNUITIES & GAMBLING

One thing is for sure if there is any unemployment in UK or Canadian paper forests, it will have been tidied up by tomorrow even though blogging and comment on line is now rampant! The teenage scribblers will have massed their troops with their respective erudite take on the Budget. I really bring nothing to the party apart from a few simple observations.

Firstly it was a budget of ‘nip & tuck’ with the borrowing requirement and the debt still far too high. The borrowing requirement will drop from £108 billion this year to a small surplus of £2 billion according to the OBR. Markets love the idea of prolonged austerity, with the prospect of blood running down Whitehall; so the Pound rallied to $1.6624. However, despite increased growth estimates for 2014 to 2.7% from 2.6% and next year to 2.3% from 2.1%, the FTSE 100 dropped a smidgen from being down 18 points to being down 34 points 6570.

There were a few little caveats that rocked a few sectors. Some of the proposed changes in the taxation of annuity thresholds saw some of the insurance companies take an absolute larruping of a slapping. This could turn into a financial free-for-all for the spend-thrift or less astute, apart from the fact the government is providing impartial advice to retirees to the tune of £20 million. Initially other financial brokers will be able to attract pension fund annuities with a view to funnelling them in to a potentially moderately risky environment, if the option of just withdrawing from the market is not exercised. Initially L&G lost 12%, Prudential -3% and Aviva 8%, Resolution -13%+ and wait for it Partnership down a massive 55%! One has to wonder whether the government actually knows the size of the can of worms it could be opening. Hard earned savings could potentially be dissipated very quickly by those who like to be ‘gungho, fixed bayonet and over the top! This initiative will reverberate around financial markets for some time to come.

On the plus side, many like me will greatly approve of the fact that the annual investment tax-allowance has been doubled to £500k from 2015. This is good for SMES and for new companies looking to take a quantum leap forward as is the change in the treatment of ISAS. Until now ISAS in cash had an annual amount of £7.5k and shares to the value of £11.500. As from 1st July the allowance will be £15k per person annually, split as the individual owner sees fit. Again this initiative is positive for business and investment.

Bookmakers did not fare well thanks to the penal tax levied on machines. After the news Ladbrokes fell by 12% and William Hill by 7.7%. Conversely Rank rallied by 4% thanks to bingo hall taxation being halved to 10%.

Finally many will be delighted that LIBOR fines will be used to alleviate hardship incurred by families from the emergency services.

I thought Ed Miliband’s response to the Budget was pitiful. He just vituperatively slagged the Tories off without ever talking about the content of the Budget – not very professional.

These are David Buik 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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FORWARD WITH FRONTLINE

Forward with Frontline

We’ve been exhausted with reports on the city’s struggle these last dreary months – hardly a motivating read for the early morning commute (partnered with the late night return home). When confronted with this constant negative grumble, it’s only too easy to lose sight of the drive we initially set out with.

Set on a mission to motivate and inspire leaders and teams alike, Fieri, a London based leadership and development consultancy, have formed a team of ex-military personnel and other inspirational individuals who have achieved commendable success post injury or whilst fighting long-term illnesses.

Fieri have developed these veterans to become motivational speakers and leadership and development consultants for a series of Frontline motivational speaking events. Co-founder of Fieri and wounded ex-captain of the HM parachute regiment, Martin Hewitt explains quite simply: “We believe our speakers’ stories are powerful and we strive to share them.”

The launch of Fieri’s Frontline venture, with their ambition to invest in the individual, their role within a team, and the wider community, coincides with today’s need for the city of London to re-build trust in society. Organizations are looking to invest in re-building team moral in their heightened responsibility to uphold integrity.

Fieri Frontline speakers and consultants will be showcasing a free Frontline: An Evening of Inspiration event at The Gibson Hall on Wednesday 26 March. Speakers will share their stories on overcoming adversity through completing world first expeditions and achieving world records. Guest host, David Buik, market analyst and commentator on global financial issues, will be compering the evening, and there will be an opportunity to interact with the speakers during the audience Q&A, which has been scheduled in the evening’s agenda.

If you would like to show your support for the Frontline speakers and you’re keen to learn from their experiences, please reserve your tickets at the Fieri ticket booking site: http://fieri.biz/frontline-evening/tickets/. Tickets are free but are limited to availability. Doors will open for the evening at 6.30. Alternatively please get in touch to find out more from Fieri’s Marketing Manager: Joanna@fieri.biz

TODAY’S FAYRE – Wednesday 19th March 2014

TODAY’S FAYRE – Wednesday 19th March 2014

“A stranger came to the door at eve,
And he spoke the bridegroom fair.
He bore a green-white stick in his hand,
And, for all burden, care.
He asked with the eyes more than the lips
For a shelter for the night,
And he turned and looked at the road afar
Without a window light.

The bridegroom came forth into the porch
With, “Let us look at the sky,
And question what of the night to be,
Stranger, you and I.”
The woodbine leaves littered the yard,
The woodbine berries were blue,
Autumn, yes, winter was in the wind;
“Stranger, I wish I knew.”

Within, the bride in the dusk alone
Bent over the open fire,
Her face rose-red with the glowing coal
And the thought of the heart’s desire.
The bridegroom looked at the weary road,
Yet saw but her within,
And wished her heart in a case of gold
And pinned with a silver pin.

The bridegroom thought it little to give
A dole of bread, a purse,
A heartfelt prayer for the poor of God,
Or for the rich a curse;
But whether or not a man was asked
To mar the love of two
by harboring woe in the bridal house,
The bridegroom wished he knew.”

Robert Frost – poet – 1874-1963

Unlike his predecessors Ken Clarke and Gordon Brown, Chancellor Osborne has got his priorities right – not having the Budget during the Cheltenham Festival, where the entire city would have been happier down for the week, but was never given the opportunity. However the Chancellor has picked up other bad habits introduced by previous incumbents – allowing the Treasury to leak the entire content of the Budget in the preceding month. Of course, Mr Osborne can put a little colour on the content at noon, but I doubt there will be much in the way of surprises. We still have such a gargantuan debt and borrowing requirement – circa £111 billion – that I fear a degree of necessary austerity for another 5 years despite growth target being raised in coordination with the OBR – Coalition, Tory or Labour will all be obliged to adhere to cutting expenditure! However it is voiced abroad that Mr Osborne is keeping a little powder dry. Apparently he allowed DPM Clegg to crow about the £2k child allowance and as a ‘quid-pro-quo’, the Chancellor may open a ‘goodie-bag’ at the end of his speech, which normally lasts about 48 minutes, for us all to drool over!

I was wittering on yesterday about the necessity of appointing a market person as deputy governor, whose finger-nails were actually dirty from working at the coalface of banking; someone who actually knows the ‘movers & shakers’ in the City and Canary Wharf – in fact the Bank needs to know people in ‘low places’. Well my assessment of the situation of what was required bore zero resemblance to Governor Carney radical changes. I must apologise for being way off the pace. Not for one minute did I think that Paul Fisher would be held to account as the scapegoat for forthcoming foreign exchange misdemeanours, despite his unfortunate comments last week – “It’s not our job to go hunting for market wrongdoing!” Knowing Mr Fisher a little, I suspect this remark was made out of context. In his defence Andrew Tyrie and his visceral colleagues on the Treasury Select Committee are a daunting prospect. I have nothing against Mr Tyrie – he does a very necessary job with the utmost diligence.

The Governor expressed concerns about the unwieldy size of the BOE with fresh responsibilities for regulation taking increasing toll on executive management. Well Mr Carney, if nothing else, has been brave and radical. He really has had the drains up. So Paul Fisher leaves the MPC and his responsibility for markets and heads for Prudential Authority as Andrew Bailey’s deputy. Spencer Dale more or less swaps with Andy Haldane – Financial Stability and Economist – Haldane to the MPC in place of Dale.

There is no doubt that Ben Broadbent has an exemplary CV – economist to Bank of England to Goldman Sachs as economist and back to BOE as deputy governor. However forgive me for whingeing but he’s ANOTHER ECONOMIST! – Not what is required at this juncture! Yes he replaces Charlie Bean, who is an economist, but the Bank has economists crawling out of every ‘nook and cranny.’ We need practioners!

Now to Nemat (Minouche) Shafik; She was crow-barred out of the IMF by Mark Carney to take control of markets and banking. She will oversee the UK’s eventual withdrawal from QE, improve the Bank’s access to market intelligence and represent the UK on international financial bodies and committees. Internationally educated M/S Shafik has unprecedented intellectual capacity, having held down a number of very high profile jobs at the World Bank, the IMF and more recently as Permanent Secretary to the Department of International Development. She clearly has impressed the PM, the Chancellor and Governor Carney with her credentials. My problem with her appointment and I will have to get over it, is that she has never been a market practitioner. Knowing the CEO at Barclays and HSBC is all very well, but her appointment or someone else of similar ilk is never going to put an end to banking transgressions or more to the point heading the threat of them off!

We have had a sepulchral start to the session this morning. At 9.00am the FTSE 100 was down 17 at 6587. Partnership and Smith Industries lost some value on perceived shortcomings in their results. Conversely Inditex added 3.8%, as its fall in sales was already priced in. Since January 2014 Inditex’s share price has fallen from E320 to E107.

Eyes down for a full house from Chancellor Osborne’s Budget at 12.00noon today – all the fun of the fair!

These are David Buik 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.

Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.
Please refer to http://www.panmure.com/emaildisclaimer.aspx for additional important disclaimers and legal information.

TODAY’S FAYRE – Tuesday, 18th March 2014

TODAY’S FAYRE – Monday 17th March 2014

“Twice or thrice had I lov’d thee,
Before I knew thy face or name;
So in a voice, so in a shapeless flame
Angels affect us oft, and worshipp’d be;
Still when, to where thou wert, I came,
Some lovely glorious nothing I did see.
But since my soul, whose child love is,
Takes limbs of flesh, and else could nothing do,
More subtle than the parent is
Love must not be, but take a body too;
And therefore what thou wert, and who,
I bid Love ask, and now
That it assume thy body, I allow,
And fix itself in thy lip, eye, and brow.

Whilst thus to ballast love I thought,
And so more steadily to have gone,
With wares which would sink admiration,
I saw I had love’s pinnace overfraught;
Ev’ry thy hair for love to work upon
Is much too much, some fitter must be sought;
For, nor in nothing, nor in things
Extreme, and scatt’ring bright, can love inhere;
Then, as an angel, face, and wings
Of air, not pure as it, yet pure, doth wear,
So thy love may be my love’s sphere;
Just such disparity
As is ‘twixt air and angels’ purity,
‘Twixt women’s love, and men’s, will ever be.”

John Donne – poet –1571-1632

How sad it is that L’Wren Scott, the beautiful model/fashion icon can have seen fit to take her own life at the tender age of 49. Whatever persuaded her to do it! Why was her depression not picked up? Our hearts go out to Sir Mick Jagger and her family.

I have to admit that I thought Michael Vaughan was unnecessarily unpleasant about Jonathan Trott, in the Telegraph, by suggesting that Trott’s bottle had gone against the likes of Mitchell & Co. Even if it had and I doubt that the reason was that focused, I always thought there was honour amongst thieves – if not respect! Who needs enemies when you have friends like Mr Vaughan, whose career I might say ended rather like a damp squib!

As President Obama, Chancellor Angela Merkel and particularly FCS William Hague raised the diplomatic temperature with their jingoistic tone towards President Putin, whose attitude, in fairness, lacked even the semblance of appeasement, business adopted a rather more pragmatic attitude towards the crisis. Equity markets, having surrendered the best part of 5% in the two weeks up to last Friday, some of the loss being attributable to China’s ailing economy, with the threat of shadow banking throwing up alarming signals, regained some poise yesterday. It seemed to market participators and observers that we were not quite knocking at Armageddon’s front door! This rally was all the more remarkable as the Crimea poll had been nothing less than emphatic – 96.7% in favour of returning to Russia.

The Street of Dreams bounced off the floor, looking at the Empire State’s improved Factory Orders as an excuse to trigger a modest, though measurable rally. The DOW & S&P 500 both added 0.96% and the NASDAQ 0.81% yesterday. The US had other matters on their mind such as the start to the 2-day meeting of the FED. Will Chairman Janet Yellen taper another $10 billion off QE, taking the outstanding balance down to $55 billion? There are signs that the US economy has fought its way through the atrocious cold weather that has prevailed. However, the market will need a quick resolution to the Russian crisis plus some clear indications from China that it is getting on top of its economic issues, to confirm that the US really has its ‘growth’ show confidently back on the road. The patchy and sometimes poor retail figures are a worry to may. If only the on-line sales had been buoyant!

Yesterday Yahoo added 4%! Why? It owns 24% of Alibaba, which is about to make its IPO bow with a $10 billion IPO capitalising the company at $120 billion. This tech operator is not about ‘jam tomorrow!’ – It makes real profits. Hertz was another stock that stood out yesterday in adding 4.8%.

This morning Asia girded up its loins and at 6.30am the ASX had closed up 0.51%. The Shanghai Composite was near enough flat, despite new home prices slowing last month; the Hang Seng was 0.32% to the good and the NIKKEI was 0.94% up as it headed for the close. Yesterday the FTSE closed up 40 points at 6568 in a scrappy session, dominated by Vodafone’s confirmation of its much heralded and talked about bid for Spain’s ONO, for which it spent E7.2 billion. As we know the cash it received – £56 billion, some of which will be returned to shareholders and some to pay off debt – was burning a hole in the Newbury based mobile mogul’s pocket. Frankly the mobile market is getting very congested though there is scope in Spain if its economy eventually shows signs of coming back on the bridle. However sadly Vittorio Colao, the CEO, dispelled any ideas of Vodafone entering the media or TV sectors. I think that might be a pity. It would be a natural progression. It is also rumoured that Channel 5 might be an option for BT to expand its TV enterprises which would give BT Sport a real fillip. Richard Desmond may have other ideas, such as a £700 million IPO. The public might not be so enthusiastic.

There were also stellar performances from Sports Direct, Persimmon, RSA and CocacolaHBC – all of which added 3%+. Supermarkets were still heading in to reverse with Tesco and J Sainsbury easing by 1%+.

It was great to see the entrepreneur Simon Nixon taking £200 million out of the ring after selling 10% of his stake in Moneysupermarket.com. The IPO of Just Eat valuing the company at about £800 million endorses the appetite investors have for the retail sector. The company is only looking to raise £100 million. Lloyds Banking Group seems to be having a bit of a spat over the price of repurchasing £8.4 billion of bonds on the cheap, sold to 120k customers to supplement its bailout in 2009. Barclays will be distributing £30 million of shares to executives. I have no problem with that as long as it is on a long term basis. Governor Mark Carney is purported to announce the appointment of another Deputy Governor. I have been known to have a tilt at the ring and my money would be on Paul Fisher to replace Charlie Bean.

So finally J Sainsbury’s Justin King’s ‘bubble’ has finally burst after 37 quarters of increased sales. Sales in the 4th quarter were down 1.5% and like-for-like sales were easier by 3.8%. A lack of food inflation has been submitted as the cause. The discount game is likely to damage this sector’s share prices as demonstrated by Morrison last week. Today ASOS, IG GROUP, CAIRN ENERGY, SPIRIT PUB COMPANY, ANTOFAGASTA and BERKELEY GROUP also post numbers. The FTSE is expected to open up down about 6 points.

These are David Buik 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.

Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.
Please refer to http://www.panmure.com/emaildisclaimer.aspx for additional important disclaimers and legal information.