TODAY’S FAYRE – Sunday 2nd March 2014

TODAY’S FAYRE – Sunday 2nd March 2014

“O tender time that love thinks long to see,
Sweet foot of spring that with her footfall sows
Late snow like flowery leavings of the snows,
Be not too long irresolute to be;
O mother-month, where have they hidden thee?
Out of the pale time of the flowerless rose
I reach my heart out toward the springtime lands,
I stretch my spirit forth to the fair hours,
The purplest of the prime;
I lean my soul down over them, with hands
Made wide to take the ghostly growths of flowers;
I send my love back to the lovely time.

Where has the greenwood hid thy gracious head?
Veiled with what visions while the grey world grieves,
Or muffled with what shadows of green leaves,
What warm intangible green shadows spread
To sweeten the sweet twilight for thy bed?
What sleep enchants thee? what delight deceives?
Where the deep dreamlike dew before the dawn
Feels not the fingers of the sunlight yet
Its silver web unweave,
Thy footless ghost on some unfooted lawn
Whose air the unrisen sunbeams fear to fret
Lives a ghost’s life of daylong dawn and eve.”

Algernon Charles Swinburne – poet – 1837-1909

Many will have enjoyed Lepe Partners’ Jonnie Goodwin’s article in the Sunday Telegraph drawing an analogy between the competitive banking practices in the City and Canary Wharf and the manic working environment in the Tom Cruise film ‘Jerry Maguire.’ Lepe Partners is an independent merchant bank focused on helping media, consumer entrepreneurs and business leaders unlock growth, set in the leafy streets of Holland Park.

The death of the intern at Goldman Sachs and the suicide of the banker at JP Morgan Chase in recent times were desperately sad occurrences. However to imply that these two incidents were systemic of our banking practices, in my humble opinion, is way over the top – hysterical nonsense! There is no doubt that getting the balance between professional life and leisure right is fundamental. Life, sadly, is far more competitive than it was 30 years ago in all walks of life. Consequently one hears of these heart-rending stories of intolerable pressure from right across the business spectrum – not just banking.

I am utterly amazed that Mike Ashley and the directors of Newcastle United did not sack Alan Pardew on the spot for head-butting a Hull City player, even if it was not a vicious one and regardless of the protection of his players or any provocation. Perhaps when this missive reaches you there will have been a change of heart. A football manager is supposed to be a role model. Newcastle and the surrounding areas has a population of 880,000 – not good news for them.

We hear that John Lewis/Waitrose may have made a profit to £370 million thanks to a great Christmas. The staff will be buzzing about their bonuses. Well done them! How dare a Labour MP criticise Waitrose for distributing free coffee and newspapers as a marketing ploy, supposedly damaging local shops. I am not surprised that Chuka Umunna stepped in applauding the initiative. Some elements of the Labour party must get out of the habit of abjectly loathing profit, free enterprise and improving one’s lot in life!

Last week US equities stuttered their way to an all-time ‘high’ despite inconclusive US economic data – the declining quality of it has been blamed on the inclement weather – and the escalating aggression by the Russian government towards the Ukraine, orchestrated by President Putin. The aggression has gathered momentum since stumps were drawn on Wall Street on Friday evening with Putin being granted permission by the Russian parliament to resort to military action if required. So, come Monday morning, unless good sense prevails, investors may be inclined to take some risk off the table and ‘head temporarily for the hills!’ There has already been some evidence of concern in response to the level of acute uncertainty which prevailed in Kiev and in the Crimea, reflected in the bond market, where 10-year yields fell measurably across the spectrum.

Many shrewder people than me feel that President Putin is even more dangerous and omnipotent than he was a decade ago pre the Medvedev sojourn. The world has just watched Russia over-dominate the energy market with a vice like control of gas pipes as well as oil out of Iran and Iraq. We should all be gravely concerned at the threat of military action between the two factions. With the EU, the US and the IMF reluctant to divvy up the $35 billion required to bail-out Ukraine, it would seem that Russia now very much has the whip-hand.

On Friday Pending Home Sales in the US grew by a miniscule amount of 0.1% when the estimate was 1.8%. Michigan Consumer Confidence beat expectation marginally, which settled a few frayed nerves. We also hear the Citigroup had to put in a fresh provision of $235 million for fraud in the 4th quarter results. Turnover on Wall Street was brisk with 7.7 billion shares being traded – 19% above the 30-day leading average. Also we should remind ourselves that the S&P 500 has added 175% from a 12 year low and a similar amount since March 2009.

At the end of the week the S&P 500 was up 1.6% (+4.3% in February) with FTSE 100 down 0.4%, European bourses +0.38% and the NIKKEI all but flat. Deckers Outdoor Corporation dropped 12% on Friday, Apple was up 0.5%, Kroger +4.5% and post the on-going takeover battle between Jos A Bank and Men’s Wearhouse their respective shares were up 3% and 6.7%. The world of Bitcoin looks to be under the cosh with Mt Gox filing for bankruptcy. The SEC is going to probe in to allegations that Verizon bond allocations were unfairly distributed. Apparently ‘Big’ was even more beautiful than usual.

The FTSE closed flat on Friday at 6809. Pearson’s results did not pass muster – -5.5%. Aggreko shed 4.9% and Shire after a terrific run was 2.7% easier. We suspect that their day will come again soon. William Hill gave investors hope with better numbers on Friday – +6%. Old Mutual saw funds under management increase by 19% in the last year – +5.8% and Tullow saw buyers – +4.5%. M&S have appointed the Lindsey bothers from Next as sourcing directors. I think it would be no bad thing if M&S were to have talks with Next about an all-round tie up. It will never happen, but it is hard to see M&S rise like the phoenix from the ashes as a ‘mover and shaker’ in fashion. There is concern that Standard Chartered may struggle to maintain its dividend and also there may be some bonus dodging in the offing! All will be revealed this week when the bank reports on Wednesday. Bonuses may come down from £900 million to £750 million.

The week started with the controversial bank results; so we may as well finish with them. RBS’s numbers were disastrous – a loss of £8.2 billion. Still Vince Cable uses the shortfall of £2.3 billion lending to SMES as a political football of expedience. I don’t get the fellow? You cannot cut a balance sheet from £2.2 trillion to £1.4 trillion and expect to maintain lending. It is nonsense and he knows it. Had the bank been split 5 years ago, which was the only time it could have been achieved with limited damage; then he might have had a point. The Sunday Telegraph reported that free banking at RBS could end and the Sunday Times had an interesting story this morning that its toxically laden Ulster Bank could be merged or be tied up with Permanent TSB, Danske Bank or KBC. Ulster Bank has dropped £2.5 billion in the last 2 years.

UK companies posting results this week – Monday – AMLIN, KELLER GROUP, Tuesday – GLENCORE/XSTRATA, ADMIRAL, L&G, CARILLION, MICHAEL PAGE, STANDARD CHARTERED BANK, Thursday – AGGREKO, AVIVA, BALFOUR BEATTY, SAVILLS.

US ECONOMIC DATA – NON-FARM PAYROLLS – Friday 7th March 2014.

These are David Buik personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
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