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
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