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
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