TODAY’S FAYRE – Friday 4th April 2014
“Come to me in my dreams, and then
By day I shall be well again.
For then the night will more than pay
The hopeless longing of the day.
Come, as thou cam’st a thousand times,
A messenger from radiant climes,
And smile on thy new world, and be
As kind to others as to me.
Or, as thou never cam’st in sooth,
Come now, and let me dream it truth.
And part my hair, and kiss my brow,
And say My love! why sufferest thou?
Come to me in my dreams, and then
By day I shall be well again.
For then the night will more than pay
The hopeless longing of the day.”
Matthew Arnold – poet – 1822 1888
Yesterday I wrote with a little alarm and a great deal of concern about the UK’s gargantuan debt and its unsustainable borrowing requirement. I don’t think that any more than a few realise the gravity of the problem. If it were not for the Herculean efforts of the UK debt management office and its highly switched on CEO Robert Stheeman, I can assure you that this country would be servicing yields a great deal higher than the current 2.77%, which would drop this country perpendicularly into penury! This government and the next one must do something about cutting welfare drastically. Otherwise the market will vent its spleen on our beloved gilts. We talk glibly about austerity. With respect we cannot even spell it!
I might as well finish my whingeing whilst I am at it. Apart from government debt personal debt is at epidemic proportions with debt at catastrophic levels with savings running at between 3-5%. Every time I see a young person ordering a ‘double-tall-semi-cappuccino’ for £2.50 and uses a credit card to pay for it, he/she certainly almost certainly cannot afford it!
I have been going to Aintree for the Grand National almost annually for 26 years. The racecourse is unrecognisable from the run-down dump of place it was in 1988. As a punter the course is now really user friendly. Having been engrossed with the pinnacle of jump racing, I have seen the enormous improvement in the safety standards for the race. The jumps are nothing like as imposing and fearful as they were. Fallers are less frequent. Horses tend to get brought down through interference, rather than fall of their own accord. Consequently the race attracts a far higher caliber of horse with Gold Cup winners and entries being common place.
On Saturday if he were not 13 years of age I would really fancy ‘Tidal Bay.’ ‘Long Run’, a recent Gold Cup winner could easily win it. His jockey Sam Waley-Cohen is a course expert/winner, though I have my doubts about his jumping. I fancy Monbeg Dude, ‘Double Seven’ and Burton Point to put in challenging performances.
Though we saw encouraging ISM manufacturing data in the US last month posted yesterday, the trade gap widened from $48.5 billion to $50 billion, resulting in a non-descript enigmatic performance on the Street of Dreams. The DOW closed flat, the S&P 500 eased by a miniscule -0.11% and the NASDAQ pulled back by 0.91%, thanks to biotech’s not being the flavour of the day. There were two stocks that drew attention to themselves yesterday were Barnes & Noble down 14% and Anadarko +15%, having settled with the authorities over the Gulf disaster. Equity markets in the US have reached record levels in recent days and in the case of some European bourses they are also beginning to look quite rich. So the data and more importantly the quality of the 2nd quarter earnings, starting next week are of real significance, if investors are to be enticed back in to the ring to buy more stock. Markets feel quite full up and there is little trading momentum apart from IPOS.
However everyone was waiting with bated breath for today’s employment data, which will be posted at 1.30pm GMT. The Non-farm payrolls are expected to have created 195k jobs and the employment rate may fall by a pip to 6.6%. However for investors, bankers or politicians to read any meaningful conclusions on this fuzzy data may be folly. It might be sensible to wait for another 3 months to complete a comprehensive analysis. The weather in March was better, but still the quality of jobs created is in doubt. Many believe that the wages number is more important (2.2% Y/O/Y). Since 2008 about 5 million jobs have been created since the recession – far too many of them on a temporary basis. In 2013 it is believed that 75% of the million jobs created were part time.
Yesterday from an economic perspective it was not a red letter day. In the UK Service data saw activity fall to 57.6 against expectations of 58.2. Also an inflation number of just 0.5% for the last month was posted, thanks to benign food and energy prices. The ECB’s Mario Draghi indicated at yesterday’s press conferences that fresh stimulus packages to prevent deflation were being considered. How you get 27 countries to agree on anything let alone breakfast escapes me. But we are told the matter is in hand.
It was a lack lustre session in London yesterday with the FTSE 100 losing just over a dozen points. The session in Asia was also uninspiring, again waiting on NFP. However the Chinese authorities may soon implement a banking stress test, such is the growing level of loan defaults. Just-Eat had a reasonably auspicious IPO debut, initially adding 5% in terms of premium valuing the operation at £1.5 billion. Note the rather rich valuation! Sports Direct’s Mike Ashley’s demand for a £70 million bonus was denied by the shareholders pro-tem. Considering the company’s achievement under his banner, we may not have heard the last of this bone of contention. Tesco is expected to announce that it has parted company with its FD Laurie McIlwee. Under Phil Clarke’s leadership the following have left – Messrs Higginson, Mason, Potts and Brasher. Few of the Leahy team are left. It was also confirmed this morning that Ewen Stevenson has been appointed FD of RBS. He comes from Credit Suisse and helped with the RBS bail-out six years ago. EASYJET will have announced traffic news this morning. Kingfisher will be paying £227 million for Monsieur Bricolage adding it to its Castorama operation.
These are David Buik personal views
Twitter – @truemagic68
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.