TODAY’S FAYRE – Tuesday 29th April 2014

TODAY’S FAYRE – Tuesday 29th April 2014

“The wild bee reels from bough to bough
With his furry coat and his gauzy wing,
Now in a lily-cup, and now
Setting a jacinth bell a-swing,
In his wandering;
Sit closer love: it was here I trow
I made that vow,
Swore that two lives should be like one
As long as the sea-gull loved the sea,
As long as the sunflower sought the sun,-
It shall be, I said, for eternity
‘Twixt you and me!
Dear friend, those times are over and done;
Love’s web is spun.
Look upward where the poplar trees
Sway and sway in the summer air,
Here in the valley never a breeze
Scatters the thistledown, but there
Great winds blow fair
From the mighty murmuring mystical seas,
And the wave-lashed leas.
Look upward where the white gull screams,
What does it see that we do not see?
Is that a star? or the lamp that gleams
On some outward voyaging argosy,
Ah! can it be
We have lived our lives in a land of dreams!
How sad it seems.
Sweet, there is nothing left to say
But this, that love is never lost,
Keen winter stabs the breasts of May
Whose crimson roses burst his frost,
Ships tempest-tossed
Will find a harbour in some bay,
And so we may.

And there is nothing left to do
But to kiss once again, and part,
Nay, there is nothing we should rue,
I have my beauty,-you your Art,
Nay, do not start,
One world was not enough for two
Like me and you.”

Oscar Wilde – poet & playwright – 1854-1900

You have to admire people in all walks of life for having the courage of their convictions. There again conviction is one thing and stubbornness is another altogether. David Cameron has encompassed both attributes in spades. To be not worried that UKIP, which is now top of the poll for the Euro elections is tantamount to treating his party supporters with contempt. Of course persuading the EU to change tact using the influential offices of Chancellor Merkel is the most positive course of action. Sadly there is not one visible or confirmed piece of evidence that any action has been taken in this direction so far and the General Election is just one year away. A protest vote can be dismissed, but I fear that tsunami level of support for Nigel Farage and his troops may be something altogether different.

I noted with interest that City UK came out yesterday overwhelmingly in favour of UK remaining in the EU, warning that an exit could wreck financial capital business. One has to respect its findings but I challenge some of the validity of its findings. There’s a great big world out there. The UK needs to embrace it. We scored 40 years ago with the Euro Dollar market; we then scored again with the abolition of exchange controls in 1981. The City, with the resolve required, can do it again!

For the umpteenth time it was Merger ‘Monday Mania’ yesterday, which gave equity markets a boost, despite a background of deteriorating geopolitical discomfort in Ukraine. The US have upped their sanctions game against a few more high profile Russian diplomats and oligarchs. One of them is sadly the chairman of Rosneft, BP’s 20% partner. I understand, though I don’t necessarily respect the execution, the US’S and EU’s stance towards Ukraine, but I was wondering if there is any more hatred and bile the US can tip over BP, aided and abetted by the UK government. I find the choice of that individual astonishing – banal in the extreme – and hugely counter-productive from a business perspective. BP announced its figures this morning with a pre-tax profit of $5.27 billion. BP is chipping away at its problems in the Gulf – no thanks to the state of Louisiana. The total cost of the Gulf ecological disaster remains constant at an astronomical $42.7 billion. BP is producing 3.13 million barrels a day of which about 1 million is produced in conjunction with Rosneft. In the last quarter this only gleaned a profit of $271 million thanks to the decline of the Rouble. The dividend was increased by just over 8%. The market was happy with Bob Dudley’s presentation in the circumstances – shares up 1% at the opening.

Two thirds of US companies that have reported so far have beaten expectations. Yesterday’s session proved to be no exception on the Street of Dreams, though the mood was reflective. The DOW added 0.5%, the S&P 0.3% and the NASDAQ closed near enough flat. Investors pondered over Pfizer’s hostile £60 billion bid for Astra Zeneca. Pascal Soirot told their US predator that its valuation was wholly inadequate. Despite Astra’s narrowing pipeline Pfizer insist there is great synergy particularly with scientific development, cancer & oncology treatment. If that is the case one would hope the number of redundancies would be limited amongst its 7000 workforce. It is also thought that Astra attaches huge credence to tax advantages – UK 20%, 10% only from patents against 37% in the US. I suspect the US government would be horrified to think tax was a key issue. Pfizer has a great track record in acquiring what it wants. So if the bid is upped to between £51 and £54 a share, I suspect Astra will acquiesce, despite strong protestations. Also my diseased ridden mind working overtime allows me to think that cashing in share options at these inflated levels in comparison to £35 a share in January, has great attraction.

It is further understood that MERCK’s consumer business, valued at $14 billion, may end up in Reckitt Benckiser’s portfolio, if the rumour mill is accurate. I enjoyed President Hollande’s comment that he was not against GE’s bid for Alstom – yeah right! – So long as Siemens can improve theirs! That’s very cynical of me, but Germany’s and France’s track record for protectionism is exemplary and consequently attracts comments of that nature.

At 9.30am many will be disappointed if Q1 GDP of +0.9% is not posted – taking the annualised rate close to 3.2%. The US economy is likely to be at its most robust since 2007, with unemployment below 7% at 6.9% and retail sales last week coming in at +4.2%. The outlook, according to Governor Carney is improving all the time. However I doubt that rates will rise until the autumn of next year.

There were decent results from Petropavlovsk, Redrow, St James’s Place and in Europe Nokia was looking in better shape with a new CEO in Rajee Suri. Deutsche Bank, Santander and Sanofi-Aventis did not disappoint their acolytes with improved performances. However Deutsche Bank may well need an injection of capital before too long. Talking of banks those in the UK are likely to be subjected to much more stringent stress tests, using the assumptions that house prices fall 35% and interest rates rise by 2%.

Finally Whitbread posted a 16% increase in profits to £411 million on a 13% increase in revenues of £2.29 billion with sales increasing on a like-for-like basis by 4.2%. Premier Inns cracked on but it was the Costa Coffee brand that excelled. There are 1700 coffee shops in the UK and Ian Harrison, the CEO is confident that another 300 can be added in the next few years. Their shares were up 2.7% this morning, but many wonder if Whitbread’s goals are not too ambitious.

Asia’s session was rather nebulous, with Tokyo closed for a public holiday. At 9.10am the FTSE 100 was up 32 points at 6732.

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.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: