Monthly Archives: May 2014

TODAY’S FAYRE – Markets & Man Utd

TODAY’S FAYRE – Thursday, 29th May 2014

“Now that we’ve done our best and worst, and parted,
I would fill my mind with thoughts that will not rend.
(O heart, I do not dare go empty-hearted)
I’ll think of Love in books, Love without end;
Women with child, content; and old men sleeping;
And wet strong ploughlands, scarred for certain grain;
And babes that weep, and so forget their weeping;
And the young heavens, forgetful after rain;
And evening hush, broken by homing wings;
And Song’s nobility, and Wisdom holy,
That live, we dead. I would think of a thousand things,
Lovely and durable, and taste them slowly,
One after one, like tasting a sweet food.
I have need to busy my heart with quietude.”

Rupert Brooke – poet & soldier – 1887-1915

I cannot say that I am shedding too many tears for the Lib-Dems’ current political meltdown. However who needs enemies when one has friends like Lord Oakeshott?

It’s always sad to hear news of anyone’s death. The death of Malcolm Glazer, who died yesterday aged 85, will be mourned by his family, close contacts at Tampa Bay Buccaneers, Perry Capital, Manchester United executives and his friends. However not many tears will be shed around Old Trafford, the home of the most ardent of all football fans.

Despite Man Utd phenomenal success the fans have resented the fact that the Club has been run as a ‘cash cow’ to service the Glazers’ debt ridden empire. Man Utd’s $1.5 billion IPO in New York in 2012, which left the Glazer family and Perry Capital with the best part of 90% control of the Club, did not go down well with the fans and it left the Glazers in conjunction with Perry Capital virtually omnipotent and impregnable. Yes, the debt has fallen form £700 million to about £385 billion. However this club is not run for any other reason than business. It is the financial hub of the Glazer Empire. Hence, once David Moyes was seen to struggle, the board was merciless in binning him. The Red Devil’s lack of participation in the Champions League and the Europa Cup next year may cost the club £40 million in revenues including all the marketing franchise. So contingency plans were made – out went Moyes and in came Louis Van Gaal. There’s no emotion over this decision! – Just business.

If contingency plans of this nature had not been implemented I suspect the Cub’s bankers would have been all over them like a bad rash on concerns that with so much less income, banking covenants would be in danger of being broken. The Glazers may love their sport but it is of secondary importance when it comes to business and paying the bills. Man Utd share price came off 67 cents yesterday to $16.19 down from $17.40 a month ago.

Yesterday was a really uneventful affair for trading. Most mature markets hardly moved. Deals are underpinning markets. Yesterday GE was forced to improve its offer for Alstom and well as giving further reassurances on employment. Valeant has upped the ‘ante’ for Allegan (botox) to about $42 billion – $166 a share. After hours Apple agreed to pay $3 billion for Beats Music Beats Electronics – makers of sound hardware and an amazing music library. Steve Jobs, God rest his soul, would not have approved. He would have preferred Apple had developed its own facility. Man Group is rumoured to be buying Numeric, a hedge fund from Boston Mass. And finally Weir Group has been rebuffed from a £3.7 billion bid for Finland’s Metso. Deals of this nature seem to be preventing equities from easing. Volumes remain dire – probably 40% down on 2 years ago.

There are plenty of nuggets of news to ruminate over. Serco have landed an £800 million contract for the railways from London to Scotland from 2018. There is a little bit of concern about high street retail sales. 38% are enjoying higher sales than a year ago and 22% thought they were lower. Sales may pick up next month but the level of activity may level off.

Nationwide’s Graham Beale, on the back of excellent results yesterday, warned the Chancellor that his pensioners’ scheme of allowing each one to buy £10,000 of 1 and 3 year bonds yielding 2.8% and 4% respectively could well damage mortgage lenders deposit base.

This morning Severn Trent, Tate & Lyle and Kingfisher posted results much in line with expectation.

US GDP for the first quarter may come in as low as -0.5% having been originally estimated at +0.1%. The appalling weather, which savaged industrial production, manufacturing, retail and exports have been blamed. The US show appears to be back on the road. The FED’s Janet Yellen seemed happy enough to shrug this issue off as just a temporary setback. The ECB’s rate decision next week will be eagerly awaited. The disruptive election results will give Mario Draghi plenty to think about. He may well cut the repo rate and widen the net for buying in bonds to fight off deflation.

Finally with the World Cup upon us Panmure’s Karl Burns make this observation. Gambling shares have been trashed in the past 6 months for a variety of reasons – 888 Holdings -25%, Ladbrokes -20%, William Hill -18% and Betfair -6%. He suggests that some appetite for this sector may return.

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.

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TODAY’S FAYRE – EU BACKLASH & INCLUSIVE CAPITALISM

TODAY’S FAYRE – Wednesday, 28th May 2014

“Love set you going like a fat gold watch.
The midwife slapped your footsoles, and your bald cry
Took its place among the elements.

Our voices echo, magnifying your arrival. New statue.
In a drafty museum, your nakedness
Shadows our safety. We stand round blankly as walls.

I’m no more your mother
Than the cloud that distills a mirror to reflect its own slow
Effacement at the wind’s hand.

All night your moth-breath
Flickers among the flat pink roses. I wake to listen:
A far sea moves in my ear.

One cry, and I stumble from bed, cow-heavy and floral
In my Victorian nightgown.
Your mouth opens clean as a cat’s. The window square

Whitens and swallows its dull stars. And now you try
Your handful of notes;
The clear vowels rise like balloons.

Sylvia Plath – poet – 1932-1963

Political correctness – “Political correctness is a doctrine, fostered by a delusional, illogical minority, and promoted by mainstream media, which holds forth the proposition that it is entirely possible to pick up a piece of excrement by the clean end.” – A student from Bond University in Australia – May 2014

I must confess to being a tremendous admirer of Nigel Farage and the progress UKIP has made in the last 2 years, filling a void the main parties have neglected. If UKIP is to make that quantum leap forward, political banana skins must be avoided at all costs. Adopting Neil Hamilton could be a banana skin! I commend greatly what Neil and Christine Hamilton have achieved; they have paid back all their debts; they have regrouped and are now a brand that is in demand by the public. However for Neil Hamilton to stand as a UKIP MP may just be a bridge too far. Mr Hamilton, after becoming involved in a political scandal known as the ‘Cash-for-questions affairs’, which cost him a great deal of money defending himself, eventually costing him his seat at Tatton. Like it or not this incident suggests a credibility factor. Many believe that Mr Farage should avoid such controversies. At present he intends to ignore the threat of any potential fall-out. We shall see how the media and electorate react.

In the same breath Marine Le Pen from France’s National Front political party has made the biggest swing toward anti-Europe, ahead of even Britain. Le Pen declared victory in European Union elections as voters across Europe backed populist, far-Right and Left-wing parties in a backlash against immigration and the euro’s economic policies and the ‘establishment.’ So much for those people who claim that the Bildebergs control the world.

With great gusto all the ‘good and the great’ in Europe have pushed the panic button with a meeting being convened in short order in Brussels. All of a sudden Chancellor Merkel is not sure that J-C Juncker is the man to take the EU journey forward. There must also be concern that the anti-austerity brigade could really damage the recovery process in the region. From a UK perspective it is becoming increasingly important that PM Cameron declares his hand over the proposed referendum in 2017. If he genuinely is going to hold an ‘in/out’ referendum, he needs to declare that he will take the UK out, if the EU fails to deliver the necessary changes that meets the UK’s criteria. To date he has refused to do so.

Certainly the Rothschild sponsored Inclusive Capitalism Conference attracted plenty of press comment, much of it very controversial. The Prince of Wales, Mme Lagarde and Governor Mark Carney grabbed the opportunity with open arms to get the boot into the bankers and their bloated bonuses – the public were always going to lap it up. There is nothing new about the widening gap between those that have and those that have not! It has been an issue since the Thatcher days of 1984, when income tax levels started to be reduced. It has become progressively worse.

What I found disappointing was that all their comments venture to suggest that no progress has been made since those dark days of 2008. This is palpably not true nor fair. All we hear is vituperative lambasting for increased bonuses of Barclays and Goldman. You hear nothing of the fact that many of these contractual obligations are coming to a finish. You hear nothing of Barclays and RBS winding down their investment banking operation. How many times does the public have to be told that bonuses have a relatively small cash element and that the substantial share incentive schemes are paid at least 3 years in arrears and have a pull back if profit goals are not achieved? Banks are global. London is the leading financial centre. We need the income until our economy is more broad based. If London is to maintain its pre-eminence it needs to pay sensible and competitive bonuses.

Off the cuff comments about bonuses and moral obligations and excessive greed from major luminaries in life on a public platform without the whole picture being painted, is very counterproductive. As for Mme Lagarde, who has made a king’s ransom as senior partner of a leading law firm in Chicago; how can she have the temerity to suggest that income tax needs to be increased with a property tax to be introduced – only a LEETLE BIT! – To narrow the divide in terms of income discrepancies. Please, Madame – on your bike with those socialist principals. Just as we are recovering, the idea of smashing the incentive to work or create wealth and increase employment, on the head with negative legislation of that nature, cuts no ice with entrepreneurs and business people alike.

I agree with the IMF’s CEO that insufficient progress has been made by banks in Europe to become more robust, postponing the need to eradicate the “too big to fail” tag. Governor Mark Carney speech was well thought out on this subject and it is encouraging to hear that the ‘too big to fail’ philosophy will be extinct, maybe as quickly as a year from now. The BOE/FCA have worked tirelessly on this issue and are to be commended for achieving that necessary goal.

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.

TODAY’S FAYRE – Tuesday 27th May 2014 – EU, TSB, ASTRA

TODAY’S FAYRE – Tuesday, 27th May 2014

“When Beauty and Beauty meet
All naked, fair to fair,
The earth is crying-sweet,
And scattering-bright the air,
Eddying, dizzying, closing round,
With soft and drunken laughter;
Veiling all that may befall
After — after —

Where Beauty and Beauty met,
Earth’s still a-tremble there,
And winds are scented yet,
And memory-soft the air,
Bosoming, folding glints of light,
And shreds of shadowy laughter;
Not the tears that fill the years
After — after –“

Rupert Brooke – poet & soldier – 1887-1915

The passing of time very often plays havoc with our memory cells. The whole idea or raisin d’être behind the EU was economic, trade and business cooperation. It started with the formation of the European Coal & Steel Community by France & Germany back in 1950; eventually it was increased to 6 countries to include, Holland, Belgium, Luxembourg and Italy. That arrangement became the basis of the Common Market. In the ’60s Edward Heath and Geoffrey Rippon unsuccessful attempted to negotiate the UK’S entry in to the Common Market – a union based on trade.

By the grace of God and not a bit of luck John Major and Norman Lamont had the UK’s ejection from the ERM to be grateful for. This action gratuitously prevented the UK from embracing full membership. Unfortunately Tony Blair’s obsession with Europe and the belligerent attitude of Gordon Brown, who signed the Treaty of Lisbon, almost out of pure spite, have committed the UK to contractual obligations they may well regret, particularly in the field of financial regulation. For the UK to be exposed to the tune of 45% of our trade with the EU is absurd. Consequently the UK has neglected the obvious merits of the Commonwealth, China, Africa and South America.

Don’t just blame Nigel Farage for the rise of UKIP in expressing disenchantment towards the EU. A majority of minor parties in other countries have universally expressed their dislike of the status quo, with France’s Le Pen and Greece’s left wing anti-austerity party to the fore. Van Rompuy & Barosso have done a huge disservice to the EU by beating the drum of federalism rather than the business and economic drum it is supposed to support.

The danger with the rise of these parties is that there will be insufficient effort spent on renegotiating the unacceptable parts of the treaty, whilst they understandably indulge themselves by disrupting legislation. Also those countries which have been committed to necessary austerity measures to comply with help from the ECB, may insist through the influence of the minority parties, on relaxing these austerity measures. This could damage the already painful EU recovery process. Chancellor Merkel, President Hollande and the other EU federalists will need to re-group and heed very carefully to the discontent within the ranks of so many member nations. Steam rollers may well be toys/tools of the past. Even PM Cameron has been on the blower yesterday suggesting contingency plans to placate the increasing number of dissenters towards the EU.

After the banking crisis manifested itself in 2008, the EU decreed that Lloyds Banking Group, 40 odd percent owned by the taxpayer, should sell 630 branches to comply with EU bail-out criteria. The woeful Rev Flowers and the capricious Peter Marks stepped up to the plate on behalf of the Cooperative Bank to take over these branches, until last year it became clear the Coop had neither sufficient capital nor the quality of management to satisfy regulators to complete this ambitious transaction. Hence Lloyds chose the IPO route.

It is understood that the government in conjunction with Lloyds Banking Group has decided to sell 25% of this bank, valued at £1.5 billion, with between 15% and 30% going to retail investors. These retail investors will also be offered one share for every 20 they own, according to Sky, provided these shares are not sold for a year.

It has become increasingly evident that the IPO market is suffering from indigestion. Fat Face pulled out last week. Saga has not been a roaring success to date, though the offer was over well subscribed. There was a feeling that fund managers were not allocated a sufficient number of shares, which was reflected by the lack of momentum in the conditional trading. Maybe we will learn more when unconditional trading starts next Thursday.

So when CEO Paul Pester and his advisors come to price these shares soon, they will need to err on the side of generosity to get the float away with a bang – whatever the likes of Chuka Ummuna have to say on the subject. It must not be forgotten that there is plenty of choice in the months ahead, starting with our own Williams & Glyn, as well as potentially another tranche of Lloyds plus copious bank rights issues throughout Europe! The choice on offer will be VERY wide ranging. This all comes against a background of private equity selling their business with relish and enthusiasm. Has the fair left town and is the investor being asked to pick up the trash?

So 5.00pm came and went today – no deal with Astra Zeneca. As promised there was no improvement on the £69.4 billion offer (£55 a share). Pfizer drew stumps and headed for home to get on with its business. Is that it for ever and a day? I doubt it. I have been amazed that the likes of Black. L&G, Jupiter, Axa and Schoders -the major shareholders have been so muted in their response to the initial offer, until the horse bolted. One thing seems clear – the Soirot team did not like the Read team; so there was little chance of a deal unless the bid was absurd. Astra’s Share price was £35 in January with the drug pipeline not looking particularly strong. All of a sudden Pfizer pops it’s head above the parapet and out from the woodwork appear enormously important oncology drugs for lung cancer worth billions. I have been known to have a tilt at the ring in my time; so in 3 months from now, I suspect that the major shareholders will force both parties to re-open talk.

Dr Charlie Bean, the deputy governor of BOE, in a valedictory speech, told the market that rates will eventually settle at about 3% – though no date was stated I suspect that level may not be achieved until 2017. Dr Bean is so sensible to warn the unsuspecting consumer that real interest rates will return and they must always be able to service their debt.

Finally great to see BP’s Bob Dudley support their Russian business partners – Rosneft – in the development of shale fields. A decade ago Dudley was persona non grata in Moscow – today he is an acceptable appointment in the Kremlin, with his relationship with the US government at an all-time low. I find the Obama administration’s attitude totally incomprehensible. Also PM Cameron’s inability to interject very disappointing.

Companies posting numbers this week. Tuesday – AVEVA, IG GROUP, Wednesday – DE LA RUE, Thursday – SEVERN TRENT, TATE & LYLE, KINGFISHER.

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.

TODAY’S FAYRE – Sunday 25th May 2014

TODAY’S FAYRE – Sunday, 25th May 2014

“Lay Your Sleeping head, my love,
Human on my faithless arm:
Time and fevers burn away
Individual beauty from
Thoughtful children, and the grave
Proves the child ephemeral:
But in my arms till break of day
Let the living creature lie,
Mortal, guilty, but to me
The entirely beautiful.

Soul and body have no bounds:
To lovers as they lie upon
Her tolerant enchanted slope
In their ordinary swoon,
Grave the vision Venus sends
Of supernatural sympathy,
Universal love and hope;
While an abstract insight wakes
Among the glaciers and the rocks
The hermit’s carnal ecstasy,

Certainty, fidelity
On the stroke of midnight pass
Like vibrations of a bell
And fashionable madmen raise
Their pedantic boring cry:
Every farthing of the cost.
All the dreaded cards foretell.
Shall be paid, but from this night
Not a whisper, not a thought.
Not a kiss nor look be lost.

Beauty, midnight, vision dies:
Let the winds of dawn that blow
Softly round your dreaming head
Such a day of welcome show
Eye and knocking heart may bless,
Find our mortal world enough;
Noons of dryness find you fed
By the involuntary powers,
Nights of insult let you pass
Watched by every human love.”

WH Auden – poet – 1907-1973

Jonny Wilkinson played his final game of professional rugby in the UK last Saturday whilst captaining and helping Toulon win the Heineken Cup for the 2nd year running. I think I can safely say that he ranks, together with Bobby Moore, Roger Federer, Pete Sampras, Arnold Palmer Jack Nicklaus and Carl Lewis, as quintessentially the finest advertisements for sporting role models. Jonny and his co athletic gladiators tick every box of excellence – top class professionalism, creative talent, play their respective sports in an exemplary manner, whilst remaining fully-paid up members of the human race.

Spare a thought for Derby County. Until the 92nd minute when QPR, playing with 10 men for the last 30 minutes, ‘never had a kick’, until Booby Zamora curled his shot round the keeper to gain promotion to the Premiership. Without the heroics of Richard Dunn & Clint Hill in the heart of Rangers’ defence and some great goal keeping from Rob Green, QPR would have faced another year in the Championship. Instead they collect £120 million from the Football League and head for the top flight at the first attempt.

This is an interesting statistic released recently in the US – A veteran commits suicide every 80 minutes (that is 18 per day). It is estimated that veteran suicides account for nearly 20% of all suicides in America, even though less than 1% of the population has served in the military. Veterans are almost five times more likely to commit suicide than non-veterans. Suicide accounted for more than 25% of all deaths among veterans age 17-24.

Last week markets and particularly equities entered a continuing war of attrition – valuation concerns and geopolitical threats up against improved economic sentiment in the US, UK and Europe, though I have my doubts about the latter apart from Germany, and there being no appetising alternative asset class to enthusiastically support. The FED, which has already tapered $40 billion of the $85 billion facility reiterated the necessity for being accommodative in terms of liquidity and QE, soothed frayed nerves on the Street of Dreams and few believe there is any doubt that the ECB will soon be forced to cut rates or stimulate its bond buying facilities to head off deflation. Most global indices are beginning to look quite rich in value, especially the S&P 500, the NASDAQ and the DAX. The NIKKEI is a law unto itself with China’s Shanghai Composite still attracting support as is India’s Sensex and the ‘Nifty Fifty’ after a conclusive General Election result. Talking of elections, the result the European Parliament elections are expected to make very interesting reading with minority Parties right across the spectrum, not just UKIP, possibly proving to be very disruptive over implementing legislation, assuming they have attracted greater support. Political instability could certainly damage economic recovery in the UK and Europe.

At the end of last week the S&P 500 closed up 1.2%, the FTSE 100 down by 0.58% with the drop in Astra’s value not helping. European bourses were up 0.56% and the NIKKEI cracking on by 2.29%. Abe-San seems happy to throe the kitchen sink in terms of stimulation to Japan’s economy.

Time seems to have run out for Pfizer to conclude any deal with Astra Zeneca in terms of its proposed £70 billion acquisition. Monday is D-Day; so Pfizer will need to wait at least 6 months before massing its troops again. Despite Blackrock and Jupiter expressing their irritation at Astra’s refusal to engage, CEO Pascal Soirot seems to have played a clever political game, rather than deal with the financial attraction and viability for shareholders, which makes a mockery of corporate governance. This is not the only gargantuan drug deal in history. Those suffering from amnesia need reminding that Pfizer paid $90 billion to secure Warner-Lambert back in 2000.

Barclays were again the recipients of bad press but also a significant fine of £26 million + change for rigging the gold fixing price. There are allegations of 4 other banks being involved in similar transgressions and we await developments. Friday’s HSBC AGM was a stormy affair with over 20% of shareholders voting against Chairman Douglas Flint’s £2.2 million bonus, which was reduced to a million. Sir Simon Robertson, former leading M&A light at Goldman Sachs, who chairs HSBC’s remuneration committee, expressed his frustration by insisting Flint was underpaid for his responsibility and I agree. HSBC has had its regulatory issues, particularly money laundering. Nonetheless it is generally considered to be the best run large bank on the planet. Talking further on the subject of fines. The US Justice Department is expected to vent its spleen on BNP Paribas with a whopping $5 billion for breaking legal sanctions with countries such as Syria and Libya.

The retails sales picture varied on both sides of the ‘Pond.’ US retail sales grew by a disappointing 0.3% last month, whereas the UK blazed the trail with a 1.3% increase last month – 7% over Easter and estimating a 6.9% increase on the year. This robust number had some resonance with the MPC. Many believe rates could go up very slowly but starting as early as the end of this year.

On the deal front JD.com posted a 10% increase for this Chinese Amazon on its IPO debut, which is more than can be said for Saga, who insure 1.5 million ‘crinklies’ like me as well as provide holidays and healthcare. Saga share price closed flat on the first day of conditional trading at 185p. Unconditional trading starts on 29th May. There are two concerns. Firstly there is a little indigestion in the IPO market, which saw Fat Face pull out and secondly there is a feeling that laudable though it is to give retails shareholders decent allocation, it is essential for fund managers to be given decent holdings. It remains to be seen if they have been satisfied. The credit ratings of Reynolds American and Lorillard have come under scrutiny ahead of their merger.

Last week there were a few significant share price movements at the end of the week. BTG was up 6%, Lonmin by 5.4% and Go Ahead by 9%. Halfords, after decent numbers, have asked for greater financial support, much to the chagrin of many suppliers. Intercontinental Hotels Group is alleged to have shunned a £6 billion takeover. Starwood Hotels have been fingered as the possible predator. Let’s end on two old chestnuts. Firstly Amazon may have sheltered as much as £11 billion from the taxman and secondly the government keeps bleating on about banks’ lending more to SMES. I thinks banks are the best judges as to who are ‘credit-worthy’ and who are not, unless government owns the banks!

Hopefully we will shortly hear who will replace Allister Heath as Editor of CityAM, whose reputation grows by the day. The market tells me it is down to 4 good candidates – two external Iain Dey and James Ashton and two internal – David Hellier and Marc Sidwell. Let’s see if the rumour mill is accurate.

Companies posting numbers next week. Tuesday – AVEVA, IG GROUP, Wednesday – DE LA RUE, Thursday – SEVERN TRENT, TATE & LYLE, KINGFISHER.

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.

TODAY’S FAYRE – Friday 23rd May 2014

TONIGHT’S FAYRE – Friday, 23rd May 2014

“For beauty being the best of all we know
Sums up the unsearchable and secret aims
Of nature, and on joys whose earthly names
Were never told can form and sense bestow;
And man has sped his instinct to outgo
The step of science; and against her shames
Imagination stakes out heavenly claims,
Building a tower above the head of woe.
Nor is there fairer work for beauty found
Than that she win in nature her release
From all the woes that in the world abound;
Nay with his sorrow may his love increase,
If from man’s greater need beauty redound,
And claim his tears for homage of his peace.”

Robert Bridges – poet – 1844-1930

This whole Putin saga, made sensational by the Prince of Wales having a private conversation, which triggered an intemperate remark by HRH, just goes to prove how incredibly toxic and menacing all types of media and particularly its social cousins can be! These comments were almost certainly taken out of context. However, just look at the potentially damaging effect this unfortunate and regrettable indiscretion could have in terms of diplomatic and trade fall-out with Russia?

We shall have to wait until Sunday before we know how strongly the Farage bandwagon has gathered momentum in the European elections. Certainly outside London, UKIP look to have done well enough in the local elections to suggest Messrs Cameron, Miliband and Clegg will have collected bloody noses. If the Conservatives and Labour are to regain their poise and more to the point support, these personal attacks on Nigel Farage must cease.

The economic data in the UK remains solid with recent retail sales figures gathered in around Easter, showed that the consumer is not perhaps quite yet, ‘gungho, fixed bayonets! And over the top!’ However he/she is certainly gaining in confidence to such a degree that the hawks on the MPC are ruffling their feathers in suggesting that some interest rate increase may have to be implemented before the end of the year.

One can be forgiven for being frustrated that equities are meeting with a little resistance at these new levels and the 6930 record threshold for the FTSE 100 seems agonisingly far away. I’m afraid we need to see better quality results in places for equities to select another gear. Like many other cynics, I am less than convinced that the EU’s economy is as ready to come off ‘life support’, despite the Barosso/Van Rompuy PR thrust.

We are also seeing investors losing their appetite for some IPOS, unless they are priced as snips! We await news on Saga this morning, particularly since the issue price has come in right at the bottom end of the range. This, I am sure, is only a temporary rejection by the market place. Zoopla, with DMGT as a major shareholder, will surely find its supporters when it steps up to the plate in the late summer or early autumn. And let’s not forget the likes of B&M Retail and Wizzair. Sir Stuart Rose’s Fat Face has pulled out due to lack of shareholder support. Technology stocks are notoriously in the doldrums in the summer. Again come the autumn I expect the sector to come under a wet sail again.

There again yesterday in New York, JD.com – a sort of Chinese answer to Amazon – gained 10% on its $1.78 billion IPO debut on Wall Street. The company is valued at $25 billion. We wait with bated breath for Alibaba in the hope that it ignites interest in the same manner. With this juggernaut of a company in terms of value, conceivably $150 billion, the mind boggles.

Yesterday on the Street of Dreams decent industrial production numbers and factory orders persuaded investors to stay with the game, though the DOW only added 0.06 %. However the S&P 500 gained 0.24% and the NASDAQ 0.55%. Hewlett-Packard fell short of estimates with its shares falling 2.3%, with the likelihood of another 16,000 jobs being lost. That Meg Whitfield is some tough cookie! Best Buy was up 3.4%, Williams Sonoma by 8.7% and good old Dollar Tree by 6%.

The FTSE closed near enough flat yesterday at 6820 in a very nondescript session with little turnover. There was a wave of support for Astra’s shares yesterday as the likes of Blackrock who own 7.8% of the drug titan would like all parties to return to the negotiating table, despite having voted against accepting the £50 a share bid. They and other shareholders feel there is room for Pfizer to up the ante! Royal Mail Group’s results were in line with expectation with profits up 12% at £671 million. However CEO Moya Greene had some warning shots across the bow about competition from the likes of TNT, which was forcing the RMG to agree to Sunday deliveries as well as a price war. Investors shed some risk and the shares eased by 7%. Rumours abounded that BATS were helping Reynolds American owners of the Pall Mall and Winston cigarette brands to buy Lorillard, who make the menthol Newport cigarette, before merging with the new unit. Unilever have sold Ragu and Bertolli food brands to the Japanese food titan Mizcan for $2.1 billion. These brands were disposed of for 3.5 times sales, which appears healthy.

On the economic front Germany confirmed 1st quarter GDP at +0.8% with an annualised rate of 2.5% for 2014. S&P upgraded Spain’s debt to BB and Greece’s to B. We shall watch with interest the progress of these two economies. In the UK George Osborne will not have been pleased at the prospect of the UK’s borrowing requirement rising by £2 billion to £11.5 billion in April.

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.

AFTERNOON FAYRE – 21st May 2014

AFTERNOON FAYRE – 21st May 2014

Forget the Street of Dream’s poor performance yesterday thanks to indifferent retail company results and the fact that Asia was incapable of waking out of its slumber, probably deterred in Japan by the fact that the Yen reached its highest point against the Greenback for 3 months. The REAL NEWS for me, which left me quaking in my boots and I admit I have always tended to be a drama king, was China signing at $400 billion gas deal with Uncle Vlad. The West’s approach to Russia, even allowing for Russia’s outrageous stance towards Ukraine and for me, even more terrifying, tolerance of Syria, is arrogance personified. Obama is a wuss, if that is how you spell it; Merkel is cleverly pragmatic and Cameron looks light, pointlessly attempting to punch above his weight. We need to get the Botox King around a negotiating table and perhaps it might be sensible if the Prince of Wales stayed away, though I must confess HRH has been shabbily treated on this issue.

There are plenty of nuggets of news out there – many of them positive. The MPC, regardless of rumours of disagreement on interest rates agreed unanimously that until the slack in the economy had picked up, rates should remain where they are. Sticking with the US we heard rumour that Google had amassed a war chest abroad from the US of $30 billion for acquisitions and also Microsoft was about to launch a new pad. Target, second only to Walmart as a grocery/supermarket operation, saw revenues fall by 16%. Well its shares rose by 70 cents. Of course the share price graph indicated that the news was obviously in the price.

There was also good news on UK retail sales – up 1.3% in April against March, with the estimate only at +0.5%. There was a blockbuster Easter +7.1% and the year on year figure posted was 6.9%. SSE, Britvic and UK Mail all posted decent numbers. Petrofac, Barclays and Sports Direct were also up by 2%. Morrison was down 3.5%. The level of activity is just too sepulchral. I am no chartists but the FTSE 100 looks very heavy and if the charts hold any credence a pull back to 6600 could not be ruled out, unless the news improves in quality. By news I mean corporate news and top class results. Astra’s share price crept back to £44 – up 2%. You wonder whether the major shareholders might be having a re-think? – EGM? I doubt it. However one cannot help thinking that many of them have thrown the baby out with the bathwater.

At 3.00pm the FTSE 100 was up3 points at 6800, helped by the fact that the Dow is up 125 points.

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.

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TODAY’S FAYRE RE EUROPEAN PARLIAMENT ELECTIONS

TODAY’S FAYRE – 21st May 2014

“WHAT does it mean? Tired, angry, and ill at ease,
No man, woman, or child alive could please
Me now. And yet I almost dare to laugh
Because I sit and frame an epitaph–
“Here lies all that no one loved of him
And that loved no one.” Then in a trice that whim
Has wearied. But, though I am like a river
At fall of evening when it seems that never
Has the sun lighted it or warmed it, while
Cross breezes cut the surface to a file,
This heart, some fraction of me, happily
Floats through a window even now to a tree
Down in the misting, dim-lit, quiet vale;
Not like a pewit that returns to wail
For something it has lost, but like a dove
That slants unanswering to its home and love.
There I find my rest, and through the dusk air
Flies what yet lives in me. Beauty is there.”

Edward Thomas – poet & soldier – 1878-1917

“60s losers are today’s professors!” – PJ O’Rourke – American journalist and satirist – 1947-

So tomorrow is European Parliament election. Let me pre-empt the result on Friday morning, with a little caveat that many of you may find surprising – only 7% of the electorate really cares about the UK’s membership of the EU. It pales in to insignificance in comparison to the economy and employment. However such is the fervour, contempt and passion it has generated, this election is grabbing too many headlines – many of them unattractive.

Anyway, UKIP will probably attract the most votes, with Labour second, the Tories 3rd and the Lib-Dems nowhere, due to the fact they are a political irrelevance holding the current coalition government to ransom.

It is a huge shame that UKIP seems now to be a party of immigration rather than a party of Eurosceptics. Sadly the intemperate and bellicose language used by the PM in recent months topped up with the Chancellor’s views more recently, has engendered a momentum support for Mr Farage. DPM Clegg’s personal contempt has not helped either. I know Mr Farage reasonably well. He’s a very decent bloke, with huge charisma and he is no racist. It does not help being rude or truculent towards him, because you cannot get your point of view across. I must say I am disappointed on 2 counts, being a die-hard-in-the-wool’ old fashioned Tory, who would resemble a piece of Brighton Rock, if chopped in half – TRUE BLUE! Firstly though laudable the PM’s vision to persuade the EU of the errors of his ways is, he refuses to support an ‘out’ vote, if he fails in his valiant attempt. Secondly there is no guaranty that there will be a Conservative/Coalition government in 2017. So the Government has explained its policies towards continued membership, wholly inadequately. So many voters have no idea what they are voting for. At least Mr Farage has attempted to explain the options coherently. Labour will wimp it and vote to stay in, as the party lacks vision and therefore failing to respond to the indisputable fact that there is a great big wide world out there for the UK to trade with. I am sorry to say the Conservatives have exacerbated the UKIP bubble by feeding an electorate, which is far from convinced by Conservative policies, with some angst. Personally I think the PM and his cohorts have done an excellent job in very difficult circumstances, but they have not articulated themselves very well.

The UK should never have allowed itself to get in to the position of doing 45% of its trade with the EU over the past 15 years. We have neglected the rest of the world – China, Asia, Africa and South America for too long. We must be grateful to the PM, the Chancellor, the Foreign Secretary and to Lord Green, Lord Livingston, Michael Fallon and Matt Hancock for attempting to redress that balance by giving it their best shot in selling UK PLC globally. Such a pity we do not hear more of Lord Livingston’s infectious enthusiasm as he sets about his task with such relish, conviction and considerable success. Frankly Lord L should be in the Cabinet! PM get him there and be sharp about it! I am sorry that I don’t mention Secretary of State Dr Vince Cable in the same breath as I am less than convinced that he is ‘pro’ business. I know he is not pro the City and certainly not banks. However I am reliably informed that he is a standard bearer for small businesses.

Finally of course the PM is right to attempt to change the EU’s culture on many aspects, but he is not ‘Charles Atlas’ reincarnated. I am told the City is very pro the EU! I have my doubts. I think EU regulation could burst the City’s balloon sooner rather than later. The PM/Chancellor have supressed some unnecessary regulation, but nothing like enough. London is the centre of the time zone, with English the trading language of the world. We are better at creating earnings from the financial sector; so to be controlled by irrelevant regulation could be very counter-productive.

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.

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PANMURE’S SAVVAS NEOPHYTOU’S APPRAISAL OF ASTRA SHAREHOLDERS

Fidelity investments (1.2% shareholder) has come out in support of management. So we have had Frams, Aberdeen, Schroders, Jupiter voicing dissent. In support we have had Investor (4%), Woodford (2%), Threadneedle (not said in public), M&G (1.3%). Blackrock at 8% and Invesco (4%) have stayed quiet so far. The rules regarding calling an EGM are not onerous (10%) but there isn’t enough support to get to 50% in order to replace the board.

Can’t see an EGM been called personally. Be too much ‘hassle’ for investors that are not really into that sort of aggressive behaviours style…

They’ll let management know they aren’t happy but that’s that…

Savvas Neophytou
@PanmureSavvas
Tel (d) 0151 243 0973
Tel (m) 0781 140 90 46

TUESDAY’S FAYRE – M&S, ASTRA, VOD & CREDIT SUISSE

TUESDAY’S FAYRE – 20th May 2014

“Yes, I remember Adlestrop —
The name, because one afternoon
Of heat the express-train drew up there
Unwontedly. It was late June.

The steam hissed. Someone cleared his throat.
No one left and no one came
On the bare platform. What I saw
Was Adlestrop — only the name

And willows, willow-herb, and grass,
And meadowsweet, and haycocks dry,
No whit less still and lonely fair
Than the high cloudlets in the sky.

And for that minute a blackbird sang
Close by, and round him, mistier,
Farther and farther, all the birds
Of Oxfordshire and Gloucestershire.”

Edward Thomas – poet & soldier – 1878-1917

Having missed all the fun of the fair at the opening this morning when Vodafone posted not only slightly disappointing numbers, but also M&S kept up their recent track record of falling behind the curve in terms of sales of general merchandise in their end of year results. M&S’S depressing performance really came as no surprise to anyone, but nonetheless, hope sprang eternal. The winter fashions had made decent headlines, which some hoped would have rubbed off on to the Kate Swann broom, which was supposedly sweeping through most M&S high street emporiums. Sadly there is little if any sign of M&S reclaiming its share of the fashion market on the high street.

Frankly the party is over! Tomorrow has been coming for 4.5 years since Mr Bolland sat in Sir Stuart Rose’s seat. Fashion is so competitive and M&S’s fashions are not only dowdy, they are also relatively expensive against Top, Shop, Primark, H&M, Zara and Next. Mr Bolland should really go! M&S needs a radical shake up. It would be great if Lord Simon Wolfson of Next could cross the floor, but I am sure he won’t. What would be even better would be to put the two companies together – M&S for the food and NEXT for the fashion and on-line savvy. The Directory is a great tool and could be put to great effect in a broader group. Again it won’t happen, but something has to give! Many will say that Belinda Earl, who came from Debenhams, has never been given a chance. I doubt that she is the answer to the problem.

The nuts and bolts make depressing reading – Pre-tax profit fell 3.9% to £623 million – down for the third year running. Overall sales were up 2.3%. Like for like food sales up 1.7% and general merchandising down -1.4% and Christmas clothes sales down 2.1%. Debt is 6% lower on last year to £2.46 billion. M&S shares were down only 1.9%, having been down 2.7% earlier in the day. Even though on line sales have risen 23%, this is not enough to defeat the malaise.

Few parties involved in the Pfizer/Astra deal covered themselves in glory, including politicians and the unions. Their respective reputations have been damaged. Clearly the management of both companies held each other in wholesale contempt. They just disliked each other intensely. A £60 bid looks out of the question for 6 months post 26th May 2014. The likelihood of Pascal Soirot calling Pfizer back to the table before next week is virtually non-existent. The scaremongering by Soirot was by any standards, fairly base, puerile and therefore unacceptable. The behaviour of some fund managers was incomprehensible, considering the premium offered. The Rule Britannia Merchants such as Neil Woodford have my admiration for their nationalistic approach, which was laudable even though their rational thinking in terms of value deserted them. As for Pfizer’s Ian Read, I suspect he was disingenuous, in not admitting that in order to offer £55 a share cost cutting would cost at least £2.5 billion and therefore many jobs. All eyes will be on Astra’s R&D and drug pipeline. They have told the market it has risen like the phoenix from the ashes – let’s see confirmation, please?

As for Vodafone investors, despite allowing for the post-sale of Verizon blues, were very disappointed with Vodafone’s results and the fact that outlook was not particularly encouraging. The full year net profit was £59.25 billion, swelled by the sale of Vodafone (£45 billion). The dividend was up 8%. Vodafone plans to invest £19 billion in its network. However Many believe that Vittorio Coal needs to broaden Vodafone’s horizons away from a very crowded mobile market place, despite a better emerging market environment and perhaps buy a serious presence in media and TV. Investors took 4% off Vodafone share price at 1.40pm

As for Credit Suisse’s $2.6 billion fine by the US Department of Justice for tax dodging, the news was not earth shattering. Apparently 4,400 customers were tapped up. The fine is considerably more that UBS – $780 million. However both banks had a common goal – saving their US banking licence since both now major in wealth management. It was the double standards I found hard to digest. CEO Brady Dougan said nothing to do with him – it happened over many years – so I am not resigning. However the bank’s shareholders took a $1.8 billion hit, 2,500 jobs were lost and Brady took a bonus. That is WRONG! He should go. UBS’S Ossie Greubel fell on his sword for a great deal less!

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.

TONIGHT’S FAYRE – M&S

TONIGHT’S FAYRE – Monday, 19thMay 2014

“Come to me in the silence of the night;
Come in the sparkling silence of a dream;
Come with soft rounded cheeks and eyes as bright
As sunlight on a stream;
Come back in tears,
O memory, hope, love of finished years.
O dream how sweet, too sweet, too bitter sweet,
Whose wakening should have been in Paradise,
Where souls brim-full of love abide and meet;
Where thirsting longing eyes
Watch the slow door
That opening, letting in, lets out no more.

Yet come to me in dreams, that I may live
My very life again though cold in death:
Come back to me in dreams, that I may give
Pulse for pulse, breath for breath:
Speak low, lean low,
As long ago, my love, how long ago.”

Christina Rossetti – poet – 1830-1894

“My tastes are simple; I am easily satisfied with the best!” Sir Winston Churchill – Prime Minister& Statesman – 1874-1965

If there is a more idyllic or satisfying way of spending a Sunday than watching really enthusiastic 11-year olds playing in a 10/10 cricket tournament in a Utopian surrounding (Stowe School set in about 10k acres of rolling countryside), I’d like to have my cards marked. This event was supplemented with a great picnic, washed down with Pimm’s in plentiful supply and wonderfully ebullient company. It was a rarefied occasion to remember and cherish for ever.

It’s Tonight’s Fayre, as I am tied up tomorrow for much of the day and I have views on M&S!

On 24th November 2009, Marc Bolland replaced Sir Stuart Rose as CEO of Marks & Spencer PLC, the UK’s retail standard bearer. He joined to a great fanfare of trumpets, having been a huge success at Heineken, followed by an impressive sojourn at Wm Morrison. The ‘Good Ship M&S’ was, to all intents and purposes, under a wet sail, with all to play for after the UK economy was on its knees and was struggling to regain some poise. M&S had only grossed £1 billion profit twice – in 1997 and 2007. Since that fateful year profits have been eroding. Today by the time you open this missive – if you ever do – I suspect profits will have dropped for the third year to something like £620 million. Food remains as popular as ever, but general merchandise (clothing and fashion) have been an unmitigated disaster. Most of the senior managers have been replaced. John Dixon, the former head of food, runs the operation on a day to day basis with Kate Swann starting to make her presence felt as fashion guru, replacing Kate Bostock, who should have been removed from office years ago. I am hardly known for my sartorial elegance. Most who know me would describe me as a badly wrapped presence. However I know a well-dressed lady when I see one and these days she is rarely decked out in M&S fashions.

The grape vine tells us that NEXT is likely to eclipse M&S in terms of being No1 UK clothing retailer. The runes in the sand tell us that the winter fashions are looking good! They need to! However I cannot see M&S reclaiming its lost reputation at the expense of Next, H&M, Inditex, and Primark. A merger or takeover by M&S of say Next would make great sense, though I suspect Lord Simon Wolfson will have none of it. Since Bolland took over M&S’S share price is up from 387p to 450p – 16.2% – a very average performance. Investors will be watching to see what has been spent on revamping stores and how margins have been eroded.

I am fearful of M&S’S banking gimmicks and also of having another shot opening stores abroad, where the previous management failed disastrously. They are surely just marketing tools, which just paper over the cracks of its brittle infrastructure. Bolland’s charm has allowed himself to sweet-talk shareholders. God bless their patience! It is just as well I am not an influential shareholder. It would be ‘sayonara!’ BUT maybe the genie will be enticed out of the bottle in the form of a creative fashion god, who will stimulate these dowdy fashions to rise like the Phoenix from the ashes! I won’t be holding my breath.

RESULTS FOR THE REST OF THE WEEK
Tuesday – BLOOMSBURY, M&S, BTG, TOPP TILES, Wednesday – BURBERRY, FIRST GROUP, UK MAIL, Thursday – ROYAL MAIL, BOOKER GROUP, M&B, HALFORDS, AMLIN, HOGG ROBINSON, SAB MILLER, UNITED UTILITIES.

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.