TODAY’S FAYRE – Thursday 15th May 2014

TODAY’S FAYRE – Thursday, 15th May 2014

“She walks in beauty, like the night
Of cloudless climes and starry skies;
And all that’s best of dark and bright
Meet in her aspect and her eyes:
Thus mellow’d to that tender light
Which heaven to gaudy day denies.

One shade the more, one ray the less,
Had half impair’d the nameless grace
Which waves in every raven tress,
Or softly lightens o’er her face;
Where thoughts serenely sweet express
How pure, how dear their dwelling-place.

And on that cheek, and o’er that brow,
So soft, so calm, yet eloquent,
The smiles that win, the tints that glow,
But tell of days in goodness spent,
A mind at peace with all below,
A heart whose love is innocent”

George Gordon, Lord Byron – poet – 1788-1824

The Donmar Theatre is well known for its ‘left-field’ productions and its current play ‘Privacy’ proved to be no exception to the rule. This isn’t really a play – it’s more of a documentary as to how it is easily possible to find out EVERYTHING about a person’s life through his/her mobile phone. We have more than had our ‘fill’ in regard to the ‘hacking’ of celebrities’ phones, but this play exposes the privacy of the ordinary person in the street – absolutely terrifying. This play is really worth seeing ,but no so much as an art form – but more for its information.

Not surprisingly M&A is drawing all the big headlines with Astra/Pfizer playing the matinee idol role. It is interesting to note that Panmure’s Savvas Neophytou has flagged up the fact that Astra’s new lung cancer drug AZD9291 promises to be a $3bn product! So that adds some momentum to Pfizer’s Ian Read’s need to up the anti! This morning Carphone Warehouse confirmed its undying and irrevocable love for Dixons Retail in what appears to be, a merger of equals. There will be cost savings of £80 million. It appears that Carphone’s Sir Charles Dunstone, the chairman of the new group, has put his disastrous liaison with Best Buy behind them. It looks as though Dixons has finally got its digital act together in a very savvy manner. Mobile operators are becoming more irritated by the day that they are surrendering commission to Carphone; so the pooling of two great old fashioned brands makes good sense. Curry’s/PC World have 500 shops and Carphone 2000 outlets. Sebastian James, will become overall CEO of Carphone Dixons and will go straight in the FTSE at the next quarter – valued at £3.7 billion. Both stocks blipped up on the news. However I would be in dereliction of my duty if I did not point out that there is a school of thought that believes the long term prospects are not overly optimistic. Shop space is a drain on income & neither has established a sustainable strong online presence. I would take issue with that observation in terms of Dixons.

There were a slew of earnings today from Old Mutual, Vedanta Resources, National Grid, LSE, Aviva, Cairn, Energy, Premier Farnell, TalkTalk, Marston’s, Babcocks, Restaurant Group and Merlin Entertainment. Most of them were solid efforts. LSE stood out with Xavier Rolet very upbeat about the exchange’s future, expecting revenues to increase by 50% this year and inviting business from Russia, South America and Africa. His infectious enthusiasm is hard to supress. Cairn Energy pleased its acolytes with its share price responding accordingly and Aviva saw its new business grow by 13% in the first quarter. The day saw the FTSE start in negative territory but the quality of company results was pleasing and this index has poked its head above the parapet.

Today WALMART, JC PENNEY and NORDSTROM are important retail operators whose results will be eagerly awaited. France posted very disappointing 1st quarter GDP – flat, though Germany saw its GDP up by 0.8% – 2.3% on an annualised basis. The mild winter saw significant infrastructure and construction business manifest itself. Japan excelled itself by announcing a 5.9% annualised GDP, based on quarter one data. There is extreme doubt that this momentum can be sustained and that more stimulus will be required.

The Street of Dreams saw quite a sell off by SMES yesterday, which took all 3 indices down by between 0.2% and 0.5%. However, after hours Cisco Systems rallied by 7% on a great set of numbers. Groupon fell by 4%, Fossil Group by 13% and Deere & Co by 2%.

Finally on the Pfizer/Astra mega deal, suffice to say that in the last 15 years Pfizer’s share price has made little progress, despite having made acquisitions to the tune of $240 billion. Nonetheless purely on commercial considerations and valuations Astra’s shareholders should bite Pfizer’s arm off if £53-£55 a share is on offer from the US drug titan. I suspect that Capitol Hill will have its 2 cents worth of say to put into the melting pot, before this deal is considered for consummation.

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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