Monthly Archives: June 2014

DESPAIR AT 3-DAY TRADING WEEK & IPO DISAPPOINTMENT

Ever since the credit crunch and the banking meltdown, equity markets have contracted in to a three-day week, unless there is momentous news on a Monday or Friday or a Non-Farm payroll piece of data which is totally out of kilter with expectation. Such are the restraints of regulation and balance sheet usage, the level of activity seems to have fallen by about 40%. It’s hard to prove with so many more screen based trading systems and ‘dark pools’ about, but that is the general consensus of opinion. Also somewhere around 40% of trades are programme trades and option based deals, which has little to do with dealer-decision-making-process.

The management in banks and brokers spend Mondays working out strategy for the week, if they have the ability or inclination to think beyond a few minutes. Tuesday, Wednesday and Thursday involve light dealing. Thursday night is the ‘big night out’ and Friday is spent getting over a self-induced hangover and waiting for the content of the weekend’s press, prior to deciding the next course of action.

No one either trading or observing markets need the brains of a rocket scientist to realise that QE has been the main contributor of the UK stock market’s rally – up 93% – the DOW in US is up 100.9% and the S&P is up 122.5%. US markets have breached all-time records and the FTSE flirted with its record of 6930, but is now about 180 points light.

Equities feel very heavy at present. Many would think they are heading for a fall, which would be normal, when volumes are so light, particularly against a background of geopolitical turmoil in Iraq and Ukraine, plus valuation concerns over earnings plus a fairly frothy oil price. However the great conundrum is why desert equities when other asset classes remain so unappetising. Interest rates are unlikely to climb until near the turn of the year and then probably only symbolically. This leaves bonds, unless you are a professional, an unattractive alternative. Most companies are paying 3-4% dividends and profits remain subject to CGT in places. So there has to be a good reason why. That reason may manifest itself in the autumn, when it becomes clear that the EU is not going to make a gargantuan recovery. Also China may be stalling and the US may not be economically on fire. The runes in the sand for the UK look really encouraging with confidence in business higher than it has been for 22 years. Let’s hope the UK is not dragged down by the level of incompetence in the EU.

We have also had a slew of IPOS, many of them rushed on to the market by private equity, desperate to take some profits. Expectations for success, I think, have underpinned markets. To date there is mild disappointment, but with Williams & Glyn to come plus others, the next few months will prove to be interesting. Investors are shrewder than they are given credit for. They are not in the mood to be rail-roaded as can be seen by the table set out below. There are some serious valuation problems – hence quite a few have disappointed – AO.com, BooHoo.com, Pets at Home and Saga. GoPro was a huge success in the US last week and the market waits with great expectations for Alibaba on 8th August when 12% of the company will be offered for sale hopefully raising $20 billion, valuing the company at $160 billion.

company Date issued Initial price Latest price Average change
AO.com Febuary 2014 440.00p 262.10p -40.97%
Bohoo.com March 2014 50.00p 44.00p -12%
Poundland March 2014 300p 309.60p +3.11%
Pets at home March 2014 245.25p 203.00p -17.23%
B & M retail June 12th 2014 270.00p 277.00p +2.60%
Saga May 2014 185.00p 172.75p -6.62%
TSB June 2014 260.00p 275.50p +5.97%
AA June 2014 250.00p 247.00p -1.2%
King digital March 2014 $21.36 $17.85 -16.43%
GoPro June 2014 $25.00 $35.76 +43.04%
Zoe’s kitchen June 2014 $15.00 $33.95 +126.34%

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These are David Buik’s personal views

Twitter – @truemagic68 David Buik

Market Commentator D +44 (0)20 7886 2775Panmure 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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Please refer to http://www.panmure.com/emaildisclaimer.aspx for additional important disclaimers and legal information.

TODAY’S FAYRE – EU, MARKETS & CARNEY

TODAY’S FAYRE – Monday, 29th June 2014

“I nursed it in my bosom while it lived,
I hid it in my heart when it was dead;
In joy I sat alone, even so I grieved
Alone and nothing said.

I shut the door to face the naked truth,
I stood alone—I faced the truth alone,
Stripped bare of self-regard or forms or ruth
Till first and last were shown.

I took the perfect balances and weighed;
No shaking of my hand disturbed the poise;
Weighed, found it wanting: not a word I said,
But silent made my choice.

None know the choice I made; I make it still.
None know the choice I made and broke my heart,
Breaking mine idol: I have braced my will
Once, chosen for once my part.

I broke it at a blow, I laid it cold,
Crushed in my deep heart where it used to live.
My heart dies inch by inch; the time grows old,
Grows old in which I grieve.”

Christina Rossetti – poet – 1830-1894

Having experienced heart-breaking reverses for England in the World Cup, a heavier defeat at rugby in New Zealand than most ardent followers expected and an embarrassing capitulation against Sri Lanka in a home based series for the first time, how inspiring was Andy Murray’s performance against Agut in the 3rd round at Wimbledon yesterday! – Fantastic!

It did not take long for Pippa Middleton to appear in the Royal Box at Wimbledon last week – as the sister to the wife of a future King, fair enough! I don’t expect her to ‘extract the Michael’ again by making another visit in that coveted enclosure during the final week. I fear I may be very disappointed. Surely she must see that a reappearance would be an abuse of privilege!

The PM has received bad press on two issues last week. He probably deserved it for poor judgement appointing Andy Coulson, as press honcho, when many expected that he carried baggage, though I have to say I thought he did the job in an exemplary manner, unlike one of his predecessors, who just could not stay off the airwaves with his acrid comments of contempt for those not of the same political persuasion – not the modus operandi of a Government press officer.

What surprised me is that he was vilified for his performance in Brussels over his disagreement over the manner J-C Juncker was appointed rather than elected as President of the EU. Whatever views might be held over membership of the EU and the UK’s current and future role, PM Cameron, in my humble opinion, did not deserve such malicious criticism. He was betrayed by the waspish and duplicitous self-interest of Merkel and her ‘Blackadder’ styled acolytes – Hollande and Renzi. Does the UK really want to lie in the same bed as these treacherous political philanderers? The fact remains, the UK is an outsider as far as the EU is concerned and this should be recognised. This country, hopefully, has no interest in the promotion of federalism and its standard bearer – J-C Juncker, President of the EU.

The PM was not the only ‘high-profile’ celebrity to receive mixed press last week. The Treasury Select Committee’s Pat McFadden accused the Governor of the Bank of England of oscillating over interest rates over the past few months as follows – “It strikes me the Bank is behaving a bit like an unreliable boyfriend – one day hot, one day cold. I think the Governor has been unfairly criticised over his ‘forward guidance’ policy. After all economic indicators are not like door numbers – they move! Growth has picked rather more resolutely in the UK than the Governor and most people expected. Perhaps too much credence was attached to unemployment falling below 7%, though Mr Carney insists that employment data is a key indicator.

The Governors most recent comments on interest rates were rather more dovish than those in his Mansion House speech, when the tea leaves in his cup suggested rates would start to climb slowly this autumn with a symbolic 0.25% hike to 0.75%. He then went on to say in his testimony at the TSC – “For the record, we expect that there will be a pickup in earnings growth… there has not been an acceleration in earnings, in actual earnings in the measured data that has actually been produced yet.”

The concern about rates, of course, has been driven by the threat of the property bubble bursting. The Governor requires no advice from the IMF, Finland or any other body. Carney is in the hot seat. We must support him. Plans to curtail large mortgages of £500k+ with a maximum for 15% of a bank’s mortgage total and 4.5 times earnings is sensible and prudent. The authorities can tinker with this problem all they want. However there is a huge housing shortage. Until local authorities are forced to release land for building, the situation is unlikely to improve more than marginally, unless our economy, possibly triggered by EU economic incompetence, goes in to reverse. It is interesting to note that mortgage approvals may have fallen 10% in recent weeks.

Last week was another enigmatic trading period with the Iraq fall-out, higher oil prices, concern over valuations, less than robust retail activity in the US coupled with the threat of higher interest, taking the froth off the top of the main equity markets. In all truth the appetite for risk has been tapered. The S&P 500 drifted down by 0.1%, the FTSE 100 fell by 1%, the European bourses by an average of 1.7% (growth seems negligible) and the NIKKEI by 1.66% (investors have turned cynical against the Abenomics charade.)

In New York, the ProGo IPO was a huge success as the video genie added 30% in value on the first day, shares having been issued at $25 and closing at $31.65. Alibaba, China’s answer to a combination of eBay and Amazon is likely to take its bow on the NYSE on 8th August 2014. 12% of the company is likely to be sold for $20 billion, valuing the operation at about $160 billion. What investors will enjoy is that Alibaba makes profits. On Friday Dupont eased sharply on gloomy news in terms of outlook.

In London last week, shares just drifted down, though energy stocks did well in attempting to buoy the market. Barclays took a clattering on Thursday, losing 6% in value. Its ‘dark-pool’ operations have come under allegations from NY Attorney General Schneiderman that this London based bank had profited from unconnected data damaging their less sophisticated investors’ positions and stock holdings, in favour of market professionals. Barclays seem to have lost the support from investors, which have removed their funds. CEO Antony Jenkins would appear to be holding a full-sale inquiry and is cooperating with the SEC and other regulators. These allegations, in the main, seem to have manifested themselves under the Bob Diamond/Skip Magee dynasty between 2006 and 2012, though further clarification is required. It’s funny how only UK banks come consistently under the cosh of US regulators – rarely their own! BNP finally agreed to pay the US DOJ E8.9 billion as a fine for breaking sanctions with the likes of Iran.

Rolls Royce had a good week as Airbus confirmed its undying support with the £1 billion share buyback providing some impetus after losing an Emirates contract the week before. There were rumours of a takeover of SAB Miller by Diageo, with AB InBev sniffing in the wings. Tui Travel is likely to tie up with its German namesake. Post the Carney comments on mortgages and interest rates, house building shares had a bit of a run on the rails. Abbvie has not quite given up the unequal struggle to buy Shire Pharmaceuticals. However for the time being it has turned its affections in the direction of NPS Pharmaceuticals for $4 billion – a mere bagatelle! GSK bribery issues in China seem to have been exacerbated by a sex scandal. A video would appear to have been sent to Sir Andrew Witty. Anglo-American is considering divesting itself of £2 billon platinum mines in South Africa.

On the economic front, the US authorities confirmed that the 1st quarter of 2014 was dire with GDP enjoying a horrifically negative -2.9%. France confirmed no growth at present – no surprises there with Hollande seeming to have totally lost the plot. EU CPI was marginally better than expected at +0.4% against estimations of +0.2%. It still remains dangerously low, leaving Mario Draghi with plenty to think about. UK GDP for the 1st quarter was reconfirmed at +0.8%.

Private equity in the form of Carlyle look as if it wants to take a quick profit from the rise in value of its investment in Addison Lee – up from £300 million to £500 million according to the Sunday Telegraph. Adidas, like to do brilliantly over World Cup sales, as will Nike, seems to be at pains to make peace with Sports Direct’s Mike Ashley, so important a customer SDI is. Adidas had complained about the scruffy nature of the shops. Stack ‘em high and sell ‘em cheap I say!

UK companies posting results this week – Monday – ENERGISER, Tuesday – OCADO, ST MODWEN PROPERTY, , Wednesday – ANITE, TOPPS TILES, CARILLION, TULLOW OIL, PERSIMMON, Thursday – GREENE KING, POWNDLAND.

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.

IN MEMORIAM – POEMS – 100th ANNIVERSARY FIRST WORLD WAR

“If I should die, think only this of me:
That there’s some corner of a foreign field
That is forever England. There shall be
In that rich earth a richer dust concealed;
A dust whom England bore, shaped, made aware,
Gave, once, her flowers to love, her ways to roam;
A body of England’s, breathing English air,
Washed by the rivers, blest by suns of home.
And think, this heart, all evil shed away,
A pulse in the eternal mind, no less
Gives somewhere back the thoughts by England given;
Her sights and sounds; dreams happy as her day;
And laughter, learnt of friends; and gentleness,
In hearts at peace, under an English heaven.”
The Soldier
Rupert Brooke – 1887-1915

“Bent double, like old beggars under sacks,
Knock-kneed, coughing like hags, we cursed through sludge,
Till on the haunting flares we turned our backs
And towards our distant rest began to trudge.
Men marched asleep. Many had lost their boots
But limped on, blood-shod. All went lame; all blind;
Drunk with fatigue; deaf even to the hoots
Of disappointed shells that dropped behind.

GAS! Gas! Quick, boys!– An ecstasy of fumbling,
Fitting the clumsy helmets just in time;
But someone still was yelling out and stumbling
And floundering like a man in fire or lime.–
Dim, through the misty panes and thick green light
As under a green sea, I saw him drowning.

In all my dreams, before my helpless sight,
He plunges at me, guttering, choking, drowning.

If in some smothering dreams you too could pace
Behind the wagon that we flung him in,
And watch the white eyes writhing in his face,
His hanging face, like a devil’s sick of sin;
If you could hear, at every jolt, the blood
Come gargling from the froth-corrupted lungs,
Obscene as cancer, bitter as the cud
Of vile, incurable sores on innocent tongues,–
My friend, you would not tell with such high zest
To children ardent for some desperate glory,
The old Lie: Dulce et decorum est
Pro patria mori.”

Wilfred Owen – 1893-1918

TODAY’S FAYRE – Markets,IPOS & Banking

TODAY’S FAYRE – Thursday, 26th June 2014

“Never give all the heart, for love
Will hardly seem worth thinking of
To passionate women if it seem
Certain, and they never dream
That it fades out from kiss to kiss;
For everything that’s lovely is
But a brief, dreamy, kind delight.
O Never give the heart outright,
For they, for all smooth lips can say,
Have given their hearts up to the play.
And who could play it well enough
If deaf and dumb and blind with love?
He that made this knows all the cost,
For he gave all his heart and lost.”

“Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.”

William Butler Yeats – poet – 1865-1939

The fact that Rebekah Brooks, her husband Charlie and her PA were found not guilty of conspiracy to pervert the course of justice (phone hacking) comes as no surprise to me. I was told the case against them was pretty flimsy at best, despite the case against Andy Coulson being quite solid.

It has been a long time clearing the decks and one can imagine the toll it has taken on their families. One must hope that the Brooks enjoy the delights of their young daughter, without constantly living in a frightening vortex of the unknown. To date little time will have been spent enjoying her early childhood. Let’s hope the sadness is all behind them.

My approach to this regrettable episode is very simplistic in comparison to most. The Leveson Enquiry was a red herring. On the whole the UK press is brilliant. If people behave badly like ‘hacking’, resulting in the devastation of families like the Dowlers, then they must go to jail and cool their heels off. The rest should be left to get on with their lives!

Despite a truly unappetising adjustment to US first quarter GDP to minus – 2.9%!! – courtesy of the appalling winter, investors on the Street of Dreams picked up their cudgels and waded in to the ring to give a rather soft equity market on the Street of Dreams a bit of a boost. This resulted in the DOW closing up 0.29%, the S&P 500 was 0.49% to the good and the NASDAQ a satisfying 0.68%. Energy companies such as Valero and Marathon Oil were in demand. Monsanto added 5% and CBS 5.8% during the session. C&J Energy confirmed their $2.86 billion merger with Nabors. For the anoraks amongst us Wall Street has turned over an average of 5.6 billion shares a day in June – slightly better than of recent months with the impetus probably emanating from IPOS.

Talking of IPOS, COPRO the video camera titan will be introduced to the market today with shares issued at $24 – at the top of the range – enhancing CEO Nick Williams’s billionaire status. COPRO may well attract custom from the likes of Sony, JVC, Cannon, Nikon, Olympus and Samsung. There appears to be quite an appetite for this issue. This may well prove an interesting appetiser to Alibaba’s ‘entre’ due in the next few weeks. The US remains full of stories and initiatives with Google really flexing its muscles with its drive to dominate the android market by coupling its existing facility with TV, the car and the smartphone markets. Yesterday’s conference impressed many people and certainly sent a shot across Apple’s bows to sharpen up with its innovations! It is interesting to note that Google has sold 19 million units and has 1 million active users – a long way off Apple and Samsung, but watch this space.

London experienced another rubbish day – totally dispiriting, with shares just drifting away with little business, though market makers running out of pencil lead – down 0.8% to 6733! Wonga attracted adverse publicity for fraudulently using bogus lawyers’ letters to frighten those in debt. These misdemeanours which took place pre FCA days may be investigated by the boys in blue. However Wonga has already agreed to pay 45,000 customers £50 for the insult. TSB shares went unconditional yesterday with the spivs and vagabonds taking the share price down 4%. However the shares still show a premium of 10%. We really need some independent research on this company before too long.

Sir Martin Sorrell was insulted by the fact that 28% of shareholders, which included abstentions voted against his remuneration package of £28.9 million. It is good to see shareholders taking their responsibilities seriously. However in this case Sorrell deserves his demands. He has been at the heart of this company for 25 years. He has acquired or grown about 120 companies on a global basis under the WPP banner. The share price has doubled in the last 8 years. Sir Martin is also a good communicator and an excellent barometer of the world’s economy.

Sir Philip Hampton, RBS chairman made it clear yesterday, that since mobile and on line banking had increased by 232% in recent times and that branch banking had fallen 30%, it did not need the brains of a rocket scientists to see that branches will have to close. I am amazed that banks don’t get it. The vilification will not stop; the hatred will not abate until there is more contact between manager and client. Closing excessive branches is NOT the answer! Barclays will undergo some uncomfortable days in court, where the New York attorney will allege that this bank took systematic advantage of its customers in what is known as dark pool trading, by altering market material.

The forthcoming merger between Carphone Warehouse and Dixons Retail looks all set to go, with both companies posting good numbers today. Carphone posted a 14% increase in profits from £113m to £151m, having bought out Best Buy’s 50% interest. 4G sales have gone well. Dixons saw its profits up 76% to £166.2m from £94.5m with online sales up 16%.

I doubt there will be too many surprises from Mark Carney’s speech on Financial Stability Report, which will be mainly about the mortgage/bubble market. We expect the BOE to ask lenders to be more discerning about the size of mortgages, be more diligent about credit risk and ask for larger deposits.

These are David Buik’s personal views

Twitter – @truemagic68 David Buik

Market Commentator D +44 (0)20 7886 2775Panmure 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 – CARNEY & TESCO

TODAY’S FAYRE – Wednesday 25th June 2014

“The brawling of a sparrow in the eaves,
The brilliant moon and all the milky sky,
And all that famous harmony of leaves,
Had blotted out man’s image and his cry.
A girl arose that had red mournful lips
And seemed the greatness of the world in tears,
Doomed like Odysseus and the labouring ships
And proud as Priam murdered with his peers;
Arose, and on the instant clamorous eaves,
A climbing moon upon an empty sky,
And all that lamentation of the leaves,
Could but compose man’s image and his cry.”

William Butler Yeats – poet – 1865-1939

Luis Suarez may be the greatest striker to hit these shores for many a year. But these biting antics – for the third time – are just unacceptable by any standards. Though one would have to have some passing sympathy for Liverpool supporters, he should be banned from playing in the Premiership for at least two years. What kind of a role model is he for our children?

It was good to see a bit of backbone from England’s ‘tail enders’ in support of Moeen Ali’s brilliant maiden hundred at Headingley, where England lost the series to Sri Lanka for the very first time on these shores off the second last ball. Don’t blame Jimmy Anderson. He did well to survive 81 balls in a brave quest to avoid defeat.

Post the Coulson scandal, PM Cameron may rue the day he called for the Leveson Enquiry. I think it was a huge mistake. I think our press is fantastic! – The best in the world! If people transgress such as hacking phones, which is illegal, let them go to prison without delay! That should be enough without all the shenanigans that regulation will now subject this fine profession to!

I am on holiday today, but now that life will be bitten by Wimbledon and continued reluctant support for the World Cup – interesting to note that England’s early exit may cost the economy as much £1.3 billion in all periphery aspects including sub-standard productivity from depressed fans – I just wanted to make two short comments on Mark Carney and Tesco.

I think Governor Carney has been unfairly attacked for prevarication and varying his interpretations on forward guidance. Forward guidance is not an exact science. Forward guidance says what it means and is entitled to be altered in concert with the strength or weakness of the UK’s economy. Perhaps the 7% unemployment threshold was an indifferent yardstick. No-one knew that the UK economy would improve to the degree it has. Is it temporary? It could be when one thinks that, apart from Germany, the EU is economically hanging in rags – very close to recession and the US will do well to beat 2.2% GDP for 2014, with China’s economy nothing like as robust as we had hoped for. Mr Carney also pointed out that there was plenty of slack in the Labour market, with wages remaining stagnant.

Also with a property bubble still a threat the BOE has to balance probability with keeping the glow of recovery still smouldering. Put interest rates up too quickly, will put the kibosh on confidence and retail. Retail is the essential ingredient for growth. Mr Carney’s MPC will be reluctant to throw the baby out with the bath water. Therefore Governor Carney should be allowed to adjust his forward guidance as often as he sees fit.

There is little doubt that Tesco is in in a pickle and that Phil Clarke’s leadership is under the cosh, with yet another departure in the form of Neela Mukherjee, head of UK merchandise, to be replaced by Robin Terrell. Her departure follows in the wake of Messrs Higginson, Brasher, McIlwee, Mason and Platt – all heavyweights. Clarke has his work cut out. However I was disappointed to hear that Lord McLaurin, the chairman of Tesco blamed Sir Terry Leahy for Tesco’s problems. After all Mi’Lord you were in situ! What did you do about it?

Companies reporting today and the rest of the week – Wednesday – NORTHGATE, STAGECOACH, Thursday – DIXONS RETAIL, CARPHONE WAREHOUSE, DS SMITH, Friday – HORNBY & SERCO.

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 – IPOS, MARKETS & LITIGATION

TODAY’S FAYRE – Tuesday, 24th June 2014

“Rain, midnight rain, nothing but the wild rain
On this bleak hut, and solitude, and me
Remembering again that I shall die
And neither hear the rain nor give it thanks
For washing me cleaner than I have been
Since I was born into this solitude.
Blessed are the dead that the rain rains upon:
But here I pray that none whom once I loved
Is dying to-night or lying still awake
Solitary, listening to the rain,
Either in pain or thus in sympathy
Helpless among the living and the dead,
Like a cold water among broken reeds,
Myriads of broken reeds all still and stiff,
Like me who have no love which this wild rain
Has not dissolved except the love of death,
If love it be towards what is perfect and
Cannot, the tempest tells me, disappoint.”

Edward Thomas – poet & soldier – 1878-1917

Being a Fulham supporter, I have mixed feelings about the way some of our players have performed on the Wold Cup stage. It is great to see the likes of Bryan Ruiz and Ashkan Dejagah and Giorgos Karagounis playing well for the respective countries, but why collectively could they not turn it on for Fulham last season? Dejagah was tolerable, though he did score a few fabulous goals, Ruiz was woeful, and Kanagounis was just older than God!

I was privileged to see the adaptation of Hilary Mantel’s amazing book – Wolf Hall – about the life and times of Thomas Cromwell at the Aldwych Theatre last night. The stifling heat failed to taper our immense enjoyment of a truly outstanding theatrical experience. There were some outstanding performances with real Thespian qualities – Ben Miles (Cromwell), Nat Parker (Henry V111), Lydia Leonard (Anne Boleyn) and Paul Jesson (Wolsey). This production is a real MUST. However, no drinks beforehand are recommended! You need to be able to ‘get a trip’ and ‘stay four miles in a bog!’

Alastair Cook should be stood down as Captain of England, until he regains his form. He has already accumulated over 8000 runs for England, but needs to have his confidence rebuilt. Give the job to Matt Prior. He’d do a great job as chief shop steward!

It is 24th June. The sun is high on the yard arm and equities still refuse to retreat. They are just taking a nap in the stifling humidity. Deals abound around the world, underpinning these markets. GE and the French Government consummated its purchase of Alstom, with the former having rather more than it wanted in a deal valued at $17 billion. Oracle bought Micros Systems for $5 billion. SNC-Lavalin paid £1.2 billion for Kentz. Shire, having rebuffed Abbvie’s £27 billion overtures preened itself like a peacock as it told the market that would double sales of drugs to $10 billion by 2010.

The ‘AA’s’ IPO, which did not come to the market with any fanfare – You would have thought that Cenkos would have shouted about it from the roof tops – had an inauspicious start losing 7.2% of its value on the first days of trading. The debt of £3 billion was a little rich for some peoples’ blood and there was concern about not only maintaining but also increasing membership. Conversely TSB, after a volatile trading session early on added 2p on the day to 292p. With greater restrictions likely to be placed on mortgage lending criteria, it will be interesting to see how the unconditional trading goes tomorrow, when all the spivs and vagabonds get involved.

New York as a centre was dead from the neck upwards yesterday, with the Street of Dreams virtually as square with nothing to do! One interesting nugget of information transpired recently – data on IPOS in the US. In 1999 and 2000 there were 500 IPOS in each year with a pop of an average of 50% (premium on first day’s trading). So far this year in the US there have been 250 IPOS. Another 80 are due in the next couple of months. The average pop for those already brought to the market is 14%.

Wimbledon dominated proceedings yesterday. The FTSE closed down 24 points at 6800. It was hard to get enthusiastic about anything. Punters watched Shire and energy stocks and some mining stocks, which acme off the boil. Sainsbury decided to enter the unrewarding price war in the wake of Morrison’s antics, in the hope of reclaiming some market share. The fire at ASOS’S warehouse hardly damaged its share price, which has fallen 60% in recent months. Eircom served notice that it is preparing for a €1 billion float. We all noted with interest that France is not far away from going back in to recession.

I notice that some hacks are starting to give Mark Carney some stick over his interest rate and mortgage policies. I think this is unfair. You cannot give a job to a hunting dog and then start barking yourself. With growth looking fragile all around us, to raise interest rates and curb mortgage applications too aggressively would, in my opinion be folly. Let the main man and his committee get on with his job! No doubt he will make his views clear at the TSC this morning.

Challenger banks should be aided in their attempts to rival established high street players by effectively forcing public sector bodies to deposit funds with them, a report by the industry’s main lobbying group will say this week – so Sky’s Mark Kleinman inform us. Kleinman is just the messenger – don’t blame him – but the message, with respect, is just rubbish! Advice cannot be proffered as to who should receive deposits etc. These challenger banks have to earn their own spurs and no one must ever accord any favouritism.

There was a well-researched piece in the Independent on the possibility that the £22 billion fines and costs incurred by the banks for miss-selling of PPI could be usurped by litigation on interest rate misdemeanours. It’s a good article but there is more than a degree of hysteria about the cost. Transgression must be dealt with, but the FCA is a sensible and pragmatic body. It will need to be with FX fixing litigation waiting in the wings. Otherwise anarchy stares us in the face! As for Lloyds Banking Group’s sale of the taxpayers’ 25% remaining stake, well that may have to wait a few months awaiting the outcome of the FCA’s findings.

These are David Buik’s personal views

Twitter – @truemagic68 David Buik

Market Commentator D +44 (0)20 7886 2775Panmure Gordon & Co
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TODAY’S FAYRE – Monday 23rd June 2014

TODAY’S FAYRE – Monday 23rd June 2014

“When I see you, who were so wise and cool,
Gazing with silly sickness on that fool
You’ve given your love to, your adoring hands
Touch his so intimately that each understands,
I know, most hidden things; and when I know
Your holiest dreams yield to the stupid bow
Of his red lips, and that the empty grace
Of those strong legs and arms, that rosy face,
Has beaten your heart to such a flame of love,
That you have given him every touch and move,
Wrinkle and secret of you, all your life,
— Oh! then I know I’m waiting, lover-wife,
For the great time when love is at a close,
And all its fruit’s to watch the thickening nose
And sweaty neck and dulling face and eye,
That are yours, and you, most surely, till you die!
Day after day you’ll sit with him and note
The greasier tie, the dingy wrinkling coat;
As prettiness turns to pomp, and strength to fat,
And love, love, love to habit!
And after that,
When all that’s fine in man is at an end,
And you, that loved young life and clean, must tend
A foul sick fumbling dribbling body and old,
When his rare lips hang flabby and can’t hold
Slobber, and you’re enduring that worst thing,
Senility’s queasy furtive love-making,
And searching those dear eyes for human meaning,
Propping the bald and helpless head, and cleaning
A scrap that life’s flung by, and love’s forgotten, —
Then you’ll be tired; and passion dead and rotten;
And he’ll be dirty, dirty!
O lithe and free
And lightfoot, that the poor heart cries to see,
That’s how I’ll see your man and you! –“

Rupert Brooke – poet & soldier – 1887-1915

I feel so sorry for all those amazingly nationalist folk up and down the countryside, who gave their all in terms of support for the England football side. Street parties, bunting, drinks clothing flags, only to end up bitterly disappointed. Let’s face it, we cannot doubt the commitment, endeavour and passion of the England side and its management. Frankly we all know that they are just not skilful enough in comparison to South American and some European peers. It’s no good blaming the Premiership and the fact that we attract so many good overseas players. Our problems starts at the schools, where the coaching from the age of 5 years old is wholly inadequate. That, in my humble opinion is the route of the problem. Football or some sport should be absolutely compulsory, so that children learn about commitment, passion, giving teachers the opportunity to recognise real skill. IF that were to happen England has a real chance of matching the achievements of our heroes of 1966.

The bookies took a bit of a larruping at Royal Ascot with 11 out of 18 ‘jollies’ landing the spoils – quite a few at prohibitively skinny prices. After a quiet year it was great to see Sir Michael Stoute back in the vanguard as leading trainer at the meeting with four winners and Ryan Moore, his stable jockey the leading rider with 6 winners from an array of top trainers! These were many magical moments. I felt particularly pleased for the connections of ‘Telescope’ who was favourite for the Derby last year but was unable to run due to injury. He won the Hardwicke for the Stoute team in great style!

Laudable though David Cameron’s efforts to block the appointment of J-C Juncker as President of the EU are, there is a swell of concern from business that this objection has come far too late. The City of London and like it or not it is a cash-cow juggernaut, which generates £45 billion of income per annum looks very exposed to taxation. Paris and Frankfurt are ‘Mickey Mouse’ financial centres in comparison to London. London looks horribly exposed to unreasonable taxation, which will erode the UK’s competitiveness and no alterations to freedom of movement seems part of the plans of an intransigent European federalist. The EU should be about trade, not stifling sovereignty, with draconian intransigent regulation!

There were plenty of discouraging pointers to put investors off their game. Firstly Iraq insurgence by ISIS gathered momentum. Iraq being the second most prolific oil producer in the Middle East, punters in black gold required little encouragement to rack the price of crude up to $116 a barrel. Iraq is capable of producing 7000 barrels a day. The current geopolitical pressure has seen production fall to 3,300 barrels a day. Observers would not want that number to fall too much, as the region would be too reliant on Saudi Arabia or fracking. If that were the case we could be back to 2008 levels of $147! Sadly President Obama is perceived to a leader who vacillates and is loathed to make decisions, which saw the Greenback hit its lowest level against the main currencies for many months.

Janet Yellen, the Fed’s chairman helped calm the frayed nerves of investors by pouring cold water on those looking for interest rate hikes sooner rather than later. Though the QE facility will be reduced by a further $10 billion to $35 billion in July, in the same breath, after a dire winter, which savaged any growth in the first quarter of 2014, Yellen was forced to reduce GDP for the year from 2.9% to 2.1%. This proved adequate ammunition to keep the hawks at bay.

Despite some fairly worrying geopolitical and valuation issues the corporate deal pipe line as well as IPOS keeps rolling in! The appetite for deals is strangely insatiable. France may take a 20% stake in Alstom, allowing GE to assume control of the rest. Medtronic paid $25 billion for Ireland’s Covidean. On Friday Shire rebuffed Abbvie’s £27 billion bid, with Chairman Susan Kilsby promising a greater dug pipeline to fight illnesses like Hunter’s disease. The shares closed at £43.71, despite the bid being worth £46.11 a share. There may be other predators such as Bristol Myers Squibb or Allergan who may want to chance their arm. Wall Street Journal’s Helen Thomas doubts that Shire is big enough for Pfizer to invert. Any deal would have to be all stock. Oracle announced overnight that it is to buy Micros Systems for $5 billion.

At the end of the week the S&P 500 had added 1.4% to yet another record. The FTSE 100 was less flamboyant adding just 0.7%. European bourses added just 0.4% and the NIKKEI, pumped up by Abenomics nonsense added 1.7%. There will be some interesting AGMs this week with stroppy shareholders attempting to prevent a £30 million pay out to WPP’s Sir Martin Sorrell. The RBS meeting should be just as heated as Ross McEwan attempts to ram through his senior’s staffs allowances as a bonus ‘rinky-dink.’ I fear Sports Direct’s Mike Ashley is not finished with his spat over his need for further and probably justifiable excessive largesse.

Mark Carney was hawkish about UK interest rates, despite a 9-0 vote to keep rates and facilities as they are for this month. He continued to receive unsolicited advice on how to curb a property bubble. When he needs the IMF’s or Finland’s advice, I fell sure he will ask for it. Banks have already been advised to tighten up on the criteria for lending – max 4 times salary maybe coming down to 3.5 times and larger deposits. This makes the huge success of TSB’s IPO even more perplexing. There was a distinct shortage of independent advice ahead of the issue. It seems to have been a cosy deal for large shareholders in Lloyds and their clients. We shall see what unconditional trading brings out of the hat next Wednesday.

This week the following companies post results and trading statements in a quiet market – Tuesday – IMAGINATION, CARNIVAL, CARPETWRIGHT, Wednesday – NORTHGATE, STAGECOACH, Thursday – DIXONS RETAIL, CARPHONE WAREHOUSE, DS SMITH, Friday – HORNBY & SERCO.

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
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TSB – A CRACKING START – BUT I SHALL OBSERVE!

One has to doff one’s ‘titfer’ to the seven investment banks and to Lloyds Banking Group for brilliantly co-ordinating the sale of 35% of TSB at 260p, valuing the bank at £1.3 billion.

I am surprised but delighted for shareholders and the tax payer that this initial unloading has been an unqualified success on the first day of conditional trading. When unconditional trading starts on 25th June, it will be interesting to see if the open market is as responsive. It appears that the initial support has come from the large cap brigade supporting their core Lloyds holding, as £450m is such a small amount to raise in the context of Lloyds. It feels unusual to be including a 30% retail investor interest in what seems to be a well-orchestrated deal requiring 7 banks to raise such a modest sum. At 10.30am the share price stood at 291.25-291,75p – up 11%!

Time alone will tell if the mortgage market really is the ‘Arfur Daley’ many analysts expect it to be. There is also an ‘over-hang’ effect with a further 65% to be sold as well as another huge tranches of Lloyds to be disposed of and then we must consider Williams & Glyn Bank as well as copious European bank rights issues as acute competition. A brilliant effort, but I shall just observe with interest.

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.

MARKET UPDATE

I really am a trying to raise my enthusiasm for the trading day. I am trying to forget about the Gold Cup at Ascot and what lies in stall for us in San Paulo tonight! Fed Chairman Janet Yellen has done her stuff by pushing the interest rate agenda further forward, which will give Mark Carney’s MPC something to think about! Consequently the FTSE 100 has added 51 points to 6831 at 1.33pm on the back of some buying in New York late last night. The £1 billion Rolls Royce buy back gave equities the kick started the rally required. Most people sat on their hands and just let the blue pencils do their stuff. Barratt Development added 2.4%, Mondi the same and Ashtead regained 2.2% of the 6% it lost a couple of days ago. Go-Ahead posted a decent trading statement – up 2.7%. Shire and Tesco eased by 1% and 0.4% respectively on very little activity. This level of inertia is not going to get the baby a new coat. There’s Wimbledon to follow starting next week and another Test match in the 3 weeks plus Henley and the Tour de France – so God knows when the market is going to engage something apart from its backside.

Of course we have very little corporate activity in terms of results to drive this market. Yes the odd IPO – some OK like Zoopla, some disappointing like MySale. Mike Ashley’s intervention has seen the company regroup a tad, but the IPO is still under water at 206P – up 3% today – having been issued at 226p. Tomorrow TSB announces its issue price. Despite sentiment being slightly better, my personal view would suggest that it would be folly to issue shares above 220p (£1.3 billion valuation). In fact that might be a smidgen too much according to counsel taken from some fund managers. Only 25% of the company will be offered for sale, which suggest there will be an overhang for some months. So a measurable discount to book value is essential, particularly as mortgages may be harder to grant in the future, with much riding on introductory mortgages, which TSB has yet to participate in, thanks to a previous agreement with Coop Bank.

Other nuggets of news include Deutsche Bank being warned about the threat of inadequate commodity controls. Also the World Gold Council will be putting its head together with the FCA over greater transparency for gold fixing with a view to avoiding another Libor crisis.

After a positive session yesterday on the Street of Dreams, the DOW futures are looking to add just 12 points at 1.55pm.

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.

David Buik
Market Commentator

TODAY’S FAYRE – GREAT POEM, MARKETS & RESEARCH SHORTCOMINGS FOR IPOS

TODAY’S FAYRE – Wednesday 18th June 2014

“Where in this wide world can man find nobility without pride, friendship without envy
or beauty without vanity?
Here, where grace is laced with muscle, and strength by gentleness confined.
He serves without servility; he has fought without enmity.
There is nothing so powerful, nothing less violent, there is nothing so quick, nothing more patient.
England’s past has been borne on his back.
All our history is his industry; we are his heirs, he our inheritance.
The Horse!”

Ronald Duncan – poet – 1914-1982

This being Gold Cup Day at Royal Ascot, I thought it poignant to post this delightful poem! If Her Majesty’s ‘Estimate’ were to win the Ascot Gold Cup for a second time, there won’t be a dry eye on the Berkshire course! I suspect that ‘Leading Light’ might win! I suspect Michael Owen’s ‘Black Panther’ may need that drop of missing rain to get his toe in!

“England expects every man to do his duty!” COYW!

Niall Ferguson: Thatcher Would Have Seen off radical Islam, Obama is the ‘Wobbliest President of Modern Times’

A successful ISIS, encompassing parts of Iraq and Syria will pose a real threat to the security and stability to Turkey, Jordan, Lebanon, and, of course, Israel. These countries would be the first to feel the effect of a takfiri victory. But so would Saudi Arabia, Kuwait, Bahrain, Qatar, the UAE, Oman and Yemen. If ISIS is successful in Iraq, there is little reason to believe they would not want to crack on!

On the advice of many on twitter I took in “Belle” last night rather than suffer Spain v Chile! Gugu Mbatha-Raw as Dido Belle and Tom Wilkinson as Lord Mansfield, Lord Chief Jusctice gave exemplary, powerful and moving performance aided by some delightful cameo roles by Emily Watson, Penelope Wilton and Amanda Richardson. This period piece (Circa 1759) is filmed around Kenwood in Highgate. It is nearly a great film with exquisite costumes and brilliant sets. Unfortunately in places the script is rather trite and schmaltzy! Tom Wilkinson’s performance alone is worth the price of admission.

Janet Yellen’s comments given in her delightful ‘Brooklyn’ lilt at the end of the two-day FOMC meeting was music to the ears of the Street of Dreams, with the S&P 500 only needing to select another tiny gear to hit its all-time record. The FED chairman is happy that the US economy is heading in the right direction. So another $10 billion was lobbed off the QE facility down to $35 billion. Nonetheless the savage winter, which took growth in to negative territory in the first quarter, has adversely affected the growth target for 2014.

The FED has altered its forecast down from 2.9% to 2.1%. It seems that any hike in interest rates remain in the in-tray perhaps until the end of the first quarter of 2015. This was reflected in 10 year Treasury yield dropping from 2.65 yesterday to 2.58% today. Inflation does not seem to be an issue despite consumer prices rising by 0.4% last month. The inflation target of 2% appears to be threatened at the moment. As for unemployment remaining at 6.3%, the FED chairman believes it may take until 2017 before it settles at a satisfactory level.

The MPC posted a 9-0 vote in favour of no change in rates or level of quantitative easing, though Martin Weale seems to have ants in his pants. I suspect that vote may alter to 7-2 next month, threatening a symbolic hike in rates of 0.25%. Martin Weale pointed out that average wage growth may remain low until unemployment is below 5%. There seems to be significant excess capacity. There are so many guesstimates as to when rates will be increased – from the autumn 2014 to March 2015. I suspect later rather than sooner. The recovery is still brittle.

Yesterday’s activity in London was pitiful – waiting for ‘Godoh’ – well the FED! The FTSE closed up 11 points at 6,778.56. Energy shares were perky and there was some interest in Diageo and Smith & Nephew, the latter frothed up by perceived interest from Medtronic. Zoopla made its long awaited debut. Shares were issued at 220p and closed at 236p. Shareholders and DMGT will be very pleased. We were all interested to see that Mike Ashley of Sports Direct fame had filled his bots with a 3!2 million stake in Sir Philip Green’s backed MySale, which did not get off to the most auspicious of starts on Tuesday.

I am embarrassed to say I have never been into a LIDL supermarket. I will rectify that. I was amazed that LIDL was as large as it is. Its current sales are €65 billion across Europe against Carrefour and Tesco at about €80 billion. Lidl is growing at 5% per annum. Tesco and Carrefour are growing at about 2% in you are lucky. By 2018 Lidl may be larger than its two peers!

Jeremy Grime, head of research at Panmure Gordon & Co makes the following telling observations ahead of tomorrow’s TSB IPO! –

“We are all aware that a number of challenger banks that will be coming to market. OneSavings has floated (modestly underwater) and TSB closes tomorrow. Virgin Money, Aldemore, Shawbrook, Metro Bank and Williams & Glyn’s are in some brokers pipelines. After making a modest fuss a week ago about the lack of information for independent analysts on TSB miraculously the IR man from TSB did finally return my voice mails and emails. He promised there would be a meeting for independent analysts but he was too busy to tell me when.

The seven ‘book-runners’ on this seem to be pricing it low and charging more than £30m for their troubles. This amount of largesse is above 10% of the placing.

Yesterday I received an email from One Savings Bank saying they would like an independent analyst meeting in the next 9 days. We are all busy people and that’s not easy for me or others I am sure.

So I looked at their share price and saw it was at 167p versus a float price of 170p. Then, of course, I understand it is a cry for help.

What is our incentive to help when they brief ‘book-runners’ and no one else and will not even tell us “others” when they will brief us other than at 9 days’ notice? As independent analysts we will not get access unless they are in trouble.

In the meantime I take calls about TSB that the company chooses not to brief me on. I know that system has no chance of working as free markets will always win. And it is wrong. What is very worrying is how long it will take for this system of bias to change.

Sorry! It’s just the integrity point I care about. I wish the rest of the market cared as much as I do on this prickly issue.”

I whole-heartedly agree with Jeremy!

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.