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
One New Change | London | EC4M 9AF | United Kingdom

http://www.panmure.com

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