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

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