Monthly Archives: July 2014

TODAY’S FAYRE – Thursday 31st July 2014

TODAY’S FAYRE – Thursday, 31st July 2014

“HOW vainly men themselves amaze
To win the palm, the oak, or bays,
And their uncessant labours see
Crown’d from some single herb or tree,
Whose short and narrow-verged shade
Does prudently their toils upbraid;
While all the flowers and trees do close
To weave the garlands of repose!

Fair Quiet, have I found thee here,
And Innocence thy sister dear?
Mistaken long, I sought you then
In busy companies of men:
Your sacred plants, if here below,
Only among the plants will grow:
Society is all but rude
To this delicious solitude.

No white nor red was ever seen
So amorous as this lovely green.
Fond lovers, cruel as their flame,
Cut in these trees their mistress’ name:
Little, alas! they know or heed
How far these beauties hers exceed!
Fair trees! wheres’e’er your barks I wound,
No name shall but your own be found.

Andrew Marvell – poet – 1621-1678

One of the greatest ‘belcanto’ tenors of 20th century, the Italian Carlo Bergonzi died on Tuesday at the age of 90! He particularly enjoyed singing with Dame Joan Sutherland, never more so than in Lucia di Lammermoor. Many opera commentators are of the opinion that when he sang Mario Cavaradossi opposite Maria Callas with Tito Gobbi as Baron Scarpia in 1964, this production of Tosca was one of the Royal Opera House’s finest achievements.

Despite a nebulous session in Asia yesterday and some interesting corporate results in the UK – particularly Barclays and BATS, which cheered investors, Europe’s bourses just continued to drip some value, with the FTSE 100 easing by 34 points to 6773. The threat, implementation and ramifications of sanctions on Russia weighed heavily on investors’ minds.

However across the pond, there was a compendium of mixed news from the front! Sanctions also created some furrowed brows. Some corporate results were OK – some good – Twitter settled up 20%, US Steel added 19%, Amgen 5.4%, Regemeron 5.8% and Edwards Lifesciences 10%. However DreamWorks did not pass muster and was shredded by 12%. During the afternoon the US government announced a blockbuster 2nd quarter GDP number – +4%!! When markets were only expecting +3%. Argentina defaulted on its debt repayment again. It last happened 13 years ago

FED Chairman Janet Yellen announced a further $10 billion tapering of QE, taking the facility down to $25 billion. QE is expected to be finished in October. The school of investment geeks that think equities may have run their race in this cycle is growing by the day. Having been propped by the Central bank for 6 years and with the distinct possibility of rates rising in 2015, many luminaries believe that equities may be due a correction. There are so many imponderables, the future is hard to call. Tomorrow it is possible that the employment data may tell us more. 240,000 jobs are expected to have been created in July with the unemployment rate settling at 6.1%. Even though he left the FED 9 years ago, the octogenarian Alan Greenspan still keeps throwing his 2 cents worth in to the pot, having left a trail of financial devastation in his wake. Sir, the golf course beckons!

On Tuesday we had Sir Richard Lambert’s submissions about a Banking & Financial oath – laudable but Victorian in attitude. Totally understood and embraced by my generation, but today I fear it’s up to the management and the individual to acquit themselves or pay the price for falling short. In other words, it you live by the sword, you must be prepared to die by it! Yesterday BOE Prudential Authority CEO, Andrew Bailey – a man of great standing and universally respected – let it be known that senior bank bosses would be personally held to account if their staff transgressed. Management must endorse that dealers/sales staff that they are fit and proper people, checking their personal characteristics on a regular basis. Also reasonable care must be taken to remove those not considered worthy to hold down their positions, thus protecting the public and clients from harm. Some of this language is quite pithy and quite nebulous. However at the end of the day if those in authority don’t do their job, they risk, fines jail loss of benefits etc.

Many of these offences are historical. The FCA is now running a much tighter ship and bank compliance officers are very much more on the case. In the past it would have been very difficult to prove fraud against incompetence as was the case with Fred Goodwin. He was certainly guilty of incompetence, but fraud? No! Jail retrospectively for offenders brought to book has serious ramifications. The time to bring prosecutions was 2008/9. It is too late now. Such is the hatred of the banking sector by the media and public, a fair trial would be impossible. Going forward the threat of a custodial sentence is not only right; it is also just!

LLOYDS Banking Group’s results saw a 32% increase in profits to £3.8 billion. Another £600 million was allocated to PPI payments making a total of in excess of £9 billion. Impairment charges fell by 58% to £758 million. Applications will be sought to pay a dividend in 2nd half. This may incense those shareholders who have felt the 64% gain in the last year but none of the pain previously. The taxpayer still owns 25% of this bank that was bailed out for £25 billion. It is clearly going in the right direction though LIBOR fines still have to be agreed and the £218 million fine for manipulating repo rate was horrendous. Royal Dutch Shell posted a 33% increase in last quarter profits to $9.12 billion. RDS’s shares have rallied by 18% in the last year. Centrica saw profits down by 40% to £890 million thanks to BG Group’s fall in profits much due to the warm weather. Ian Conn from BP is due to succeed Sam Laidlaw as CEO of Centrica.

Today these companies have also posted results –DIAGEO, COUNTRYWIDE, BT GROUP, BODYCOTE, SPIRENT, WEIR GROUP, MERLIN ENTERTAINMENTS, SCHRODERS, THOS COOK, ROLLS ROYCE, BAE SYSTEMS, Friday – DIRECT LINE, SMITH & NEPHEW, RBS, WILLIAM HILL, MAN GROUP.

BNP PARIBAS posted an astronomical loss for the last quarter of E4.3 billion thanks to the US imposed fine of $8.9 billion. SANTANDER beat expectations with a profit of E1.45 billion for 1st half of the year with Tier One Capital at 10.93% – very acceptable.

In the US the following post interim results – Thursday – EXXON MOBIL. LINKEDIN, CME, KELLOGG, CONOCOPHILLIPS, MASTERCARD, EXPEDIA, LEGG MASON, PIXELWORKS, Friday – PROCTOR & GAMBLE, CHEVRON and FORD.

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 miss-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

TODAY’S FAYRE – Tuesday 29th July 2014

TODAY’S FAYRE – Tuesday, 29th July 2014

“The curfew tolls the knell of parting day,
The lowing herd winds slowly o’er the lea,
The ploughman homeward plods his weary way,
And leaves the world to darkness and to me.

Now fades the glimmering landscape on the sight,
And all the air a solemn stillness holds,
Save where the beetle wheels his droning flight,
And drowsy tinklings lull the distant folds:

Save that from yonder ivy-mantled tower
The moping owl does to the moon complain
Of such as, wandering near her secret bower,
Molest her ancient solitary reign.

Beneath those rugged elms, that yew-tree’s shade,
Where heaves the turf in many a mouldering heap,
Each in his narrow cell for ever laid,
The rude Forefathers of the hamlet sleep.

The breezy call of incense-breathing morn,
The swallow twittering from the straw-built shed,
The cock’s shrill clarion, or the echoing horn,
No more shall rouse them from their lowly bed.”

Thomas Gray – Eton Schoolmaster & poet – 1716-1771

It was great to see the swashbuckling Jos Buttler batting in such a carefree manner at Southampton yesterday, in making 83 towards the end of England’s 569. I can’t remember the last time England made more than 400 in their first innings. Buttler’s innings will hopefully instil great confidence for our younger players going forward.

August is nigh and I can imagine people want to read my market twaddle like they need a hole in the head; so I shall be brevity personified. Suffice to say that a witch’s nipple is likely to be more responsive than this market, though we just seen a ripple of life – the FTSE 100 is up 23 points at 6811 at 11.42am. GKN grabbed the yellow jersey with excellent numbers – up 6%. BP was up 1% at one point, but there are still some ugly imponderables both in owning 19% of Rosneft if that European tribunal can make that $50 billion claim on the Russian government stick – unlikely I think! BP’s shares are now down 1%. You cannot keep a good man down especially a really top retailer such as Lord Simon Wolfson. Next posted really solid numbers – stock up 2.5%. I was glad to see that Andy Higginson may get the nod as the next chairman of Morrison.

This fine of £218 million for Lloyds Banking Group, I am afraid is just endemic of a slew of transgressions by ALL the banks, most of which took place around 2008, when the FCA was very weak. The FSA/FCA was understaffed and their staff was woefully badly paid. In the wake of soft regulation, which all political parties supported, was in hindsight a disaster. The FCA is in good shape now with Andrew Bailey and Martin Wheatley at the helm, aided and abetted by the likes of Tracey McDermott, who appears to enjoy eating nails for breakfast and spitting the rust out!”

Sadly Lloyds, despite conveying the image that butter would not melt in its mouth, has transgressed on PPI and some LIBOR issues rather more than their peers. Thursday sees Lloyds post its results – likely to see profits up by 25% and I am afraid extra provision will have to be made for more PPI taking the figure to above £10 billion. This is disgraceful!

On the whole 99% of the banking sectors’ employees are good eggs. However the bad boys probably should be brought to book. Who are they? Good question. They are very hard to pinpoint. This is a conundrum for the judiciary and society. Those who have behaved fraudulently should probably go to jail – no question. Until that happens the deterrent may not be there. However with the media so poisonously against bankers – understandably so before you jump down my throat! – Those charged with very serious offences are unlikely to get a fair trial. Condemned before they set foot in the dock! Then tomorrow we hear from Barclays. How much will be made of the ‘dark pool allegations?’ I think they are receding. What are not going away are the foreign exchange investigations on rate fixing. If these allegations have any legs or credence behind them, we are in for a long period of penal litigation. Results this morning from Deutsche Bank and UBS ventured to suggest that their respective brands would remain in the litigious frame on a global basis for some months to come. Have sufficient provisions been made by the banks?

Just a thought! All this horrible toxic garbage is historical. The regulators and top bank management are much more on top of their game that they were 6 years ago. Retribution is wholly understandable, but also the banks should be allowed to attempt to mend fences with society.

In the US AETNA, REYNOLDS AMERICAN, McGRAW HILL, MERCK, CORNING, PFIZER, AMGEN, TWITTER and WYNN RESORTS post interim numbers today.

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 miss-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

TRIBUNAL ORDERS RUSSIA TO PAY $50 BILLION

I may be guilty of plagiarism from ‘Forbes’ magazine, but I love the quotation. “I fought the law and…I’ve forgotten how the rest of the song goes.” Sasha Mordovets – Getty Images
Having rotted in a Siberian Prison for 10.5 years – Matrosskaya Tishina – until December of last year Mikhail Khordokovsky can now raise half a ‘Giaconda smile’ on news that an international tribunal has ordered President Vladimir Putin to pay $50 billion in damages to the former owners of OAO Yukos, saying that Russia’s courts – or should I say ‘Putin’s Puppets’ – illegally expropriated them.

Not that Vladimir Putin could give a tinker’s damn about this ruling. He will feel that he has shown more than a touch of clemency in releasing Khordokovsky from truly inhuman conditions, despite the Yukos oligarch having been sentenced on no more than trumped up tax evasion charges. The ruling is one of the biggest ever against a sovereign state and threatens to inflame tensions between Russia and Europe still further. Relations are almost worse than they were during the cold war between 1960 and 1990.

Yukos was the flagship company of Mikhail Khodorkovsky, the oligarch whose fall from grace in 2003 was the defining episode in Putin’s consolidation of power.Yukos was broken up by Putin’s tyrannical regime and was sold for a fraction of its real value to OAO Rosneft. Rosneft is now the largest listed oil producer in the world, accounting for over 4% of world crude supply. Rosneft has recently been banned from U.S. capital markets, limiting its ability to deliver new projects.

A parallel suit on behalf of all Yukos shareholders is also being heard by the European Court of Human Rights in Strasbourg, France, and is expected to rule Thursday. The irony of this finding is the thought of Russia countenancing this court’s ruling – not even half a chance – NO CHANCE. But the ruling will allow the Yukos shareholders to argue that shipments of oil arriving in Europe from Rosneft are, in fact, their property. They can argue all they like Khordokovsky and his allies won’t get a penny whilst Putin remains in power. Best we take comfort from the fact that Putin will feel just a tad uncomfortable at this finding. However it retaliation Russia may use its legal system to exert its own pressure on the West by hitting western companies there, McDonalds Corp being one of the first to be hit.

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 miss-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

Banking & Finance oath

Attached is the BANKING & FINANCE OATH

http://www.thebfo.org/BFO/media/contents/PDFs/BFO-Flyer-v5a-3.pdf

I much admire Sir Richard Lambert and his colleagues, but how many more committees do we need to find the right blend of ethics and morals – Treasury Select Committee, Vickers Banking Committee, Parliamentary Banking Committee, the FCA , the Bank of England and so it goes on. This code is all highly laudable but the fact remains there has never been sufficient deterrents for bad behaviour. I am amazed that someone has not gone to jail for some of these misdemeanours – particularly PPI, money laundering and fraud.

However with all the books written and the media’s bile and hatred towards the banks now at a crescendo – and those who have transgressed are very few – I doubt many indicted would get anything but an unfair trial – such is the hatred. It should have been possible to bring those perpetrators to justice, which would have put the brakes on the continuing waves of sub-standard behaviour.

Today’s Fayre – Monday 28th July 2014

TODAY’S FAYRE – Monday, 28th July 2014

“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 tired, outstripped Five-Nines 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 flound’ring 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 – poet & soldier – 1893-1918

100 years ago today Austria-Hungary declared war on Serbia – The start of the Great War 1914-1918.

Engelbert Humperdinck’s opera ‘Hansel und Gretel’ was performed at West Green Opera last weekend by the Garsington Opera Company. This little known work was splendidly produced with excellent sets as well as blissful singing performances in beautiful surroundings – with floodlit award winning gardens, a wonderful picnic and great company, which contributed hugely to the enjoyment of the occasion.

It is over 30 years since a filly last won the King George V1 & Queen Elizabeth Diamond Stakes at Ascot – ‘Time Charter’, trained by Henry Candy in 1983. On Saturday Sheikh Hamdam’s Taghrooda, a 3-year old filly bolted up to win with a little in hand last Saturday. The John Gosden trained daughter of ‘Sea the Stars’ was brilliantly ridden by Paul Hanagan. She is now 3/1 favourite to win the ‘Prix de L’Arc de Triomphe.

Equity markets were veritably on fire in Asia this morning, having been spirited up by an encouraging Chinese stimulus programme, with Shanghai closing up 2.8%, the Hang Seng by 0.9% and the Nikkei by 0.4%. This euphoria certainly did not spill over in to Europe. Though the days started brightly with Reckitt Benckiser and Ryanair posting decent and much better results respectively, there was no momentum behind the markets. With the advent of social media, iPads and iphones, the lure Rock, Cape Ferrat, Cote D’Azur and the Algarve has encouraged dealers, traders, analysts and management to take extended holidays, in what appears to be balls-achingly boring, tired and listless markets. Volumes are non-existent and whenever management can use an excuse to sit on their hands, with alternative asset classes offering scant encouragement, it does.

The FTSE opened up 13 points but has spent the next 3 hours surrendering whatever value had been gained. Ryanair, after posting sales up 11% last quarter and profits up 152% from €78 million to €197 million, watched its shares rally by 5.1%. By 11.00am it had given all but 0.5% back. Glaxo was rumoured to be open-minded about hiving off its healthcare business, reported in many newspapers this morning. However Panmure’s Savvas Neophytou was dismissive of what he regarded as fertile imagination. He felt action of this nature would make a mockery of Glaxo’s £20 billion strategic deal with Novartis over vaccines and healthcare. Reckitt Benckiser posted decent results with a profit of just over £1 billion. Again some sort of break-up of its health care operation was mentioned in dispatches.

Reckitt chief executive Rakesh Kapoor has been keen to focus the company on its 19 ‘power-brands’ such as Durex condoms and Finish dishwasher tablets. This consumer goods giant also makes Nurofen and Dettol and maybe in plans to spin off its US-based pharmaceutical business. RB’s shares were up 2%, but are now down 2.1%. Amongst the other losers today are Aberdeen Asset -3.2%, RBS 2.6% and Glencore 2%.

Tomorrow DOMINO’S PIZZA, BP, GEM DIAMONDS, GKN, DRAX GROUP and TULLETT PREBON step up to the plate and in the US AETNA, REYNOLDS AMERICAN, McGRAW HILL, MERCK, CORNING, PFIZER, AMGEN, TWITTER and WYNN RESORTS post interim numbers.

On Wednesday the first official estimate for 2nd quarter US GDP will be posted after the appalling 2.9% fall in the 1st quarter. The IMF has raised its expectation to 1.8% for the years. Over 200k jobs should have been created in the in July in the US. Friday will reveal all.

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 miss-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

TODAY’S FAYRE – Sunday 27th July 2014

TODAY’S FAYRE – Sunday, 27th July 2014

“The girl’s far treble, muted to the heat,
Calls like a fainting bird across the fields
To where her flock lies the panting for her voice,
Their black horns buried deep in marigolds.

The climb awake, like drowsy butterflies,
And press their red flanks through the tall branched grass
And as they go their wandering tongues embrace
The vacant summer mirrored in their eyes.

Led to the limestone shadows of a barn
They snuff their past embalmed in the hay,
While her cool hand, cupped to the udder’s fount,
Distils the brimming harvest of the day.

Look what a cloudy cream the earth gives out,
Fat juice of buttercups and meadow-rye;
The girl dreams milk within her body’s field
And hears, far off, her muted children cry.”

“The Milkmaid”

Laurie Lee – poet – 1914-1997

There will never be a recording of Bellini’s ‘Norma’ as that made in 1981 by ‘La Stupenda’ Dame Joan Sutherland in the title role with a fantastic supporting cast of Luciano Pavarotti, Marilyn Horne and John Alexander. However Opera Holland Park has made a real fist of its production of this rarely performed opera, which required quite exceptional performances from ‘Norma’ and ‘Adalgisa’ as performed by Yvonne Howard and Heather Shapp. They were terrific, but Dame Joan’s melodic coloratura arias will ring in my ears forever.

We lost the 2nd test match at Lord’s against India – fair and square – deservedly so. However I have to say the antics of MS Dhoni, the Indian captain, was rather akin to those of a playground bully, in the manner that he and his side, particularly Jadeja, are gunning for Jimmy Anderson. The sledging and antagonism is all part of the international game, with Indian cricketers far from retiring violets in the grand scheme of cricket. A captain of Dhoni’s distinction should not behave like a ‘snitch.’ This altercation should have been cleared up in the dressing room. How very disappointing!

Despite international tension increasing as a result of MH17, Ukraine and the horrors of Gaza, international equities on the whole held on to most of their gains. Having flirted with record ‘highs’, the S&P surrendered just 0.02% on the week. The FTSE 100 faired rather better adding 0.6%, with European bourses up by a similar amount and the NIKKEI up by 1.6% thanks to better economic data. The FED seems comfortable to leave rates where they are at present, thanks to the successful manner QE has been tapered. Tapering will be finished by October with the final $15 billion being withdrawn. Japan is increasing QE. The ECB is on red alert to do so as well, if the EU’s economy does not come back on the bridle. Many think it will. I do not subscribe to that theory apart from Germany.

Friday’s UK GDP results were in line with expectation – +0.8% for the 2nd quarter with an estimated annualised rate for 2014 of 3.1%. This came in the wake of the IMF adjusting its forecast for the UK for the 4th time to 3.2% and to 2.7% for 2015. The strength of the UK economy has returned to where it was pre-Lehman Bros in 2008, when the financial sector wiped out 7.2% off national output, wrecking the public finances in the process. The UK’s economy appears to be much more balanced than it was with manufacturing output, industrial production and exports being rather more robust than they were. The Pound, though lower at the end of the week at $1.6990 against the Greenback, is making the expansion of exports rather tougher going than had been hoped for. Of course imports of fuel and the like are cheaper. With wage demands still some way below inflation, the prospect of higher interest rates receded. The majority think the first 25 basis points will be added in November. Maybe, but rates cannot go up measurably until next summer. Against that philosophy, we in the UK have had 6 years of zero interest rates – all but – however debt has frustratingly increased! Every time I see a young person pay Starbucks £2.60 for a double tall skinny cappuccino I know he/she almost certainly cannot afford it! Also what is also indisputable is the fact that London and parts of the South East are booming. The rest of the country are still waiting for the goodies.

In the wake of better economic and financial news, it’s such a pity that Messrs Miliband & Balls could not recognise the improvement and could only talk about the PM’s spinning and image. But that is politics.

On the whole it was a decent week for earnings in the US, with 77% of those who have reported beating expectation. This week there is another massive slew of earnings on both sides of the pond to ruminate over. In the UK the following step up to the plate – Monday – RECKITT BENCKISER, FILTRONICS, Tuesday – DOMINO’S PIZZA, BP, GEM DIAMONDS, GKN, DRAX GROUP, TULLETT PREBON – Wednesday – RIGHTMOVE, BARCLAYS, TRAVIS PERKINS, WS ATKINS, GREGGS, DIGNITY, MONEYSUPERMARKET.COM, NATIONAL EXPRESS, 3is, TRINITY MIRROR, ITV, SEGRO, Thursday – LLOYDS BANKING GROUP, ROYAL DUTCH SHELL, COUNTRYWIDE, BG GROUP, CENTRICA, BT GROUP, BODYCOTE, SPIRENT, WEIR GROUP, MERLIN ENTERTAINMENTS, SCHRODERS, THOS COOK, ROLLS ROYCE, BAE SYSTEMS, Friday – DIRECT LINE, SMITH & NEPHEW, RBS, WILLIAM HILL, MAN GROUP. The strong pound is expected to affect the profitability of many top companies such as Diageo, BP, RDS and Rolls Royce.

In the US the following post interim results – Monday – DENNY’S, Tuesday – AETNA, REYNOLDS AMERICAN, McGRAW HILL, MERCK, CORNING, PFIZER, AMGEN, TWITTER, WYNN RESORTS, Wednesday – VALERO ENERGY, PITNEY BOWES, GOODYEAR, REVLON, SPRINT, LORILLARD, KRAFT, METLIFE, WHOLE FOODS, Thursday – EXXON MOBIL. LINKEDIN, CME, KELLOGG, CONOCOPHILLIPS, MASTERCARD, EXPEDIA, LEGG MASONPIXELWORKS, Friday – PROCTOR & GAMBLE, CHEVRON and Ford.

Last week was full of corporate news. Having been refused Time Warner’s hand in marriage in an $80 billion deal with 20th Century Fox, Rupert Murdoch set to work to tidy his European operation up. BskyB (39% owned by 20th Century) bought 57% of Sky Deutschland and all of Sky Italia for £5 billion, which will increase its audience from 30 million to 90 million. Carillion and Balfour Beatty are to pool resources. The market love the idea and both shares added 10% in value. Facebook’s value overtook that of IBM – $180 billion! Tesco’s CEO, Phil Clarke gave up the unequal struggle as well as shareholder pressure with the announcement by Chairman Sir Richard Broadbent that Clarke would be leaving after 40 years with the supermarket on 1st October to be succeeded by Dave Lewis from Unilever. The whole Tesco operation needs overhauling if Tesco has any chance of regaining lost ground to Aldi and Lidl. I somehow doubt it anyway, but ‘nil desperandum.’ The week after next RSA CEO Stephen Hester is expected to announce £200 million of write-offs.

Last week was a mixed one for banks. Standard Chartered came under attack for a lack-lustre performance in recent months. Sir John Peace the chairman is purportedly looking externally and internally for candidates to succeed Peter Sands, whose stewardship has been rocked with controversy over the past 2 years. Then on Friday, RBS’S CEO Ross McEwan set down his stall with RBS’s profits a week earlier than expected. I doff my titter to Ross McEwan, his board of directors and his spin doctors – maybe Roland Rudd to the fore! Mr McEwan knows that some very dark cumuli nimbus clouds still hang over the portals of Bishopsgate, despite disclosing an excellent pre-tax profit of £2.7 billion, triggered by an improving economy, a week early. Bad debts are down by £1.9 billion.

There are potentially huge litigation issues outstanding – FX fixing, PPI and SME treatment- to answer to. If found guilty these could attract penal fines! So best investors’ furrowed brows are soothed.

George Osborne may have scrapped with Stephen Hester about selling RBS back to the public before the election. With so many imponderables, surely hell has a better chance of freezing over than this sale to the public going through before May 2015. In fact I doubt it will happen before 2017. There are potentially too many skeletons in the cupboard. Investors love to buy a recovering ‘snip’, but these assets may be just too indigestible for the time being. The balance sheet is still too large. McEwan will be looking to help matters along by selling citizens Bank for $15 billion.

This week three of our most troubled banks post results. RBS we know about. However in the case of Lloyds Banking Group, which is expected to post a 25% increase in profits, reflected by the improvement in the economy, to £3.6 billion. Impairment charges may have been halved and only another £500 million, totalling £8.5 billion, provisions for PPI claims will be announced. The Chancellor will be keen to see the sale of another £12 billion of Lloyds shares being made before the election, as opportunities to sell the rest of Royal Mail (£1.35bn), The Land Registry (£1.2bn), Eurostar (£400m) and The Student Loans Company (£12bn) may have receded.

As for Barclays, due on Wednesday, the implementation of radical changes in culture will have cost £660 million and with 19,000 jobs likely to go, it will not be surprising if profits fall 20% from £3.6 billion to £2.9 billion. What we don’t know about all these banks are the imponderables – the cost of FX manipulation if there is a case to answer!

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 miss-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

TODAY’S FAYRE – Friday 25th July 2014

TODAY’S FAYRE – Friday, 25th July 2014

“Not to sleep all the night long, for pure joy,
Counting no sheep and careless of chimes
Welcoming the dawn confabulation
Of birch, her children, who discuss idly
Fanciful details of the promised coming –
Will she be wearing red, or russet, or blue,
Or pure white? – whatever she wears, glorious:
Not to sleep all the night long, for pure joy,
This is given to few but at last to me,
So that when 1 laugh and stretch and leap from bed
I shall glide downstairs, my feet brushing the carpet
In courtesy to civilized progression,
Though, did 1 wish, I could soar through the open window
And perch on a branch above, acceptable ally
Of the birds still alert, grumbling gently together.”

Robert Graves – author, playwright & poet – 1895-1985

I was listening to the Russian Ambassador in London – Alexander Vladimirovich Yakovenko – giving a press conference on television yesterday. It’s either priceless stuff or the West is about to be acutely embarrassed. He repudiated the concept that Russia had anything to do with the shooting down of MH17 indirectly or directly. As he said show me the visual evidence! It was rather like ‘Arfur Daley’ talking to the police, having been accused of some scam – “What me Guv? I don’t know what yer on about? I was nowhere near that manor – trust me! – not even close!”

It will be interesting to see how badly sanctions affect the recovery and growth in Russia. It was interesting to note that the IMF cut its forecast to ribbons yesterday – down by 1.1% in 2014 to just +0.2%. I have a funny feeling that Europe might suffer rather more than it thinks it will. The Rouble has hardly been affected. Energy and gas are the main imponderables and Russia seem very much in the driving seat. BP’s stake in Rosneft looks vulnerable. You get the feeling that Russia will close ranks with China.

Putin’s behaviour may well be reprehensible, but Western governments have not been really on their game for some months and the lack of resolve to get on top of Putin’s unassailable power, shown by the EU has been bordering on pathetic – commercial ramifications or not! Even if the US and European investors decide to remove their money from Russian projects, the damage caused from the loss of energy/gas supplies as a quid pro quo could be even more devastating. The EU seems to have few visible contingency plans for energy.

Though Initial Jobless Claims are improving (lowest level for 8.5 years) and though the market is expecting at least 200k+ jobs to have been created in July when Payroll numbers are posted next Friday, the Street of Dreams was in a holiday mood, with turnover barely selecting second gear. There was also a modicum of concern about home sales having fallen by 8.1% last month. Despite 77% of those S&P 500 companies, who have already reported beating expectations the 3 main indices hardly moved – DOW -0.02%, S&P +0.05% and the NASDAQ -0.04%. The weekend in the Hamptons beckoned. Facebook’s shares cracked on with renewed energy (+5%) with mobile advertising revenues increasingly measurably. Ford’s efforts were decent but investors banked profits. Caterpillar missed and eased by 3%. It was announced that Greg Foran will replace Bill Simon as President and CEO of Walmart.

After hours Amazon’s Jeff Bezos set down the company’s stall. Sales were up 23% to $19.34 billion, but the company made a greater loss than expected – $126 million or -27 cents rather than expectations of -15 cents. Investors vented their spleen by taking the shares down by 10% to $322.50. Investors are due some profits and dividends. The frustration of continuing to pay for ‘jam tomorrow’ is running very thin. Amazon also knows that Alibaba will take its IPO bow in September. This company is a combination of Amazon and eBay. It made $1.3 billion last quarter. Over to you Mr Bezos. Yes you need to get your technology and infrastructure right! But you also have to pay the bills and feed the shareholders.

In London yesterday the FTSE 100 added 23 points to 6821. Unilever saw profits up by sales not quite so robust, particularly in emerging markets. easyJet’s numbers were good, but for understandable reasons investors are not excited about airline margins and costs. Kingfisher missed quite badly, particularly B&Q (sales down 3.2%). Kingfisher’s shares fell by 8%. It looks as though Iain Conn of BP will replace Sam Laidlaw as CEO of Centrica. Confirmation of this appointment is expected next Thursday, when Centrica posts results. Rumours are buzzing around that Carillion may merge with Balfour Beatty. SAB Miller’s results were OK – sales up 3%, revenues up 6%. DMGT did well out of its investment in Zoopla but revenues did fall by 6% in the last quarter.

Banks are still grabbing poor headlines with Lloyds allegedly about to be fined £300 million for LIBOR misdemeanours. Barclays is fighting tooth and nail to prevent a courts case, which could indict it for defrauding investors in the HFT ‘dark pools.’ It intends to defend its corner vigorously.

IMF upgraded the UK’s economy for the 4th time by 0.4% to 3.2% for 2014 and has suggested the UK could grow its economy by 2.7% next year. This is good news for the Chancellor ahead of the election, but it must not be forgotten that the IMF is often behind the curve. Also there are still issues with the UK’s economy. Growth could fall off in the second half of the year, particularly if the EU, Germany excluded, does not come back on the bridle. Also wage increases are very low – just +0.3% last month – way below current inflation levels. So the consumer has less disposable income, which drives retail. Retail is 60% of growth. There is still far too much consumer borrowing – dangerously high! Against that background, how can interest rates go up in a meaningful way? If the consumer is forced to service debt at a higher level, retail will suffer even more.

This morning BkyB confirmed its intentions of buying 57% of Sky Deutschland at about E7 a share (£2.9 billion) and Sky Italia lock stock and barrel for £2.1 billion to make a full pan-European TV service with 20th Century Fox maintaining its 39.14% stake in BskyB. This deal will increase viewers or subscribers from 30 million to 97 million. Revenues were better than expected for the last year – up 6.5% to £7.6 billion with an operating profit of £1.26 billion.

FINALLY GOOD NEWS FOR THE WEEKEND – ROSS McEWAN CEO OF RBS POSTED A 92% INCREASE IN PROFITS TO £2.7 BILLION A WEEK EARLY. This will take some heat out of the kitchen ahead of FX allegations etc.

Results or trading statements are due out today from – AFRICAN BARRICK GOLD, LONMIN, C&W COMMUNICATIONS, BSKYB, VODAFONE (TS) and 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 miss-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

TODAY’S FAYRE – Wednesday 23rd JULY 2014

TODAY’S FAYRE – Wednesday, 23rd July 2014

“Twice or thrice had I lov’d thee,
Before I knew thy face or name;
So in a voice, so in a shapeless flame
Angels affect us oft, and worshipp’d be;
Still when, to where thou wert, I came,
Some lovely glorious nothing I did see.
But since my soul, whose child love is,
Takes limbs of flesh, and else could nothing do,
More subtle than the parent is
Love must not be, but take a body too;
And therefore what thou wert, and who,
I bid Love ask, and now
That it assume thy body, I allow,
And fix itself in thy lip, eye, and brow.
Whilst thus to ballast love I thought,
And so more steadily to have gone,
With wares which would sink admiration,
I saw I had love’s pinnace overfraught;
Ev’ry thy hair for love to work upon
Is much too much, some fitter must be sought;
For, nor in nothing, nor in things
Extreme, and scatt’ring bright, can love inhere;
Then, as an angel, face, and wings
Of air, not pure as it, yet pure, doth wear,
So thy love may be my love’s sphere;
Just such disparity
As is ‘twixt air and angels’ purity,
‘Twixt women’s love, and men’s, will ever be.”

John Donne – poet – 1571-1632

Richard Fletcher, the Business Editor of the Times generously hosted a lively debate on the 22nd floor of the Shard yesterday – “IN” or “OUT” of Europe – with Finsbury’s CEO Roland Rudd and yours truly setting down their diametrically opposed stalls.

It is fair to say Roland Rudd won the debate by a country mile. However I am very disturbed that the audience and voters at large do not accept what a parlous state the EU’s economy is in. Also if nothing else at least those present are now aware that the Foreign Office has no contingency plans for an orderly withdrawal, in the event of a referendum voting against continued membership. This is a dangerous and irresponsible predicament to leave the country in.

Finally the EU, on a diplomacy platform, remains a toothless tiger! It has failed dismally to take strong unambiguous decisions to impose tough sanctions on Russia for sub-human behavior. If ever there was a time for resolve, it’s now!

There seemed to be some sort of haze of calm that hovered over most international bourses yesterday. Indulgence in ‘Putin bating’ was very limited. Like many others I am deeply underwhelmed by the EU’s pathetic effort to bring influence to bear on Ukraine/MH17. So it was all about earnings yesterday across the pond. On the whole they were good. Coca-Cola, CIT, Verizon and Comcast all passed muster. Harley-Davidson and McDonald’s were slightly short on shareholder joy and after hours Apple excelled and Microsoft produced mitigating circumstances why investors should hang in there after profits fell thanks to the acquisition of Nokia, which should come onside by the end of the year. 18,000 employees will bite the dust. Microsoft posted revenues of $23.4 billion and a profit for the quarter of $6.48 billion. Since Satya Nadella took over from Steve Ballmer as CEO Microsoft’s shares are up 20%. The Street of Dreams closed in fine fettle – DOW +0.4%, S&P 500 +0.5% and the NASDAQ +0.7%. The improved atmosphere was also down to benign inflation data in the US.

As for Apple this may be Tim Cook’s year, with Apple having struggled post Steve Job’s demise, with the shares falling out of bed from $705 in September 2012 to circa $450! – now $95, having been split at $75 each. Apple’s shares have rallied in recent weeks and yesterday’s interim results were not unimpressive. Apple’s profits were up 12% to $7.75 billion. 35.2 million iphones (+13%) were sold in the last quarter and 4.4 million Macs (+18%). Ipad sales were down 9%, though sales to China were up 51%. We have iPhone 6 and TVs to come towards the end of the year as well!

Asia was hardly pumped up this morning but the mood was cautiously optimistic with the Shanghai Composite adding 0.23%, the Hang Seng 0.77%, though the NIKKEI ended the session a smidgen below the Plimsoll line. This morning in London there was another slew of earnings. Provident Financial, Talktalk, BHP Biliton and Capita all posted upbeat numbers. Sage and Johnson Matthey were just a touch less exhilarating than had been expected. We await news from Glaxo SmithKline at 11.00am. At 9.15am the FTSE 100 was up 1 point at 6796

It is regrettable that RBS again attracted more adverse publicity yesterday. The Treasury Select Committee are persuaded that RBS’S management, with Chris Sullivan’s name in the frame, had been economical with the truth about the treatment of some small businesses as to whether the bank had closed any companies down or seized their assets. I suspect we have not heard the last of this issue. The Committee believed that management had been willfully obtuse.

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 miss-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.

Market update

At 3.15pm the FTSE 100 was up 68 points at 6797. Just 321 million had been traded on the LSE. If this level of inactivity prevails, it is hard not to see a few traders heading for the exit involuntarily. These excruciatingly lifeless markets seem to have established their inertia with great comfort and slothfulness. However with QE still rampant as the insurance policy for equity stability and there being little sign that the wellbeing of banks is strong enough to allow the safety valve (QE) to be pulled, market makers have the luxury of taking the market up and down a percent at a time with impunity!

Today ARM Holdings grabbed the yellow jersey – up 5%, having lost some glister in recent weeks, with a decent outlook for the 2nd half of the year. Airlines rose like grilse, the heat being slightly taken out of the geopolitical kitchen – IAG and easyJet both up 3%. House builders were also the flavour of the day with Persimmon and Barratt both up 3% as well. BP and Shell had their followers both adding about 1%.

Tesco did not find JP Morgan in a conciliatory mood. JPM got the boot in and are doubtful about a quick recovery for the UK’s number 1 supermarket – Dave Lewis or no! Sadly Morrison and Sainsbury were dragged down in sympathy – easier by 1%. Finally Royal Mail disappointed with the parcel business, which is supposed to be their best ‘Arfur Daley.’ There is a perception that Amazon is stamping on their corns – the stock was 4% easier.

The Street of Dreams seemed to be on good terms with itself – with the DOW up 77 points. CIT Group posted good numbers. Harley-Davidson’s efforts failed to pass muster. Coca-Cola beat the Street by a cent, though was down 2.5% on profit taking. There are great expectations for Apple after hours.

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 miss-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful

TODAY’S FAYRE

TODAY’S FAYRE – Thursday, 17th July 2014

“You did not come,
And marching Time drew on, and wore me numb.
Yet less for loss of your dear presence there
Than that I thus found lacking in your make
That high compassion which can overbear
Reluctance for pure loving-kindness’ sake
Grieved I, when, as the hope-hour stroked its sum,
You did not come.

You love not me,
And love alone can lend you loyalty;
-I know and knew it. But, unto the store
Of human deeds divine in all but name,
Was it not worth a little hour or more
To add yet this: Once you, a woman, came
To soothe a time-torn man; even though it be
You love not me.”

Thomas Hardy – author & poet – 1840-1928

That was a pitiful performance by England at Lord’s in the second test match against India. All our senior players are out of nick. Our bowlers are incapable of getting 8,9,10 and jack out – not helped by the lack of a front line spinner. Our confidence is shot to ribbons. He may have been a great coach at Sussex and Lancashire, but the return of the prodigal son to the national game rarely works. Peter Moores should probably go. England should employ a tough coach, who instills confidence and resolve!

Alistair Cook should take a break from captaincy and concentrate on making runs. A couple of games, if there was time, against county 2nd X1 would be helpful.

I need to galvanise myself for the Commonwealth Games. My zest for this glittering occasion has yet to get out of second gear. I suppose it is because at least 33% of Scotland’s population wants to come out of the Union. Indirectly I suppose I resent picking up the tab for people who are not with the UK through thick and thin, even though Great Britain has no representation as a team at these games.

Sentiment wasn’t great yesterday. Putin’s star was hardly in the ascendancy as he abrogated responsibility for failing to help with the safe passage of the bodies from MH17. Frankly 18 months ago I had Putin on my pad as statesman in the handicap class. Yesterday he was dropped in class to selling-plate standard. His behavior was shameful. I salute David Cameron for exhorting his pathetic European leaders to show some steel by implementing tougher sanctions, rather than just feathering their own nests commercially, particularly Germany and France. It is stating the obvious in saying that the situation in Ukraine and Gaza is dire. However these international diplomatic issues are rarely decided by ‘oil rags’ such as Kerry; they are sorted out by the engine drivers. Where are President Obama, Chancellor Merkel, President Hollande and PM Cameron? They should be fronting up Putin head-on!

The Street of Dreams took some risk off the table with the DOW losing 0.28%, the S&P 500 0.23% and the NASDAQ -0.17%. There was limited corporate news or results to ruminate over though efforts from ALLERGAN, HALLIBURTON, NETFLIX and TEXAS INSTRUMENTS were tolerable, if not outstanding. Netflix now has 50 million subscribers. Revenues and operating profits at Texas Instruments were up 8%. Today the earnings season gathers momentum. VERIZON, ALTRIA, COMCAST, OMNICOM, HARLEY-DAVIDSON, McDONALD’S, COCA-COLA, LOCKHEED, APPLE & MICROSOFT post numbers today.

Yesterday the FTSE 100 lost 21 points to 6728. House builders such as Persimmon and Barratt were under the cosh and Rightmove also took a bit of a larruping. Activity was rather limited though there were some good stories involving Tesco, tobacco stocks and possible foreign exchange misdemeanours. Mining stocks showed a bit of colour in places, with tobacco stocks losing value in response to the ludicrous award of $23 billion to Mrs Cynthia Robinson against Reynolds American for not protecting her husband from smoking – apparently he was a smoking addict. He died of cancer in 1996. Reynolds American is 42% owned by BATS.

Also the advent of Sir Richard Broadbent, the chairman of Tesco, calling time out on Phil Clarke, who has been with the supermarket – man and boy for 40 years – after 3 years as a rather unsuccessful CEO, grabbed most of the headlines.

Tesco shareholders felt that they had had a belly-full. Tesco shares have lost 22% in value in the last 5 years from 375p top 288p yesterday. Sadly Phil Clarke had probably worked for too long with Sir Terry Leahy, building up a fantastic supermarket brand with over 30% of market share. In the end Mr Clarke probably could not see the wood from the tees, despite having spent £1 billion on upgrading the business.

It seems clear that Tesco’s management was caught between a rock and a hard place – neither cheap anymore or upmarket. Since the financial crisis the consumer’s disposable income has fallen. Consequently shoppers have become more discerning and price conscious. Enter stage left Lidl and Aldi with bags full of goodies. The big brigade has suffered. I think I am right in saying that Tesco has seen sales fall almost every quarter for 3 years.

Changes had to be implemented – a fresh broom was required – enter stage left – Dave Lewis. He becomes CEO on 1st October. He is currently head of personal care and consumer products at Unilever. Tesco had to pay £525k in lieu of Lewis’s bonus – market practice of course. Mr Lewis will hopefully have fresh ideas which will need immediate implementation. The right range of products at the right price will need to find their way on to Tesco’s thousands of shelves PDQ! Make no mistake Tesco remains the UK’s largest retailer, but will need to be very innovative to regain lost ground. If Lidl continues to grow at 5% in the next decade it will become larger than both Tesco and Carrefour!

IG GROUP, ROYAL MAIL & QINETIQ posted results in line with expectation. However ARM posted a decent outlook for sales going forward and the shares after quite a sell off leading up to results rallied by 5%. Asia had a decent day thanks to a better atmosphere in terms of geopolitical threats. The Hang Seng closed up 1.7%, Shanghai by 1.22% and the NIKKEI, which had been closed yesterday by 0.9%.

The Serious Fraud Office served notice that it will be investigating allegations that certain bank traders may have manipulated the fixing of foreign exchange rates. This news has dangerous ramifications were these charges to be substantiated. This $5 trillion a day market turnover market would attract restitution not only from banks but also funds, corporates, brokers and the consumer. The potential for this crisis to be bigger than LIBOR and PPI is very real. It could make the other two look like a vicarage tea party!

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 miss-delivery: any use or disclosure of the contents of either is unauthorised and may be unlawful.