TODAY’S FAYRE, MARKETS, M&S, SAMSUNG – I am hardly known for my sartorial elegance but…?

TODAY’S FAYRE – Tuesday, 8th July 2014

“Tell me, ye prim adepts in Scandal’s school,
Who rail by precept, and detract by rule,
Lives there no character, so tried, so known,
So deck’d with grace, and so unlike your own,
That even you assist her fame to raise,
Approve by envy, and by silence praise!
Attend!—a model shall attract your view—
Daughters of calumny, I summon you!
You shall decide if this a portrait prove,
Or fond creation of the Muse and Love.
Attend, ye virgin critics, shrewd and sage,
Ye matron censors of this childish age,
Whose peering eye and wrinkled front declare
A fix’d antipathy to young and fair;
By cunning, cautious; or by nature, cold,—
In maiden madness, virulently bold;—
Attend, ye skill’d to coin the precious tale,
Creating proof, where innuendos fail!”

Richard Brinsley Sheridan – playwright & poet – 1751-1816

What amazing crowds have turned out to support the 3 days of the Tour de France in Yorkshire, the Fens, Essex and London. They warmed the cockles of our hearts. What a fantastic sporting extravaganza it has been and what an advertisement it has proved to be for UK PLC! Let’s hope that, though millions of people have gone ‘AWOL’ for a few hours or a day, their absence has not damaged the momentum for growth in the UK’s economy! No time for idleness and sloth!

Farewell to Alfredo di Stefano, the most talented of centre-forwards ever to grace a football pitch! He played in Real Madrid’s halcyon days of the ‘50s with the quicksilvered Hungarian, Ferenc Puskas at inside left – he with the largest calves ever seen on a footballer and France’s cultured Raymond Kopa. There was also Gento on the left wing, who moved like ‘greased lightning.’ Let’s not forget the best centre-half of his era – Santamaria!

With equity markets starting to look fully valued, the news that Germany had seen its industrial production fall 1.8% last month, much probably connected to ‘imposed’ sanctions on Russia, with whom Germany/Merkel, is indecently close. The DAX and CAC reacted adversely losing 1% and 1.4% respectively. Interesting to note that Merkel is making her 7th visit to China since 2005 – just goes to show how aggressive Germany is over its export and business contracts. At least the penny has dropped with PM Cameron, Chancellor Osborne and Foreign Secretary Hague – the latter three are out in India seeing PM Modi.

The FTSE 100 faired only moderately better losing 0.6%. Across the pond, the Street of Dreams, though the FED’s Janet Yellen has very recently been apathetic about any interest rate increases, the market in New York was mildly perturbed by the prospect of an early hike and stocks reacted accordingly. Though the cream came off the top of the smaller caps in the Russell, it was only a little froth that was removed from the three main indices – DOW -0.26%, S&P 500 -0.39% and the NASDAQ -0.77%. However there are still plenty of deals out there – Yesterday Archers-Daniel Midland bid for Wild Flavors – $3 billion! Also Bill Ackman’s Pershing Square Fund is actively working in concert with Canada’s Valeant to buy the Botox titan Allergan for close to $45 billion.

Yesterday in London, Taylor Wimpey posted a 9.6% increase in completed house sales in the last trading period of which 42% materialised out of the government’s help to buy scheme. There was news that Lafarge Tarmac may be sold before too long to possibly Breedon or CRH. It has not taken long for Neil Woodford to start grabbing investment headlines since he left Investec Perpetual and set up his own shop. He has attracted £1.6 billion to his fund and has already taken active stakes in Astra Zeneca, GSK, BATS and Next. The last named for the first time. His stake in Astra seems a no-brainer as either his judgment is great, which will reward him or Pfizer will eventually win the day with About a £60 a share price tag! Well done Mr W!

M&S PR bandwagon has been ‘flat to the boards’ for a week or so, in an attempt to sooth the market frayed nerves. We were told at this morning’s trading statement not to worry our pretty little heads about the fact that retail merchandise sales would fall by 1.5% on alike for like basis and that food would be up by 2%, despite 12 quarters of declining merchandise sales. Work was in progress. Marc Bolland and Laura Wade-Gery had the matter in hand and that Belinda Earl was quietly and efficiently pushing fashions out of a ‘dowdy era’ in to a fashion conscious environment. Yeah! Right! Have we not waited long enough! The official figures were as follows –
M&S QUARTER 1 2014/15 TRADING STATEMENT – 13 weeks to 28 JUNE 2014 – Group sales +2.3% – UK: total sales +2.0%, like-for-like +0.3% – General Merchandise: total sales -0.8%, like-for-like -1.5% – Clothing: total sales +0.1%, like-for-like -0.6% – Food : total sales +4.2%, like-for-like +1.7% – M& -8.1% – International sales(1) +4.7%. We will take M&S’s word for it that there is growth in woman’s wear. However the fact that on-line business has fallen 8.1% needs explanation from M/S Wade-Gery!

I have to say that at my age and shape I am hardly known for my sartorial elegance but Mrs Buik, my retail advisor, and my daughters are and they are still not in a mood to be converted by the Gospel according to St Marc and St Laura!

Finally it was interesting to note Samsung’s profits fell 24.5% last quarter. There is concern that the lower end of the smartphone sales is perhaps not as robust as many thought and in 18 months the sale of smartphones may have run out of steam. Though a brilliant memory chip maker, Samsung may be short on innovation. Conversely Apple’s share price has risen 20% in the last year taking in to account the split. Sales in June, often a flat month have apparently been encouraging. They may be up 1% whereas a loss of 3% for that month is not uncommon. Let’s not forget the advent of the Iwatch and iPhone6 in November??!!


These are David Buik personal views

Twitter – @truemagic68

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
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