Every time the grand-maternal FED’S Janet Yellen gets to the microphone, she brings a wry smile to my face. It’s not so much what she says; it’s how she says it! That relatively uncomplicated delightful Brooklyn drawl comes in to play! She told Congress on the first day of her two-day testimony that plenty of slack remains in the Labour market and a high degree of accommodation is required to get the US economy firing off 6 cylinders – so any hike in interest rates does not seem imminent. The Street of Dreams was underwhelmed and decided not to pick up the cudgel and crack on. At the time of writing – 4.00pm – the DOW was down 30 points. Not even better than expected numbers from JPM (+4%), Goldman +0.8% and Johnson & Johnson -1.3% had any effect. Not even US tobacco giant Reynolds American confirming that it will buy Lorillard for $27.4 billion and sell cigarette brands including Salem and Winston to British firm Imperial Tobacco for $7.1 billion caused investors to react apart from to take a cursory glance.

PPI data in the UK was a bit of a surprise – 1.9% last month against expectations of 1.6% and up from 1.5% the previous month. Whereas there had been no food or clothes inflation in May – -1.1% and -0.1% respectively, last month inflation was positive – +0.1% and +0.6% again respectively for these sectors. This triggered idle speculation that rates would rise sooner rather than later – maybe October. Equity geeks were less than happy. The FTSE 100 having been up 20 points took some risk off the table in very quiet trading and at 4.11pm the FTSE 100 was down 34 points at 6712. easyJet, RBS were the main winners – up 2.4% and the laggards not surprisingly included IMPS -4%, BATS -2% and Sports Direct -2.3%. The holiday period really has started and the trouble is that no one believes that any correction will be more than 10%. The sun is high on the yardarm – as they say east of Canary Wharf – BOVVERED!

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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