TODAY’S FAYRE – Monday, 25th August 2014
“Summer ends now; now, barbarous in beauty, the stooks rise
Around; up above, what wind-walks! What lovely behaviour
Of silk-sack clouds! has wilder, wilful-wavier
Meal-drift moulded ever and melted across skies?
I walk, I lift up, I lift up heart, eyes,
Down all that glory in the heavens to glean our Saviour;
And, éyes, héart, what looks, what lips yet gave you a
Rapturous love’s greeting of realer, of rounder replies?
And the azurous hung hills are his world-wielding shoulder
Majestic – as a stallion stalwart, very-violet-sweet! –
These things, these things were here and but the beholder
Wanting; which two when they once meet,
The heart rears wings bold and bolder
And hurls for him, O half hurls earth for him off under his feet.”
Gerard Manley Hopkins – poet – 1844-1889
We were hugely privileged to see the sequel to ‘Wolf Hall’ – ‘Bring up the Bodies’- an adaptation of another Hilary Mantel award winning novel at the RSC in the Aldwych. There were brilliant performances from Ben Miles as the Machiavellian and duplicitous Thomas Cromwell and Nat Parker as the ruthless King Henry VIII. This play covers that period in history when Ann Boleyn outlived her usefulness, resulting in the King’s favours being directed towards Jane Seymour in such a heartless and seamless manner. There was of course the small matter of allegations of unorthodox personal behaviour by the King’s second wife to contend with. The evening was an amazing theatrical experience!
So sad to hear of the death of Sir Richard Attenborough. Reams of informed comment will be written about his astonishing prowess as an actor in ‘Brighton Rock’ and as an outstanding director of ‘Gandhi’ and ‘Cry Freedom.’ As for my irrelevant thoughts. I shall remember his portrayal of a regimental sergeant major in a little remembered film – ‘The Guns of Batasi’, made in 1964 with Jack Hawkins, Mia Farrow, John Leyton and Flora Robson – superb character acting!
As a somnolent August, in terms of trading volumes, draws to a close, last week’s news and economic data across the globe was certainly in liberal supply, if not earth-shattering, apart from the truly horrific act of barbaric mindless killing of James Foley and other atrocities in Iraq and the cessation of the cease-fire in Gaza, which brought further intolerable bloodshed. To cap it all, Russia was pushing its luck by sending relief store trucks through the Ukraine border uninvited. In the US Housing data was positive. However retail activity – so important in the US could only be seen as neutral. The minutes of the FOMC, which suggested that rate increases may not manifest themselves until the spring of 2015, were interpreted as not unhelpful.
Here in Old Blighty inflation figures were seen as relatively benign at 1.6% and employment data as positive. With wages not growing more than 0.6% in the last 3 months, it is hard to see rates going up before next year, despite the robustness of UK GDP to 3.2%. However Ian McCafferty & Martin Weale were dissenting voices on the MPC’s vote this month, changing the regulation monthly vote for the last year from 9-0 to 7-2. This challenge should reassure those who think the BOE is a tool of the government. They are misguided – Back in your boxes! The BOE is unequivocally an independent body. On Friday Janet Yellen’s speech in Jackson Hole was more ‘hawkish’ than in recent times and then the ECB’S Mario Draghi, who made the key note speech, pierced the bows of the Good Ship ‘Austerity’, suggesting governments should increase spending and make tax cuts to stimulate growth. Left wing European political parties would have lapped up such bold and perhaps dangerous doctrine. Ed Balls would have been beside himself with glee! Consequently we may see a slightly negative reaction from equity markets on Tuesday morning, as much of the financial sector heads back for work. They seem to have been on holiday since Royal Ascot in the middle of June.
The net result of all these machinations was a positive week on the Street of Dreams, where the S&P ended the 5-day session up 1.7%. The FTSE was 1.3% to the good! European bourses added an average of 2.1% with the NIKKEI chipping in with a 1.4% gain. Logic seems to have played only a minor role in this frenzy of activity which saw the S&P 500 briefly flirt and break through its previous record of 1991. Perhaps the size of the school of thought, which believes that interest rates will only increase very modestly and slowly is growing and therefore the attraction of alternative asset classes is limited.
Retail dominated results in the US last week with GAP, Foot Locker and Ross Stores posting stellar results. Sadly Aeropostale failed to cut the cookie again and lost 10% in value. Dynergy was in demand adding 9% as it added power plants from Duke Energy’s portfolio. Here in London Vodafone added 1.6% as rumours abounded that AT&T and China Mobile considered the option of making a bid. Astra Zeneca also added some value last week as market gossips tried to give credence to Pfizer making another bid next Tuesday, though I doubt sufficient support could be mustered in time. We should keep an eye on ASOS as retail geeks suggest that NEXT could be interested in attacking this on-line fashion brand’s fashion prowess, with ASOS having perhaps lost its way pro-tem.
Several pieces of news nuggets manifested themselves at the end of last week. In the wake of BOA’s massive settlement over miss-selling bonds, HSBC is close to agreeing a settlement with US’S regulators over sub-prime lending irregularities – circa $1.6 billion. It wasn’t a great week for banks with Standard Chartered Bank concluding its second fine of $300 million with NY regulators over sloppy administration? Then the Co-op Bank let be known that it had lost 38.000 customers since it’s debacle over £2.5 billion capital shortage. Roche, the Swiss drug Titan has agreed to buy Intermune for $8.3 billion. Burger King is in talks with Tim Norton. BG group has agreed to sell its 60% stake in Tanzanian gas fields.
Finally with only 4 months of 2014 remaining, let’s have a look at the IPO market, for which so many investors had great aspirations for. To date in the UK the performance of many companies has been OK, if not spectacular. To date there have been 41 full listings in the UK – 32 are currently flat or a little above the Plimsoll line, nine of them are under the issue price. 10 are up 10% or more in value. The best performer is Allied Minds – up 42% and the poorest performer is Intelligent Energy – down 37%. There are plenty of companies queuing up to bring their goods and chattels to the altar of public sacrifice up until the end of the year. Much depends on market sentiment and how cheaply those selling are prepared to let them go at. There must not be the slightest whiff of greed or avarice. Amongst those considering a float are – JIMMY CHOO, UNITED BISCUITS, COUNTRYSIDE, ALDERMORE, BRIGHTHOUSE, TMKINS, DANGOTE CEMENT, EAST AFRICAN GOLD, HOUSES 4 HOMES REAL ESTATE, PHONES 4 U, PHOTOBOX, BRITISH CAR AUCTIONS, VIRGIN MONEY, WILLIAMS & GLYN and WIGGLE. There are others. All will be revealed if investor appetite for risk prevails.
UK companies posting results this week – Tuesday – ANTOFAGASTA, BUNZL, PETROFAC, REGUS, UTV MEDIA, WPP, STAGECOACH (TS), Wednesday – 888 HOLDINGS, APR ENERGY, POLYMETAL, EVRAZ, FOXTONS, Thursday – STV GROUP, HAYS, MELROSE, PETROPAVLOVSK, PLAYTECH, SALAMANDER ENERGY, UNITE, Friday – BWIN, COMPUTERCENTER & RESTAURANT GROUP.
US companies posting interim results – Tuesday – BEST BUY, SMITH & WESSON, Wednesday – CHICO’S FAS!, Thursday – ABERCROMBIE & FITCH, DOLLAR GENERAL, FRED’S, Friday – BIG LOTS.
These are David Buik personal views
Twitter – @truemagic68
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.