Monthly Archives: August 2014

MARKET UPDATE – CARSWELL – FOX IN THE CHICKEN COUP

With the party conferences only a couple of weeks away, I wondered why Nigel Farage had been almost somnolent. Then a couple of days ago he announced that his name would go forward as the UKIP candidate for South Thanet. That set a few cats amongst the pigeons. However today’s announcement that Douglas Carswell had defected from the Tories to UKIP and that action would trigger a by-election in his constituency in Clacton, was akin to putting a fox in a chicken run! The feathers were flying!

The maverick Carswell said he doubted that the Prime Minister David Cameron was “serious about the change we need” in Europe. I think the PM is serious, but I believe he is unrealistic to think he can achieve his goals, by persuading 25 countries that they are wrong and he is right. I think one can take Merkel’s promises that she will help implement changes with a pinch of salt. Above all else she is a pragmatist. Look at what happened last week, when the going got tough over Russian sanctions. The moment she was asked to endorse an investment by Russian oligarchs in RWE she signed with indecent haste.

The surprise announcement of Carswell’s disenchantment was made at a press conference in central London. Nigel Farage’s smile was such that you would be forgiven for thinking ’the cat had caught the cream!’ How damaging is this move? It remains to be seen. Carswell, because he is an excellent constituency MP will probably win Clacton for UKIP and Nigel Farage, through brash popularity could win Thanet South. However in terms of defection will it trigger mass defection? I doubt it. However it might be a wake-up call to the Conservatives forcing Cameron and the Conservatives to make contingency plans if negotiations fail. Foreign Secretary Philip Hammond has suggested that should negotiations fail he would recommend the UK serving notice to leave. Cameron has been non-committal. There are 2 issues. Firstly there is no sign of any negotiations taking place and there is only 2.5 years to go until a referendum is called. However that may never happen if there is no Tory lead coalition in 2015. Don’t rely on Labour or Lib-Dems for help. The Conservatives MUST force the FO and the Treasury to make contingency plans if the vote to leave transpires. There are no contingency plans at present! That is irresponsible!

At 4.15pm the FTSE was down 27 points at 6800. Volumes again have been just awful with only 348 million shares traded with 20 minutes to go. The average turnover in recent months has been 664 million. Miners took a clattering today with demand for iron ore and copper down – Anglo American –3%, BHP Billiton -2.5% and Rio down by 4%.

Let me give you the good news as it won’t take long. CSR rose like the proverbial grilse – up 35% on news that Microchip had made a bid, which has been rejected, leaving CSR’s board ruminating over the future. At the other end of the spectrum, Xaar fell off the precipice – down 24% after yet another profits warning. Salamander Energy did not pass muster – -3.7%. The response to Tullow Oil’s possible oil find was muted – +1.6%. Finally turnover in Hays was moribund – flat on the day! Roll on September!

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.

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TODAY’S FAYRE – Thursday 28th August 2014

TODAY’S FAYRE – Thursday, 28th August 2014

“The fascination of what’s difficult
Has dried the sap out of my veins, and rent
Spontaneous joy and natural content
Out of my heart. There’s something ails our colt
That must, as if it had not holy blood,
Nor on an Olympus leaped from cloud to cloud,
Shiver under the lash, strain, sweat and jolt
As though it dragged road metal. My curse on plays
That have to be set up in fifty ways,
On the day’s war with every knave and dolt,
Theatre business, management of men.
I swear before the dawn comes round again
I’ll find the stable and pull out the bolt.”

William Butler Yeats – poet – 1865-1939

Jacques Chirac avoided the strong arm of the law, in fact so has virtually every French political heavyweight in living memory. Now the climate has changed, probably caused by the advent of a head-strong socialist government. Nicolas Sarkozy and Mme Christine Lagarde suddenly find themselves under the legal cosh. The Managing Director of the IMF is being charged by the French authorities with ‘simple negligence’ surrounding ministerial wrongdoings over a pay-out of €400 million to the colourful French businessman, Bernard Tapis – Once the owner of Olympique Marseilles and a major shareholder in Adidas from 1990-1993. Monsieur Tapis did 6 months ‘bird’ for corruption in 1995. Mme Lagarde strenuously denies the allegations. I doubt very much she will be found guilty, but in the unlikely event – porridge??

I understand that to remove a senior local government official, criminal intent has to be proved. However Shaun Wright, the SYP&CC, must be joking in not immediately tendering his resignation. Even his own political party believes his number should be up. The same goes for all those officials associated with this dreadful litany of barbaric child abuse. Have these people no shame or collective accountability and responsibility?

I stupidly watched the Channel 5 highlights of yesterday’s ODI at Cardiff. The England team performance was dire! Barring a miracle, Graeme Swann is right – No chance of winning next year’s World Cup in Australia!

On the Street of Dreams yesterday is thought to have been the second quietest trading day of the year after 3rd July 2014 – just 4.2 billion shares traded on all markets. The Dow closed up a smidgen at +0.09%, the S&P 500 was flat and the NASDAQ was down by 0.02%. It is interesting to note that since 9th March 2014, the value of the US equity market has increased from $25 trillion to $63 trillion. Yesterday Best Buy regained some poise in adding 6%. Tiffany’s posted decent numbers – +1%. Smith & Wesson’s efforts did not pass muster – down 14%.

As the market waits with frenzied enthusiasm for ALIBABA’S forthcoming IPO, probably scheduled for 8th September, onlookers and potential investors will have been thrilled at the news that profits were sharply up at $2 billion for the last quarter. Alibaba has 279 million users – up 51% last year and 9% up from 3 months ago. 32.8% of the volume is traded through mobiles – 188 million mobile users. Jack Ma owns 25% of this company, which will look to raise $20 billion – just 10% of the perceived value of $200 billion. Jack was an English teacher in Shanghai and started the company with 18 people. What a huge success story – apparently, post the IPO, Ma will be the richest man in China.

There were two other stories that captured my imagination yesterday – the RBS fine and Ryanair’s initiatives to have a pop and Cyprus Airways and offering a business class service. The loquacious, bumptious and arrogant Michael O’Leary believes he can up the passenger carry from 600k to 3 million. Well he thinks he can move mountains! His star has fallen rather behind that of easyJet’s Carolyn McCall. Ryanair has had customer service issues. It failed to land Aer Lingus and there’s nothing Mr O’Leary likes more than a spat with airports over their charges. Ryanair has chosen this time to revamp its services and up its advertising game. The economy carrier will be introducing a business class service. The Business Plus ticket, which starts from £59.99, will offer free flight changes and a 20kg checked-in baggage allowance, as well as “premium seating”. Does Europe really need a business class service from an economy carrier, when many of the airports are miles from its final destinations? To me it is just marketing waffle! We shall see!

For the crime of miss-selling mortgages, RBS seemed to get off quite lightly with a £14.5 million fine. Some of these misdemeanours took place between 2011-2103, under CEO Ross McEwan’s watch. The idea of telling a potential mortgagee that rates could go to 5.5% in that climate is irresponsible, if true. It is possible that 30,000 people will have to be written to and many may need compensation. Restoring trust with its customers must be RBS’S and NatWest’s prime prerequisite. This is a bitter setback and frankly the fine imposed by Tracy McDermott was cheap at the price.

At 8.30am the FTSE 100 was down just 10 points. Tullow Oil found some oil – +0.75%, Xaar posted another profits warning – down 27%. CSR rallied by 18% based on informed takeover gossip. Hays posted satisfactory results and Salamander Energy fell by 4% with figures looking a little light.

UK companies posting results tomorrow – Friday – BWIN, COMPUTERCENTER & RESTAURANT GROUP. BIG LOTS posts interim results tomorrow.
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.

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

Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Please refer to http://www.panmure.com/emaildisclaimer.aspx for additional important disclaimers and legal information.

TODAY’S FAYRE – Wednesday 27th August 2014

TODAY’S FAYRE – Wednesday, 27th August 2014

“Earth has not anything to show more fair:
Dull would he be of soul who could pass by
A sight so touching in its majesty:
This City now doth like a garment wear
The beauty of the morning; silent, bare,
Ships, towers, domes, theatres, and temples lie
Open unto the fields, and to the sky;
All bright and glittering in the smokeless air.
Never did sun more beautifully steep
In his first splendour valley, rock, or hill;
Ne’er saw I, never felt, a calm so deep!
The river glideth at his own sweet will:
Dear God! the very houses seem asleep;
And all that mighty heart is lying still!”

William Wordsworth – poet – 1770-1850

The number of ‘GOOD’ TV dramas is perhaps quite limited. Everyone has their favourites. My two favourites are ‘Breaking Bad’ and ‘House of Cards.’ So I am always interested in the annual ‘Emmy’ awards; those for 2014 were posted last night. I was delighted that ‘Breaking Bad’ won 6 ‘Emmys’ – particularly delighted for Bryan Cranston and Aaron Paul – but was absolutely gobsmacked that the brilliant political drama ‘House of Cards’, starring the evil and duplicitous Kevin Spacey and his wife in the series, Robin Wright, received none, despite 13 nominations. There’s no accounting for taste.

Hats off to Frank Lampard, who, after winning 106 caps and scoring 29 goals for England, announced his retirement from international football yesterday. Footballers tend to attract bad personal press. Not this fellow! Frank Lampard is the commensurate professional; decent and hugely likeable. He could only be described as a legend – a term generally used too loosely – by his adoring Chelsea fan club.

One has to start wondering whether these local authorities fill their important positions with a bunch of ‘numpties.’ How on earth did the powers that be at Rotherham allow 1400 children to be abused over several years without any of the disgusting perpetrators of these heinous acts of depravity being brought to book? Were they asleep on the job? It strikes me that this Labour council may not be fit for purpose.

Yesterday European equities put their best foot forward for the second day on the bounce, thanks in the main to momentum driven by expectations that the ECB’s President Mario Draghi would introduce quantitative easing sooner rather than later to help push the EU’s economy out of the doldrums and away from the disastrous precipice of deflation. For some European equities to be where they are today is mind-blowingly illogical. However the ‘insurance’ provided by ‘funny money’ and the fact that the DAX has only 30 stocks and the CAC 40 reminds us that these indices are international and are probably not representative of the respective economies.

Perhaps, despite their woes, we must also not forget that Germany and France are the EU’s two biggest economies. The plight of European stocks also received a fillip from improving geopolitical temperatures in Gaza and Ukraine. A happy outcome in Ukraine is futuristic and I shall not be about to hold my breath for a happy outcome. However this morning’s German GFK consumer confidence index took another battering. It is also becoming clear that the level of investment in Europe has dropped sharply. Notwithstanding all these nuggets of news, the DAX added another 0.8% on top of the same gain the day before. The CAC was even bolder adding 1.2% to the 2.1% gain the day before and the FTSE which was shut on Monday for a Bank Holiday, added a modest 0.7% – up 47 points at 6822.

Yesterday WPP posted satisfactory growth with a 3% revenue increase. The interesting part of Sir Martin Sorrell’s statement was centred round his concern for geopolitical problems and the potential damage they could cause to the recovery process, particularly the Russian/Ukrainian spat. Sir Martin is often an excellent barometer of economic activity. I always listen to what he has to say, even if I do not always agree with his views. Regus’s shares were slammed – -6% and Bunzl was amongst the best performing stocks – initially up 3%, but closed up 0.7%. Across the Pond, Tim Hortons the Canadian doughnut and coffee chain, rallied by 8.5% after terms had been agreed to merge the business with Burger King with head office being deployed to Canada for tax benefits, much to the chagrin of President Obama. The fearless Warren Buffett has supplied 25% of the total funding of Can$12.5 billion to finance this deal. Best Buy did not please its acolytes with its results and the shares took a tumble – -6.9%. Amazon enjoyed a decent session – up 2.3% – having agreed to buy Twitch, the game-site for $970 million. The FTSE is set to pen this morning slightly below the Plimsoll line.

Post the last UK Budget, when the Chancellor upped the threshold for tax emption from £11.500 to £15k, yesterday’s savings numbers for July were of great interest. ISAS can now be the choice of the individual in terms of cash and equities. In July banks reported that £4.9 billion had been deposited. This figure was lower than the £6.3 billion deposited this time last year. However 23 million ISA & NISAS savers’ deposits, which totalled £4.9 billion last month, compared very favourably to the £18 million deposited last July and £806 million in July 2012.

UK companies posting results this week – 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 – Wednesday – CHICO’S FAS!, Thursday – ABERCROMBIE & FITCH, DOLLAR GENERAL, FRED’S, Friday – BIG LOTS.

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.

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

Panmure Gordon (UK) Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Please refer to http://www.panmure.com/emaildisclaimer.aspx for additional important disclaimers and legal information.

MARKET UPDATE – 26th August 2014

At 3.30pm the princely sum of 290 million shares had changed hands on the LSE – Ladies & Gentlemen, get real, that is disgraceful – perhaps not quite as embarrassing as the ill-natured rhetoric that fell from the lips of the loquacious Alex Salmond, but close! The holidays are surely over; its shoulders to the wheel or is it really true that funny money (QE) is underwriting equity values? Certainly the spurt shown yesterday by the CAC and the DAX, which added 2.1% and 1.8% respectively, courtesy of Draghi inspired QE rumour, gave the FTSE 100 a modest fillip today.

At the time of writing the FTSE 100 is up 40 points at 6815. The main gainers were MONDI +2.3%, AB FOODS & EASYJET +2%. WPP added 1.7% after decent numbers and a veiled warning about the future from CEO Sir Martin Sorrell. BUNZL fell from its high of +3% to +0.75%. Regus had a shocker after dispiriting numbers. Banks were popular – RBS +1.4%, HSBC +0.75%, BARCLAYS +1.2%. House builders were also in demand with BARRATT DEVELOPMENT in the vanguard +1.%. ASTRA was up 1% – but not enough to think that Pfizer diseased ridden mind was working overtime to launch another bid. The main losers were ANTOFAGASTA, whose shares travelled and arrived after satisfactory results were down 2%. PETROFAC and RIO were easier by 1.5%.

The Street of Dreams was up 50 points at 17128 and the S&P 500 breached through the record 2000 barrier at 2001 – up 0.25%

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.

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

TODAY’S FAYRE

TODAY’S FAYRE – Tuesday, 26th August 2014

“Your troubles shrink not, though I feel them less
Here, far away, than when I tarried near;
I even smile old smiles–with listlessness–
Yet smiles they are, not ghastly mockeries mere.

A thought too strange to house within my brain
Haunting its outer precincts I discern:
–That I will not show zeal again to learn
Your griefs, and, sharing them, renew my pain….

It goes, like murky bird or buccaneer
That shapes its lawless figure on the main,
And each new impulse tends to make outflee
The unseemly instinct that had lodgment here;
Yet, comrade old, can bitterer knowledge be
Than that, though banned, such instinct was in me!”

Thomas Hardy – author & poet – 1840-1928

“My hatred of Bolshevism and Bolsheviks is not founded on their silly system of economics, or their absurd doctrine of an impossible equality. It arises from the bloody and devastating terrorism which they practice in every land into which they have broken, and by which alone their criminal regime can be maintained.” – Sir Winston S Churchill – statesman & Prime Minister – 1874-1965

Yesterday’s gathering at Glasgow’s Kelvingrove Art Gallery and Museum to hear Scotland’s independence issue discussed by Alex Salmond and Alistair Darling wasn’t a debate! It was mob oratory by the SNP leader in front of a highly partisan and biased audience, rather poorly mediated by Glen Campbell. I doubt that the ill-mannered shouting will clarified any of the main issues. The occasion did little to enhance the flagging reputation of UK politics. This morning, after the so-called-debate, Ladbrokes were 1/6 for a No! Vote and 7/2 for a ‘YES’ vote

Whilst most of us were watching the rain lashing down on Bank Holiday Monday, punters supporting the DAX and the CAC made some serious measurable progress, based entirely on the perception that Mario Draghi would introduce QE sooner rather than later. Germany’s IFO number was poor. Business sentiment dropped to its lowest level dropped to its lowest level for a year. So once again, silly money props up equity sentiment and the appetite for risk – All madness to me! Just look at those EU bond yields? – Spain’s 10-year yield at 2.25%, with gilts at 2.38%, Italy at 2.48%, not forgetting Germany at 0.95% and France at 1.31%. I understand ECB monetary policy – well I think I do, but these yields seem unrealistic to me! I had to laugh at the news that the French government had collapsed and that President Hollande insisted on support for further austerity, rather different to Draghi’s advice over the weekend of loosening fiscal policy and increase spending on infrastructure throughout the EU!

In the US yesterday despite slightly weak New Home Sales and rather average PMI data, the Street of Dreams was quite happy to push on, though the S&P remained below its recently achieved intra-day ‘high’ of 2000. The main US markets added an average of 0.42% yesterday. It is fair to say that corporate and M&A news helped provide some continued momentum. Roche buying InterMune for $8.3 billion set the ball rolling and Burger King landing Canada’s Tim Hortons in what looked like a tax efficient trade set the ball rolling helped keep the show on the road. However the icing on the cake was Amazon.com trumping Google in paying $970 million for an on-line games website, TWITCH. Twitch has about 55 million visitors and a fair few spend as much as 20 hours a week playing their games! Clearly Twitch will provide a decent platform for digital advertising for Amazon.

This morning there were positive numbers from Bunzl (+3%), an adequate effort from WPP (+1%), which saw earnings up by 3% and growth by about 4% and a dispiriting effort from Regus (-5%). Stagecoach pleased its acolytes with its trading statement. Hypothetically Pzizer could bid again for Astra Zeneca. However with Astra only up by 0.5% it seems unlikely. At 8.45am the FTSE was up 25 points at 6800.

UK companies posting results this week – Wednesday – 888 HOLDINGS, APR ENERGY, POLYMETAL, EVRAZ, FOXTONS, Thursday – STV GROUP, HAYS, MELROSE, PETROPAVLOVSK, LLAYTECH, SALAMANDER ENERGY, UNITE, Friday – BWIN, COMPUTERCENTER & RESTAURANT GROUP.

US companies posting interim results – Wednesday – CHICO’S FAS!, Thursday – ABERCROMBIE & FITCH, DOLLAR GENERAL and FRED’S, Friday – BIG LOTS.

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 THOUGHTS AHEAD OF TUESDAY

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

David Buik

Market Commentator

D +44 (0)20 7886 2775
Panmure Gordon & Co
One New Change | London | EC4M 9AF | United Kingdom
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TODAY’S FAYRE – ENERGY & JACKSON HOLE

TODAY’S FAYRE – Saturday, 23rd August 2014

“Farewell, thou child of my right hand, and joy;
My sinne was too much hope of thee, lov’d boy
Seven yeeres thou wert lent to me, and I thee pay,
Exacted by thy fate, on the just day.
O, could I loose all father, now. For why
Will man lament the state he should envie?
To have so soone scap’d worlds, and fleshes rage,
And, if no other miserie, yet age
Rest in soft peace, and, ask’d, say here doth lye
Ben Jonson his best piece of poetrie.
For whose sake, hence-forth, all his vowes be such,
As what he loves may never like too much.”

Ben Johnson – author & poet – 1572-1637

“I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian national interest.” – Winston S Churchill – Statesman & Prime Minister – 1874-1965

I have always had a healthy respect for Chancellor Merkel, though I have never been in any doubt as to how duplicitous she. She is pragmatism personified. She has recently been seen to cosy up to Ukraine, though in the same breath she allows one of Germany’s main utility companies – RWE to sell assets to Russian investors. Politics, dear boy, politics! I hope the UK has stopped selling military equipment to the House of the ‘Hammer & Sickle’ for the time being.

I was very lucky to go to a magnificent ‘Cole Porter’ concert at the Cadogan Hall with full orchestra, choir and four soloists. ‘Begin the Beguine’, ‘True Love’, ‘You’re Sensational!’, ‘Night & Day’, ‘Let’s Do it!’, ‘I’ve Got You Under My Skin’ and ‘Anything Goes’ were amongst the memorable scores performed from the Cole Porter repertoire. They just don’t write songs these days that have remained hugely popular with the passing of time! It was such a happy evening, though hardly surprising to see that the average age of attendees was 70+!

I wondered how long it would take before Ed Miliband and Caroline Flint declared war on the energy companies again, threatening to withdraw their licences if they transgressed from Labour government energy policy, which includes the cutting and freezing of energy prices. I doubt anyone has ever heard such a ham-fisted energy policy. How can prices be frozen, when there are so many imponderables? – Geopolitical problems, price of oil, supply of oil and gas. It is just ridiculous to even suggest it. If energy prices are frozen, it means they could not be raised in the advent of a Labour administration.

Caroline Flint is a feisty robust and eloquent politician, but given the wrong brief she must be categorised as dangerous. I doubt she knows much more about long-term energy supply than I know about non-ferrous welding.

Labour’s energy policy is totally flawed. Does M/S Flint not know that 70% of our energy comes from coal? As I understand it Labour’s and the coalition’s policy for decarbonising energy on the next 15 years could cost as much as £500 billion, which could add £1500 to every family’s utility bill. Gas is relatively cheap and clean. Such a pity that Russia is so dominant in this arena, though the UK is not reliant on Russia for its supply. If this country does not formulate a coherent policy for energy the lights in the UK could go out in eighteen months. And by the by I am advised by energy experts that these wind farms are not the immediate answer, as they are heinously expensive and ugly to boot!

Finally on this subject the energy companies are being bullied in to a corner. Splitting these suppliers could make the industry very vulnerable resulting in a drop in the quality of service. A full open and constructive dialogue between the energy companies and our political masters might help the consumer understand what is required in terms of capital investment to our anachronistic equipment and systems. It is just ludicrous for the public to be fed duff information for political expedience.

After her first Jackson Hole speech as Chairman of the FED, Janet Yellen saw markets on the Street of Dreams take a modest dip, thanks to her slightly more ‘hawkish’ approach to interest rates than had been expected. To the layman (me) she said very little of interest and spoke in coded geek language – Blechley Park Code book material. The gist, I think of what she said, was that great progress in terms of recovery had been made by the US economy – probably as great as that made in 1929 when coming out of the ‘Depression.’ However, though some slack had been picked up in the Labour market, under-utilisation of labour resources remained. The FED chairman said she was pleased that unemployment had dropped to 6.2%. However the workforce is ageing. Consequently there has been a reduction of middle and skilled blue collar workers. Also poor job prospects had triggered early retirement in places.

Reading through the ‘runes in the sand’ I was left the impression that any upturn in inflation would bring a quick response to required rate hikes. However the scribblers interpreted that rates might start to go up in March 2015 with 1.13% being reached by the end of 2015 and possibly 2.5% by the end of 2016. The FED was on course to end quantitative easing by October 2014, when the balance the $25 billion of the facility will finally be withdrawn.

The key note speech at Jackson Hole was made by The ECB’S Mario Draghi, the tone in total contrast to Janet Yellen’s – not surprisingly, as the EU shows little signs of girding up its economic loins, so as to speak. It will hardly astound anyone that the ECB president expressed concern at the high level of unemployment and the threat of deflation in the EU.

Draghi certainly made me sit up very sharply when suggesting that austerity should be eased and the constituent countries should be encouraged to spend more! I understand that infrastructure spending creates jobs and a modicum of growth but most of these countries, with the exception of Germany, are already drowning in debt. We do not need a replication of the Greek tragedy of 4 years ago! Debt is the greatest threat to democracy and in the wrong circumstances could lead to anarchy.

Draghi was looking for improved cooperation between the ECB and individual governments. He was very Luke warm about introducing QE. He felt that mass bond purchases needed to be supported by looser fiscal policy and structural reforms to strengthen the region’s recovery process. At least Draghi is consistent, but his appetite for debt terrifies the living daylights out of me. This is a recipe for disaster and heaven forbid that the UK were to be sucked in to another loose fiscal policy cycle. I can see Miliband and Balls smiling like Cheshire Cats!

It will be interesting to see how traders interpret the content of the speeches on Monday morning.

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.

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

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ASTRA ZENECA up 3.3% today…NO!.. It can’t be…!

ASTRA ZENECA – up 3.3% today at 4425p in a sepulchral market place – WHY? It’s a long way from £58 but…….

It may be my diseased ridden mind working overtime, but why such aggressive interest on such a nondescript day, when it should be all about the Yorkshire Oaks!

So I set about having the drains up as to why this stock was so firm tonight. Virulent rumours are permeating around the market that on 26 August, when Pfizer, could theoretically or creatively be able to bid for AZN again, either by being invited by AZN to bid (VERY unlikely in Savvas Neophytou’s view) OR by launching a bid if it’s guaranteed to be a knock-out blow. This is no more than informed but baseless gossip. It would EXTREMELY aggressive for Pfizer to adopt this stance and brave in the extreme, especially without access to accounts. However Astra did set its price tag as £58.85 so Pfizer may be able to argue if it goes there, it will be a deal… This is Judy Garland territory for me – somewhere over the rainbow, but….

Some people even think tax inversion is off the agenda! Rubbish. The US can’t even pass a budget without multiple extensions and government shutting down. So to change legislation of this nature will take years or require an act of God! This deal gets done, but it gets done in November. In Savvas Neophytou’s opinion no deal will be completed before November. However the drums are rumbling!

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, 21st August 2014

“Woman much missed, how you call to me, call to me,
Saying that now you are not as you were
When you had changed from the one who was all to me,
But as at first, when our day was fair.

Can it be you that I hear? Let me view you, then,
Standing as when I drew near to the town
Where you would wait for me: yes, as I knew you then,
Even to the original air-blue gown!

Or is it only the breeze in its listlessness
Travelling across the wet mead to me here,
You being ever dissolved to wan wistlessness,
Heard no more again far or near?

Thus I; faltering forward,
Leaves around me falling,
Wind oozing thin through the thorn from norward,
And the woman calling.”

Thomas Hardy – author & poet – 1840-1928

In the wake of the very sad news of the passing of James Alexander-Gordon, who for decades read the football results on a Saturday afternoon at 5.00pm so brilliantly in his own inimitable style, The Daily Mail’s Quentin Letts wrote a brilliant article on voices and his thoughts as to how these presenters and commentators must look in real life – Garry Richardson the Radio-4 sports presenter, the Hampshire drawl of John Arlott, Radio-4 newsreader Brian Perkins, whispering Ted Lowe from snooker and the Australian twang of Richie Benaud – were all discussed. The article is beautifully written with an impish sense of Letts’s mischievousness.

Being a less than special after dinner speaker I took lessons on delivery from Polly James – she the dizzy blonde from ‘The Liver Birds.’ She once told me that voices deceive and mislead. In the first lesson she gave me on speech delivery she told me to milk the audience for all that it was worth and not start speaking too quickly!

“After all, she said, people who have heard you on the radio with that smoker’s voice will think you are tall, dark and good looking. They need to adjust to the fact that you are squat, bald and rather plain looking!” It takes all sorts…..

It looked as if yesterday was going be yet another quiet day, with little to get the taste buds going. We rather expected that Balfour Beatty would draw stumps on Carillion in terms of a reverse takeover for 2 reasons – the sale of Parsons Brinkerhoff, BB’S US operations and the proposed strategy of cutting back on UK construction contracts. This news resulted in Balfour’s shares dropping 5% – not surprising having experienced 3 profits warnings in recent months. Also a £50 million improvement in price on a £2 billion deal is hardly measurable. Who knows, when the cooling off period has been completed talks could re-open.

We also expected Glencore to announce a $1 billion share buyback; they did not disappoint. Also the market’s response to Standard Chartered Bank’s fine startled me. Dealers felt that the punishment meted out was excessive for the crime committed. There is no doubt that the SEC and all New York regulatory bodies mean business – tough as old boots, making the FCA looking more than reasonable in its approach.

However it was the Central banks that grabbed the interesting headlines yesterday! I thought the fact that Martin Weale and Ian McCafferty voted against the rump of the MPC for a hike in rates was a very healthy illustration of discussion on the subject – not dissent. Also hopefully Mark Field MP will be reassured that the BOE MPC committee is independent and maybe John Mann MP will get back in his box after his preposterous comment that the Governor and the Chancellor were in cahoots over the UK economy. One of the few decent decisions Gordon Brown made during his stewardship of the economy was the introduction of an independent Central bank. At the time I thought it was a political abrogation of responsibility. I was wrong! I actually don’t think the 7-2 vote to maintain the status quo changes anything. Anaemic wage increases and average productivity suggests that rates won’t go up before February 2015.

Conversely Janet Yellen’s comments from the FED meeting had a rather more hawkish tone than before. The FED believes that the Labour market rate debate is moving towards normal. In English I suppose that means the slack is being tightened with the quality of jobs is improving. So thoughts are being curdled that rate increases in the US will be brought forward from July 2015 to perhaps March 2015, with perhaps 3.2% being reached post a nine month cycle.

The Jackson Hole Central Bank jamboree starts tomorrow. We all are waiting with bated breath for the pearls of wisdom and philosophical gems that will drip from the lips of the world’s leading Central bankers’ lips. Mario Draghi is the main speaker. I hope he has a few goodies from his Pandora’s Box. The EU economy could certainly benefit from something innovative in terms of stimulation for its sagging fortunes. It is interesting to note that the usual cordial invitations sent to representatives from Goldman, Morgan Stanley, BOA Merrill and the likes of Meredith Whitney have not been extended this year.

The Street of Dreams felt that Yellen’s comments on rates yesterday were helpful and the DOW finished up 0.35%, with the S&P 500 up 0.25% better and the NASDAQ near enough flat. Hewlett-Packard posted satisfactory numbers, if a little unspectacular, with revenue up 1% at $27.6 billion for the quarter. Shares fell 1%. Asia had a slightly dispiriting session thanks the HSBC China PMI data which was light of expectations. This news took London’s mining sector down by an average of 1.2% in early skirmishes. WH Smith posted a satisfactory trading statement and the market’s reaction to Quindell was surprising – down 6%. The FTSE 100 was somnolent – down 2 points.

US company results –Thursday – HORMEL FOODS, GAP, ROSS STORES, Friday – FOOT LOCKER.

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 – Wednesday, 20th August 2014
“Shoulders to cry on,
these mooring posts,
trios leaning together,
supporting each other:
in grief and inconsolable.
Mooring posts tapering to blunt black
like a lost child’s lost crayons.
The endless wash
of salt water.
See-through, threadbare, worn,
these great fogs like ghosts
in slow flight from some slaughter.
The hoarse cries of fog-horns,
lost in their loss,
with no way back,
and the world gone white
in a single night.”

Craig Raine – poet – 1944

“If we got one-tenth of what was promised to us in these State of the Union speeches, there wouldn’t be any inducement to go to heaven.
– Will Rogers – American humourist

“Politicians are the same all over. They promise to build a bridge even where there is no river.” – Nikita Khrushchev – Russian Prime Minister in ‘1960s’

“When I was a boy I was told that anybody could become President; I’m beginning to believe it.” – Clarence Darrow – US lawyer

The FED chairman Janet Yellen had no surprises in her hand bag ahead of the Jackson Hole meeting for Central bankers and some other luminaries which starts this Friday. It will be interesting to hear what Mario Draghi, the main speaker and she have to say this coming weekend. From what little she said one certainly gets the impression that interest rates in the US are likely to remain close to zero for longer than economic growth shows signs of accelerating. Despite unemployment dropping to 6.4% in the US, there is still plenty of slack in the economy with little threat of wage costs being ramped up. With those thoughts in mind it is unlikely that rates will start to go up until the 3rd quarter of 2015. I doubt very much that Mario Draghi will bear his soul about the forced introduction of quantitative easing in the Eurozone. However with growth on the floor and deflation knocking at the door, the ECB’s President may be forced to act sooner rather than later.

Much has been written about the drop inflation to 1.6% last month in the UK and the fact that wages only rose 0.6% in the 3 months to the end of June. Despite veiled threats by Governor Carney to increase rates before wages start going up, my revered colleague Simon French, Panmure’s economist is strongly of the opinion that there will be no increase in rates until February 2015. Certainly market appeared to adopt that thought process as the Pound lost nearly a cent to $1.66 and a few pips. The minutes of the last MPC meeting are due out today. By the time this missive arrives they may have been posted. However it would not amaze me if Martin Weale and even Ian McCafferty votes for a rate hike. However if a push comes to a shove I still think it will be 9-0 in favour of no change and maintaining QE at £375 billion.

We waited with bated breath for news of Standard Chartered being fined $300m (£181m) for failing to control/regulate the flow of transactions, which might have perceived to have been illegal from sanctioned states. The bank had agreed to cut off dealings with certain customers

New York’s Department of Financial Services (DFS) announced this penalty yesterday. On top of the fine, the British bank will suspend dollar clearing transactions from high-risk clients in Hong Kong and exit certain relationships with certain customers from its United Arab Emirates offices. Additionally, new clients who want to open US dollar accounts will have to be approved by the DFS. “If a bank fails to live up to its commitments, there should be consequences,” said Benjamin Lawsky, New York’s superintendent of financial services. This is a real blow to Peter Sands, the CEO and his directors. This is the second transgression. A third could result in Standard Chartered losing its New York licence. One feels that Mr Sands position is close to being untenable. I am truly amazed that the share price rose by 0.5% this morning.

The FED Chairman’s dovish comment saw the Street of Dreams select another gear as the DOW added 0.48%, the S&P 0.50% and the NASDAQ 0.43%. It was interesting to note that Apple’s shares have reached $100.53 – a 25% increase in value since April 2014 when there was a 7 for 1 split, valuing each share at $75.00.

This morning Balfour Beatty rejected Carillion’s overtures despite the latter sweetening its offer by allocating BB 58.3% of the new company. There were 2 reasons given. The plan to cut back on UK construction business and to stop the sale of Balfour’s US operation Parsons Brinckerhoff. The ‘Shut up or put up’ closes tomorrow; so the shareholders may not have enough time to bang both parties’ heads together to see if there is common ground. Balfour Beatty’s shares plunged by 6% after the news broke.

The following post numbers on Thursday – KAZAKHMYS, WH SMITH, QUINDELL.
US Thursday – HORMEL FOODS, GAP, ROSS STORES, Friday – FOOT LOCKER.

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.

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