TODAY’S FAYRE – Friday 8th August 2014

TODAY’S FAYRE – Friday, 8th August 2014

“And these words shall then become
Like Oppression’s thundered doom
Ringing through each heart and brain,
Heard again — again — again—

Rise like Lions after slumber
In unvanquishable number–
Shake your chains to earth like dew
Which in sleep had fallen on you –
Ye are many — they are few.”

Percy Bysshe Shelley – poet – 1792-1822

Those who have followed the Iraq crisis for the past 20 years would think they were in the middle of a nightmare. In 2003 the Bush/Blair juggernaut crashes through Iraq, bombing seven bails out of the country, eventually capturing and executing Saddam Hussein. I may be short on government information and natural savvy, but there seems to have been no contingency plans to rebuild the infrastructure of that country including its defence forces, after the invasion.

So with a few thousand very dear lives surrendered to the cause, the US and the UK, in their infinite wisdom and majesty, decide they will pull their troops out. You didn’t need the brains of a rocket scientists to realise that Iraqis were clearly under-prepared to look after themselves. Enter stage left the ISS insurgents; they have run amok, resulting in President Obama agreeing in principle to the bombing of focused targets! What is going on here? Everyone knows that Middle East politics are very complicated. However why on earth get involved in a dangerous combat if you are not going to see the job PROPERLY completed?

Just a couple of thoughts on the Old Trafford test match. What a disappointing crowd for the first day of a test match in an affluent city such as Manchester, where there’s more brass than you can shake a stick at! – Very disappointing. I am beginning to think that all the test matches should be played at Lord’s and the Oval.

Sir Ian Botham keeps making snide comments and having a pop against Straussy. I hope it’s just banter amongst colleagues. However with the ‘Galloping Knight’ you never quite know!’ ITB might not get an honours degree from the ‘charm school.’

Yesterday markets were caustic – a dreadful pungent stench of fear hovered over most of the main international bourse. The Putin ‘hob-nailed boot’ has been firmly planted in the haunches of the EU and the US. Russia retaliated yesterday towards sanctions against them by blocking the import of food from the US and fruit and veg from its neighbours. Putin – never one to worry about his image away from Moscow (Putin has an 87% approval rating, based on censored news flow) – decides he will turn up the heat underneath the pot of political instability by massing a large number of tanks on the Ukraine border. This stand-off is here to stay and like or not the EU’s brittle economy and that of the UK is going to suffer.

Even if many people don’t want to believe that damage is being caused by this conflict, the markets are convinced this is the case and have taken remedial action by taking risk off the table. The main equity markets have fallen about 5-6% so far and sentiment is far from positive. This morning Japan’s perilous quest to support Abenomics took a blow to the head, when Japan posted a trade deficit of Y399 billion after 4 months of surplus. Japan’s plight will not be helped, exacerbated by the market’s flight to so-called quality in times of stress by the fact that the Yen is so strong – gold has breached through the $1300 threshold to $1316 and change. The NIKKEI, at the time of writing had fallen by 2.9%. Conversely China posted good trade data with exports up 14.5% (EST 7.5%) with imports disappointing low at +1.6%. This data gives a little credence to China achieving GDP of 7.5% for this year.

Europe’s economy will start to feel the pinch the moment the weather becomes inclement and the snow starts to fall. Putin has just as many calling cards as his political opponents. The difference between Putin and the West, is that Putin is ambivalent about a bit of hardship, particularly when he misleads his country through a controlled media. It was interesting to note that Mario Draghi, at yesterday’s ECB press conference, where rates remained unaltered, acknowledged the fact that the EU’s recovery process could be hampered by Russia economic aggression as well as its military efforts. I think he said by inference that his finger is on the trigger! – …of what? Hopefully to the door to QE to help the EU galvanise itself against the threat of deflation as well as an economy that could dip very quickly in to recession.

Mark Carney’s MPC, with two news additions had the decision to leave rates at 0.5% and QE at £375 billion where they were, made for it. International factors and the weakness of the EU economy provided the endorsement to a very obvious outcome!

Yesterday the Street of Dreams put in another lack-lustre performance, The DOW and the NASDAQ fell by 0.46% with the S&P easing by 0.56%. Initial Jobless Claims fell by 14k to 289K. US Consumer credit rose by $17.3 billion thanks to an increase in student loans and loans for new cars. Yesterday the FTSE 100 eased by 58 points to 6597. Poor efforts from Old Mutual and Randgold did not help the cause. RSA, under Stephen Hester’s guidance posted a small profit of £2 million, but the business looks very messy, as RSA looks to make savings of £180 million which will involve redundancies. Aviva posted healthy progress not reflected in the performance of its shares. Dixons joined hands in holy matrimony with Carphone Warehouse. Let’s hope the joint venture is as successful as Messrs Dunstone, James and Harrison think it will be.

It was announced yesterday that Sir Philip Hampton will be leaving RBS. He is set to join GSK as its chairman, replacing Sir Chris Gent of Vodafone fame. Look at Sir Philip’s pedigree – BT, Sainsbury and RBS. This steely-eyed operator is just what GSK needs. Metaphorically he eats nails for breakfast and spits rust out. He will have noticed that GSK’s share price has slipped in a sector that has been vogue. He will be wanting answers to the bribery allegations in China and he will want to be reassured that the pipeline for new drugs is sufficient for the world’s 4th largest drug company to hold its own. In fairness the exchange of assets with Novartis has yet to have had sufficient time to kick in extra profits. Sir Philip will be making sure that Sir Andrew Witty, the CEO, is the right man to take the business forward.

This morning European markets are expected to shed virtually another 1% in value. Where is the good news? Tui Travel posts results.

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.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: