TODAY’S FAYRE – Tuesday, 12th August 2014

“Dear Babe, that sleepest cradled by my side,
Whose gentle breathings, heard in this deep calm,
Fill up the intersperséd vacancies
And momentary pauses of the thought!
My babe so beautiful! it thrills my heart
With tender gladness, thus to look at thee,
And think that thou shalt learn far other lore,
And in far other scenes! For I was reared
In the great city, pent ‘mid cloisters dim,
And saw nought lovely but the sky and stars.
But thou, my babe! shalt wander like a breeze
By lakes and sandy shores, beneath the crags
Of ancient mountain, and beneath the clouds,
Which image in their bulk both lakes and shores
And mountain crags: so shalt thou see and hear
The lovely shapes and sounds intelligible
Of that eternal language, which thy God
Utters, who from eternity doth teach
Himself in all, and all things in himself.
Great universal Teacher! He shall mould
Thy spirit, and by giving make it ask.”

Samuel Taylor Coleridge – poet – 1772-1834

I spent the most delightful day at Kenwood yesterday – between Hampstead and Highgate – the home of the Iveagh Bequest (Guinness family) who bought this ancestral home from the Mansfield family in the late 18th century. Those of you who saw the film ‘Belle’ starring Tom Wilkinson as Earl of Mansfield will recall that he was Lord Chancellor at the time of the abolition of the slave trade and Kenwood was the family home.

The House sits in the most beautiful surroundings on the edge of Hampstead Heath. Not only is there tremendous influence from Robert Adam in regards to the architecture, but also there are more paintings by Gainsborough, Reynolds and Romney than one can shake a stick at, as well as two pieces de resistance in Rembrandt’s self-portrait and a smattering of Vermeers. Joyously the Iveagh Bequest gave this beautiful house and its contents to a grateful nation.

Only the country’s petrol heads, in support of Lewis Hamilton, if he were to snatch the F1 championship from Nico Rosberg, can thwart Rory McIlroy from being unequivocally voted BBC Sports Personality of the Year. What a phenomenal achievement winning two majors and that important tournament in Akron, Ohio all within a month!

Isn’t it extraordinary how painfully often we hear tragic news of a suicide by individuals who are universally considered geniuses and yet they hide in dark corners, unrelated to the immense contribution they make to society? Robin Williams – you were a genius! RIP

For reasons best known to themselves investors have suddenly become relatively comfortable with the potentially extremely dangerous geopolitical climate that prevails in Gaza, Iraq and Ukraine. The first ‘hell-hole’ mentioned is on a knife’s edge in terms of any cease fire becoming meaningful. Iraq is an absolute mess. Russia tried for 30 years to sort Afghanistan out and consummately failed. How President Obama thinks a few bombing raids will bring the ISS back on the bridle escapes me and finally Russia pandering to Ukraine’s humanitarian needs ventures to suggest that the situation will be used by Putin to infiltrate Ukraine for his own gains. Whatever I think market forces are market forces. Wall Street rallied strongly last Friday and it did not take long for Europe to regroup yesterday. The FTSE 100 added 65 points to 6632.

The Street of Dreams attempted to consolidate yesterday with the DOW adding 0.1%, the S&OP 500 0.28% with the NASDAQ cracking on in adding 0.7%. The Russell Index was up 0.9% on the day. Since its high in July where the P/E ratio for the S&P stood at the rather rich number of 18.3 X earnings, it has fallen to a more realistic level of 17.5X. Dean Foods rallied by 3.8%. Intel had another decent session – +1.3%. Sanofi Aventis has agreed to Pay MannKind up to $925m for its Inhaled insulin. Alibaba, ahead of its forthcoming gargantuan IPO – to be valued somewhere between $150 billion and $200 billion in September was seen to be encouraging top brand retail names to open accounts on-line. Clearly there is modest concern to avoid fake merchandise.

Having rejected Carillion’s overtures pro-tem Balfour Beatty’s share price rallied by 2.5%, having been under the ‘cosh’ for months. It is hard to see Carillion going hostile in the current climate.

This morning Asia put in a workmanlike performance, though Shanghai and the Hang Seng seemed destined to close below the Plimsoll line. In London at 8.15am the FTSE 100 was down just 7 points. Good numbers were posted by Ladbrokes (+2.5%), Serco (+6.5%), Just-Eat (+7.5%) and SIG (+3.8%). We await numbers from Prudential within the hour. Tomorrow the BANK OF ENGLAND’S INFLATION REPORT WILL BE ALL CONSUMING!

Panmure’s economist SIMON FRENCH reflects on the BRC’s data posted today and the consumer’s concern –
If you have been trying to work out what the UK consumer has been up to in 2014 you can be forgiven for being dazed and confused. A warm winter, a late Easter, delayed summer sales, heavy discounting and a continued structural shift to online retailing has left the headline indictors in somewhat of a tailspin. This morning’s British Retail Consortium (BRC) data however provides further evidence that UK retail sales have hit a summer soft patch as households begin to price in a rising interest rate environment in 2015. With unsecured personal debt at £1.45 trillion (an all-time nominal high – if still off its 2008 peak as a ratio of earnings) we see the UK consumer keeping their wallet under control in the second half of this year. This news will likely lead to a further round of discounting, particularly amongst food retailers, where competitive pressures are particularly acute.


Significant US companies posting results this week –Thursday – WALMART, KOHL’S, JC PENNEY.

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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