TODAY’S FAYRE – Wednesday, 13th August 2014

“Now, God be thanked Who has watched us with His hour,
And caught our youth, and wakened us from sleeping,
With hand made sure, clear eye, and sharpened power,
To turn, as swimmers into cleanness leaping,
Glad from a world grown old and cold and weary,
Leave the sick hearts that honour could not move,
And half-men, and their dirty songs and dreary,
And all the little emptiness of love!

Oh! we, who have known shame, we have found release there,
Where there’s no ill, no grief, but sleep has mending,
Naught broken save this body, lost but breath;
Nothing to shake the laughing heart’s long peace there
But only agony, and that has ending;
And the worst friend and enemy is but Death.”

Rupert Brooke – soldier & poet – 187-1915

You may well have seen the poppy display at the Tower of London on television and consequently have been moved by its poignant solemnity and as a symbol of the importance of humanity. I promise you, if you take the trouble to go, you will be even more moved by importance of planting over 888,000 poppies – one for each member of the armed forces that died in the line of duty. At 8.40pm every evening until 11th November the last post is played and the names of a hundred of the ‘fallen’ are read out! It’s quite an occasion.

You should also visit the pictorial exhibition of the battlefields in France, Belgium, Gallipoli, Slovakia etc in St James’s Park, near to the Guard’s Memorial near Horse Guard’s Parade – just fantastic! Much of the history of the war is brilliantly explained.

Yesterday in London, there were signs that we might expect a bit of a ‘follow-through’ with reasonable results from Just-Eat Prudential and adequate efforts from Ladbrokes and Serco – the latter two having lost 25% and 31% in value since the beginning of the year. Both are recovery stories with the appointment in February of Sir Winston Churchill’s grandson – Rupert Soames – to replace Chris Hyman as CEO. Serco’s figures in isolation were awful – a loss of £7.3 million against a profit of £106 million this time last year. The loss of DLR at a cost of £100 million and the tagging crisis put this company on the rocks. However having taken Angus Cockburn from Aggreko as his CFO, the market looks as if it is prepared to be patient. This is a management issue. Soames comes with good press and a decent CV, which may attract more contracts from the government. Interesting to note that after the figures Serco shares rose like a grilse – up 8%, but closed up just 0.5%. Then Germany’s dire ZEW number was posted, as was its rather anemic GDP rate of just 0.5%. That news did nothing for sentiment and any gilt that was on the gingerbread was quickly removed.

However any gains that were around European bourses were wiped out and frankly the FTSE 100 did well to close flat on the day. US markets also failed to float anyone’s boat, despite the UK budget narrowing by 25% in the last fiscal year with much of the improvement attributed to growth. The DOW, S&P 500 and the NASDAQ closed a smidgen below the Plimsoll line. Tomorrow Walmart, Kohl’s & JC Penney post results, which will be eagerly awaited. In Asia this morning a measurable drop in credit manifested itself in China last month; much of it down to money supply drying up. The Shanghai Composite and the Hang Seng, having been marginally in negative territory during the session, closed up 0.08% and 0.14%, respectively. The Nikkei closed up +0.35%. 2nd quarter GDP was slightly better than 7.1% estimates at -6.8% – much of that negative number was down to the implementation of the sales tax.

This morning there were workmanlike efforts from Admiral (-2.5%), G4S (-0.5%), Glencore (-0.7%) and Michael Page (-3%), but none really captured the imagination. The FTSE 100 lost 21.9 points this morning for dividend payments on behalf of a few large constituent companies. City veteran banker Sir Win Bischoff after a hugely successful career at Schroders and then shorter stints at Citigroup and Lloyds Banking Group as Chairman seems to have an insatiable appetite for challenges. He has accepted the chairmanship of JP Morgan Securities. RBS’S management have implemented a £3.5 million share allowance amongst 10 senior staff, which will benefit by between £200k and £533k dependent on seniority and contribution. The BOE/Prudential Banking CEO Andrew Bailey described these awards as slightly less awful than bonuses.

Finally today is Inflation Report day – every quarterly second Wednesday. Mark Carney, BOE Governor masses his troops to explain the Bank’s strategy on inflation, employment growth and interest rates. The Bank parades Menouche Shafik, Ben Broadbent and Sir John Cunliffe together for the first time. It will be interesting to see if the Bank becomes a little more ‘dovish’ and as supportive of a regular update on forward guidance as Mr Carney himself. I know I am in a huge minority, but I can see no case for any interest rate hike, even a symbolic one until the New Year. With the EU’S economy hanging in rags and with no visible wage inflation unless the data has improved, why would the consumer, with less disposable income, be in a position to boost retail, by spending more when his/her debt will increase with higher interest rate servicing requirements. I cannot equate with that scenario. Also the threat of higher rates has damaged our exports with a Pound that is much too strong. We wait for 10.30am with bated breath.

UK companies posting results this week – Thursday – RANK ORGANISATION, CINEWORLD, PARTNERSHIP ASSURANCE, ZOOPLA (TS).

Significant US companies posting results tomorrow – 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
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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