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.

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 – 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


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