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
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