TODAY’S FAYRE – Friday 26th September 2014

TODAY’S FAYRE – Friday, 26th September 2014

“Once more unto the breach, dear friends, once more;
Or close the wall up with our English dead.
In peace there’s nothing so becomes a man
As modest stillness and humility:
But when the blast of war blows in our ears,
Then imitate the action of the tiger;
Stiffen the sinews, summon up the blood,
Disguise fair nature with hard-favour’d rage;
Then lend the eye a terrible aspect;
Let pry through the portage of the head
Like the brass cannon; let the brow o’erwhelm it
As fearfully as doth a galled rock
O’erhang and jutty his confounded base,
Swill’d with the wild and wasteful ocean.
Now set the teeth and stretch the nostril wide,
Hold hard the breath and bend up every spirit
To his full height. On, on, you noblest English”

William Shakespeare – playwright & poet – 1564-1616

It may have been a rubbish week for equities and bonds, but on a personal basis it has been absolutely scintillating for me in terms of events visited. An invitation to the Windsor Festival to hear a concert in the Waterloo Room followed by refreshments in the beautifully refurbished St George’s Room, was particularly memorable. We all remember the devastating fire which swept through St George’s Room in 1992. The renovation has been breath-taking – such pictures and treasures on display – such a privilege to see it.

So Parliament is being recalled today for endorsement of the US coalition bombing raids in Syria/Iraq. No doubt the PM will win the vote. Such a pity there was no stomach for the fray from President Obama, when PM Cameron looked for support to give Assad a bloody nose 2 years ago.

In the past 24 hours the world’s equity markets have experienced a measurable shake down and it may just be that September will have been a negative month for investors. There was a toxic compendium of news items that shook the rafters of Wall Street yesterday – Geopolitical issues over Iraq & Syria, reprisals by Russia that threatens to seize assets, US Durable Goods falling 18% last month and a possible hike in US interest rates manifesting itself earlier than originally expected. The DOW shed 254 points with consummate ease – 1.54%, with the S&P 500 taken down by 1.62% (-1.9% so far in September) and the NASDAQ by a short 2% (-2.5% this month), thanks in the main to Apple losing 3.8% as a result of issues with its iPhone 6 and inadequate software update of its i.O.S.8.1. The Russell indices for SMES has seen the most vehement sell-off for small caps. The Russell 2000 has dropped 8% since 3rd July.

IG’S Chris Weston makes the following interesting observations – “Unlike other recent sell-offs of late, driven by moves in the US bond markets as Fed rate hikes increase, what we saw in Europe, the US and today in Asia is a classic ‘risk off’ move. In the US, the S&P printed a bullish outside day on Wednesday, suggesting the bulls were in firm control. However, this move lacked follow-through buying yesterday and, as the S&P 500 moved through the 50-day average, selling picked up on rumours of a sizeable sell program hitting the market. The bears will certainly be enthused by the fact the index closed not only below the September 15 low of 1978, but also on session lows.”

The climate in Europe was no better yesterday with the DAX being larruped by 1.57%, the CAC by 1.32% and the FTSE 100 by 66 points to 6639. It was only a few weeks ago that 7000 was being considered as a possible goal for the FTSE by the end of the year. Now it is just a smidgen under 300 points light of its record of 6930 in January 2000. Banks, miners, supermarkets, retail and drugs were larruped yesterday. That did not stop Sports Direct’s entrepreneurial CEO Mike Ashley from wading in to the ring to buy a ‘put-option’, which potentially exposes him to a £43 million loss in the very unlikely event of Tesco going to the wall. Few know the exact details of this transaction. Ashley has been there before with raids on Debenhams and has been known to have a tilt at the ring with spread betting when shorting HBOS with some success a few years ago. Asia experienced another downbeat session today with concern over China’s property market and the strength of the Dollar. Here is Europe markets may open flat, which may just be a rather whimpish bear squeeze rally.

Lloyds of London posted numbers yesterday and it is just possible that there could be liabilities of up to $600 million from the Malayan Airline disasters and the Libyan crisis. Mark Carney had a pop at the insurance industry, implying that he and the regulators will come down hard on insurance companies that give a distorted view of risk to decrease the amount of capital they are expected to hold. Both Mr Carney and Minouche Shafik also gave a clear signal that higher rates in the UK were on their way. There was much speculation as to who would succeed Sir Philip Hampton as chairman of RBS. I am championing the cause of Lord Myners who ticks all the boxes. However no one will listen to me. Other candidates include Richard Meddings, Sir Sandy Crombie, who is currently on the board, Sir Gerry Grimstone (Standard Life) Brendon Nelson and Lord Gus O’Donnell.

Lloyds Banking Group has sold another 11.5% of its stake in TSB – 57.5 million shares at 280p worth £161 million, leaving the Black Horse with a 50% stake to dispose of when the time is right.

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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