TODAY’S FAYRE – Tuesday, 7th October 2014

Ask me no more: the moon may draw the sea;
The cloud may stoop from heaven and take the shape,
With fold to fold, of mountain or of cape;
But O too fond, when have I answer’d thee?
Ask me no more.

Ask me no more: what answer should I give?
I love not hollow cheek or faded eye:
Yet, O my friend, I will not have thee die!
Ask me no more, lest I should bid thee live;
Ask me no more.

Ask me no more: thy fate and mine are seal’d:
I strove against the stream and all in vain:
Let the great river take me to the main:
No more, dear love, for at a touch I yield;
Ask me no more.”

Alfred, Lord Tennyson – poet – 1809-1892

“You can always count on Americans to do the right thing – after they’ve tried everything else.” – Winston Churchill – Prime Minister and Statesman – 1874-1965

“A rule of government is never look into anything you don’t have to; never start an inquiry unless you know what its findings will be!” – Sir Humphrey Appleby – Yes, Minister!

So the two ‘hot-heads’ – Pietersen & Keane – went into print yesterday and to what purpose? – MONEY! I was enthusiastically awaiting these books for Christmas. I don’t want them now! Firstly there’s no return for England’s most recent and prolific run scorer; so why carp in such a vitriolic manner. As for Roy Keane, even if it were out of context, to say you are glad that Clive Clarke had a heart attack, is unpleasant in the extreme. Stay on the bench at Villa as assistant to Paul Lambert. I will just remember you as a great player at United. As for the rest of it…..?

After Friday’s sharp bounce, there was always going to be a touch of ‘after the Lord Mayor’s show’ about yesterday’s trading session; and so it proved to be! In Europe the market bounced out of the traps with vigour, particularly the DAX which had been on holiday on Friday. However post the truly dispiriting German factory orders data – the worst since August 2009 – the premier German index gave up most of its 1%+ early gains, closing up just 0.15%. As for the FTSE it bumbled along adding 35 points in light trading to close at 6563. Banks did well; so did some energy and mining stocks such as BG and Antofagasta. There was also some respite for Tesco – up 2.6%, responding positively to the appointment of non-executive directors with retail excellence – Messrs Cousins and Ohlsson from Compass and IKEA.

On the Street of Dreams it was rather a nebulous session. Investors vented their spleens on the Russell 2000 index, taking it down by 0.9%, which encouraged those involved in the three main indices to take a little risk off the table – DOW -0.10%, S&P -0.16% and the NASDAQ -0.47%. Meg Whitman, the CEO of Hewlett-Packard, grabbed most of the headlines serving notice that the company would be split – computers and software/Enterprise operation, with Whitman acting as CEO of the latter. Rumours abound that M/S Whitman may not come out on top of her $3 billion spat with Autonomy’s Mike Lynch. This spat comes about as a result of accountancy valuations for Autonomy, which Hewlett-Packard bought for $11 billion. The split is likely to take place before the outcome of this law suit. What is behind the split? – To generate more shareholder value, I suspect. The shares have recovered strongly in the last year and were up 4.7% overnight, BUT in the last 3 years these shares have fallen from $44 to $36.87 yesterday – not a great track record over three years in isolation.

I really don’t get this €1 billion debt/rights issue deal for Euro-Disney nor did the market, which took the share price down by 9.5%. Paris and Disney as a venture? – Never! The cultural blockage is huge. Why would Europeans want to go to one of the most expensive cities in the world with their children when the US offers an adventure at a decent price for all comers and all languages! English is the international language of the world. The only reason Walt Disney will be contributing €420 million cash with a conversion clause in to €600 million worth of equity is to protect the Disney brand. It cannot possibly be a straight business decision.

I love the way all these proposed IPOs have crawled out of the woodwork in the last week. To a fanfare of trumpets Virgin Money has set sail looking to value the company at about £2 billion, making Branson and Ross even more stinking rich on paper than they already are! I suppose the Branson brand rules OK for most – so the marketing gurus would have us believe! Rumours abound on the street that Aldermore’s road show is proving no ‘doddle’ for its £800 million float due for pricing between 217-265p on 17th October. It feels horribly like – Call for the Rennies! – Such is the indigestion, with Jimmy Choo also looking to float around 17th October as well – the share issue price will be between 140-180p – feels like a ‘coach & four’ in terms of a price range. Again the vibes are a little mixed. Are luxury brands immune from any economic downturn were it to manifest itself? The British Car Auction is also seeking a public quotation in November valuing the international operations in 13 countries at about £1.2 billion. Last year 900.000 cars were sold; so this is no ‘dinky’ operation and could have appeal presupposing there is no avarice and greed over pricing by Jeffries, UBS and JP Morgan.

Apparently Glencore’s CEO Ivan Glasenberg made overtures to Rio about a possible merger last August. The idea was supposedly rejected out of hand. So yesterday’s rumour appeared to be old hat – but you never know – RIO +5% and Glencore unchanged. Many think that ASOS may be a take-over target now – perhaps Amazon.

Markets are looking soft again, despite a steady if unspectacular session in Asia. The EU looks to be diving head-long in to the cack with a huge reluctance from Germany as the EU’s talisman prepared to do anything about it. I am not that worried that the IMF has downgraded growth in China to 7.4% from 7.6% this year and to 7.2% next year. The IMF is often off the pace and the Chinese authorities are very clever at manipulations and an economy of truthful data.

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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