TODAY’S FAYRE – Wednesday 15th October 2014

TODAY’S FAYRE – Wednesday, 15th October 2014

“Between us now and here –
Two thrown together
Who are not wont to wear
Life’s flushest feather –
Who see the scenes slide past,
The daytimes dimming fast,
Let there be truth at last,
Even if despair.

So thoroughly and long
Have you now known me,
So real in faith and strong
Have I now shown me,
That nothing needs disguise
Further in any wise,
Or asks or justifies
A guarded tongue.

Face unto face, then, say,
Eyes mine own meeting,
Is your heart far away,
Or with mine beating?
When false things are brought low,
And swift things have grown slow,
Feigning like froth shall go,
Faith be for aye.”

Thomas Hardy – author & poet – 1840-1928

I have always been a great supporter of BOE and the Governor. However I must confess to being disappointed at Governor Mark Carney’s high-handed attitude towards bankers. Yes, regulatory controls are his domain and the retribution for mal-practices he wants the FCA to implement is for him and the Government’s to decide. But to attack bankers over ‘top-golf-club’ membership is ludicrous and frankly offensive. Where executives play their golf should be on no concern to him!

Looking at the performance of most global indices yesterday in isolation, you would be forgiven for thinking market conditions were quiet. They are far from quiet. Volatility rules OK! US markets closed either side of par. The Street of Dreams was initially bouncing off the walls. JP Morgan just marginally disappointed with EPS perceived to be 2 cents light at $1.36 on $5.57 billion revenues. However the Wall Street titan had to find an extra $1 billion for legal expenses. Wells Fargo and Citibank (+3%) both beat the Street with the latter serving notice that it would withdraw consumer banking services from 11 international centres to concentrate on ‘Uncle Sam’ for its expansion plans. Then we saw oil prices continuing to drop like a stone – Brent $85+. This put the skids under energy stocks and took the wind out of Wall Street’s sails. After hours Intel posted better than expected numbers with sales up 14% in the last quarter at $14.5 billion. Mature markets did particularly well, with emerging countries less than ebullient.

In London yesterday, against a background of negative data and comment coming from the EU, the FTSE 100 gave the market its best shot. Having opened up down 34 points it rallied on the back of good performances from miners plus a ‘better feel good factor’ to close up 26 points at 6392. Burberry’s sales were up but comments made by CEO Chris Bailey that condition were getting tougher including sales to China took the shares down 3.6%. Mulberry also let the luxury good ship down with sales off by 17% in the last trading period. Michael Page’s efforts failed to pass muster as well. The shares received visceral treatment – down 10.7%. Qualcomm came in this morning with a slam-dunk £9 cash bid for CSR. The shares were up 35% at 875p.

Inflation in the UK fell from 1.5% to 1.2% with all the reasons well chronicled by far better economic geeks than me. Suffice to say that Sterling received a good slapping down to $1.59 and I suspect that hell has a better chance of freezing over than rates in the UK going up before June 2015. Eat your heart out Messrs McCafferty & Weale. I suspect next month’s MPC vote won’t read 7-2!

This morning it has been all about Shire and a re-think by AbbVie on whether a takeover of Shire is in their interests. It seems that Abbvie may have been collared by the Obama administration in regards to tax inversion benefits. Shire’s shares stood at £35 when AbbVie stepped up to the plate. They closed last night at £531.5p. They are now £38.25 (at 9.30am), having fallen as low as £36.25. Down 25%! It would appear that the market hold out very much hope on this deal being rekindled. Perhaps someone else will cast their beady eyes over Shire’s books. Tesco saw fit to stand down 3 further executives, pending investigations and findings by Deloitte – shares down 0.5%. This morning oil stocks are being killed on the back of falling crude. Not surprisingly drug stocks – Astra, GSK and S&N are out of sorts and miners have slipped in to reverse. Rio posted encouraging results – down 1.5% – travelled and arrived.

CPI data in China continues to look soft – 1.6% last months – a worry that might trigger further stimulus packages by the authorities. Talking of economic data, UK unemployment fell from 6.4% last quarter to 6.0% in September – 1.97 million people out of work – the lowest level since 2008. This is encouraging news though one slight blight – still too many people discouraged from looking for work, similar problems to those in the US. At 9.45am the FTSE 100 was down 77 points at 6315.

UK inflation data – Wednesday – BANK OF AMERICA, BLACKROCK, CHARLES SCWAB, NETFLIX, eBAY, AMERICAN EXPRESS, Thursday – DELTA, UNITED HEALTH, MATTEL, BAKER HUGHES, GOLDMAN SACHS, GOOGLE, SCHLUMBERGER, Friday – MORGAN STANLEY, HONEYWELL & BANK OF NEW YORK, MELLON.

UK companies posting results and updates – Thursday – GAME DIGITAL, WH SMITH, BSKYB, BOOKER, DIAGEO (TS), MONDI (TS), EVRAZ (TS), MAN GROUP (TS), SPEEDY HIRE (TS), RATHBONE BROS (TS), Friday – TRAVIS PERKINS (TS), PROVIDENT FINANCIAL.

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
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