TODAY’S FAYRE

TODAY’S FAYRE – Wednesday, 19th November 2014

 

 “Hope” is the thing with feathers—

That perches in the soul—

And sings the tune without the words—

And never stops—at all—

 

And sweetest—in the Gale—is heard—

And sore must be the storm—

That could abash the little Bird That kept so many warm—

I’ve heard it in the chillest land—

 

And on the strangest Sea—

Yet, never, in Extremity,

It asked a crumb—of Me.”

 

Emily Dickinson – poet – 1830-1886

 

 

 

“Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy” – Winston S Churchill – Prime Minister & statesman – 1874-1965

 

 I was pleased for Wayne Rooney that he played a Captain’s role at Celtic Park last night, where England beat the ‘Auld Enemy’ 1-3 with what looked like a bit to spare. No one has ever really doubted Rooney’s ability, but to be captain of a ‘three lions’ side; many including me had their doubts.

 

 There was an engaging picture of Benedict Cumberbatch and his fiancé Sophie Hunter taken in New York on the front page of the Evening Standard last night. They look a handsome couple and that reminds me I must go and see “The Imitation Game.” Could he really get an ‘Oscar’, a ‘Bafta’ or a Golden Globe for his performance?

 

 I must confess I did not much care for Putin’s antagonistic comments, made in the comfort of his own backyard, about the US wanting to subdue Russia. Putin, gloriously jingoistic, reminded the press conference that the US had always failed with its objective and always would. It’s going to be a cold, cold winter! Putin sends shivers down by backbone!

 

 As most people expected, after the recessionary Japanese GDP number of -1.6% for the last quarter posted yesterday, Japan’s PM Abe-san has called for a snap election and he has also postponed the introduction of another sales tax for 18 months, which many believe could add 0.5% to GDP. The Bank of Japan also left its monetary policy unchanged. The NIKKEI reacted relatively positively initially, but as we head towards the close it fell below the Plimsoll line – -0.13%. There just seems a touch of ‘deja-vous.’ How many times have we been here before? The rest of Asia put in a very lack-lustre performance with most indices surrendering modest ground. The trading cross fertilisation between Shanghai and Hong Kong, which had been rampant since its inception abated significantly today.

 

 Healthcare M&A activity and the upbeat performance of some constituent natural resources stocks saw the Street of Dreams extend its record run, with the DOW adding 0.23%, the S&P 500 0.51% and the NASDAQ 0.67%. Covidien, Medtronic’s prey added 3.7% and the predator, itself added 4.7% as did Activas, the winner of the titanic struggle to buy Allergan for $66 billion. Home Depot slipped by 2.1%. Newmont Mining grabbed hold of an extra 3.4% in value, whilst Intel put in an eye-catching performance – +1.4%. The findings of the FED meeting will be posted tomorrow. Few expect a dramatic change in policy with rates remaining unchanged until deep in to 2015. Netflix served notice that it will launching in Australia and New Zealand.

 

 Europe enjoyed quite a resilient session yesterday with the FTSE adding 37 points to 6709. London was given some momentum thanks to a slew of great earnings from EasyJet, British Land and the Pru. Last month’s inflation number of 1.3% was thought to be only a blip thanks to transport costs, higher than last year and the sale of computer games as we head towards Christmas. PPI fell by 0.5% and that is often an indicator that inflation will fall accordingly. Many expect inflation to be around 0.9% in January, which could trigger a letter from Governor Carney to the Chancellor explaining why inflation has drifted more than 1% away from the 2% guideline.

 

 The titanic supermarkets surrendered more market share with Tesco’s sales down by 3.7%, Morrison by 3.3%, Sainsbury by 2.5% and Asda by 0.2% in the last 3 months whereas Lidl has grown by 16.8% and Aldi by 25.5%. Business models of the good and the great will need to be changed to compete with their German cousins. I must say that I profoundly disapprove of Ofcom trying to allow aspiring purveyors of sports programmes in through the back door because EU and other regulators say so. Where I come from, it all about free enterprise and charging what the traffic will bear. BskyB got there first. If BT and Virgin want a share of that market, then step up to the plate and compete commercially. Sir Terry Leahy announced that B&M will be buying some Homebase units. BNP Paribas we understand is under investigation post the $9 billion fine imposed by US regulators.

 

 his morning ICAP posted a 9% drop in revenues for the first half of the year. Profits were down 38% and there will be a cost cutting exercise of maybe as much as £60 million. Royal Mail Group posted a 2% increase in revenue for the first half of the year to £3.7 billion with pre-tax profits of £167 million. Parcel delivery grew by 2%; letters fell by 3% (emails one suspects! Who writes letters?). The competition is ferociously fierce out there from the likes of Deutsche Post, TNT, FedEx and UPS and the margins are narrowing all the time from the likes of UK mail. RMG shares have rallied by only 3.2% in the past year. The shares were controversially issued at 330p in October 2013 – up 41.5% since then. They did briefly touch 595p in December 2013. I think Goldman, UBS, Lazard, Vince Cable and Michael Fallon had a difficult job pricing this. This IPO had to go like a rocket for optics and credibility! The government retains about 40% of Royal Mail Group.

 

US companies posting results and trading statements this week – Tuesday – Wednesday – TARGET, STAGE STORES, Thursday – BEST BUY, ROSS STORES, GAP, Friday – ANN INC, FOOT LOCKER

 

UK companies – Wednesday – ROYAL MAIL, AMLIN, ICAP, CHESNARA, MELROSE, Thursday – CENTRICA, CLOSE BROS, JOHNSON MATTHEY, INVESTEC, FRENCH CONNECTION, BABCOCK INTERNATIONAL, MOTHERCARE, QINETIQ.

 

 

David Buik

Market Commentator

 

+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom  www.panmure.com

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