Monthly Archives: December 2014


TODAY’S FAYRE – Tuesday, 30th December 2014


“What is this life if, full of care,

We have no time to stand and stare.

No time to stand beneath the boughs

And stare as long as sheep or cows.

No time to see, when woods we pass,

Where squirrels hide their nuts in grass.


No time to see, in broad daylight,

Streams full of stars, like skies at night.

No time to turn at Beauty’s glance,

And watch her feet, how they can dance.


No time to wait till her mouth can

Enrich that smile her eyes began.

A poor life this is if, full of care,

We have no time to stand and stare.”


WH Davies – poet – 1871-1940


Christmas festivities are never quite complete without a pantomime or some form of culture derived from the world of fantasy. The Royal Ballet’s production of ‘Alice in Wonderland’ set to modern music from composer Joby Talbot, provided a night of pure magical entertainment in spades.  Superb is the only word to describe this unforgettable musical/dancing


experience. Sarah Lamb, a 34 year old principal dancer from the US, who looked no more than 14, danced the leading role and was on stage throughout the performance. She was exquisite, as was the whole production, which was very imaginative. This production would have ticked the boxes of everyone over the age of 6!

Those of you who are not BBC radio 4 Today Programme junkies will have missed Lord Mervyn King of Lothbury’s recently acquired vocation; that of guest producer for the day. He was lucid, informative and articulate, occasionally verging on amusing. He was word-perfect!

His interview with Ben Bernanke, whom he shared an academic friendship before both embarked on separate careers in their respective Central banks, was interesting rather than illuminating. Lord King described dealing with the financial crisis as ‘Fun’, which Bernanke felt was an inappropriate description.

When asked by Jim Naughtie what percentage of blame for the banking crisis should be appropriated to the politicians – both Tory & Labour – Lord King refused to be drawn.  He himself has always been politically savvy.  Lord King should be commended for not trapping off on these issues unlike Alan Greenspan, who cannot keep his mouth shut.  He has been an embarrassment and a thorn in the side to Bernanke throughout the latter’s FED reign!


Yesterday, after the third rejection by the Greek parliament to have Stavros Dimas elected as President, PM Antonis Samaras felt obliged to call an election! – Dangerous, as the ‘left’ – Syriza – in coalition with other minority parties could form the next government. The ramifications are enormous! Yesterday the Greek stock exchange fell by 3.9% and is down 15% since the beginning of December – a 17 months low. Greek bonds were friendless in the ring with 10-year yields leaping from 8.2% to 9.29%, having been at one point even higher.


Many market observers were looking at the adverse moves reflected in credit default swaps. Pre-yesterday there was what amounts to an insurance premium of $500k per $10 million of debt for 5 years. The premium rose yesterday to $3.65 million per $10 million, which suggests a 64% chance of Greece defaulting on its debt repayments. Could a change in government trigger Greece leaving the EU. YES PLEASE! It would at last crystalize the serious faults of the undemocratic system of government promulgated by the EU. However, sadly this capitulation is unlikely to happen. Decisive action of that nature would set a dangerous precedent for the future of the EU, driving huge cracks of discord in to the European dream. I tell you what I think will happen. As a result of Syriza winning, it will be ‘sayonara’ to austerity with default a real possibility. Enter stage the Troikas – EU, ECB and IMF – to fudge a deal that accommodates all parties. That of course would rattle the chains of Spain, Italy and Portugal; all of whom will demand similar concessions on cruel social austerity. The whole system is a sham – a total charade. The sooner the EU wakes up and smells the coffee and allows Greece to depart in peace, the better.


This morning, after New York closed virtually flat yesterday, Europe took a little risk off the able thanks to the threat of Greek disruption to European markets and despite US Consumer Confidence likely to show signs of improvement when numbers are posted this afternoon. At 9.30am the FTSE was down 38 points at 6594. Energy and miners were easier thanks to falling oil prices. NEXT bucked the trend adding 2.8% on good sales numbers. Nationwide announced that house prices rose 8.3% last year and London by 17.9%. According to this august building society there is unlikely to be any replication of this performance in 2015.


City Link fell on its sword with about 2700 people sadly likely to lose their jobs. The announcement created furore. Though John Moulton, the private equity guru at the helm of Better Capital received some stick for the rather heartless manner the business was closed, he was entirely within his rights. He bought the operation in what was perceived to be a bold and adventurous move and the gamble did not work. Life is not a philanthropic society and this company should not be bailed out. The Government is helping with some closure costs. Sadly and however reprehensible, enough is enough.


As we come to the end of the year, there were some useful nuggets of gossip to ruminate over. There may be a £3 billion hole in Tesco’s pension scheme. Also there could be widespread failure amongst small firms who supply large supermarkets. They are under the cosh, as the big four resort to not only cutting costs but also prices, to remain competitive with Aldi and Lidl. Let’s hope their banks can be persuaded to acquire more appetite for risk. Lloyds Bank may well incur losses of £10 million as a result of FI’s Marussia going under. Apple was responsible for 51% of sales of smartphones/iphones in the Christmas week.


It was interesting to note that in 2014 30% of M&A deals collapsed including 3 US tax inversion deals. Reckitt Benckiser has confirmed one of the worst kept secrets in the City – namely that it is spinning off its drugs arm. The demerger will occur just before the Square Mile breaks up for Christmas, with newly christened Invidior making its debut on December 23.Analysts value the business, which makes the addiction treatment Suboxone, at £2-£2.5bn.


According to the Financial Times, revenues from the Reckitt pharma business are predicted to fall by 12.5% this year to £680mln, while profits are seen tumbling by a fifth to £345mln. The Anglo-Dutch firm by contrast has a whole supermarket aisle full of famous household names such as Dettol, Nurofen and Vanish that require its full marketing force.



David Buik

Market Commentator


+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom



TODAY’S FAYRE – Sunday, 28th December 2014


“Nobody heard him, the dead man,

But still he lay moaning:

I was much further out than you thought

And not waving but drowning.


Poor chap, he always loved larking

And now he’s dead It must have been too cold for him his heart gave way,

They said. Oh, no no no, it was too cold always (Still the dead one lay moaning)

I was much too far out all my life And not waving but drowning.”


Stevie Smith – poet – 1902 -1971


Apart from the joy of Christmas festivities and all the indulgence that goes with them, there are also other peripheral bonuses to be lapped up during a period of business and commercial inertia. For me most of them come from sport – football, racing and cricket.


We saw a two real stars on Boxing Day at Kempton – ‘Silviniano Conti’, who ran a high class field of stayers ragged to win the King George V1 chase as he liked and ‘Faugheen’ who won the ‘Christmas Hurdle’ in a hack-canter. You will forgive me for speaking through my pocket, as my love affection, understanding and more to the point my money was on ‘Champagne Fever’ in the King George; frankly, he did not stay the trip. I expect him to do battle with ‘Dynaste’ in the Ryanair at Cheltenham, which is a mouth-watering prospect!


I hope all cricket acolytes were lucky enough to watch New Zealand’s Brendon McCullum bludgeoning his way to an exhilarating 195 against Sri Lanka. Also Australia’s Steve Smith’s 3rd hundred in the series against India was also great theatre. Smith has amassed 1200 runs this calendar year – a fabulous achievement; yet to me he does not look a player in the classic mould. The statistics, however, are warning me I am wrong! There was also much to admire from centuries made by Kohli and Rahane today – world class performances!


Most of this average missive will be about the ‘highs’ and ‘lows’ of 2014, though to start with it would be churlish not to pay some credence to the machinations on Wall Street on Boxing Day, when we are all filling our faces. Superficially it was a somewhat non-descript session with the DOW adding 0.13%, the S&P 500 0.33% and the NASDAQ a very respectable 0.70%. However through this mediocrity some significant land marks were reached. The DOW experienced seven successive positive sessions to reach 18,000. Also the NASDAQ achieved its highest mark for 14 years as it blazed through the 4800 threshold. The Russell small cap index is also flirting with all-time ‘highs.’ With only 3 working days to go until the end of the year the DOW has added 9.1% and the S&P 500 +13%.



Conversely the FTSE 100 is still down 2.2% on the year. The AIM market is down a staggering 19% on the year. It is interesting to note that though there has been a very strong IPO market this year, so many debutantes have failed to bat on after their initial public offering. There is an excellent article in Saturday’s Times by Gary Parkinson and Deirdre Hipwell on the subject. 135 companies were floated in 2014 with 56 coming on the main market – the best since 1999. However as Panmure’s Patric Johnson points out 70% of those companies that came to the market in the first quarter were priced at the top end of the range and by the end of the 2nd quarter 68% at the ‘bottom end!’


There seemed to me to be more disappointments or ‘highs’ than ‘lows’ in 2014. Initially the year offered great prospects for growth and employment but there were far too many geopolitical imponderables as the year unfolded which damaged progress in so many parts of the world. China disappointed with only just a smidgen over 7% growth for the year. The demand for basic raw materials, coal and metals fell sharply. In fact most commodities fell sharply throughout the year. This news took a heavy toll on FTSE 100 mining stocks which shed between 12% and 42% in value. Russia’s intervention in Ukraine triggered a very unpleasant reaction from Western democracies – understandably so! US, UK and EU imposed economic sanctions and naturally there were reprisals from Russia. These will hurt the EU and particularly Germany, which is the engine room of Europe’s economy. Crude oil fell by 45% to circa $60 a barrel during the year. OPEC, with Saudi Arabia having filled their boots at higher levels with sales in the first 6 months of the year abrogated their responsibility by refusing to cut production at the November meeting in Vienna. Saudi denies these allegations and insist that demand has fallen, whilst accusing the US’S self-sufficiency policy for shale and fracking production for helping to undercut the price of crude. Companies such as BP, Royal Dutch Shell, Total and Repsol suffered damaging loss in value between 12% and 20%.


The fall in oil prices will damage Russia’s economy severely possibly sending Russia into recession by as much as -4% in 2015. In isolation who cares, but the world’s economy cares profoundly, as the damaging effects are felt globally. Though there has been a modest rally in the value of the Ruble in the past 10 days, thanks to spurious but unsustainable support for the Russian currency and its banks. Over the weekend it was announced that there had been a $1.9 billion bail-out operation for VTB and Gazprombank. However, during 2014 the Ruble surrendered 40% of its value against the Greenback and 60% against the Euro.


Sadly there has been no measurable growth in the EU this year. As time goes by the EU loses its credibility, with unemployment in double figures. This economic ineptness will be exposed again as early as next month if there is a general election in Greece. The ‘left’ could win this, but no matter; the EU and the Troikas will fudge the issue of austerity by softening its approach as well as accommodating any default problems. In my humble opinion the EU is an undemocratic sham!


Here in Old Blighty it was a ‘toss-up’ between the shameful behaviour of the banks in 2014, which incurred fines in excess of £25 billion for LIBOR, PPI, money laundering and FX manipulation transgressions and the incompetence of Tesco’s management pre the appointment of Dave Lewis. The individual ‘Dunce’s Cap’ should probably be awarded to Rev Flowers, who must have been the worst ever appointment by a financial company of some status. He was wholly unqualified to be chairman of the Cooperative Bank. Tesco’s shareholders saw profits tumble, market share surrendered and worst of all the exposure of some unacceptable creative accountancy, which helped savage its share price by 45% in the past year. Sainsbury also enjoyed a fall from grace, with no visible evidence of skulduggery (-35%). You have to hand it to Justin King. After 30 quarters of increased sales, the CEO’s decision to leave Sainsbury showed impeccable timing.


What of the ‘Highs’ in 2014? In the UK growth at 3% was better than any country in the Western world, with unemployment falling from 8% to 6% in the past 4.5 years. I million people were taken of taxation. Welfare cuts were implemented – most very necessary and some painful. On the equity market front, Whitbread + 38%, RBS +29%, Next +19% and Ashtead +50.7% from the large cap stocks were the pick. Most of the good news emanated from added the US. The indices records are posted above. Apple added 36% with Yahoo! +24% and Facebook +39% making eye-catching performances. Conversely Twitter lost 36% in 2014. However Alibaba’s IPO was the success of the year. Shares were issued at $68 and on Friday closed at $105.95 – up 56% valuing the company at $273 billion.


Happy New Year!

David Buik

Market Commentator


+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom

TODAY’S FAYRE – Monday, 22nd December 2014


“Twas the night before Christmas, when all through the house

Not a creature was stirring, not even a mouse.

The stockings were hung by the chimney with care,

In hopes that St Nicholas soon would be there.


The children were nestled all snug in their beds,

While visions of sugar-plums danced in their heads.

And mamma in her ‘kerchief, and I in my cap,

Had just settled our brains for a long winter’s nap.

When out on the lawn there arose such a clatter,


I sprang from the bed to see what was the matter.

Away to the window I flew like a flash,

Tore open the shutters and threw up the sash.

The moon on the breast of the new-fallen snow

Gave the lustre of mid-day to objects below.


When, what to my wondering eyes should appear,

But a miniature sleigh, and eight tinny reindeer.

With a little old driver, so lively and quick,

I knew in a moment it must be St Nick.

More rapid than eagles his coursers they came,

And he whistled, and shouted, and called them by name!



On, Comet! On, Cupid! on, on Donner and Blitzen!

To the top of the porch! to the top of the wall!

Now dash away! Dash away! Dash away all!”

As dry leaves that before the wild hurricane fly,

When they meet with an obstacle, mount to the sky.


So up to the house-top the coursers they flew,

With the sleigh full of Toys, and St Nicholas too.

And then, in a twinkling, I heard on the roof

The prancing and pawing of each little hoof.


As I drew in my head, and was turning around,

Down the chimney St Nicholas came with a bound.

He was dressed all in fur, from his head to his foot,

And his clothes were all tarnished with ashes and soot.


A bundle of Toys he had flung on his back,

And he looked like a peddler, just opening his pack. H

is eyes-how they twinkled! his dimples how merry!

His cheeks were like roses, his nose like a cherry!

His droll little mouth was drawn up like a bow,

And the beard of his chin was as white as the snow.


The stump of a pipe he held tight in his teeth,

And the smoke it encircled his head like a wreath.

He had a broad face and a little round belly,

That shook when he laughed, like a bowlful of jelly!


He was chubby and plump, a right jolly old elf,

And I laughed when I saw him, in spite of myself!

A wink of his eye and a twist of his head,

Soon gave me to know I had nothing to dread.


He spoke not a word, but went straight to his work, A

nd filled all the stockings, then turned with a jerk.

And laying his finger aside of his nose,

And giving a nod, up the chimney he rose!


He sprang to his sleigh, to his team gave a whistle,

And away they all flew like the down of a thistle.

But I heard him exclaim, ‘ere he drove out of sight,

“Happy Christmas to all, and to all a good-night!”



Clement Clarke Moore – clergyman & poet – 1799-1863


I am just loving the ‘BIG BASH’ in Australia. It has every chance of being as competitive as the IPL in India – certainly as much fun. However this huge empty stadiums these games are played take a huge amount of atmosphere away from the enjoyment and excitement of the occasion.


Over the years there may have been more dramatic international events that have moved markets so viscerally than what we experienced last week such the 1987 crash, ‘9/11’, The Russian credit crisis of 1996, the Iraq crisis of 2003 and the introduction of QE in 2009, but last week’s astonishing rally was precipitated in what appeared to be a mild and innocuous comment made by FED Chairman Janet Yellen to the effect that the US central bank was prepared to be patient before raising interest rates, despite a robust Labour market which has seen unemployment fall from 8% in 2009 to 5.8%. In making these qualified observations, the FED has clearly taken in to account the parlous state of the EU’s economy and the potential damage that imposed sanctions on Russia and their response and reprisals towards the rest of the world in the wake of oil falling to $55 a barrel and likely to head lower. Initially on the Street of Dreams, equity geeks were like rats up a drain pipe in responding to this signal on Tuesday which resulted in a 180 degree change in sentiment with market volumes selecting another gear. Even the sleepy FTSE 100 entered in to the party spirit with volumes last week up by an average of 42% on the previous 30 days.


On the week the S&P 500 ended the week just 5 points short of its record. Wall Street enjoyed its biggest 4-day rally since 2012 – up 3.4% on the week. Even the FTSE eclipsed the S&P by gaining 3.9% on the week. European stocks were up 2.9% and the NIKKEI in Japan by 1.4%. I suppose the FTSE 100’s performance was enhanced by the strength in the Dollar as 70% of earnings from this index are Dollar-related.   Crude oil headed South – circa $55 Nymex and $59 Brent. Despite the fact that equities were wearing their best bib and tucker 10-year bond yields remained derisively low – Germany 0.68%, Gilts 1.78%, US Treasuries 2.12%, Italy 1.95% and Greece out on a limb at 8.56%. The precarious situation over a possible unappetising change in government stares the EU in the face with PM Samaris being unable to galvanise enough votes to have Stavros Dimas elected President. A new left-wing government could spell trouble for the Three Troikas in their quest to sustain austerity and preventing any default.


There were plenty of nuggets of financial news, often gossipy. Serco saw allegations of wrong doing over a prisoner escort contract dropped by the City of London Police. A spat is developing between Ofcom and SKY over sports/football rights, possibly forcing the satellite broadcaster to sell some channels to BT. I profoundly disagree with the regulator in its findings. If a company spends 25 years attempting to dominate a market by being wholly committed to providing the public with a TV service it wants and appreciates, what right does a communications regulator have to take it away? Life often appears to be unfair. Sky set down its stall first. If BT or anyone else wants to muscle in on its act, then compete by stepping up to the plate. Don’t whine to the regulator that the playing field isn’t level! Why should it be? Having done a great job bedding down Iberia into IAG, Willie Walsh would like to add Aer Lingus to its portfolio. Walsh made a tentative bid last weekend of £1 billion, but was turned down by the Irish carrier. IAG would like the Aer Lingus footprint at Heathrow. Aer Lingus is 30% owned by the bumptious Michael O’Leary, who tried to buy the other 70% last year to no avail. Initially Aer Lingus’s shares leapt by 20% but settled up 9%. Investors also approved of the Anglo-Spanish company’s plan idea and its shares rose nearly 4%. Smith’s Group’s Philip Bowman is stepping down next year. This engineering conglomerate. Revenues have been falling and cost cutting has been difficult to implement. Spain’s largest bank Santander is still battling against allegations of involvement in the Madoff Ponzi scheme. The bank is defending its position vigorously. Manuel Echeverria is purported to have known about a possible involvement in a relationship between Bernie Madoff, the bank and the Botin family. The Madoff Ponzi scheme went down for $65 billion. Caitlin, the Lloyds insurer looks as if it will be bought be the US listed XL, which works out of London for £2.5 billion, with Stephen Caitlin likely to walk off in to the sunshine with £44 million (1.7% 0f the company). He started this insurer 30 years ago.


We hear news that an inhabitant of Billericay who traded FX at RBS may be charged by the City of London Police with manipulating FX markets. 6 Banks have already been fined a total of £2.6 billion – RBS £400 million. FX is the largest market in the world with a daily turnover of $5 trillion a day. It seems likely that those found guilty may go to prison, certainly if the US Department of Justice gets actively involved in bringing transgressors successfully to justice




Economic Data – Monday – US EXISTING HOME SALES, Tuesday – EU GDP (EST 3rd Q +0.3%, Y/O/Y 0.8%), UK GDP 3%, US DURABLE GOODS, US REDBOOK, US GDP (EST: Q3 1.4%, Y/O/Y 4.1%



David Buik

Market Commentator


+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom


The splendid little Granny from Brooklyn sends out a far from clear signal on interest rates and stimulus packages, which probably would not have transpired had oil prices not fallen out of bed sending many equity and currency markets in to free-fall and the market takes it as read that rates will no rise in the foreseeable future – not before April 2015 and only very slowly.  


Well, bless investors and the teenage scribblers! They were beside themselves with glee at her comments and there has been no holding them back in the last 48 hours – The DOW has added 500 points in 2 days and the FTSE 270 points – FTSE up 116 at 6452. The rally here in the UK has been very general. Miners added a rather muted average 1.5% across the spectrum. Oils have done reasonably well but it is the medium sized operators that have been the real beneficiaries.


Insurance companies having been slaughtered in recent sessions. However today they have risen like the Phoenix from the ashes – Old Mutual +5.5%, Pru +2.5%, Aviva+3%. Lloyds Banking Group’s acolytes have treated the news that Morgan Stanley will ease its stock in to the market up to £3 billion in value above 73.5p with interest rather than enthusiasm for a parsimonious fee of £1– were flat on the day. Barclays has had a lovely run on the rails – up 3%, and RBS has done even better adding 4% today. BT, on news of an imminent announcement of a required rights issue of £2 billion plus, only eased back 0.5%.


This market is unfathomable. However if you think about it, until Uncle Vlad flexes his muscles when the sun is high over the yardarm next spring and it also becomes clear that the EU is deep in the economic manure, where is the alternative asset class, when company profits are reasonable if selection is sound and dividends are good?


David Buik

Market Commentator


+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom


TODAY’S FAYRE – Thursday, 18th December 2014


Everyone suddenly burst out singing;

And I was filled with such delight

As prisoned birds must find in freedom,

Winging wildly across the white Orchards and dark-green fields; on–on–and out of sight.

Everyone’s voice was suddenly lifted;

And beauty came like the setting sun:

My heart was shaken with tears; and horror Drifted away … O, but Everyone

Was a bird; and the song was wordless; the singing will never be done.”


Siegfried Sassoon – soldier & poet – 1886-1967


Isn’t it amazing that a charming grand maternal lady – Chairman Janet Yellen – she, with that delightful lilt of a Brooklyn accent can change the mood of a market with what one might interpret as an innocuous comment! – ‘The FED was prepared to be patient in terms of raising interest rates, despite the improvement in the Labour market.’ The Street of Dreams did not think that was a bland statement and it purred like a Cheshire Cat, selected another gear and set off ‘hot-foot’ for a better place perhaps not Valhalla, but a happy hunting ground.


The Dow ended the session up 1.69%. The S&P was 2.04% to the good, the best daily gain since October 2013. The NASDAQ also enjoyed a great session – up 2.12%. The rally was right across the spectrum. A feel good factor was contrived from M/S Yellen’s comments. McDonalds rallied by 3%, Carnival by 3.7%, Exxon Mobil and Chevron by 3% and Transocean by 8.5%. Oracle beat the street with an extra $100 million profit thanks to ‘Cloud.’ FEDEX slightly disappointed its acolytes.


Reverting back to Yellen’s FOMC comments she made it clear that inflation was not a threat, thanks to falling oil prices and no visible food inflation and that the range for inflation in 2015 was 1-1.6%, somewhat under the 2% FED guidelines. Wages were increasing on an improving Labour market which had seen unemployment fall from 8% 4 years ago to 5.8%. UK employment data was also encouraging – down from 7.2% a year ago to 6%. Wages grew by 2.2% in October and there is every reason to believe that wages will grow by 2.5% next year. Whether this current level of euphoria can be maintained, remains to be seen. As we head towards the end of the year, fund managers tend to attract cash which has to go somewhere – often into FTSE 100 companies some a modest ‘Santa Rally’ cannot be ruled out.


However the cumuli nimbus clouds of geopolitical jingoism remain prevalent, particularly concerning Russia. As I write this modest missive the Great Bear himself, Vladimir Putin, addressed the world concerning Russia’s economic plight and what he is going to do about the Rouble with oil at $57 a barrel ish in terms of market support and propping up his banks with more capital. The Rouble rallied 10% yesterday and initially put on another 1% today to R61.7. However he said nothing of consequence and the Rouble fell by 3% against the Greenback. The major panic may be temporarily over, but it will almost certainly return. Russia has only sent $2 billion supporting its currency – with respect peanuts. However Putin’s Russia has an enormous war chest of $400 billion in terms of reserves to call upon. He may be placatory today, but come March when the snow starts to melt, his military ambitions in terms of Ukraine, Georgia and the Baltic could well manifest themselves. This problem is not going to disappear. It should not be forgotten that wealthy Russian oligarchs may well have haemorrhaged $360 billion worth of Roubles in the past year. The overall damage to Russia economy could be apocalyptic – GDP could be -5% in 2015.


As to Greece PM Antonio Samaris’s party failed by 20 votes to have Stavros Dimas elected President. This situation will probably go to a third vote, which could result in a General Election, which the left – Alexis Tsipras and Syrzia in coalition – could win. That would set the cat amongst the austerity pigeons and could threaten debt defaults. However the Three Troikas could come to the rescue with a compromise, which could see Italy, Spain and Portugal demand similar concessions. Frankly EU politics seems like just a game of tin soldiers.


It looks as though Dr Vince Cable will not be held responsible for selling the Royal Mail IPO short of £1 billion. Lord Paul Myners, a deeply respected doyen of the City and his committee believe that there may have been a £180 million shortfall – ie shares might have been sold at 360p not 330p. The company I work for, Panmure Gordon was the first to flag up the value for the punter of this IPO. My colleague Gert Zonneveld did his job brilliantly for the investor, but, on this rare occasion, I felt there was method in the BIS Secretary’s and Michael Fallon’s madness. Politically it had to go like a rocket. Look at the stock now 330p to 600p to 392p. Lord Myners quite rightly suggested that the book building process should probably be revamped in a more competitive manner.


David Buik

Market Commentator


+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom

Panmure’s Simon French’s take on UK General Election & Capital markets






















GE & CM_1























TODAY’S FAYRE – Wednesday, 17th December 2014



THE wind was a torrent of darkness among the gusty trees,

The moon was a ghostly galleon tossed upon cloudy seas,

The road was a ribbon of moonlight over the purple moor,

And the highwayman came riding— Riding—riding—

The highwayman came riding, up to the old inn-door.


He’d a French cocked-hat on his forehead, a bunch of lace at his chin,

A coat of the claret velvet, and breeches of brown doe-skin;

They fitted with never a wrinkle: his boots were up to the thigh!

And he rode with a jewelled twinkle,

His pistol butts a-twinkle,

His rapier hilt a-twinkle, under the jewelled sky.


Over the cobbles he clattered and clashed in the dark inn-yard,

And he tapped with his whip on the shutters, but all was locked and barred;

He whistled a tune to the window, and who should be waiting there

But the landlord’s black-eyed daughter, Bess, the landlord’s daughter,

Plaiting a dark red love-knot into her long black hair.  


Alfred Noyes – poet – 1880-1958


Yesterday was one of the most extraordinary days I have spent trading or watching markets for 52 years. For a start equity markets were rudderless – like a bunch of headless chickens. Secondly falling oil prices – below $60 a barrel – attempted to dominate the agenda with very little conviction. Russia’s Central Bank jacked up rates from 10.5% to 17% to help protect the Ruble. What a waste of space that was!  What country has successfully stimulated its recovery process by viscerally raising rates? No one, except Putin, would have even remotely countenanced the idea of adopting such a panic-stricken action, to stop a run on its currency. Few were surprised that the Ruble fell 11% against the Greenback (19% early on) – 80 to a dollar before settling at 68 – down 53% against the Dollar in a year. Whilst Putin controls the media in Russia he can do as he likes and blame the West. His popularity in Russia remains buoyant but for how long? Come January and February, when sanctions start to become more painful and a lack of nutritional food disquiets the population, Putin may have to go back to the drawing board.


However anyone thinking that this is just a passing local difficulty dream on! Putin, having made sure that the people of Russia are ill-informed as to what is happening to Russia’s economy and why, may well be attempting to build powerful relationships with the likes of China and India. However they are of secondary importance to Putin’s relentless quest to win back control of the Balkans, Georgia and Ukraine. He intends to threaten military action, even carry it out in a qualified manner in these regions. The US & EU’s joint and several response will be greater sanctions. The west has no interest in military action and there will be no boots on the ground. The US’S and EU’S response will be to just increase sanctions against Russia. The manipulation of oil prices could be one sanction. If the US becomes self-sufficient in oil, it would make Russia much more reliant on OPEC. To balance the books Russia needs to sell its vast oil reserves at $80 a barrel to balance its books. As far as one can see the situation in Russia and the health of its currency, let alone the economy, could get much worse before it gets better. Meanwhile back at the ranch there has been evidence of the Russian Finance Ministry selling foreign exchange reserves on the open market. Also just as alarming has been the appetite investors have had in piling out of Russian assets into safe haven assets like the German bund, whose 10 year yield has fallen away to 0.59%! Moscow’s MICEX was down 7% yesterday and it had fallen by 1.79% at 9.50am this morning. Also Gazprom lost 10% in value yesterday.


I cannot remember a more volatile day on the LSE than we experienced yesterday since October 2008 and ‘9/11.’ The FTSE opened up 30, went down 30, then flat then +60 and then an incredible rally in the last 2 hours adding 149 points at 6331 – up 2.4%. Mining and energy stocks rose like the proverbial grilse based on very little, apart from the fact that the market looked over-sold. The DAX rose in sympathy by 2.7% and the CAC by 2.5%. New York failed to engender much enthusiasm for the fray with tech stocks forcing Wall Street to lose its appetite for risk, with Google, Apple and Yahoo! being in the vanguard as the laggards. The DOW ended the session easing by 0.65%, the S&P by 0.85% and the NASDAQ by 1.2%. The mood was mixed in Asia this morning with the ASX closing up 0.18% and the NIKKEI up 0.38%. Though the Shanghai Composite was 1.3% to the good, the Hang Seng was down 0.37% towards the close. This morning the FTSE 100 saw profit takers in the ring with healthcare and banks surrendering a little value – down 42 points at 6289. Dixon Carphone posted solid results.


The BOE Stress tests put RBS and Lloyds under the spotlight. They both passed, but their marks were a little too close for comfort. Governor Carney’s team may make the criteria for HSBC and Standard Chartered tougher going forward, as life in emerging markets looks challenging. Here are some stress test criteria – Sterling falling by 30%, House prices by 35, Bank rate reaching 4.2%, Inflation peaking at 6.6%, GDP falling 3.5% and share valuations falling by 30%. This is sensible housekeeping by the BOE and Andrew Bailey’s team.


UK companies posting results – Friday CARNIVAL,


Global economic data – Wednesday – BOE MINUTES, EU CPI, US FOMC, US CPI, Thursday – UK RETAIL SALES (+0.3%), US PHILI-FED, Friday – UK CONSUMER CONFIDENCE




David Buik

Market Commentator


+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom


TODAY’S FAYRE – Tuesday, 15th December 2014

“APRIL is the cruellest month, breeding
Lilacs out of the dead land, mixing
Memory and desire, stirring
Dull roots with spring rain.
Winter kept us warm, covering
Earth in forgetful snow, feeding
A little life with dried tubers.
Summer surprised us, coming over the Starnbergersee
With a shower of rain; we stopped in the colonnade,
And went on in sunlight, into the Hofgarten,
And drank coffee, and talked for an hour.
Bin gar keine Russin, stamm’ aus Litauen, echt deutsch.
And when we were children, staying at the archduke’s,
My cousin’s, he took me out on a sled,
And I was frightened. He said, Marie,
Marie, hold on tight. And down we went.
In the mountains, there you feel free.
I read, much of the night, and go south in the winter.”

TS Eliot – poet – 1888-1965


I found it hard to comprehend the margin of votes over Rory McIlroy Lewis Hamilton managed to have pledged to win the BBC SPOTY – 120,000! I am not a petrol head, but I acknowledge Hamilton’s achievement in what was a fairly poor year for sport. Talent is an essential ingredient and Hamilton clearly has it in spades.


However I find myself in total agreement with Ian Poulter. Hamilton had serious competition from one bloke, thanks to Mercedes’s supremacy. In the case of McIlroy he saw off the world, winning two majors, as well as being a key contributor to UK’s and EU’s Ryder Cup success. Sometimes I feel that some people don’t think their decision out. I am not a particular golf fan but Rory’s achievement is phenomenal. Special praise should go to Jo Pavey – 40 years old! Well done


Hats off the Australian Government for taking positive action after the Café siege! So sad that two immensely brave people died. However had there been a bomb, so many more could have died!



Note from Panmure’s Colin Smith on oil – incisive and frightening!


Following the OPEC meeting, the pace of decline in the oil price has increased sharply and it is now falling at the same rate it did in 2008. That puts it on track to be in the low US$ 50 bbl range by YE and the low US$ 30 bbl range by the end of January. We believe the closest parallel is with events in 1998 99 which demonstrate that only OPEC action is likely to alleviate the fall in the short medium term. We continue to expect that OPEC will be forced to call an Extraordinary Meeting in the New Year but there is clearly a risk of a more prolonged stand-off. The stocks are already trading at levels that look below or well below US$60 bbl long term, but as the focus turns increasingly to corporate survivability and a desire by investors to cut equity exposures to the oil and related sectors, the likelihood is that valuations will become even more extreme, we expect.


Santa Rally? – It looks although Christmas has been cancelled altogether. It was a dreadful day for equities across the globe, particularly in Europe yesterday, as oil cascaded down hill – Nymex to $55 a barrel and Brent to $60. Who knows, as Panmure’s Colin Smith indicated, we could be at $40 a barrel by the end of the year. OPEC has an interesting conundrum to deal with. In the case of Saudi Arabia, it is just as well that this country has squirrelled away $500 billion from oil. However, if the price drops to say $40 a barrel that would cost Saudi the best part of $500 million a day, so I am led to believe. That quickly waters down the value of Saudi’s and other Middle East countries’ asset values. So, many expect OPEC to call a meeting in January or February. With many areas of oil exploration now highly leveraged, there is a feeling that since their exertions could be curtailed for a few months, some banks could feel the heat in their kitchen with many loans, perhaps and understandably, not performing.



European stocks were clattered yesterday with mining, energy and some banks leading the charge – FTSE -1.87%, DAX -2.72% and the CAC 2.52%. In the small hours Russia, having seen the Ruble lose 10.7% in value yesterday, its Central bank raised rates from 10.5% to 17%. This is the third hike in a month – 8% to 9%, then 9% to 10.5%. The Ruble has fallen about 64% against the Euro in a year and 43% against the Dollar. This strikes many as a panic measure. I doubt the Ruble will attract much money with oil dropping and sanctions biting. Also Russia will almost certainly remain in recession in 2015 – initial guesstimate -0.8%; the situation could get worse. Asia did not enjoy a happy session, having taken their lead from the US – The Nikkei closed down 2.1% and the Hang Seng was down 1.23% at lunch. To date the FTSE is down 8.7% and AIM is easier by 19%. Conversely the S&P is up7.6% and the NASDAQ by 10.7%. Add in the currency gain and they are up 10.4% and 17% respectively.


In the US House builder confidence was at a9 year high! Industrial production was at its highest monthly level since May 2010. Thoma Brava served notice to buy Riverbed for $3.6 billion – $21 a share. Also BC Partners agreed to buy PetSmart Inc for $8.3 billion – so life is not all doom and gloom.


The Bank of England posted the results of its stress tests. The Coop as was flagged up failed -2.4%. However the rest got through – HSBC 8.7%, Barclays 7.1%, Nationwide 6%, Lloyds 5% and RBS 4.6%. The latter did not leave much margin for error. CPI came out at 9.30am this morning. Panmure’s Simon French believed that inflation will drop to 1.1% this month against consensus of 1.2%, thanks to falling oil, no food or clothes inflation to speak of. In point of fact it came in at 1%, which I think triggers a letter from Governor Carney to the Chancellor as it fell 1% below the 2% guideline for inflation. Interest rates? – I will give you a clue; they ain’t going up!


Finally Gavin Patterson and his board at BT decided that EE was the right partner to expand their fixed lines, broadband mobile and media operations. The price was £12.5 billion, valuing the new company at £44 billion. Deutsche Telekom will own 12% of the new operation and Orange 4%. It may be that BT will need a rights issue of £6.2 billion to pay for the deal. Apparently EE’s 4G facility is the best. This deal could be a regulatory minefield. There will be a certain sadness that there will be no return of the prodigal son – o2! Sky fell 4% yesterday as concerns appeared over future Premiership viewing rights.


The FTSE 100 has experienced a real roller-coaster ride this morning – opening up +30, easing back to -30 then the inflation number came out – +60 and now as I write up just up 15 at 6200. Post stress tests banks have been neutral with just Barclays showing a 1% gain. Stress test or not, the taxpayer is still owed a pot of money – perhaps as much as £60 billion.


David Buik

Market Commentator


+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom


TODAY’S FAYRE – Sunday, 14th December 2014


 Whose woods these are I think I know.

His house is in the village, though;

He will not see me stopping here

To watch his woods fill up with snow.

My little horse must think it queer

To stop without a farmhouse near

Between the woods and frozen lake

The darkest evening of the year.

He gives his harness bells a shake

To ask if there is some mistake.

The only other sound’s the sweep

Of easy wind and downy flake.

The woods are lovely, dark, and deep,

But I have promises to keep, And miles to go before I sleep,

And miles to go before I sleep.” 


Robert Frost – poet – 1874-1963


 “The social objective of skilled investment should be to defeat the dark forces of time and ignorance which envelope our future.” – John Maynard Keynes – economist – 1883-1946


“The difference between stupidity and genius is that genius has its limits.” – Albert Einstein – physicist & philosopher – 1879-1955


What a wonderful advertisement the match between Australia and India in Adelaide was for test match cricket. Apart from some childish antics by David Warner, who incidentally made two brilliant centuries, the game was played very positively by both sides with one thought in mind – to win the match! Captain Virat Kohli’s brilliant century on the last day almost saw India home. Australia won by 48 runs, despite the fact that India required 89 to win with 6 wickets in hand! Fantastic stuff!


 Post the last OPEC meeting on 29th November in Vienna, which saw the insufferably selfish and enigmatic Saudi oil minister refuse to turn down the supply pipes, resulting in crude oil heading for the $60 a barrel threshold, global equities started to lose not only their poise but also investors’ confidence.

It was convenient for investors to hang their hats on a 40% cut in the price of crude in the last three months to vent their spleens on the equity markets as they set off ‘hot-foot’ on a flight to quality to the sovereign debt market, with yields for 10-years dropping to unrealistically low levels -Germany 0.62%, the virtually bankrupt France to 0.87% and the insolvent Italy to 2.07%. The UK commands a yield of 1.87% and US Treasuries 2.08%.

The world is hugely troubled by many imponderable. The EU hangs in economic rags with little sign of guaranteed QE being introduced after the next ECB meeting in the New Year. Last week the ECB’s stimulus package saw it buy in E129 billion bills – less than an estimated E150 billion. Also Greece could default post its forthcoming election. That distinct possibility could set an ugly and embarrassing precedent. Now to China; its economy is certainly not firing off six cylinders. What about Japan? Many are coming round to the idea of – ‘if you believe in Abenomics, you believe in fairies! Then if you add the threat of damaging sanctions against Russia and their reprisals against the US and the EU plus question marks over the quality of earnings, apart from the US, and all in all that adds up to a toxic cocktail of uncertainty. Frankly cascading oil prices was purely a catalyst to hit the ‘sell’ button!  Investors required little encouragement to take the cream off the top of their respective markets. It was convenient for investors to hang their hats on a 40% cut in the price of crude in the last three months to vent their spleens on the equity markets as they set off! hot-foot to the sovereign debt market, with yields for 10-years dropping to unrealistically low levels -Germany 0.62%, the virtually bankrupt France to 0.87% and the insolvent Italy to 2.07%. The UK commands a yield of 1.87% and US Treasuries 2.08%.


 Equity really felt the wheels of pain across their backs. No one appeared to be immune. Us markets suffered their biggest weekly falls – DOW -3.7% since 2012 and the S&P -3.5% since 2011. The FTSE was thumped due to the weighting of energy and mining stocks – -6.5% and European bourses fell by an average of 5.9. Greece had a shocker losing about 15% on the week. I suspect some of these markets were over-sold. We shall see. So far this year the FTSE is down 6.6% and AIM by 19%! To date this year the S&P 500 is up 8.3%! There were a couple of positives that came out of last week’s machination. The Senate voted through a $1.1 billion budget expenditure facility, rather than leave us on a cliff edge as it did last year. Astonishing though it may appear the Lending Club, supported by luminaries such as Larry Summers, Mary Meeker and John Mack saw its IPO add 60% in value to $9.2 billion in early trading. I was extraordinary to see such an appetite for peer to peer lending!


 Bank of England Governor Mark Carney’s PR bandwagon was out ‘en-masse’ last week, with plans to increase the level of policy transparency with probably only 8 meetings of the MPC per annum rather than a monthly effort. How effective this change in policy will be remains to be seen. It certainly appears that the current Bank officials are very high class operators and greater in number – Minouche Shafic, Sir John Cunliffe, Andrew Bailey, Andy Haldane and Charlotte Hogg.


 I must confess that Baroness Shriti Vadera’s appointment as chairman of Santander UK caught me on the hop. We all know that this irascible peer, not known for her interpersonal skills and warmth of human spirit, was an immensely powerful and influential member of Gordon Brown’s financial team, post the banking crisis. However there is little evidence of her being a ‘mover or shaker’ as a banker at UBS Warburg. I know many who worked there and her name rarely appeared in neon-lights. She, as I understand it, was part of the debt relief and restructuring of some African countries. Clearly Anna Botin knows more than I do! Certainly if Labour are returned to power she will be a commanding figure.


The corporate news likely to dominate the headlines next week are as follows – Tesco, with a view to shoring up its balance sheet is likely to raise hundreds of millions by the sale of property, as we await the findings of Deloitte’s independent enquiry . With oil have dropped to less than $60 a barrel, many development projects in the North Sea – some say as many as 32 valued at £55 billion – may be put on hold. Finally we hear that BT is closer to making a decision to buy either 02 involving Telefonica or EE for about £10 billion. That should signal a head to head with Sky and Vodafone, who must surely introduce some new strategic plans.


 UK companies posting results – Monday – CARPETWRIGHT, Tuesday – ROCKHOPPER, Wednesday – DIXON CARPHONE, Friday CARNIVAL,



 David Buik

Market Commentator


+44 (0)20 7886 2775

Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom


The Street of Dreams saw the light in early trading with the DOW adding 212 points (1.2%). It was felt that US equity markets had been oversold on the falling crude oil price. Would the FTSE 100 follow suit and respond to the errors of its ways? No! It made a feeble attempt to come back on the bridle. Having been down 50 points, it made a half-hearted attempt to regain poise and as I speak at 3.55pm it has limped back to be up a parsimonious 16 points at 6483. Volumes, though have been rather better than average today with 983 million shares having been traded on the LSE with 45 minutes to go.


We started the session with our noses just above the Plimsoll line, with positive results from Wood Group +1.25%, Ocado +4%, and Whitbread +0.9% leading the way. Sports Direct travelled and arrived -1% as did SuperGroup -0.5%. However before too long the appetite for mining stocks became non-existent with Anglo American falling by 2.6%, BHP by 2%, Rio by2% as was Glencore, though Ivan Glassenberg was upbeat about the future and far from dismissive about a future relationship with Rio. BG Group remains in the doldrums – -2.5%. There was little in the way of support for supermarkets – Tesco down another 1%, as was Morrison. Sainsbury made a pathetic attempt at a rally +0.25% as did M&S +0.75%.


As we I write the FTSE 100 is down 4.16% this year with the FTSE 350 down 3.8% and wait for it AIM is down 17.9%! How about this folks, the DOW is up 11% and the NASDAQ by 13% and if you take in currency considerations ($), they are up 17% and 18% respectively. It is interesting to note that larger cap shares in the FTSE 250 such as Quindell have had shockers, though Songbird is up about 80% this year!