TODAY’S FAYRE – Wednesday, 3rd December 2014


“Fear death?—to feel the fog in my throat,

The mist in my face,

When the snows begin, and the blasts denote

I am nearing the place,

The power of the night, the press of the storm,

The post of the foe; Where he stands, the Arch Fear in a visible form;

Yet the strong man must go: F

or the journey is done and the summit attained,

And the barriers fall,

Though a battle’s to fight ere the guerdon be gained,

The reward of it all.

I was ever a fighter, so—one fight more,

The best and the last! I would hate that

Death bandaged my eyes, and forbore,

And made me creep past.

No! let me taste the whole of it, fare like my peers,

The heroes of old,

Bear the brunt, in a minute pay glad life’s arrears

Of pain, darkness and cold.

For sudden the worst turns the best to the brave.

The black minute’s at end,

And the elements’ rage, the fiend voices that rave,

Shall dwindle, shall blend,

Shall change, shall become first a peace out of pain.

Then a light, then thy breat,

O thou soul of my soul! I shall clasp thee again,

And with God be the rest!”


Robert Browning – poet – 1812-1889


Today I was asked where I thought the FTSE 100 would end up at the end of 2015. I was rather non-plus. I should have asked my expert colleagues – Panmure’s senior management or analysts, but I chose not to, because any answer is a lottery. This year’s guestimate, I think, is an even more anal question than usual. How can anyone answer it objectively?


The thought that the UK may be ungovernable come 7th May 2015 is a real possibility. As we know over the years, markets deal well with bad and good news. It just does not cope with uncertainty and we have it in spades. Also the cumuli nimbus clouds of economic demise, which circles round the EU, not forgetting the threat of Russian reprisals towards US/EU sanctions in response to Putin unacceptable stance in Ukraine, are of massive concern. So when one adds in disquiet about global growth, oil and commodity prices, it will prove quite a challenge getting one’s investment strategy right for the next year. Political uncertainty will certainly be the matinee idol or perhaps Nemesis in the New Year. However against that thought process the FTSE 100 gleans 70% of its earnings from abroad; so progress could be made.


However if a push came to a shove, my hunch tells me the FTSE could retrench by between 10-15% in the first quarter form its current level, in concert with other global indices. Unless A Tory government is returned, any coalition combination would send seismic waves of the collywobbles through equity luminaries’ bellies; so what do I predict, and I do not really proffer advice, the FTSE 100 will do well to stay above 6500 at the end of 2015.


So much of the autumn statement was correctly flagged up and for the intricate detail, I will leave it the excellent Simon French to add some real meat on the bone.


However from a bystander’s perspective I thought it was a very clever budget – well delivered and very much catching Balls & Co on the hop over the budget deficit. Chancellor Osborne cleverly drew upon the ONS rather than rely on the OBR for budget deficit data which was better than expected – 2015 £91.3 billion, 2016 £75.9 billion, 2017 £40.9 billion, 2018 £14.15 billion and 2019 surplus of £4 billion. However, most government departments will be required to make cuts of 10% to 15%; but if health, pensions and international development remain ring-fenced, then we are staring at an eye-watering 40% cut, severing waste and profligacy. With lower welfare cots, servicing interest rate payment will fall by £16 billion. Also lower inflation takes £4 billion off pensions payments.


There was encouraging news on the inflation front – 1.5% in 2014, 1.2% in 2015 and 1.7% in 2016; then 2% thereafter. A sovereign wealth fund will be formed to finance shale energy.  There were great tax breaks for small businesses and good subsidized apprentice training schemes.


The real corker today was stamp duty – fresh thresholds – 0-£125k Zero, £125k to £250k 2%, £250k to £925k 5%, £925k-£1.5 million 10% – above £1.5 million 12%! That may have put the mansion house tax to the sword if a Labour coalition is elected, though they may be spiteful enough to introduce it. The government will lose £750 million in revenue. It is painful for very few and only if they buy and if they can they can probably afford it. The rest of us – 98% – will experience a real and encouraging saving. The froth may come off the top of the housing market – no bad thing to keep a sense of perspective. Only London the SE and very large landowners are affected. Finally the ability to pass on the £15k ISAS and unrealised pensions pots to spouses, tax free is very sensible. All in all Osborne starred.


David Buik

Market Commentator


+44 (0)20 7886 2775

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


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