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


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