TODAY’S FAYRE – Wednesday, 8th January 2015


Looking up at the stars, I know quite well

That, for all they care, I can go to hell,

But on earth indifference is the least

We have to dread from man or beast.


How should we like it were stars to burn

With a passion for us we could not return?

If equal affection cannot be,

Let the more loving one be me.


Admirer as I think I am

Of stars that do not give a damn,

I cannot, now I see them, say

I missed one terribly all day.


Were all stars to disappear or die,

I should learn to look at an empty sky

And feel its total dark sublime,

Though this might take me a little time.


 WH Auden – poet – 1907-1973


It would be churlish to start talking about Lionel Messi possibly moving to Chelsea or what a great film ‘Unbroken’ is, in the wake of the barbaric slaughter of twelve people in Paris yesterday morning, who were mindlessly gun downed by evil and deluded murders. May they be brought to book sooner rather than later! Needless to say the free world is united in their support for the people of Paris and particularly those families, which have suffered a tragic loss.


All of a sudden yesterday sentiment turned on a sixpence! None of the basic fundamentals have changed. There was a case for thinking that markets may be oversold. It is also becoming apparent that volatile conditions are likely to remain for some months to come. Deflation stared the EU in the face with prices falling 0.2% last month, but equity markets ‘cocked a snook’ at its importance. It seems very unlikely that ECB’s Mario Draghi will be able to introduce any meaningful QE until he knows the outcome of the Greek General Election – ‘in’ or ‘out’ or ‘sayonara’ to austerity, resulting in a cosy deal with the Troikas. That action would rattle the cage of Spain and Italy, who understandably would be looking for similar concessions. However regardless of timing, QE will and has to be introduced by the ECB.


Anyway European markets cracked on and when it became clear that the FED and chairman Janet Yellen was not the least bit interested in raising rates at all until April, due to concerns over oil prices and global uncertainty particularly in the EU and Russia. Consequently the Street of Dreams purred like a ‘Cheshire Cat’ – saw the comments as benign – and it was off to the races. I hasten to add that the ADP index which created 241k jobs in the private sector was not unhelpful. Non-Farm Payrolls tomorrow are expected to produce a similar number of jobs in December, despite inclement weather. Nor was the possibility of more M&A deals such as Verizon and AOL unhelpful. The DOW added 1.23%, the S&P 1.16% and the NASDAQ 1.26%. The FTSE 100 added 51 points yesterday to 6419, with notable performances from energy, oil and mining stocks. The market’s initial interpretation of Sainsbury’s trading statement was positive, despite like for like sales falling by 1.7% in the last quarter. A price war has been waged on Tesco. However the shares, on further scrutiny, closed down 2.3%.


Overnight Asian bourses, with the exception of Shanghai (-1.8%) hung on to New York’s coattails. The ASX was up 0.41%, the Hang Seng by 0.74% and the NIKKEI +1.68%. The FTSE 100 got off to a flyer this morning adding 77 points to 6450 at 9.15am. Aided and abetted by news yesterday on stellar car sales for the year – up 9.3% according to SMMT, investors seem to have acquired a bit more appetite for risk. Tesco, despite paying no dividend, witnessed numbers that were slightly less awful than expected. Also cuts will be made, unprofitable units will be shut and new CEO Dave Lewis has certainly commanded the respect of fund managers – up 7%.


Conversely M&S’s efforts with general merchandise in the last quarter – vital as it includes Christmas – could only be described as disgraceful and unacceptable – like for like sales down 5.8% in the last quarter. This was due to on-line issues and failure to deliver purchases in time. Laura Wade-Gery, the director responsible for on-line operations, may not need any ‘rouge’ for makeup in the foreseeable future; natural embarrassment should do the trick. How much longer must the market and fund managers put up with the wave of excuses and false promises that life is getting better! Marc Bolland’s credibility has taken another huge knock. Though M&S food remains excellent, there is little evidence of any market improvement for fashion, however good Belinda Earl may be. When a retailer has lost the support of its customers, in the current competitive market place, regaining ground seems a very unlikely outcome. Frankly what I would like to see is M&S merger with a sharp operator like NEXT. Mix M&S’s brand and prowess with food with Lord Wolfson’s commercial savvy over clothes; what an electric combination. It won’t happen but I can always dream. Hays numbers were good – up 4% and Interserve confirmed yesterday’s rally by adding another 1% this morning.

It looks as though Trainline will be the first sizeable IPO to be introduced to the market – raising £100 million valuing the company at £500 million.



David Buik

Market Commentator


+44 (0)20 7886 2775

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


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