TODAY’S FAYRE – Wednesday, 29th January 2015



“Thou comest, Autumn, heralded by the rain,

With banners, by great gales incessant fanned,

Brighter than brightest silks of Samarcand,

And stately oxen harnessed to thy wain!

Thou standest, like imperial Charlemagne,

Upon thy bridge of gold; thy royal hand

Outstretched with benedictions o’er the land,

Blessing the farms through all thy vast domain!

Thy shield is the red harvest moon, suspended

So long beneath the heaven’s o’er-hanging eaves;

Thy steps are by the farmer’s prayers attended;

Like flames upon an altar shine the sheaves;

And, following thee, in thy ovation splendid,

Thine almoner, the wind, scatters the golden leaves!”


Henry Wadsworth Longfellow – poet – 1807-1882



Phone hacking is illegal and is not an attractive occupational hazard.  However when one reads that Jude Law has sired his fifth child not all progeny from the same mare, you could be forgiven from thinking that news of this nature was in the public interest. I know Mr Law is entitled to damages for having his phone hacked.  However he and the likes of Hugh Grant invite intrusion by the unorthodox manner they lead their private lives.  If you are a celebrity and you spread your pleasure about town indiscriminately, you must expect your jaunts to grab the headlines!



“I think equity markets will get devastated!” – Thus spake the famed £9bn hedge fund manager Crispin Odey recently in his latest letter to investors. Having been one of the biggest bulls of this particular central bank artificially-driven-bull cycle, his dramatic bearish outlook will not go unnoticed. Finally, Odey fears major economies will be entering a recession that will be “remembered in a hundred years,” adding that the “bearish opportunity” to short stocks looks as great as it was in 2007-2009.


The FOMC started its two-day meeting yesterday and the comments that emanated from this august gathering were relatively benign without any real guidance as to when interest rates would go up, with Chairman Yellen insisting that the US Central bank was happy to pay a waiting game. I think the Street of Dreams had heard all this rhetoric before and consequently decided to focus their attention on more immediate issues such as the strength of the Dollar affecting earnings going forward, with companies such as Microsoft, Pfizer, Procter & Gamble and McDonald’s being adversely affected. A very weak oil price, which was affecting the share price of oil and energy companies, also contributed fundamentally to yesterday’s reversals.


When stumps were drawn on Wall Street, the DOW had surrendered 290 points 1.13%, the S&P 500 has eased by 1.35% and the NASDAQ gave up only 0.03% thanks to the strength of Apple, which added 6.4% on their stellar results. Commodity shares and the oil sector fell by an average of 1.6% – Chevron and Exxon Mobil both falling by a similar amount. Yesterday Facebook beat the ‘Street’ with EPS coming in at 54 cents against expectations of 48 cents. Yahoo! was 1.7% to the good. Boeing’s efforts attracted another 4.8% in value. It may be of some comfort to know that of those S&P 500 companies that have so far reported 77% have beaten their profits forecast. Today FORD, ZIMMER, RAYTHEON, CONOCO-PHILLIPS, HERSHEY, PULTE, VIACOM, NORTHROP GRUMMAN, ABBOTT LABS, VISA, GOOGLE and AMAZON step up to the plate!


Investors tend to look at the DAX, CAC and FTSE to feel the market’s pulse. Though those two European bourses fell a tad with the FTSE 100 ending the session up 14 at 6825, all eyes were on Greece and the astonishing comments made by the good looking matinee idol Greek PM Tsipras. To tell the world in your first policy statement that you are going to raise pensions and create more public sector jobs strikes me as an odd way to win friends and influence people, when your country is in debt to the tune of €260 billion. PM Tsipras is either bold, naïve or just plain stupid! Perhaps he is trying ‘call Chancellor Merkel’s bluff’ on austerity in the hope that the Troikas will capitulate and cobble together a sweet deal in rescheduling their debt as well writing some of it off. I know Greece substantially holds Germany responsible for forcing it into the EU, when the criteria could not be met. However markets left Greece in no doubt what it thought of Tsipras’s outburst. The Athens exchange fell 9% yesterday, with banks being clattered. Piraeus Bank lost 29% in value. Bond yields leapt like grilse – 5 year yield to 13% and 10 year yield to 10.17%, suggesting default cannot be ruled out. Maybe Greece wants to head for the EU exit, allowing the Drachma to be reintroduced devalued by 40%, which would inject life in to its tourism, the export of booze and agricultural produce. Greece exit could also attract international businesses to set up operation in Greece with attractive currency and tax considerations. If that is not Greece game it setting about life in a very ham-fisted manner. A lack of coordination could trash many banks in Europe, triggering massive losses. I fear there will be more losses to Greek banks.


Yesterday concern was expressed towards Wm Morrison and shares fell away by 6%. On the bright side SAB Miller was up over 4% thanks to bid gossip attributed in the direction of InBev. Today Royal Dutch Shell disappointed with income 20% lower than expected for the quarter – $3.3 billion against expectations of $4.1 billion. EPS was only 52 cents against estimates of 64 cents. The company will keep dividends flat for 2015. The company may reduce its buy-back programme, which will be dictated by the price of oil. Diageo’s numbers were neutral with sales down by 0.1% and volumes down by 1.9%. The dividend will be increased by 9% to 21.5p.

Deutsche Bank’s quarterly numbers were much better than expected – a profit of €438 million against a loss of €289 million. Trading in FX and fixed income was bountiful. The main four divisions did well though investment banking looked a little weak.


UK companies posting results and trading statements –  Thursday – ROYAL DUTCH SHELL, RPC, 3iii, DIAGEO, FULLER, SMITH & TURNER, Friday – BT GROUP, VEDANTA RESOURCES – Economics BBA mortgage applications


US companies posting interim results tomorrow – XEROX, MATTEL, MASTERCARD and CHEVRON.



David Buik

Market Commentator


+44 (0)20 7886 2775

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


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