TODAY’S FAYRE – Sunday, 1st February 2015



Flow down, cold rivulet, to the sea,

Thy tribute wave deliver:

No more by thee my steps shall be,

For ever and for ever.

Flow, softly flow, by lawn and lea,

A rivulet then a river:

Nowhere by thee my steps shall be

For ever and for ever.


But here will sigh thine alder tree

And here thine aspen shiver;

And here by thee will hum the bee,

For ever and for ever.

A thousand suns will stream on thee,

A thousand moons will quiver;

But not by thee my steps shall be,

For ever and yesterday was for ever.”



Alfred, Lord Tennyson – poet Laureate– 1809-1892



Friday was the 50th anniversary of the funeral of Sir Winston Churchill. I felt that it was time to dust down my old ‘CD’ of his magnificent and inspirational war-time speeches. They quite made the hair on the back of my neck tingle. Though times are very different world leaders these days really fail to instil the same positive sense of patriotism and history that this great ‘war’ leader did.



In their halcyon days Harold MacMillan occasionally caught the imagination with his very dry wit. President Obama in his early campaign years was the past master of brilliant hollow rhetoric. Martin Luther King and Nelson Mandela certainly had their moments. President Bill Clinton could occasionally charm the birds off the trees. Then there was Colonel Tim Collins’s rousing rally call to his troops prior to their engagement in the Iraq war, which was quite the most brilliant effort I have ever listened to from a non-politician. I am sorry but I never bought Tony’s Blair’s phoney orations. Over so many years Churchill was in a league of his own.


Many people have expressed their outrage that the contents of the Chilcot Inquiry will not be posted until after General Election for what appears to be spurious reasons, which have cut no ice with anyone. Sir Jeremy Heywood has given a few pathetic mitigating circumstances, which are totally unacceptable – disgraceful!


However the postponement of the FSA’S Inquiry into the collapse of HBOS, which started in 2012, so succinctly elucidated by James Salmon in the Daily Mail last week, is almost as preposterous. Why is the FSA leaving it until after the General Election? Peter Cummings is the only HBOS executive to have been ‘hung out to dry.’ He was banned and fined £500k for negligence. James Crosby, the former CEO handed back his knighthood and 30% of his pension, acknowledging some of the responsibility for the bank’s demise happened under his stewardship. However the financial markets and shareholders are desperate to know how incompetent chairman Lord Denis Stevenson was and also the level of ineptness CEO Andy Hornby and the rest of the board displayed at the time of this bank’s collapse and that of Lloyds Bank, which had acquired HBOS with indecent haste under what appeared to be significant encouragement from PM Gordon Brown. My diseased-ridden mind working over-time ventures to suggest a cover-up, which could prevent unreasonable political influence being brought to bear – perish the thought! Ironically there is talk about Lloyds Banking Group paying its first dividend since 2008!



There was so much to preoccupation in markets this week towards numerous economic and political imponderables. At the top of the agenda was the plight of Greece, culminating in Syriza forming a coalition Government. Then there was an 8% fall in industrial production profits in China to contend with, a very strong Dollar, which many felt could damage US earnings, the re-confirmation of sanctions against Russia and an expected 2% cut in interest rates down to 15%. Then of course, the digestion of accompanying comments from the FOMC on Wednesday to the effect that the FED was in no hurry to hike rates, was given special consideration. However I suspect that the very disappointing US GDP figure of 2.6% for the 4th quarter – 2.5% for 2014 posted on Friday – was probably the catalyst for the FED to convey the impression that it was totally chilled out about the timing of a rate increase. Chairman Yellen expressed concern about the EU and the fact that Germany was facing deflation (-0.5% in December) and the lack of growth in other parts of the world, but she will have been equally concerned at the modest level of US growth.



At the end of last week the net result of this complicated compendium of economic and geo-political issues, was that the S&P 500 surrendered 2.3%, the FTSE 100 1.22%, Euro Stoxx 0.98% and the NIKKEI -0.93%. The month of January which had started so promisingly for US markets saw the main indices end up in negative territory 0 DOW -3.89%, S&P 500 -3.87% and the NASDAQ -2.87%. Europe faired rather better courtesy of the introduction of QE – FTSE 100 +3.32%, DAX +9.06% and the CAC +6.63%. In Asia the Hang Seng added 3.09%, Shanghai +1.34% and the NIKKEI was light by -0.37%. Brent crude steadied at circa $49 a barrel and gold rallied to $1276 an ounce. On the Street of Dreams Shake Shack’s IPO was a huge success, more than doubling in price on the first day, from $19 to $52, valuing the company at $1.7 billion. There were stellar results from Amazon +13% and from Apple, whose share price has risen from $75 after last April’s 7 for 1 split to $120. Royal Dutch Shell’ interim results were light. Diageo’s numbers were never going to set the World on fire and BT’s £7 billion pension hole was alarming though the company has promised to contribute £2 billion in the next 3 years. This week is a significant one for earnings – set out below. UK GDP for the last quarter came in at +0.5% – slightly disappointing as was 2.6% for 2014 and 2.5% Y/O/Y.



Standard Chartered Bank may look to HSBC’S Head of Global Commercial Banking, Simon Cooper, to replace Peter Sands as CEO at the appropriate time. Rob Whitfield of Westpac and Antonio Simoes, CEO of HSBC in London are other top bankers under consideration. John Allan, deputy chairman of Dixons Carphone has been flagged up to become chairman of Tesco. Hellman & Friedman may muscle in with a £2 billion bid for Auto Trader, thus scuppering any possibility of an IPO. This week BG and BP may announce large redundancies when their interim results are posted on Tuesday. Three’s £10 billion acquisition of 02 from Telefonica is likely to be backed up with substantial financial clout from sovereign wealth funds from China, Middle East and Singapore.



So much has already been written about the Greek General Election, that any unemployment problems in the forestry industry should now be sorted out. Suffice to say that PM Tsipras is playing with fire in ‘cocking a snook’ at the EU and specifically at Merkel, by implying that Greece cares not a jot for austerity or its obligation in regards to honouring its commitment to service and repayment of its gargantuan debt, if the German Chancellor’s intransigence is to be believed. There are only 2 outcomes – GREXIT or some willingness to compromise by both parties, allowing a sweet deal to be cobbled together with Troikas, by the issuance of zero coupon bonds for a longer period (circa 20 years) coupled with a ‘haircut’ in exchange for the existing debt. Certainly the Greek equity and debt markets were not enjoying the reckless rhetoric of its matinee idol PM! The ASE was down 7% at the end of the week with 3 year bond yields nudging 16%, 5 year bonds 13% and 10-year bonds around 10%. A shambolic outcome to these negotiations could have a devastating effect of the overall stability of the EU and particular its banks.






David Buik – market commentator

Panmure Gordon & Co


+44 (0)20 7886 2775 – mobile – 07788 144 877

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


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