TODAY’S FAYRE – Tuesday 17th February 2015


“Another bride, another June

Another sunny honeymoon

Another season, another reason

For makin’ whoopee


A lot of shoes, a lot of rice

The groom is nervous, he answers twice

It’s really killin’ that he’s so willin’

To make whoopee



Picture the same sweet love nest

And think what a year can bring

He’s washin’ dishes and baby clothes

He’s so ambitious, he even sews

But don’t forget folks, that’s what you get folks

For makin’ whoopee


Another bride, another June

Another sunny, a sunny honeymoon

Another reason is that season

For makin’ whoopee”


Gus Khan – lyrics in 1928


“Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.” -Lord Tomlin in the UK House of Lords case, IRC v. Duke of Westminster (1936)

The above quotation will just go to annoy all the sanctimonious hypocrites that are currently pontificating over current tax avoidance issues. Regardless of political persuasion there are transgressions on both sides of the political divide and the only way to put matters to bed once and for all is to make the laws pertaining to tax avoidance full-proof!


Some of you will recall the 2004 film ‘Closer’ with Julia Roberts, Natalie Portman, Jude Law and Clive Owen. This interesting melodrama which includes the most graphic description of sexual activity on an internet chat line that anyone is ever likely to see, has recently been re-scripted in to the original play. I would describe myself as fairly open-minded, but some the dialogue even made my thinning hair stand on end!


‘Closer’ tells a story of four people, whose lives collide and whose fates change in an instant; as strangers become lovers and lovers become strangers. Rachel Redford stars alongside Nancy Carroll, Oliver Chris and Rufus Sewell in Patrick Marber’s Olivier Award-winning play ‘Closer’at the Donmar Warehouse.


So here we go again, with the EU and Greece playing at brinkmanship again. Most of us are getting very tired of it. Frankly it hasn’t the same aesthetic value as playing out a classical Greek tragedy. The eruditely flamboyant Yanis Varoufakis arrives for his meeting as debonair as you like – grey shirt not tucked in – as if the world were his oyster. After just 4 hours we, not surprisingly, find out that there is not a semblance of agreement for a six month extension of the existing bail-out agreement, without any evidence of contrition, flexibility or concessions. Mind you, Greece thinks it is part of a ‘Brave New World’ and expects to be treated as an equal partner. Greece does not want an extension. It wants a new deal with massive concessions. Both parties are surely being wholly unrealistic, unless we are playing another tiresome game of brinkmanship. The EU, Germany’s Schauble, Mme Lagarde and the IMF know only too well that Greece was given a mandate by a Syriza coalition left wing led government that cannot spell austerity or ‘bail-out.’


The EU just continues to provide further evidence that it is an economic and political shambles. It must have been said a million times and I will say it again. 27 countries cannot and will not sing from the same hymn sheet when they have different cultures and objectives. Maybe I am oversimplifying the problem, but unless the EU has coordinated monetary, fiscal and federal policies, it will fail. Heaven forbid that there should be any talk on a Federal EU!


My good friend Graham Reid, who is keeping a close watching brief on the situation thinks as follows – “I suspect that any hint of Grexit would cause panic and chaos in markets, infuriate the US and be greeted with a slight ‘Giaconda smile’ by Putin. Compromise, however distasteful, is my preference at this stage even though it does nothing towards solving the inherent stupidity of the EZ construct! A negotiation of a restructured debt over at least 20 years in required.”


My take is different! Time out for Greece – a negotiated GREXIT over 3 years! With a devalued Drachma, Greece will boom over 5 years.


Simon French, Panmure’s senior economist says – “This morning’s CPI data will signal a further fall towards deflation in the UK. We forecast a fall to 0.3% growth in the January data – but with this rate falling further and faster during February and March. By the end of Q1 2015 we expect to see sub-zero headline inflation for the first time in the UK since March 1960.


Capital markets remain relaxed about deflation. Given recent Japanese experience this reflects the transitory nature of the commodity story underpinning these numbers. Against a backdrop of a strong labour market, the UK is well-placed to grow throughout 2015 and return to positive headline inflation in Q4. We continue to see the first rise in UK rates in Q1 2016 as wage pressures pick up and the sharp price declines of H2 2014 begin to leave the headline inflation rate”.



It was President’s Day yesterday; so the Street of Dreams had time with the family and to reflect on George Washington and the “star-spangled banner!” It was a sepulchral session in London yesterday, as dealers fretted about Europe. The FTSE 100 just drifted off a tad – down 16 points at 6857. There was little to get fired about in terms of price dissemination. 888 Holdings fell 11% when William Hill’s bid was declared null and void! It had risen by 20% two days ago – so damage limitation was controllable. Rolls Royce became embroiled in another bribery scandal – this time someone supposedly offered to cross some dude’s palm at Petrobras with silver. John Rishden the CEO will no doubt be having the drains up, as he has done with allegations against Rolls Royce in China and India. I find it hard to believe that SAB Miller is a possible takeover target by Brazils 3G Capital and AB/InBev, but stranger things have happened.



The best story yesterday was Archie Norman’s response to the idea of him becoming chairman of Tesco! He insisted on transparency in making sure that the market was diligently trawled for candidates. John Allan is a possibility, but surely Dixon Carphone will want him to complete the task. With his experience at ASDA, also as a government minister and most recently as an excellent chairman of ITV, Archie Norman would be an inspired choice to be the next Tesco chairman. Tesco’s share price is now 13p above the price it announced the £263m exaggerated profit for the quarter ending August 2014 – 240p. Amazing the perception of strong management – well done Dave Lewis! When Norman became chairman of ITV, the share price stood at 60p – now 227p. Even Sky mitigated some of its loss on its 19% shareholding, which looked under water.



IHG posted numbers in line and John Wood really pleased its acolytes – shares up 5.25% at 8.30am. We wait on Greece and the Street of Dreams.


US companies posting interim results – Tuesday – MGM , GOODYEAR, MEDTRONICS, Wednesday –HYATT, BJ RESTAURANTS, MARRIOTT , MARATHON OIL, Thursday – NORDSTROM.

David Buik – market commentator

Panmure Gordon & Co

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

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


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