TODAY’S FAYRE – Tuesday 2nd March 2015
“Men of England, wherefore plough
For the lords who lay ye low?
Wherefore weave with toil and care T
he rich robes your tyrants wear?
Wherefore feed and clothe and save,
From the cradle to the grave,
Those ungrateful drones who would
Drain your sweat — nay, drink your blood?
Wherefore, Bees of England, forge
Many a weapon, chain, and scourge,
That these stingless drones may spoil
The forced produce of your toil?
Have ye leisure, comfort, calm,
Shelter, food, love’s gentle balm?
Or what is it ye buy so dear
With your pain and with your fear?
The seed ye sow another reaps;
The wealth ye find another keeps;
The robes ye weave another wears;
The arms ye forge another bears.”
Percy Bysshe Shelley – poet – 1792-1822
There are two things I am very annoyed about at present! One I will get over in 48 hours – England’s abject performance against Ireland on Sunday. England were asleep at the wheel in the first half!
The second point of irritation I will never get over is the fact that the media keep telling us that ‘Jihadi John’ was a model student in his day. I and millions like me could not give a tinker’s damn. He is a poisonous, venomous, barbaric terrorist, who must be brought to justice and never be allowed to see the light of day – sadly an unlikely possibility! Until then, nothing will placate me about this soulless despot. The media should not give him one second’s air time. He is beyond redemption.
They say the flesh is weak – maybe! But no one ever told Dave Mackay, who died aged 80 this morning. He was probably the most indomitable player, with the heart of a lion I have ever watched on a regular basis. He was bought from Hearts for £32,000 in 1959 and together with Danny Blanchflower and John White was the heart-beat of the Spurs double winning side of 1960-61. Who could ever forget this barrel-chested wing half, who tackled fearless though fairly, whilst at the same time passing culturally with the deftest of left feet. Those were the days!
We have had a very quiet start to the week. Nothing stirred very much on the domestic front. Trinity Mirror made progress and Thornton’s posted what amounted to another profits warning. There was an interesting compendium of news over the weekend, which required digestion. Blackstone’s Stephen Schwartzman ‘trousered’ another $450 million from his investment escapades making over $1 billion over 2 years taking his personal wealth to $12 billion, which includes a Park Avenue apartment which cost $37 million! Vue Cinemas may decide to buy Nordic Cinemas. Bill Adderley, the 50% owner of Dunelm has bought 2 million shares in Wm Morrison in support of the new management – The Tesco ‘Butch Cassidy & the Sundance Kid’ – alias Higginson and Potts.
We further understand that Carillion is not interested in having another ‘pop’ at Balfour Beatty. The Bank of England, particularly Minouche Shafik will be keeping a watching brief on the ‘Buyout Barons’ who are alleged to be heavily leveraged – maybe even too leveraged. There seems to be no asset that is safe from predators in the Middle East. It is rumoured that Abu Dhabi Investment Authority is mulling over a £1.66 billion bid for Maybourne Hotel Group, which includes the Berkeley, Claridge’s and The Connaught. Even Crispin Odey, Sports Direct’s most ardent of supporters is now, with many others, concerned that Mike Ashley has yet to appoint a finance director.
Yesterday the Street of Dreams, despite a slight fall in ISM manufacturing and a modest cut in personal spending in January was buoyed by an improvement in Consumer Confidence and yet more evidence of M&A activity, with Hewlett-Packard agreeing to buy Aruba Networks for $24.67 billion. The DOW added 0.86%, the S&P 500 0.61% and the NASDAQ 0.90%. Despite Samsung displaying its new goods and chattels in the form of the Galaxy S6 and S6 edge, Apple shares added 0.49% to a record $129.09 – up 22% since the beginning of the year. The NASDAQ has at last breached the 5k threshold – just 400 points to go for the record to be beaten. Asian bourses seem to have been pre-occupied by concern over growth falling in China – ASX closed -0.42%; Shanghai -0.92% and Hang Seng -0.72% at lunch time. The Nikkei closed down a smidgen -0.06%.
There was a slew of earning this morning – Ashtead (good +2.2%), Travis Perkins (in line-1.2%), Taylor Wimpey (good +2.75%), Glencore (beat expectations -1.6%) and Moneysupermarket (inline). Also Pace and Tullett Prebon, whose efforts were of little interest in the grand scheme of things today, posted interim results. Direct Line, relatively fresh from its IPO and from the shackles of RBS posted a 12.2% increase in profits (shares +0.2%).
Now for Barclays! It is hard to reconcile the fact that our banks, despite dreadful headlines for misdemeanours such as Libor, PPI and FX, have made progress in the past two years and they have. However the billions paid away as fines and recompense to clients clearly dissuades investors from embracing banks as an investment pro-tem. In the past year you would have lost 6% on HSBC, broken even on Lloyds, made 5% on RBS and the same on Barclays, though the latter is up nearly 20% in the last six months!
The pre-tax profit was up 12% at £5.502 billion. Tier One Capital was 10.5%. Provisions for bad debt or impairment charges fell by 29% to £2.168 billion. PPI provision was increased by £200 million. FX manipulation came in at £750 million, though provision for another £500 million taking the total to £1.25 billion will be made for this year. Return on capital was 10.9%, hoping for 12% this year. 14,000 were made redundant in last two years and another 5,000 staff are expected to go this year. Investment banking profits were down 1% at £1.6 billion. CEO Antony Jenkins filled his boots with total remuneration of £5 million including a bonus of £1 million, which for the previous two years he waved.
The best news is the conformed appointment of John McFarlane as chairman to succeed the political appointment of Sir David Walker, himself and BOE economist and hardly one of the great ‘movers & shakers’ in banking, though, as the expression, goes , a safe pair of hands – just what was required by Lord King et all at the time. John McFarlane does not suffer fools gladly and will “kick butt!” All management will be vulnerable if they do not deliver. He is a terrific appointment!
UK companies posting results this week, Wednesday – ITV, STANDARD CHARTERED BANK, MELROSE, DIGNITY, GREGGS, Thursday – AGGREKO, LSE, COBHAM, AVIVA, INMARSAT, CSR, Friday – MARSHALLS, ALLIANCE TRUST.
US companies posting interim results – Tuesday – STAGE STORES, FORD, BEST BUY, AUTOZONE, SMITH & WESSON, Wednesday – AMERICAN EAGLE, BROWN FORMAN, ABERCROMBIE & FITCH, PETSMART, H&R BLOCK, Thursday – FRED’S, RITE AID, CIENA, GAP, Friday – BIG LOTS, FOOT LOCKER
David Buik – market commentator
Panmure Gordon & Co
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