TODAY’S FAYRE – Wednesday 4th March 2015


“I had a dream, which was not all a dream.

The bright sun was extinguish’d, and the stars

Did wander darkling in the eternal space,

Rayless, and pathless, and the icy earth

Swung blind and blackening in the moonless air;

Morn came and went–and came, and brought no day,

And men forgot their passions in the dread

Of this their desolation; and all hearts

Were chill’d into a selfish prayer for light:

And they did live by watchfires–and the thrones,

The palaces of crowned kings–the huts,

The habitations of all things which dwell,

Were burnt for beacons; cities were consum’d,

And men were gather’d round their blazing homes

To look once more into each other’s face;

Happy were those who dwelt within the eye

Of the volcanos, and their mountain-torch:

A fearful hope was all the world contain’d;

Forests were set on fire–but hour by hour

They fell and faded–and the crackling trunks

Extinguish’d with a crash–and all was black.”


George Gordon, Lord Byron – poet – 1788-1824


It has taken 6 years for incomes to regain some poise and hit pre-crash levels according to the Institute for Fiscal Studies. If inflation remains between zero and 0.5% and wage inflation can climb above 2% later this year, hopefully a feel good factor will return, not felt in so many parts of the country for many a month!


The problem when equity markets have either breached records or flirted with them in doing so, is that momentum is required to crack on and there seems to be an inadequate stream of positive news to allow shares to select another gear for the moment. The imponderables remain – Russia, uncertainty over growth in China, the vagaries and outcome to the UK election and a need to challenge the validity of the economic recovery within the EU, as well as the quality of corporate earnings going forward. Certainly the retail appetite has temporarily returned and the inexpensive Euro is attractive to Germany’s exporting aspirations. On the economic front all eyes will be focused on the ECB on Thursday, when it is expected that QE will be introduced (E1.1 trillion). Also Friday’s Non-Farm Payrolls will be posted in the US when 240k jobs may have been created in February, though wage inflation data will be more eagerly awaited. This will provide further guidance to the timing of an interest rate hike currently expected in the summer. In the UK the MPC is expected to keep rates at 0.5% for the 72nd month in succession. In passing India’s RPI cut rates for the second in recent weeks to 7.5%. 


Yesterday the FTSE 100 shed 51 points to 6889, with the DAX easing by 1.14% and the CAC by 0.98%. Mining stocks were in retreat including Glencore, which had posted very successful results. Nonetheless the shares were down nearly 3%. Barclays was down by 3.25%, thanks to some concerns over PPI and FX misdemeanours. Direct Line lightened up by 0.7%, Travis Perkins by -4% and Moneysupermarket -10% (results fell short). Pace grabbed the yellow jersey +8% (M&A gossip) and Ashtead posted solid numbers but investors took profits – -1%. Just one comment on Barclays – the CEO Antony Jenkins said he would like to pull out of free-banking, but could not afford to be the first – he said: ‘I do think that would be a step forward, yes! It would be difficult to achieve of course because the banks would be fearful of doing that. It would probably have to be regulated or legislated.’ We must remind ourselves that the chosen route forward by all UK banks is “BORING BANK PLC!” Banking now requires much greater capital requirements. Who pays? You do! – The customer! We seem to be stepping aside and saying Deutsche Bank, Goldman, Morgan Stanley and JP Morgan fill your boots at our expense!


On the Street of Dreams the DOW fell 0.47%, the S&P by 0.45% and the NASDAQ by 0.56%. Alibaba’s shares fell to their lowest level post IPO issuance – $81. Car sales in February were disappointing because of the inclement weather – FORD -2%, GM +4%, Fiat Chrysler +6%, Toyota ++13%, Nissan +3% and Honda +5%. Ford shares fell by 2.4% on that news! Healthcare and technology supporters also took some risk off the table.


ITV posted stellar numbers this morning – profits of £466m on a 7% increase in revenues to £2.96 billion. EPS came in at 11.5p. There was a special dividend of £250 million – 6.25p per share. Revenues from advertising were better than expected – up 6% to £1.6 billion. These shares have rallied from 50p 5 years ago to 221p yesterday with great leadership from Archie Norman and Adam Crozier. L&G, Dignity and Greggs also posted very satisfactory efforts this morning.


Standard Chartered Bank posted a 25% reduction in profits to $5.19 billion. Impairment charges for loans were up 32%. Tier One capital will be between 11-12% at the end of 2015. Customer advances fell 3% and deposits rose 6% in the last quarter. Bill Winters succeeds Peter Sands as CEO in June. So to expect any dramatic changes in management until then may be unrealistic.


The Government has reached agreement to sell off its entire stake in the Eurostar for £757 million, the Treasury has announced, which was “significantly ahead of expectations” when the UK’s shareholding in the cross-Channel rail link operator was put up for sale in October. A consortium of institutional investors – Caisse de depot et placement du Quebec (CDPQ) and Hermes Infrastructure – have agreed to acquire Government’s 40% stake for £585.1 million. In addition, Eurostar has agreed to redeem the Government’s preference share, raising a further £172 million for the Exchequer.


UK companies posting results this week –Thursday – AGGREKO, LSE, COBHAM, AVIVA, INMARSAT, CSR, Friday – MARSHALLS, ALLIANCE TRUST.




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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