TODAY’S FAYRE – Tuesday 28th April 2015
“This is no case of petty right or wrong
That politicians or philosophers Can judge.
I hate not Germans, nor grow hot
With love of Englishmen, to please newspapers.
Beside my hate for one fat patriot
My hatred of the Kaiser is love true:-
A kind of god he is, banging a gong.
But I have not to choose between the two,
Or between justice and injustice.
Dinned With war and argument I read no more
Than in the storm smoking along the wind
Athwart the wood. Two witches’ cauldrons roar.
From one the weather shall rise clear and gay;
Out of the other an England beautiful
And like her mother that died yesterday.
Little I know or care if, being dull,
I shall miss something that historians
Can rake out of the ashes when perchance
The phoenix broods serene above their ken.
But with the best and meanest Englishmen
I am one in crying, God save England, lest
We lose what never slaves and cattle blessed.
The ages made her that made us from dust:
She is all we know and live by, and we trust S
he is good and must endure, loving her so:
And as we love ourselves we hate her foe.”
Edward Thomas – soldier & poet – 1878-1917
It appears that the PM always took his time in every competition he ever participated in, metaphorically producing a terrific burst of speed with a late ‘rattle on the rails.’ Like all decent thoroughbreds he took time to come in his spring coat!
A Labour/SNP coalition, at this moment in the UK’s recovery process, could not come at a worst time. It is imperative for all business – great and small – to be given the chance of broadening their horizons in the next few years and that means that sentiment must remain positive and incentives must be offered to keep that light burning under the bushel of hope! Frustratingly Messrs Miliband and Balls don’t seem to understand that business thrives on incentives. That enables companies and employees to pay a large amount of tax to fund the public sector – particularly health and education, the two ‘golden services’ at the heart of our society.
My colleague and friend at Panmure, Simon French makes the following salient comments –
“Balls and Miliband see a market failure and believe that state intervention is the answer. Rent controls, energy freezes, nationalisation of rail franchises, abolition of ‘non-dom’ status. If you want more money for public services then by all means raise marginal tax rates or cut out waste – Clinton did this in the 1990s and grew the US economy! If however you want to run industry into the ground you replace the invisible hand of the market with the very visible and disruptive hand of the state. The U.K. is a trading nation with footloose international businesses creating jobs – should you make the U.K. less accommodating these companies do domicile elsewhere in the world?”
Lord Ashcroft’s poll yesterday suggests that ‘hope springs eternal!’ –
“The Conservatives lead Labour by 36% to 30% in this week’s Ashcroft National Poll, conducted over the past weekend. The Tories are up two points since last week and Labour is unchanged. The Liberal Democrats are down a point at 9%, UKIP down two at 11%, the Greens up three at 7% and the SNP.”
Messrs Cameron & Osborne may not enjoy today’s forecasted drop in GDP to 0.5%/0.6%, to be posted at 9.30am this morning. Needless to say Miliband and Balls will be jumping for joy at that prospect!
So Finance Minister Varoufakis does not get on with some EU financial heavyweights – bovvered! So PM Tsipras moves him sideways and brings the Oxford educated sweet-talking Euclid Tsakalotos to spear-head negotiations. Athens’s index rallied by 4% and other European bourses took heart and cracked on! I never was the sharpest pin in the box, but what has changed? Greece is still broke. 11 million cannot service €240 billion let alone repay it. I am missing something. Is Aladdin about to rub his lamp with a view to the genie printing money? Mr Tsakalotos may be more amiable to deal with, but surely the day of reckoning has arrived? It’s HAIRCUT-TIME and an end to prevarication!
On the Street of Dreams it was a relatively quiet day for earnings and investors felt obliged to take a few profits. The DOW ended down 0.23%, the S&P 500 by 0.41% and the NASDAQ by 0.63%. Investors levitated two inches above the carpet for Apple results after hours. Apple’s acolytes were not disappointed! The figures were great, though the shares after hours only rallied by 1.3% to $134. In the last quarter 61.17m iPhones were sold. Profits were up 33% at net $13.57 billion, Sales advanced by 70% and revenues were up 27% at $58.01 billion. The cash pile grew by $29 billion to $194 billion. Sales to China via China Mobile were up 72%. IPad sales down 7% and Mac sales up 10%. No account was taken for iWatch sales – A great effort by Tim Cook and his team!
Heavyweight banks grabbed most of the headlines in Europe. Deutsche’s CEO Anshu Jain posted dispiriting numbers – a profit of €559 million, but also included were €1.5 billion legal charges and €2.3 billion fine for LIBOR – not the greatest achievement of Deutsche Bank’s life. Notice was also served, as expected, to sell Postbank in the next 18 months and to split the bank into a commercial bank and an investment one – clearly dropping the banks presence in trading. The shares after a bright start dropped 5%. As for HSBC, if I was a serious shareholder I would demand a feasibility study on repatriation. When a bank makes 80% of its profits away from these shores and appears to be financially discriminated against with the bank levy – £740 million and increasing, maybe it would be better to move to HK or Singapore. An IPO of the domestic operation in the name of Midland Bank for circa £20 billion may save a few blushes all the way round. Also EU regulation is tantamount to penury for UK banks. So Mr Gulliver, please proceed! I frankly think that HSBC is bluffing as the cost of leaving could be catastrophically high, but let’s hope, Miliband, Balls, and to a lesser degree Messrs Cameron and Osborne get the message. Don’t extract the Michael too vigorously – if so? HSBC shares were up 3.1% with Standard Chartered, due to post numbers this morning up 4.3%. RBS sold $5.6 billion North American debt to Mizuho and took a $30 million hit.
In concert with New York most Asian markets took some risk off the table, though the NIKKEI closed up 0.38%. The Hang Seng was down 0.15% and Shanghai by 1.37%.
There were a slew of earnings this morning. BP and Whitbread captured the imagination. BP’s numbers were better than expected, though there was no increase in the dividend, which there has been in recent times. There was a $450 million tax credit, which may have made the figures look a touch more euphoric. However Bob Dudley seemed pleased with the progress.
Whitbread posted excellent numbers, but there is a feeling that the level of improvement going forward is limited. Nonetheless group sales were up 6.5%; Premier Inn sales +15.3%; Costa sales +17.9% and profits for the year up 13.2% to £366 million.
UK companies posting results this week – Tuesday – BP, REXAM, SEGRO, STANDARD CHARTERED BANK, WHITBREAD, WILLIS GROUP, ST JAMES’S PLACE, CARPETWRIGHT, Wednesday – BARCLAYS, LSE, TSB, HOME RETAIL, PETROPAVLOVSK, STANDARD LIFE, SPIRIT PUB GROUP, NEXT, BATS, AER LINGUS, GREGGS, STAGECOACH, Thursday – RBS, IAG, SMITH & NEPHEW, GO-AHEAD, ROYAL DUTCH SHELL, SAGA, MONEYSUPERMARKET, SCHRODERS, Friday – LLOYDS BANKING GROUP, AON, VIRGIN MONEY
US companies posting interim results this week – Tuesday – WHIRLPOOL, AETNA, FORD, PFIZER, BRISTOL MYERS SQUIBB, MERCK, HOSPIRA, WYNN RESORTS, TWITTER, Wednesday – MASTERCARD, NORTHROP GUMMAN, TIME WARNER, THOMSON REUTERS, BGC, GENERAL DYNAMICS, Thursday – VISA, CME, CONOCO-PHILLIPS, EXXON MOBIL, VIACOM, TIME WARNER, PITNEY BOWES, EXPEDIA, DREAMWORKS, PIXELWORKS, LINKEDIN, ZIMMER, Friday – CHEVRON
David Buik – market commentator
Panmure Gordon & Co