TODAY’S FAYRE – Tuesday 20th May 2015


“I walked among the seven woods of Coole:

Shan-walla, where a willow-hordered pond

Gathers the wild duck from the winter dawn;

Shady Kyle-dortha; sunnier Kyle-na-no,

Where many hundred squirrels are as happy

As though they had been hidden hy green houghs

Where old age cannot find them; Paire-na-lee,

Where hazel and ash and privet hlind the paths:

Dim Pairc-na-carraig, where the wild bees fling

Their sudden fragrances on the green air;

Dim Pairc-na-tarav, where enchanted eyes

Have seen immortal, mild, proud shadows walk;

Dim Inchy wood, that hides badger and fox

And marten-cat, and borders that old wood

Wise Buddy Early called the wicked wood:

Seven odours, seven murmurs, seven woods.

I had not eyes like those enchanted eyes,

Yet dreamed that beings happier than men

Moved round me in the shadows, and at night

My dreams were clown hy voices and by fires;

And the images I have woven in this story

Of Forgael and Dectora and the empty waters

Moved round me in the voices and the fires,

And more I may not write of, for they that cleave

The waters of sleep can make a chattering tongue

Heavy like stone, their wisdom being half silence.

How shall I name you, immortal, mild, proud shadows?

I only know that all we know comes from you.”


William Butler Yeats – poet – 1865-1939


So CBI President Sir Mike Rake has joined the big battalion of business titans which include Vittorio Colao of Vodafone, Sir Martin Sorrell from WPP, Stuart Gulliver of HSBC and Anshu Jain of Deutsche Bank in warning with veiled threats about the consequences of leaving the EU. BOE Governor, Mark Carney has also chucked his ‘two cents worth in’ as well, in wanting a quick resolution. Almost to a man they seem ambivalent about the need for change. 


Of course ‘Big Business’ is embroiled in the cobwebs of EU bureaucracy and I suppose the cost of being objective is too great a risk for it to even be considered as an option. I am sure most FTSE 100 CEOS will feel the same as those who have already been vociferous. What about the SMES, which drown in red tape and are attracted by global markets – like those who might make widgets in Wisbech – Will their case be heard?  One should be forgiven for worrying about who will be standard bearers and spokesmen for BREXIT.  It is essential that they should be identified to ensure a proper debate.  Sadly I am not sure Nigel Farage, Peter Hargreaves and JCB’s Lord Bamford and Graeme MacDonald are sufficiently heavyweight luminaries. It would great if Lord Wolfson of Next and Michael Spencer of ICAP – both probably sceptic, but not declared – had the time to pick up the cudgel and run with this thorny issue. Graham Brady, Chairman of 1922 Committee would be a welcome cohort! However if a push come to a shove those voting or wanting BREXIT are, to use the vernacular – flatulating against thunder! It ain’t going to happen!


Dear Old Steve Hilton, PM Cameron’s most prized advisor is back in town – lithe, lissom and gazelle like after hours of bicycling around California! His contempt for convention, in wandering around Downing Street in flip-flops, regardless of what luminaries were visiting knows no bounds. He loves having a tilt at the wind. His tirade against bank bonuses – suggesting top remuneration should be no more than top civil servants £200k+- amused us all! I love his style with his very able wife Rachel Whetstone crying all the way to the bank, having been a successful executive at Google and now on her way to clean up in a senior capacity at Uber.


If you were a market activist on the Street of Dreams, it might have been better to have taken the day off and headed for the Hamptons for a decent lobster washed down with some agreeable Chardonnay! There was little news. Wal-Mart missed by a couple of cents – shares closed down 4.3%. At the end of the session activity could only be described as insipid. The DOW finished the session down 0.07%, with the S&P 500 easier by 0.06% and the NASDAQ -0.17%. The Greenback has regained a fair bit of poise in the last 24 hours against most major currencies. We wait with bated breath for the FOMC minutes, which may venture to suggest a postponement of a rate hike in the late autumn or possibly early 2016. The DAX’s and CAC’s marked rally yesterday – +2.23% and +2.09% respectively, was attributed to front loading of quantitative easing and a weaker Euro. The FTSE 100 enjoyed a more measured rally – up 26 points to 6995.


Japan’s 1st quarter GDP recovered a tad – up by 0.6% (estimate +0.4%) – 2.4% on an annualized basis, with retail better than expected and with inventories looking a big part of this number – which replicates a pattern seen in the recent US and Chinese data, according to Panmure’s economist Simon French. The data suggests that price inflation will remain weak as the market tries to clear. This news was the highlight of the Asian session. though there appeared to be a bear squeeze rally in Shanghai, where the Shanghai composite closed up 0.5% having been up 1.5% earlier in the session. The Hang Seng closed down 0.38%.


Again it has been a big day for results listed below. Dealing to start with; Thos Cook. There has been an improvement in the fact that the losses are narrowing and the business plan is being expanded with an exciting joint venture in China. Investors have already vented their spleens against the company for its callous and appalling PR exercise, when dealing with the Shepherd family post the loss of their lovely two children back in 2006. The shares are unchanged, as I write. So clearly, Cook’s reputational damage going forward looks limited. Burberry, despite increasing revenue by 11% to £2.5 billion last year, saw its shares down by 4.25%. CEO Chris Bailey seemed rather cautious and measured about the outlook.


Finally M&S – I was a little underwhelmed considering the trumpeting that had gone on courtesy of Marc Bolland and his PR agents for the past week. Profits were up 6.1% to £660 million, but the figures I saw lacked detail on general merchandising sales over the past year. The word on the street is that Belinda Earl is making some strides with the dowdy fashions. Retail luminaries like Investec’s Charles Newsome tell me the business model has improved and that margins are better. He also made the observation that the £150m buy back needs to be below intrinsic value. Shares were down 0.9% at 583p. The performance of the share price has been full of expectation – up from 383p in October 2014 – up 53% – ASTONISHING! This of course is a far cry from £1 billion profit made under Sir Richard Greenbury in 1997 and again under Lord Stuart Rose in 2007.


This morning’s MPC minutes are really rather bland and unchanged from last month. Only new language at first glance is “The Committee’s central expectation was that CPI would pick up notably towards the end of the year”, according to Simon French. He has been saying that for a while; see his Feb note on “A year of two halves for UK inflation”.


I am bored commenting on Greece – it’s a poor joke and as Wolfgang Schauble says – no progress appears to have been made.



ECONOMICS – Thursday BOE MPC minutes & FOMC minutes.



David Buik – market commentator


Panmure Gordon & Co


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