TODAY’S FAYRE – Wednesday 3rd June 2015


“Certain people would not clean their buttons,

Nor polish buckles after latest fashions,

Preferred their hair long, putties comfortable,

Barely escaping hanging, indeed hardly able;

In Bridge and smoking without army cautions

Spending hours that sped like evil for quickness,

(While others burnished brasses, earned promotions) T

hese were those ones who jested in the trench,

While others argued of army ways, and wrenched

What little soul they had still further from shape,

And died off one by one, or became officers,

Without the first of dream, the ghost of notions

Of ever becoming soldiers, or smart and neat,

Surprised as ever to find the army capable

Of sounding ‘Lights out’ to break a game of Bridge,”


Ivor Gurney – poet & composer– 1890-1937


Savannah, Georgia, is one of the most picturesque and beautifully laid out cities it has ever been my privilege to visit. It is supposed to have more squares than any other western city in the world, with exquisite colonial architecture, with its culture very much associated with ‘Confederacy’ -“Gone with the Wind” country, without a shadow of a doubt.


I was appalled to see former Lehman Bros CEO Dick Fulds peddling his wares with a fresh business colleague in Manhattan last week with ‘mea culpa’ and contrition very much not in evidence.  How Mr Fulds has had the temerity to walk away with hundreds of millions of Dollars without so much as a visible blemish on his character, completely escapes me, considering the deprivation the bank he ran caused thousands of people.


Well it has only taken a decade to get rid of Sepp Blatter from being President of FIFA. I wonder if someone from the Swiss authorities or the FBI/DOJ has had a little tug at Blatter’s lapels.  Where I was brought up, if a company/trade body/Club suffered from the merest hint of a toxic aroma or the remotest whiff of corruption, the CEO/President was automatically stood down or he/she resigned.  What took Blatter so long for the ‘penny to drop?’ It transpires that prior to a couple of days ago, Africa, Asia and South America were united behind Blatter against European influence.  Not so now – it would appear that South America has broken ranks. Listening to the BBC World Service this morning I was surprised at the outpouring of affection and support for Blatter from African countries. Blatter’s contribution was apparently immense. What a pity this largesse could not be dispensed with corruption in FIFA!


I have only been away for a week, but looking at many of the global indices I should be forgiven for thinking nothing has happened, but I know that is not the case! The market has been served up with a litany of issues, deals and results. Banks have grabbed many headlines – some still unattractive such as money laundering FIFA business with HSBC, Standard Chartered and Barclays in the frame – though I hasten to add no blame attached. Lloyds Banking Group is only beholden to HMT for 18.99% of its equity. Morgan Stanley has done a great job dribbling the stock out! A sale of £5 billion to retail investors may not be far away.  However talk of RBS being sold is surely premature.  The share price ventures to suggest that the bank is not yet fit for purpose – 345p against 500p break even, unless the bank is split – ‘goo0d and bad’.  However an overhang of banking shares remains with not only a tranche of Lloyds shares to be sold, also not forgetting W&G is due to come to the market before too long – 307 RBS branches forced sale courtesy of EU.


It has been rock ‘n roll territory with M&A activity, with Intel paying $16.7 billion for Altera, easily trumped by a $90 billion deal involving Charter, Time Warner Cable and Bright House. Here in old Blighty CenterParcs went was sold to Canada’s Brookfield for £2.4 billion rather than take the IPO route.


Markets were listless yesterday, waiting on PMI data in US, EU and UK today. UK PMI manufacturing data posted this morning is expected to shrug off 1st quarter sluggish performance according to Panmure’s Simon French. The ECB is expected to keep rates where they are but an update on QE is expected as is progress over Greek charade – €300 million due for repayment on Friday and €6.5 billion to IMF on 12th July. The EU/IMF/Greece tryst needs to fudge a deal sooner rather than later.  The credibility of all parties gets lower by the day. Non-Farm Payrolls on Friday will be more than just a key guider on the movement of interest rates in the US. 230k jobs are expected to have been created in May.


Yesterday’s stock market activity seemed rather anemic with the 3 main US markets closing down 0.1%.  In London the FTSE lost 30 points at 6953. Mining stocks were not in vogue with BHP surrendering 1.5%. BAT suffered at the hand of a successful class action in Canada, which saw the tobacco giant fined £5.5 million for failing to warn smokers of dangers. The shares fell by 2.4%. This morning the disaster at Alton Towers did not damage Merlin Entertainment’s share price – down 2p.  There are 41 rides at Alton and the accident happened on a ride that appeals to 17-22 year old, whose memories, I am told, are very short. The effect on profitability will be very short-lived – June being just the 5th most important month way below August which generates 35% of Alton’s profits. Dixons Carphone posted great numbers but shares only rallied 0.75% at 8.10am.  WH Smith put in a solid effort – shares were unchanged.  Great-4-music made an encouraging debut on AIM this morning – shares were issued at 139p and opened at 143.5p


Panmure’s senior oil analyst, Colin Smith makes the following observations on oil.


OPEC goes into this Friday’s meeting looking likely to roll over its current 30mmbbl target. Meanwhile, despite the falling US rig count and increase in demand forecasts, the rate of over-supply has doubled since the start of the year to 1.8mmbd, largely driven by an increase in OPEC production. That is driving an unsustainable inventory build, in our view. Consequently, we believe there is a substantial risk that oil price weakness will reassert itself in the fairly near future, in the absence of more concrete action by OPEC.


UK companies posting results – Wednesday – WH SMITH, Thursday – PETS AT HOME

US companies posting interim results – Wednesday, BROWN-FORMAN, COSTCO – Thursday – GAP, RITE AID, FRED’S, JOY GLOBAL, CIENA, MICHAEL’S COMPANIES, ZIMMER, ZOE’S KITCHEN



David Buik – market commentator




David Buik

Market Commentator


D +44 (0)20 7886 2775

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


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