TODAY’S FAYRE – Thursday 18th June 2015


“Had I the heavens’ embroidered cloths,

Enwrought with golden and silver light,

The blue and the dim and the dark cloths

Of night and light and the half-light,

I would spread the cloths under your feet:

But I, being poor, have only my dreams;

I have spread my dreams under your feet;

Tread softly because you tread on my dreams.”


“WHEN you are old and gray and full of sleep

And nodding by the fire, take down this book,

And slowly read, and dream of the soft look

Your eyes had once, and of their shadows deep;


How many loved your moments of glad grace,

And loved your beauty with love false or true;

But one man loved the pilgrim soul in you,

And loved the sorrows of your changing face.


And bending down beside the glowing bars,

Murmur, a little sadly, how love fled

And paced upon the mountains overhead,

And hid his face amid a crowd of stars.”


William Butler Yeats – poet – 1865-1939


I thought I had died and gone to heaven yesterday – an exquisite day’s racing at Ascot, being royally looked after by Ladrokes followed England’s amazing run chase of 350 to beat New Zealand, with glorious contributions from Hales, Morgan and Root on television. It is the change in England’s mind-set that I am enjoying so much! Morgan and his troops are so positive about the way they set about their game plan – magnificent!


I don’t know about the rest of you, but I am sick and tired of the whole Greek crisis. Love the Greeks, their country, their culture, but whether they stay within the EU, I am wholly ambivalent. The financial sector has been on notice for years about Greece’s economic fragility. So if the banks and fund managers have not made contingency plans against potential haircuts or losses, I have little sympathy for them. It is the uncertainty that is damaging sentiment and in the case of the FTSE it has lost almost 5%, with little else adverse to upset the applecart apart from the fallout from European bond illiquidity. This is a political issue and I doubt Merkel’s rousing speech today in the Bundestag or the EU finance ministers’ meeting in Luxembourg will resolve anything! The EU dream could turn in to a nightmare with cracks of disunity appearing everywhere; so the Greek ‘can’ will be kicked down the road for another 3 to 6 months and I suppose some fudged deal will eventually be agreed. However the politicians are trying investors’ patience.


Since I last put pen to paper the possibility of a number of corporate deals may culminate in to reality – Proctor & Gamble are looking to sell $10 billion worth of beauty and hair brands, including Wella and Clairol to Coty, which has in its portfolio, Calvin Klein, Marc Jacobs and scents for brands for the likes of D&C, Hugo Boss and Gucci– Coty’s revenue last year was $3 billion and it sells 47 brands. Bart Brecht, formerly of Reckitt Benckiser is the chairman.


Also in the US, FITBIT, fitness tracking bracelet operation, may enjoy an excellent IPO debut. Shares will be issued at $20, when the market thought the price would be between $16-19. The company was valued at $4.1 billion having raised $740m. Morgan Stanley, BOA and Deutsche Bank were advisors.


Last year RBS loss of £3.5bn, Virgin made £121m and TSB £133.7m. Against that rather mixed performance – UK Asset Resolution – owner of bad bank debt – particularly Northern Rock and Bradford & Bingley saw profits jump 11% to £1.4 billion, thanks to house prices rising measurably during that period. The government has plans to sell off £13bn of risky loans and mortgages sooner rather than later.


There was no particularly surprising outcome to last night’s FOMC meeting. Chairman Janet Yellen believes there is a case for a modest rise in rates, probably starting in September. 5 FOMC members believe there is a case for 2 rises totalling 0.5% this year; the rest just one. M/S Yellen is concerned as to whether the recovery has sufficient evidence of a last turnaround. The main concern is the fragility of expansion. With an annualised GDP on quarter one reaching only 0.7%, the recovery looks patchy with manufacturing output slowing, suggesting signs of cyclical weakness and with wage inflation subdued, despite 1 million jobs being created in the first 5 months of 2015 and the housing data looking robust. Unemployment is stubbornly stuck at 5.5%. The FED will also be looking over its shoulder at international imponderables such as Greece, the EU and China, prior to any cuts being implemented. UK employment data looks superficially solid, with 43k jobs being created in the last quarter though unemployment stuck last month at 5.5%. There are 1.8 million unemployed and about 1 million are young. Wage inflation rose by 2.7% and private sector pay by 3.3%. The MPC may have to consider a rate increase before the end of the year.


Yesterday the Street of Dreams was not put off by the FOMC statement and the 3 main markets rallied by an average of 0.2%. Sentiment in China was slightly negative, thanks to concern over the bubble bursting, with the Hang Seng closing -0.2% and the Nikkei in Japan 1.13% lower. At 9.05am the FTSE 100 was down 21 at 6660. Conditions were quiet, waiting on a few pearls of wisdom emanating in Luxembourg; I venture to suggest we don’t hold our breath. Poundland was down 5%. The year’s numbers were good but their sales in the last quarter were slightly disappointing.


UK companies posting results –Thursday – PREMIER FARNEL, POUNDLAND GROUP, Friday – AUTOTRADER

US companies posting interim results –Thursday – RITE AID, RED HAT, SMITH & WESSON



Economic data –         Thursday – US INFLATION, Friday – UK PUBLIC SECTOR FINANCE.



David Buik – market commentator


Panmure Gordon & Co


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