TODAY’S FAYRE – Thursday 24th June 2015



“She looked over his shoulder

For vines and olive trees,

Marble well-governed cities

And ships upon untamed seas,

But there on the shining metal

His hands had put instead

An artificial wilderness

And a sky like lead. 


A plain without a feature, bare and brown,

No blade of grass, no sign of neighborhood,

Nothing to eat and nowhere to sit down,

Yet, congregated on its blankness, stood

An unintelligible multitude,

A million eyes, a million boots in line,

Without expression, waiting for a sign. 


Out of the air a voice without a face

Proved by statistics that some cause was just

In tones as dry and level as the place:

No one was cheered and nothing was discussed;

Column by column in a cloud of dust

They marched away enduring a belief

Whose logic brought them, somewhere else, to grief?”


WH Auden – poet – 1907-1973


As the days start to draw in after not much evidence of a summer, so equity acolytes start to reflect on their plight for the rest of the year. We hear nothing but, Greece, Greece and more Greece. Yet there is not the slightest possibility of a satisfactory accord being agreed in the long-term from these protracted and painful negotiations between Greece and its creditors.


Last night they came to a halt for the umpteenth time over disagreement in regards to cuts in public expenditure and wages – in other words more austerity. We are heading towards Greece’s “D-Day” – 30th June when E1.6 billion is due to go back to the IMF or as the case may be – default! A few days may not make that much difference and maybe there will be a fudged deal. My colleague Simon French has an interesting take on this on-going saga!


“Greece: There is a slightly overdone reaction to today’s rejection by the Brussels Group (troika) of the latest Greek proposal – and the Greek rejection of the counterproposal. It boils down to disagreement over increasing VAT on restaurants, earlier implementation (by 3 years) of the state pension age increase to 67 and larger cuts in defence spending. None insurmountable and given the precipice I still think we will get a deal for the E1.6bn by the weekend. HOWEVER this is but the end of the beginning as then looms the 3rd bailout which will be required when these new funds run out at the end of August (ECB payments of 3bn in both July and August are required). The terms of “Bailout 3” will be much more draconian than the ones being negotiated today and I think will necessitate a Greek referendum/fresh national elections. Invariably these things always happen when all the European politicians are on holiday so best guess would be the third week in August when Draghi is harvesting his olives….”


Not surprisingly these disheartening negotiations have damaged sentiment. How ironic that having sold his Netflix investment for a gargantuan profit of $1.9 billion made in 3 years – in at $58 and out at circa $678 a share – that the mega-entrepreneur Carl Icahn should suggest that a negative outcome to the Greek negotiations could put pressure on earnings, valuations and bond liquidity, inviting a 5-10% correction in the S&P 500! Certainly yesterday, in the wake of Monday’s euphoria, investors took some risk off the table in Europe and the US. The DAX eased by 0.62%, the CAC by 0.24%, whilst the FTSE remained just above the Plimsoll line at 6844 – up 9 points.   However punters on the Street of Dreams were in no mood to be trifled with. The DOW closed down 0.98%, with the S&P 500 easing by 0.74% and the NASDAQ by 0.73%.


There was some slightly better news on the economic front in the US. 1st quarter GDP was adjusted upwards from -0.7% to -0.2%. Monsanto was a significant faller – down 5.7% as its bid for Syngenta was rejected on valuation. Most of the major S&P sectors were lower with materials more adversely affected than most. Lennar the house builder shone through the gloom adding 4.2%. Yahoo’s Marissa Mayer was due to update the market with plans for its stake in Alibaba, valued at $40 billion. Many expect this division to be spun off. In London, it was oils and mining that kept the FTSE from going in to negative territory. The market seemed convinced that Shell would complete the acquisition of BG Group. Also there was some interest in Sainsbury and Morrison on broker upgrades. Volumes were derisory with investors expressing little appetite to get involved. Stagecoach posted decent numbers with revenues increasing on the year by 9.2% to £3.2 billion with profits up 10% to £26.3 million. It is interesting to note that IKEA may be prepared to open up smaller warehouses to attract more business rather than the 18 huge establishments they have dotted around the country – often further than people are prepared to travel. Ikea have started this initiative in Norwich.


One of the more hawkish members of the MPC, Martin Weale reminded the market that UK shoppers were hitting the plastic with indecent enthusiasm – consumer credit up 5% last month – a further proof of confidence. Add these issues to a very strong Pound and the possibility of today’s CBI Distributive Trades Survey (DTS) being very positive and then there is more than a case for a rate rise perhaps as early as August if Mr Weale has anything to do with it. Ian McCafferty would probably vote for an increase as well, as might Ben Broadbent, a deputy governor!


This morning that retail juggernaut H&M posted a 23% increase in sales in the past 6 months and have plans to open up another 400 shops in emerging countries. Conversely Debenhams’ sales have been flat over the last 15 weeks but are up 0.9% in the last 41 weeks.

UK companies posting results – Thursday – PHOTO-ME, DS SMITH, COSTAIN (TS), DEBENHAMS, Friday – TESCO (TS), TRINITY MIRROR (TS)


US companies posting results –Thursday – BARNES & NOBLE, NIKE, ACCENTURE



Economic data – Thursday – US JOBLESS CLAIMS



David Buik – market commentator


Panmure Gordon & Co



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