TODAY’S FAYRE – Sunday 28th June 2015


“The piers are pummelled by the waves;

In a lonely field the rain

Lashes an abandoned train;

Outlaws fill the mountain caves. 


Fantastic grow the evening gowns;

Agents of the Fisc pursue

Absconding tax-defaulters through

The sewers of provincial towns. 


Private rites of magic send

The temple prostitutes to sleep;

All the literati keep

An imaginary friend. 


Cerebrotonic Cato may

Extol the Ancient Disciplines,

But the muscle-bound Marines

Mutiny for food and pay. 


Caesar’s double-bed is warm

As an unimportant clerk


On a pink official form. 


Unendowed with wealth or pity,

Little birds with scarlet legs,

Sitting on their speckled eggs,

Eye each flu-infected city.


 Altogether elsewhere, vast

Herds of reindeer move across

Miles and miles of golden moss,

Silently and very fast. 


WH Auden – poet – 1907-1973


The latter part of last week was an unmitigated disaster from a human perspective with so many innocent holiday makers, religious worshipers and office workers butchered by the barbaric IS, who care not a jot for human life. Without being hysterical and hopefully never succumbing to the threat of terrorism, the number of safe places to live or visit on holiday diminish by the day. The immigrant crisis in the Mediterranean and in Calais as well as on the shores of our beloved ‘Sceptred-Isle’ get worse by the day and no one has offered anything looking remotely like a solution. It is truly an insufferable state of disrepair.


Though I have every sympathy for the Greek people, their suffering pales into relative insignificance in comparison to those under ferociously cruel attack from religious fanaticism.


As expected the Greek crisis produced not even the semblance of a resolution. In fact the temperature of the coterie of delegates hit fever pitch by Saturday with Greece, the EU and the IMF exchanging bitter accusations of mistrust and contempt. Chancellor Merkel goaded Tsipras into accepting the very generous terms offered by the creditors, which was rebuffed by the affronted Greek PM with counter charges that Greece was being blackmailed and threatened with ultimatums. It looks as though next Tuesday’s deadline to repay €1.5billion to IMF (30th June) will come and go without agreement, despite the urgent need to unlock €15.3billion bail-out fun, including €7.2 billion withheld since lady year. This atmosphere does not bode well for Sunday’s Eurozone Finance Ministers’ meeting.


PM Tsipras apparently refused a 5 month extension of the bailout. Barring a miracle Greece may see a run on its banks as early as next week, though they will remain closed on Monday. Unless the ECB offers reassurance about temporary liquidity help, there could be carnage on Monday morning in European bond and equity markets. Assuming no agreement, the EU will also discuss plan B with involves protecting the rest of the Union from any fall -out from Greece’s refusal to accept terms. Tsipras insists that the EU’s draconian proposals will stifle growth and recovery. Messrs Tsipras and Varoufakis are going to find it increasing difficult to get Parliament and or the Greek electorate to agree to this plan. The EU/IMF have rejected an extension of the loan facility until after the proposed referendum. Default threatens, but the ramifications are gargantuan.


This is much more of a political crisis than a financial and economic one. With GREXIT now a distinct possibility, there is no doubt that Portugal, Spain and Italy will be keeping tabs on the ramifications. Why should they be discriminated against? Could this be the end of the European dream? Greece being expelled could have serious repercussions. As discussed earlier a run on Greek banks is highly likely.  Will European bourses fall like a stone? Much of the problem may be priced in, but sentiment plays a far greater role than logic. The DAX and CAC could get larruped. The FTSE is much more of an international index reliant very much on Dollar earnings. The idea of Merkel playing hardball sticks in the crawl a tad.  It was Germany that ‘rail-roaded’ Greece in to joining the EU, when there was no chance of the financial criteria being met. She has a moral obligation to help the Greek people. The IMF and Mme Lagarde has not come out of these negotiations with very much credit according to many. It was felt that she should have given more scope to the EU to solve these issues. The IMF has conspired according to certain aficionados to turn a containable crisis in to a total disaster. However the IMF advises 188 countries and cannot be seen to unfairly accommodate Greece.


There are too many prophets of doom out there! GREXIT, expulsion from the Euro need not necessarily be Armageddon. The reintroduction of the Drachma, which would be devalued by as much as 40% would be the greatest possible ‘fix’ for Greece’s tourism. People would flock in.  Also attractive rates of taxation would encourage international corporations to open factories and business which would help unemployment.  The likes of Google, Apple, GM, Ford, Toyota etc would surely give great consideration to opening up operations. This would only be viable if there was an orderly GREXIT facilitated by every EU member.


Despite the weeping sore that is the Greek Crisis – exasperation for the rest of the world is hardly an adequate description – there was much to keep the investing public occupied, interested and concerned. Last week the S&P closed down -0.39%, the FTSE was up 0.64%, European stocks rallied by an illogical 2.9%, in the hope that Greece would be put to bed once and for all, with the DAX adding 4% and the Greek exchange 2%. The NIKKEI closed up 2.64%, hitting its highest level since 1996, thanks to one stimulus package after another being introduced.  China’s Shanghai Composite certainly saw the cracks of doubt appearing in terms of its equity bubble bursting. This Index has lost 18.8% in value since 12th of June and eased by 7.4% on Friday. China, on Friday cut its one year deposit and lending rates by 0.25%. The minutes of the FOMC, despite suggesting a symbolic rise in the not too distant future, had quite a dovish tone to it – hardly surprising considering the US economy has a slightly soft belly attached to it plus problems in China and Europe, which will concern Chairman Yellen and her troops.


June has been the best month for US IPOS so far this year, with $4.79 billion worth of trades. Nike added 4% after good numbers. Tesco added 2.7% last week after producing slightly less than awful sales numbers for the last 13 weeks – like for like sales down just 1.3% with Asia down 2.9%. This is the end of year one of a 5 year plan for a rejuvenated Tesco; so Dave Lewis has been given the benefit of the doubt. A rights issue may be required later and many expect Tesco to sell its Korean unit for $6 billion – maybe to private equity. On news of a possible merger with Coral Gala, LADBROKES shares rallied by 16% on the week. Few will be happy if Andy Hornsby walks out of the deal with a pot of gold post the HBOS debacle.


John Browett, former CEO OF Dixons and post an unsatisfactory sortie with Apple has been appointed CEO of DUNELM. Shell hope to complete its takeover of BG Group in a July. There looks as though there will be no deal between 3G Capital an Diageo. Miami Dolphin’s Stephen Ross in conjunction with Qatar were rumoured to be making a circa $8 billion bid for 35.5% of F1 owned by CVC Capital. However it is also believed that Sky and Liberty Global are weighing up the possibility of competitive offers. This private equity mogul’s stake is currently nursed by Bernie Ecclestone.  Sophos, the cyber security titan in competition with McAfee and Symantec is close to its £1. Billion IPO. About £125 million worth of stock will be offered for sale. Apax Partners currently own 65%. Former Labour minister Hazel Blears and Ruth Spellman have been nominated as directors for the Coop.




US Company results – Wednesday -CONSTELLATION BRANDS, FORD MOTOR (sales), Thursday. – RITE AID CORPORATIONS.

Global economic diary – Monday – UK Consumer confidence, Wednesday – BOE Financial Stability report – Thursday -US NON-FARM PAYROLLS (+2015k) rate 5.5%, Friday -US INDEPENDENCE DAY NEW YORK markets closed.



David Buik – market commentator


Panmure Gordon & Co



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