TODAY’S FAYRE – Wednesday 1st July 2015
“So, we’ll go no more a-roving
So late into the night,
Though the heart be still as loving,
And the moon be still as bright.
For the sword outwears its sheath,
And the soul wears out the breast,
And the heart must pause to breathe,
And love itself have a rest.
Though the night was made for loving,
And the day returns too soon,
Yet we’ll go no more a-roving
By the light of the moon.”
George Gordon, Lord Byron – poet – 1788-1824
To have lived to the ripe old age of 106 is a phenomenal achievement in isolation by any standards, but we must all salute Sir Nicholas Winton, who sadly died, for his selfless, brave and caring commitment to so many young Jewish children, who were saved from inevitable extermination. What a wonderful man. Unlike Schindler, Sir Nicholas had no ulterior motive such as financially capitalising on the threat of desperate acts of inhumanity.
So delighted that Trevor Bayliss the England coach has added Adil Rashid to England’s Ashes squad. This is the bold move that all England fans were looking for to carry on their swashbuckling approach to the recent series against New Zealand. If the occasion arises and the pitches are very dry, why not play Rashid and Ali! At least the option is now there.
Markets seemed to have rumbled the Greek charade. I use the term advisedly, as the Greek people don’t see the situation as such, with banks closed, pension withdrawals very limited and with economy diving in to a vortex of recession. However the antics of PM Tsipras are hard to fathom. He withdraws from negotiations, then hands out an olive branch of peace to the EU/IMF looking for a compromise, when it is far from clear why he thinks the conditions for E29bn loan will be the same as one for a E7.2bn loan. That just won’t wash with Euro Group. Then in the same breath he says he will advise the Greek people to say ‘NO!’ to the terms on offer in Sunday’s referendum. Now the EU won’t talk until Monday 6th July. Yet, the FTSE added 87 points yesterday – +1.34%, with the DAX adding 2.15% and the CAC 1.94%. Why? Well, I suppose traders think the situation is containable and that eventually there will be some fudged sort of a deal. Frankly, apart from China, where the authorities are still throwing the kitchen sink at equities to stop a major sell-off, the US economy and the UK’s economy look to be in pretty good shape; so in fact does most of Europe, admittedly from a very base level.
Also there are so many mega deals around at present. With inflation so low and interest rates non-existent, margins of profit are being eroded, thus triggering mergers to save costs and deliver better profits. Yesterday there was confirmation of Towers Watson’s marriage to Willis in an £11.5 billion deal. Overnight Ace confirmed its interest to buy Chubb in a $23 billion deal, which saw Chubb’s share price jump like a grilse – up 26%. PayPal, the online payments titan is expected to buy international money-sending service Xoom in a deal valued at $890 million. PayPal, a subsidiary of eBay, will pay $25 per share of Xoom in what amounts to a premium of 32 percent over the stock’s average price over the past three months. And so it goes on! On a smaller scale, but for those involved how exciting that Sirius Minerals got the go-ahead for its potash mine in Yorkshire, triggering a 30% bounce in its share price.
Bank of England Governor Mark Carney, in his Financial Stability Report warned that the gravity of the situation in Greece had ‘moved very quickly’ and that the risks to the banking sector are ‘now particularly acute.’ For the Governor to be prudent is sensible and understandable, but surely no need for hysteria at this juncture? If UK banks are heavily exposed to Greece after 5-years acute warnings, then I am truly shocked. There may well be some contagion with other European banks which could adversely affect growth in the UK and Europe, but that should be all in a day’s work. I suppose the main concern is the damage that could be caused by GREXIT. Again the BOE and the ECB must have been talking for donkeys’ years about that possibility and contingency plans.
Yesterday Greene King’ Rooney Anan announced that sales had hit £1 billion, thanks to the added importance to the success of Old Speckled Hen, Abbot Ale and Belhaven Best hostelries. The purchase of Spirit Pubs, with its prowess in the North of England will provide great synergy going forward. Serco look as if they might be starting to turn the corner under Rupert Soames’s stewardship. There is still a long way to go, though new contracts valued at £1 billion are encouraging. Ennismore Capital is about to complete its £200 million acquisition of Gleneagles for £200 million. LLOYDS BANKING GROUP announced that the taxpayer’s stake in the bank has been reduced by another 1% to 15.9%. Nationwide posted a 0.2% fall in house prices in June but prices on an annualised basis have increased by 3.3%. I suspect house owner in London and the South East may beg to differ! Persimmon posted another good set of numbers today with revenues up by 12% and unit sales up by 7% totalling 6855. Persimmon’s share price has rattled up in the last 5 years from 299p in November 2010 to 2030 yesterday.
Eyes down today for Non-Farm Payrolls for June with New York shut on Friday for Independence Day. The market expects 230k jobs to have been created last month. These expectations clearly buoyed expectations on the Street of Dreams with all 3 main indices adding some value – DOW +0.79%, S&P 500 0.69% and the NASDAQ 0.53%. In Asia the NIKKEI was 1.1% to the good heading for the close, though the Shanghai Composite was till down 0.75%
UK companies posting results – Thursday – PERSIMMON, TOPPS TILES (TS), TULLOW (TS), Friday – MARSHALLS, FERREXPO
US Company results – Thursday. – RITE AID CORPORATIONS.
Global economic diary – Thursday -US NON-FARM PAYROLLS (+2015k) rate 5.5%, Friday -US INDEPENDENCE DAY NEW YORK markets closed.
David Buik – market commentator
Panmure Gordon & Co