Monthly Archives: August 2015


TODAY’S FAYRE – Sunday, 30th August 2015


What’s it all about, Alfie

Is it just for the moment we live

What’s it all about when you sort it out, Alfie

Are we meant to take more than we give

Or are we meant to be kind

And if only fools are kind, Alfie

Then I guess it’s wise to be cruel

And if life belongs only to the strong, Alfie

What will you lend on an old golden rule

As sure as I believe there’s a heaven above, Alfie

I know there’s something much more

Something even non-believers can believe in

I believe in love, Alfie

Without true love we just exist,

Alfie you find the love you’ve missed you’re nothing, Alfie

When you walk let your heart lead the way

And you’ll find love any day, Alfie, Alfie”


Burt Bacharach – Singer, lyricist, composer – 1928-



This song was written for the screenplay for the film ‘Alfie’ in 1966, starring Sir Michael Caine and Millicent Martin. It was originally sung by Cilla Black, who made it a huge hit, but Dionne Warwick’s interpretation was also very popular.


I had a feeling that ’45 years’, the recent release, which stars those two celebrated thespians, Sir Tom Courtney and Charlotte Rampling might receive four and five star ratings from most film critics. I was not disappointed and the acting thoroughly deserved the praise that was heaped on them, particularly Charlotte Rampling, whose brilliant performance of mature lady some years in to retirement in an East Norfolk village. She is about to celebrate her 45th wedding anniversary party, when suddenly, through news of an old pre-marriage girlfriend of her husband Jeff, her life is turned upside down! I hasten to add that this film is far from uplifting and it would be understandable if any film buff made light of a bottle or two of Sauvignon Blanc having seen it!


Her presence, undercooked humorous charm, warmth and reflective sorrow believes me to think that a BAFTA for her performance is a ‘nailed-on certainty.’ However her performance may just be too subtly English for the Academy Awards to bestow what should be an obvious Oscar!


How sad is this fact! There have been a number of violent gun crimes in the US last year, culminating with the appalling murder of two TV presenters in Virginia last week. Smith & Wesson’s shares have increased 86% in value in the last year and 11% last week!


I thought it rather poignant to use Burt Bacharach’s lyrics as an introduction to this Sunday’s missive  – as if to say what was all that about last week? Such wild visceral volatility rattled the cage of virtually every market, but at the end of the day, global equities came out of the week in pretty good shape considering what happened on Monday and Tuesday.  When the numbers were totted up at the end of the week, it felt as though we had suffered from the effects of bad dream – The S&P ended the week in positive territory – up 0.9% as did the FTSE 100. Having suffered percentage wise much greater losses, it was amazing that European bourses should end the week with their heads above the Plimsoll line – up 0.6%. The Nikkei reversed the trend losing 1.5%. in the US the VIX volatility Index fell 50% last week.


As for the main fall-guy or if you prefer the ‘Moriarty’ of the plot – THE SHANGHAI COMPOSITE – what a journey! – down 43% since 14th June and it took a severe larruping early in the week before grabbing back 10% in value on Thursday and Friday. With all the ‘jiggery-pokey’ employed by the Chinese authorities encompassing devaluation the previous week and stock buying interjections, culminating with Yuan 140 billion being pumped into the banks as fresh liquidity, some temporary respite was inevitable.


We have two outstanding issues to consider next week, which will have a huge bearing on the behaviour of global stock markets leading up to Christmas. Firstly the guidance or hints towards interest rate increases made in speeches by Deputy Governor of the FED Stanley Fischer and BOE Governor Mark Carney at the Central banks’ meeting in Jackson Hole, Wyoming this weekend would be not only top of the agenda, but would also be hugely influential. Certainly comments made by New York FED member William Dudley, who felt constraint on hiking rates until it became clearer how damaging the stock market correction had affected the world’s economy was the order of the day, differed measurably by those made St Louis FED member James Bullard. Bullard insisted that the U.S. Economy was robust enough to cope with an initial symbolic 25 basis point rise in September, regardless of the threat of lower growth in China.


Stanley Fischer, in his keynote speech, said on balance that he would prefer the FED to start carefully raising rates at next month’s 16/17th September FOMC meeting. It was his measured opinion that despite inflation remaining at only 1.2%, there was sufficient evidence of downward price pressure from the rising Dollar, softish oil prices and a robust Labour market. Friday’s Non-farm payrolls are expected to confirm that perception. Mark Carney speaking at the same venue was even more ‘gung-ho’ about rates rising in the UK. Though inflation remains close to zero, the governor felt there was little danger of deflation and that the robustness of the UK’s economy was very evident to warrant an introduction of higher rates maybe as early as the end of this year rather than wait until the spring or summer of 2016. He reminded the audience that the UK’s exposure to China was relatively modest and that the UK should not be overly influenced by China’s problems. I am now becoming so confused by ‘forward guidance’ that I am beginning to think it is becoming unhelpful. The changes in ‘forward guidance’ are as unreliable as the UK’S weather. To a monosyllabic congenital throwback such as myself, I worry that the lack of clarity on interest rates may not trigger more volatility! I hope not!


Secondly we turn to trading the markets next week. Hopefully most of the sun worshipers will have returned to their desks in Threadneedle Street, Canary Wharf, Boulevard Haussmann and Wall Street to put in a decent contribution rather than allow the world of technology and a smattering of mathematical geeks to run amok with their algorithms plus their programme and HF trades, which indisputably caused markets excessive strains and pains. No one suggests that a correction wasn’t fully deserved, but it was the manner it was achieved was unnecessary visceral. 


Certainly economists, analyst and observers will have been encouraged that US GDP has been adjusted on an annual basis to 3.7% from 2.3%. Also the UK saw 2nd quarter GDP came in at 0.7%, which on an annual basis suggest growth of 3+ for the year. It would appear that China’s growth is not about to fall off the cliff. 6.6% is the current guestimate. Even if it is 3%, it is not the end of the world. Frankly we should all be much more concerned about the robustness of China’s banks. Will the clobbering their consumer customers have taken in the past 2 months damage the strength of the sector’s capital?


Last week crude Oil rose by 13%. Gold down $26 to $1134. Not surprisingly mining, banks and oils stocks were the worst performing sectors in the FTSE with Glencore’s share price falling to an unenviable low of 148p. On Thursday and Friday, the likes of Rio, and Anglo American made huge rebounds (7-9%). Debenhams eased by 7% on Friday and the yellow jersey for holding its head high throughout the turmoil goes to NEXT! Its share price has proved very durable regardless of conditions!


It looks as though Andy Haldane, the BOE’S chief economist is a very warm order to succeed Martin Wheatley as CEO of the FCA. He is a great communicator with very radical ideas, who would likely be very tough on banking culture and their behavioural patterns. Vue Cinemas may make an audacious £600m bid for Odeon Cinemas. Allianz may join ranks with Ontario’s MERS in buying City Airport for £2 billion. The Irish entrepreneur bought the airport from John Mowlem 20 years ago for £23.5 million before selling it to GIP for £750 million in 2006. We wait with interest to see Chancellor Osborne’s reaction to the protestations made by challenger banks such as Aldermore, Metro and OneSavings to the draconian tax plans on profits. I won’t be holding my breath.


UK companies posting results – Tuesday – SNOOZEBOX, Wednesday – ASHTEAD, DIPLOMA (TS), Thursday – GO-AHEAD, THE COOP, Friday – EMIS, EASYJET (TS).


US companies posting interim results – Tuesday – DOLLAR TREE, H&R BLOCK, Thursday – JOY GLOBAL, CIENA

Economic data – Tuesday – EU UNEMPLOYMENT, UK PMI MANUFACTURING, Wednesday – UK PMI Construction, Thursday – ECB MEETING, UK PMI SERVICES, Friday – US NON-FARM PAYROLLS (EST: 223k) & EMPLOYMENT DATA (5.2%).



David Buik – market commentator


Panmure Gordon & Co



Company 22nd June 2015 27th August 2015 % fall
GOOGLE $475 $358 -24.6%
APPLE $127 $111 -12.6%
WALMART $73 $65 -10.9%
EXXON MOBIL $85 $74 -10.6%
McDONALDS $97 $95 -2.1%
MICROSOFT $46 $43 -6.5%
JP MORGAN CHASE $69 $63 -8.7%


And the winner is……. NEXT PLC!


Company 22nd June 2015 27th August 2015 % fall
RIO 2770p 2312 -16.5%
BHP BILLITON 1346p 1078p -19.9%
ANGLO AMERICAN 995p 710p -28.6%
GLENCORE 273p 141p -48.3%
BP 439p 346p -21.2%
SHELL 1875p 1634p -12.9%
PREMIER 157p 99p -36.9%
TULLOW 366p 202p -44.8%
CENTRICA 280p 241p -13.9%
BG GROUP 1093p 950p -13.1%
HSBC 602p 517p -14.1%
STANDARD CHARTERED 1062p 753p -29.1%
RBS 355p 334p -5.9%
LLOYDS 87p 77p -11.5%
BARCLAYS 272p 263p -3.3%
GLAXO 1377p 1322p -4%
ASTRA 4242p 4051p -4.5%
SHIRE 5325p 4985p -6.4%
TESCO 214p 190p -11.2%
MARKS & SPENCER 549p 520p -5.3%
NEXT 7450p 7895p +5.9%
VODAFONE 239p 225p -5.8%
BT GROUP 465p 435p -6.4%
SKY 1074p 1037p -3.4%
REED ELSEVIER 1071p 1037p -3.3%
ITV 269p 249p -7.4%
BRITISH AMERICAN 3593p 3462p -3.6%
IMPERIAL TOBACCO 3247p 3126p -3.7%


Oh the grand old Duke of York, he had 10k men! – Up, up and away!


Well on the back of a decent performance in New York last night, a strong follow through in Asia, a bumper revision for GDP for the year in the US of 3.7%, the FTSE 100 almost went in to orbit this afternoon. With a few minutes to go – enough certainly for the programme trade geeks to spoil it – It was up 3.8% at 6206 (+228 points). The oils +5-6% and miners +7-9% were the standard bearers, leading the charge with banks hotly in pursuit followed by consumer stocks such as Diageo +3.5%, Reckitt Benckiser +3% and SAB Miller +2.7%.


I just thought I would attach a list of performances of some stocks mainly in the UK over the past 2 months. Even taking in to account today’s rally, there has been some visible financial carnage, exacerbated by the huge influence played by HFT, algorithms, and programme trading. Hopefully next week, a sense of proportion will prevail, though equities are likely to be volatile for some time. Note the amazing performance of NEXT through all this turmoil. What an outstanding performance by Lord Simon Wolfson and his team.



TODAY’S FAYRE – Tuesday 25th August 2015


You go up the long track

That will take a car, but is best walked

On slow foot, noting the lichen

That writes history on the page Of the grey rock.

Trees are about you At first, but yield to the green bracken,

The nightjars house: you can hear it spin

On warm evenings; it is still now

In the noonday heat, only the lesser

Voices sound, blue-fly and gnat And the stream’s whisper.


As the road climbs,

You will pause for breath and the far sea’s

Signal will flash, till you turn again

To the steep track, buttressed with cloud.

And there at the top that old woman,

Born almost a century back In that stone farm, awaits your coming;

Waits for the news of the lost village

She thinks she knows, a place that exists

In her memory only.

You bring her greeting

And praise for having lasted so long

With time’s knife shaving the bone.

Yet no bridge joins her own

World with yours, all you can do

Is lean kindly across the abyss

To hear words that were once wise.”


RS Thomas – vicar & poet – 1913-2000


Much written about the BETFAIR/PADDY POWER merger, which has, in essence, been well received by the market, with both stocks rallying sharply to the cause – up 24% and 19.5% respectively. The synergy is good – bookmaking and exchange trading with expansion plans probably focused overseas. The Competition Commission is unlikely to stick its unwelcome oar in to the proposal. The same may not be said about the forthcoming merger proposal set down by Ladbrokes and Gala Royal. One expects that several shops will need to be sold to satisfy the regulator. Not unrealistically, Ladbrokes and William Hill’s share prices took some tap – down 2.7% and 2.9% respectively.


I think world markets operators have been a little naïve in interpreting the seismic gyrations of the Shanghai Composite in the last 2 months. Forget the fact that the Chinese authorities have been economical with the truth over the robustness of its economy.


Folks we need to remember that this index has only been open for 25 years. It is still a very immature market. We must remember that 80% of Chinese householders (owners) have borrowed money from the banks to buy equities, particularly aggressively from June of last year, when there was a slew of IPOS, resulting in the index rallying by 150% in a year to June 2015 – the herd mentality. So in view of the concerns arising from growth in China and the ham-fisted way stimulus packages have been managed, by manipulating equities, bank liquidity and the devaluation of the Yuan from their tool kits, no one should be that surprised that that there has been a 38% retrenchment of the Shanghai Composite in the past two months. However this has hammered the retail investor and margin calls will put great strain on the banking system. We should be far more concerned about the durability of the banking sector than the Shanghai Composite. Few think that China’s economy is going to fall off a cliff!


So to markets in the last 48 hours – Investors are still cynical towards the Composite, despite China pumping a further Yuan 140 billion liquidity in to the market. As the expression goes, when you have a weak animal by the jugular, keep squeezing! Yesterday the FTSE made some effort early on to recover, but by the afternoon, the teenage scribblers, HFT, algorithms, programme trading and in particular the spivs from the futures markets became omnipotent. Plain vanilla traders gave up the unequal struggle and the FTSE 100 closed down 100 points. The Street of Dreams was having none of this nonsense. Good sense after a measurable correction in the last week started to prevail. The DOW rose like a grilse adding 619 points – I understand the single biggest daily rally for 6 years. The S&P and NASDAQ made up nearly 4%. Apple added 6%, Google up 8%. McDonald’s, Starbucks and Best Buy all responded positively. Let’s hope that when we have an orderly return to work with a bit of human input, some of the gyrations will be ironed out, though we must expect some volatility for some weeks to come.


This morning, after a bit a lively start in Asia courtesy of a positive sentiment in New York, the Shanghai Composite started to show signs of anxiety but the region had a very strong finish – Shanghai Composite +5.95% (flat an hour ago!), Hang Seng +4.12%, NIKKEI +1.08%. Europe had a bright start this AM and as I write at 911am the FTSE 100 is up 125 points to 6104 with the DAX better by a very healthy 2.9% and the CAC by 2.6%. There were great numbers from Aldermore – up 10% – profits up 112% with encouraging lending to SMES and domestic mortgages. Hays also did not disappoint, with Playtech, Evraz and Amec posting acceptable efforts.


The next hurdle markets have to negotiate is the Jackson Hole meeting of Central bankers this weekend. Richard Fischer is likely to play down the necessity of a rate rise by the FED next months and many suspect that Mark Carney, who speaks on Saturday will have similar misgivings towards guarantying a symbolic rate rise in January. My good friend and Panmure’s excellent economist, Simon French, believes that instead of raising rates, both Central banks probably should cut back on their respective bond buying facilities. It could prove to be more effective way of achieving their goals. It is an unorthodox approach and almost certainly won’t be adopted. Next month £17 billion of Gilts mature. The BoE will definitely reinvest. Simon would argue the BOE would be better placed to start tapering back re-investments – say 50% of each maturity – and sterilising the redemptions. He makes a very good point!




US companies posting interim results – Thursday – FRED’S, DOLLAR GENERAL, AEROPOSTALE, SMITH & WESSON, Friday – BIG LOTS.


Economic data –  Thursday – US GDP& JOBLESS CLAIMS


TODAY’S FAYRE – Wednesday, 26th August 2015




Unluckily for a death Waiting with phoenix under

The pyre yet to be lighted of my sins and days,

And for the woman in shades Saint carved and sensual among the scudding

Dead and gone, dedicate forever to myself

Though the brawl of the kiss has not occurred

On the clay cold mouth, on the fire

Branded forehead, that could bind

Her constant, nor the winds of love broken wide

To the wind the choir and cloister

Of the wintry nunnery of the order of lust

Beneath my life, that sighs for the seducer’s coming

In the sun strokes of summer,


 Loving on this sea banged guilt

My holy lucky body

Under the cloud against love is caught and held and kissed

In the mill of the midst

Of the descending day, the dark our folly,

Cut to the still star in the order of the quick

But blessed by such heroic hosts in your every

Inch and glance that the wound Is certain god, and the ceremony of souls

Is celebrated there, and communion between suns.

Never shall my self-chant

About the saint in shades while the endless breviary

Turns of your prayed flesh, nor shall I shoo the bird below me:

The death biding two lie lonely.”


Dylan Thomas – poet – 1914-1953


For those ‘telly’ addicts that have not honed in on the brilliant French thriller ‘Witnesses’ on Channel 4, please do so. It is quite amazing. It finishes this week. It has everything – a great plot, love, intrigue, uncertainty, violence, sadism and excitement! The acting is outstanding and the filming in such a quiet unassuming town such as Le Treport in Normandy is exquisite. Great drama!



It was a stuttering start to yesterday’s market machination after Monday’s financial carnage. Then around lunchtime China’s PBOC announced a rate cut of 25 basis points – the fifth rate cut in nine months in a fresh initiative to shore up slowing economic growth as well as attempting to dispel fears the yuan might fall further in value. The benchmark rate for a one-year loan will be cut by 0.25 percentage points to 4.6 percent and the one-year rate for deposits will fall by a similar margin to 1.75 percent. The initial response by global equity markets was spontaneous, especially Europe’s bourses, which were struggling to get off the canvas and dust themselves down, ready to do battle again. The FTSE closed up 3.09%, the DAX by a whopping 4.97% and the CAC by 4.14%.


In London the mining stocks, banks, oils and drugs, those which had suffered the most from the recent fall-out, girded up their loins, regardless there being no thoughts of increased demands for minerals and despite Nymex crude remaining below the $40 threshold at $39.25 a barrel. By the time New York had digested the news, dealers and economists decided it was not enough and it was also too little too late. The move by the Chinese authorities attracted considerable adverse criticism not only from the market but also from political heavyweights such as the Japanese Finance Minister, Aso-San, who was not backward in coming forward in implying that last week’s devaluation of the Yuan was ‘ham-fisted’ and unprofessional. Market observers were also expressing real concern about the robustness of China’s banking sector and the potential threat of a major credit crisis. This issue is more acute than China’s growth contraction. The Yen surged by the largest amount since 2008, initially to Y116.18 before settling yesterday to Y119.31.


Yesterday the DOW initially rose 400 points, but at the close it was down 200 points – 1.29%, with the S&P 500 easier by 1.35% and the NASDAQ by a modest 0.44%. A 600 point turnaround in a day is a very grown up move by any standards. After the 2-day 7% rout on Wall Street, stocks have surrendered over $2 trillion in value during the last week, including yesterday’s reverses. The recent pull-back is the worst since 2008.


After Monday’s 1000 initial fall in the DOW, Apple’s share price fell by 10% – about $80 billion – which caused Tim Cook the CEO to call up CNBC and point out that sales to China were encouraging. Not sure that kind of price sensitive information should have been imparted, but it certainly had the desired effect with Apple closing in positive territory.


This morning, the ASX started off in the doldrums – down over 0.5% but when it closed it was up 0.60%, with the Shanghai Composite adding 2.60% by lunch and the Hang Seng 0.40% – a much better attitude two hours before. The NIKKEI galloped away adding 3.21% by the close. It was interesting to note that as a result of the meltdown in Shanghai, the world’s richest man, Wang Jianlin is purported to have lost $3.6 billion on his stock in Dalian Wanda Commercial Properties which has lost 17% in value!


This morning Sir Martin Sorrell, the CEO of WPP posted results for disputably the largest PR/advertising agency in the world for the first half year with like for like sales up by 2.3% and revenues up by 6.8% to £5.8 billion. One slightly disturbing aspect from these results was the fact that sales in Africa, Middle East and Asia were only up 1.1%! It looks as though Zurich will be buying RSA for £5.6 billion. Well done to Stephen Hester – at last a decent payday – denied relatively speaking at RBS! Paddy Power & Betfair will be pooling their resources with Betfair owning 48% and Paddy Power 52%. And so the fight goes on! We shall know more about how markets settle down when normal working service is resumed next week.










David Buik – market commentator


Panmure Gordon & Co


TODAY’S FAYRE – Tuesday 25th August 2015

To be, or not to be- that is the question:

Whether ’tis nobler in the mind to suffer

The slings and arrows of outrageous fortune

Or to take arms against a sea of troubles,

And by opposing end them.

To die- to sleep- No more; and by a sleep to say we end

The heartache, and the thousand natural shocks that flesh is heir to.

‘Tis a consummation Devoutly to be wish’d.

To die- to sleep. To sleep- perchance to dream: ay, there’s the rub!

For in that sleep of death what dreams may come

When we have shuffled off this mortal coil, Must give us pause.

There’s the respect That makes calamity of so long life.

For who would bear the whips and scorns of time,

Th’ oppressor’s wrong, the proud man’s contumely,

The pangs of despis’d love, the law’s delay,

The insolence of office, and the spurns

That patient merit of th’ unworthy takes,

When he himself might his quietus make

With a bare bodkin? Who would these fardels bear,

To grunt and sweat under a weary life,

But that the dread of something after death-

The undiscover’d country, from whose bourn

No traveller returns- puzzles the will,

And makes us rather bear those ills we have

Than fly to others that we know not of? 

Thus conscience does make cowards of us all, A

nd thus the native hue of resolution

Is sicklied o’er with the pale cast of thought,

And enterprises of great pith and moment

With this regard their currents turn awry

And lose the name of action.- Soft you now! T

he fair Ophelia!- Nymph, in thy orisons

Be all my sins rememb’red.”


RS Thomas – vicar & poet – 1913-2000


How many times in the last 15 years have we been there before! – Never seen anything like it! Not until the next time!…And the next time was yesterday! The DOW falls 6% in the opening six minutes – 1000 points and the NASDAQ by 8% in the early part of the session! What on earth is going on? Then the DOW rallies to close down just 3.58%, which is still pretty horrific. That intraday move was the biggest in Wall Street’s history.


It’s funny how the market is always provided with interesting data after the horse has bolted. It appears that hedge funds have had ‘shorts’ on since July – never saw that! Funny how it always comes out after the event! Also in July apparently exchange traded funds and mutual took $78 billion out of the US market place. So the writing was on the wall, so I have been reliably informed. I was told by Panmure’s Simon French and BGC’S Mike Ingram, but never heard a peep out of Goldman, JPM etc or I missed it! My colleague Paul Modlock made the most telling comment of all yesterday, saying that he was confident that this seismic and vituperative ‘pull-back’ was an overdue, healthy necessary correction, based on the fact that in normal circumstances massive ‘sell-offs’ coincide with recession. There is not a whiff in either nostril. There never has been a recession started by falling oil prices, which is good for the consumer. With Russia and Iran pumping oil out of the ground for all they are worth oil prices could dip mildly lower unless Saudi/OPEC call a halt to their political machinations. Next week when the market deigns to return to work, perhaps we won’t be so reliant on technology, mathematical geeks, and algorithms and programme trading. The human touch could help good sense to prevail.


The stench of fear was rampant in beautiful downtown Manhattan at the opening yesterday; hence the unrealistic downturn, which shook the Street of Dreams to the rafters. Stocks like Netflix lost 6.8%, Facebook 4.6%, Yahoo! 4.9%, Twitter 8.9%, Google 4% and sad news – Alibaba fell below its issue price losing 3.5%. Big cap stocks like Chevron made severe losses – in its case 4.7%. It was a horrible session but it could have been a lot worse. As regards US share valuations the S&P 500 was heading towards 21x earnings – unrealistic in terms of growth and profit forecasts. The S&P closed down3.94% and the NASDAQ has 3.82% of value shaken from its branches.


Yesterday the FTSE lost 4.67% – 288 points down to 5898. Not a hint of blue anywhere. Mining and resources retreated by an average of 7% (Glencore -13% and Anglo American -9.9%), with oils surrendering 5-10% (BP -7%, Premier -14% and Tullow -10%). Banks took some real tap particularly Standard Chartered and HSBC. It felt very uncomfortable and the mood was dreary, hardly surprising after the vituperative treatment that was meted out.


Asia attempted to rally this morning and most bourses made a fair fist in their attempt, with the exception of the Shanghai Composite which fell another 7.06% thanks to deafening silence from the authorities as to stimulus packages. Bloomberg announced that it expected China’s GDP for July to come in at 6.6%. The FTSE is enjoying a tremendous bear squeeze rally this morning – up 2.75% – 162 points to 6061. The DAX similarly is up 2.6% and the CAC 2.9% at 9.30am. In London financials are up between 3.5% and 4.5%, mining between 4-6% and oils 2-3%. Wall Street is expected to rally by 2% plus! Allelujah!













David Buik – market commentator


Panmure Gordon & Co


Call me old fashioned. Tell me I’m behind the curve! Tell me I am past my ‘sell-by-date!’ – All probably true! However it is time for a reality check for all of us. Maybe China has been economical with the truth about its growth and future prospects. Maybe oil and commodities have fallen out of bed! Yes, emerging market currencies have been trashed against the Dollar under a cloud of threatened higher interest rates being implemented in the US. It is also not unreasonable to surmise that stocks are fully valued. Also QE, which at the time of introduction in March 2009, was absolutely essential, is starting to wear off in places. QE has also largely been responsible for massive rallied in US and UK stock markets. From 9th March 2009 – the day QE was introduced – the FTSE 100 went up 100.5% (from 3542 to 7103) to 27th April 2015. The S&P 500 went up from 9th March to 18th May 2015 214% (676.7 to 2129). So how could anyone possibly be surprised that there has been some profit taking from wholly unrealistic increases in the value of many shares?


There is little doubt that dealer/trader idleness and sloth has crept in to European markets, as July and August seem to be almost exclusively reserved for holidays. The ‘laissez-faire’ laid back style to life has certainly exacerbated the level of volatility. It would also be folly to underestimate the influence of algorithm and programme trading in modern era trading. In normal circumstances these trades are responsible for as much as 40% of ‘market volumes.’ So if a machine tells you to sell, if the market lacks liquidity, the falls will be gargantuan.


If the market puts in a day’s work next week, it is possible that equity markets will experience a ‘dead-cat-bounce’, but conditions will remain very volatile up until Christmas. At 9.20am the FTSE 100 was down 145 points at 6052. Mining stocks down an average of 5% and oils by 2% inflicted the most damage. There was little blue in evidence. Business was brisk today as portfolios were lightened up – but not massive as volumes were on the Street of Dreams on Friday. The DAX and the CAC were down 2.5% and the DOW was due to open up down 400 points.


TODAY’S FAYRE – Sunday, 23rd August 2015




“It must be borne in mind that the tragedy of life doesn’t lie in not reaching your goal.

The tragedy lies in having no goal to reach.

It is not a calamity to die with dreams unfulfilled.

But it is a calamity not to dream.

It is not a disaster to be unable to capture your ideal,

But it is a disaster to no ideal to capture.

It is not a disgrace not to reach the stars.

But it is a disgrace not to have stars to reach for.

Not failure, but low aim is a sin.



Dr Benjamin Elijah Mays – poet & sociologist – 1894-1984


In response to Australia’s 481 on a fair cricket wicket that offered few demons, England’s response of 107 for 8 was a pathetic effort on Friday. The sun was high on the yardarm, the ball moved around only moderately and the front-line English batsmen played Nathan Lyon as if he were Jim Laker bowling on a real ‘turner’ at Old Trafford back in 1956, when he took 19 wickets in the match. Lyon is a splendid journeyman of his trade, but he was hardly lethal on that track. Had Alistair Cook played forward to the good length ball he received he would have been fine. Basic schoolboy stuff! In fairness to the Australians all their bowlers used the conditions far more effectively that Broad, Wood, Finn, Stokes and Ali. This Ashes series certainly has been ‘topsy-turvy’ affair!


Global equities have experienced a very toxic, unpleasant journey in recent weeks, full of financial potholes and economic traffic hazards. Uncertainty over the robustness of China’s economy and the fact that the authorities have clearly been economic with the truth over growth targets, has been blamed for the measurable correction markets are currently undergoing. The prevailing uncertainty has had a ‘Svengali-styled’ influence on sentiment, which has turned very negative, triggering a collapse in value of the Shanghai Composite, down 34% since June – and more significantly the misleading unreliability of China’s economic data has inflicted major damage on global stock markets and the dangerous path the world seems to be heading towards deflation.


It’s amazing but no matter the length of their experience market protagonists have never been able to cope with uncertainty in the same manner as they cope with good and bad news. Uncertainty breeds fear in spades resulting in markets over- exaggerating their need for remedial action.


China has not helped its cause with copious stimulus packages being introduced with monotonous regularity to keep its economic show on the road. It could be monetary policy, fiscal means, bank liquidity as well as property. More recently it has been stock market intervention, forcing brokers, banks and insurance companies to buy stocks, as well as restricting ‘short selling.’ What a disaster that course of action has proved to be. Yes, the Shanghai Composite had rallied by about 150% from June 2014 to June 2015. So, considering that the economy is ‘off the boil’ it is hardly surprising that about 34% has been surrendered in the past 2 months and 11% last. Yesterday’s 4% drop was the result of the latest piece of dispiriting economic data – Chinese PMI for July, coming in at lowest level since 2011. The fact that Nymex dropped below the $40 a barrel Plimsoll line for the first time since 2008, with Brent dropping to $45.46 exacerbated the situation. The attempt to devalue the Yuan against the Greenback last week was handled in the most ‘ham-fisted’ manner. Any Government-led support of its currency rarely has long-term positive effects. They are short-lived.

With such terrifying trade imbalances involving Japan, Germany and China against the rest of the world, this problem puts markets in a parlours position. Who knows when this ‘drip-drip’ sell off will be finished.  It is hard to see where the good news is coming from. The problem the world has is that it is heading for a deflationary period. It seems that the service sector is holding most economies together, but without inflation, recession in some countries may be close at hand. The vibes in the UK for its economy are really upbeat and not bad in the US, but unfettered progress cannot be made indefinitely if the rest of the world is not contributing. China is a real problem and Japan’s Abenomics are starting to be held in derision. They palpably do not work


So looking at the ‘nuts & bolts’ than emanated last week, the S&P 500 eased by 3.2% and by 7.7% since its May ‘high’ and the DOW by 10.3% in the same period. Last week the FTSE fell by 5.5% and by 11% since April – 9 consecutive days of losses wiping £135 billion in terms of value in the last 10 trading sessions. The FTSE 100 has lost 5.8% this year. European stocks fell by an average of 6.6% last week. The DAX is now only up 4% on the year and the CAC 11%. We must hope that when people come back from their annual leave at the beginning of September, some sort of calm will return. However between now and then markets have every chance of continuing to behave in a vituperative manner. I have been very impressed how much earlier than most Simon French of Panmure Gordon and Mike Ingram of BGC flagged up their concerns about China. They have been very much on top of this issue. I also found it fascinating that the Greek ‘bail-out’ came and went last week, without sending the slightest wave of concern across markets. Of course it was a political decision and not a financial or an economic problem. Had it been the latter, the proposal of an extra E86 billion to be added to the existing E240 billion ‘bail-out loan’ would have been kicked in to the long grass as insanity personified.


In and out of the wreckage and carnage deals were still being concocted, tweaked or rejected. The Shire/Baxalta deal looks as though it is struggling to the finishing line, as its share price has dipped 6% since early August. Glencore posted unsatisfactory results which saw its shares fall 11% on the week and by 2/3rds in the last 4 years. Lonmin was up 9% on Friday and on Thursday Kaz Minerals rallied 17% on a currency variation. It should not be forgotten that emerging market currencies have been slaughtered at the hands of the Greenback in the wake of deflationary signs and the threat of higher rates in the US. I view of what has happened in the past week, I suspect that the FED will put next month’s symbolic rise of 0.25% on hold and the MPC can kiss goodbye pro-tem to their aspirations of putting rates up early in 2016. In the US Hewlett-Packard rose 5% as results appeared to be better than expected. Other points of interest concern the dissipating performance of some tech stocks during these troubled days. In the past month due to concerns expressed over Apple’s challenging outlook for sales in China the market has taken the world’s largest company’s share price down 19.8% since the beginning of July from $132 to $105.76 on Friday. Netflix, another market darling took some stick on Friday. Its shares fell 7.8%. The other troubled company is Twitter. Its share price fell below its November 2013 IPO issue price of $26 to $25.87 – down from a ‘high’ of $69 in December 2013.



There was some good news for the Government. Its borrowing was in surplus by £1.3bn in July, according to the ONS. That was the first July surplus since 2012, thanks largely to higher amounts of income tax receipts. The Treasury received £59.1bn in income in July 2015, which is about 4% higher than last year’s figure. Public sector net debt, excluding public sector banks, now stands at £1.5 trillion, which is 80.8% of gross domestic product (GDP).



The Cooperative Bank virtually tripled its losses in the first half of 2015, falling £204.2m into the red. Niall Booker the CEO said the bank’s losses were mainly due to non-core asset sales that were executed in order to streamline the company and to “improve the bank’s stressed capital resilience”. A high increase in transformational costs were also reported as the Co-op deals with a catalogue of historic strategic problems under the REV Paul Flowers and Peter Marks, before Richard Pym and Richard Pennycook climbed in to the saddle of the holding company. It may be another 5 years before this bank, now hugely influenced by its US hedge fund shareholders see the fruits of their labours.


Finally this weekend there was further confirmation that UK banks may be involved in private litigious claims for forex manipulation at a cost to them as maybe as much as £5 billion.










David Buik – market commentator


Panmure Gordon & Co

Market update – It’s going to be a long sticky weekend!

When it comes to a straight forward challenge on equity prices between economic data, valuation and logic, when the opposition is sentiment there’s only ever one winner – sentiment!

When the sentiment is negative its influence is even more virulent. Such has been the case in the past month, when global equity markets driven by the uncertainty and unreliability of data emanating from China which went hand in glove with falling oil and commodity prices.  These factors have driven the Shanghai Composite down 32% in the last 2 months, thus forcing global indices to surrender some value almost daily over the same period. The FTSE has surrendered 11% since April and the DAX and CAC are now only up 3% and 10.5% respectively this year, both having been up over 20% in the past year.

Today is Friday – investors are rather ‘non-plussed’ and rather downcast. The response to the quarterly expiry was pitiful. There was no sign of heavy selling! Market makers have been very light on their feet. There will be ‘short sellers’ out there smiling like Cheshire cats, but the market seems resolved to its plight – sort of waiting for those dealers absent on holiday to return to the fold to help hold the fort. The Street of Dreams made a pathetic attempt to rally early doors, though it was to no avail, with Wall Street’s main indices down by 1.3% at 4.00pm. The FTSE never flickered at the attempted US rally.

There was little sign of blue in any sector apart from property. Even tobacco and utilities were 1% to 1.5%. Mining stocks suffered minimal damage in comparison to the pain inflicted in the 3 previous months; the sector was down 1%. Oils -2%-2.5%, drugs -2%-2.5%, banks and retail all down an average of 2% suffered most of ‘the slings and arrows of outrageous fortune!’ The FTSE has been through 8 consecutive losing sessions. At 4.00pm the FTSE was down 124 points at 6247 and 4.6% down on the week. The DAX was easier by 1.6% and the DAX by 2%.

Both the FED and the BOE can kiss goodbye to any increases in interest rates before December 2015 and the summer of 2016 respectively! It’s going to be a long, hot, sticky weekend! Where will the good news come from? It is hard to see. However this ‘pull-back’ has all the hallmarks of sensible correction. Let’s hope it is nothing more sinister!


TODAY’S FAYRE – Thursday, 20th August 2015



Too far for you to see

The fluke and the foot-rot and the fat maggot

Gnawing the skin from the small bones,

The sheep are grazing at Bwlch-y-Fedwen, A

rranged romantically in the usual manner

On a bleak background of bald stone.


Too far for you to see

The moss and the mould on the cold chimneys,

The nettles growing through the cracked doors,

The houses stand empty at Nant-yr-Eira,

There are holes in the roofs that are thatched with sunlight,

And the fields are reverting to the bare moor.

Too far, too far to see

The set of his eyes and the slow pthisis

Wasting his frame under the ripped coat,

There’s a man still farming at Ty’n-y-Fawnog,

Contributing grimly to the accepted pattern,

The embryo music dead in his throat.”


RS Thomas – Vicar & poet – 1913-2000


And so for the jugular vein over the next five days! England have never won an Ashes series 4-1 at home and how appropriate it would be for Alistair Cook to lead the charge, after all the initial criticism that was laid at his feet post the Australian and West Indian tours. …and believe me I was one of his critics!  Let’s hope Wyth is rested and that Moeen Ali opens the batting with the selectors bringing in the ‘legger’ Adil Rashid.  However I suspect that Broad, Finn and Stokes will be leading the charge, assuming Wood is unfit! – I am just bubbling over with excitement. Make no mistake the ‘Kangaroo’ is wounded and he will fight back!


Internet, iPhone, iPad, yes, they may well be at hand, but those market activists, supposedly enjoying a well-earned rest, would have been moving uncomfortable from one cheek of their backside to another during yesterday’s European equity rout. Yesterday was the 7th day in succession that the FTSE 100 has headed south on moderate volume levels.  With so many people away, the moves tend to be more seismic than in normal circumstances.  Since the turn of the year the FTSE is down 2.48% and 9.8% since its high of 7100 in April. Yes, the UK’s economy may be in good shape, with Central bankers on both sides of the pond attempting to wean us out the cushy and comfortable beds of zero interest rates into accepting commercial reality. However sentiment has turned ugly, with oil prices at a six-year low – Nymex $40.54 and Brent $46.92 – with commodity prices continuing to drift uncomfortable.  There is a school of thought that believes that if oil drifts much below $40 a barrel, $30 is not out of the question – far be it for me to fuel the fire!



With the FED prevaricating over its intended interest rate hike and then if you add Chinese and Japanese anaemic growth prospects plus many equity indices looking fairly fully valued and all of a sudden, investors are being asked to digest and accept a fairly toxic cocktail. There’s an old anonymous saying which hangs over the fireplace at the Hind’s Head at Bray – ‘Fear knocked at the door, faith answered no one was there!’ I am less than convinced that was appropriate yesterday. Last night’s FOMC minutes were sadly ambiguous. Chairman Yellen was clearly happy with US growth prospects, but inflation remains benign (little to drive it up with those current oil prices) and despite a slight rise in CPI posted yesterday. However the robustness of China’s and the EU’s economies is a major concern. As she so succinctly put it – GDP is tilted to the downside. So September’s scheduled hike, which 70% of economists felt was a certainty next month, is in the balance. The Street of Dreams did not know what to make of these innuendos. With resource prices tumbling the market was taken lower – DOW -0.93%, S&P 500 -0.83% and that NASDAQ -0.80%.


Yesterday the FTSE 100 eased by 122 points to 6403. The DAX was spanked by 2,1%, with the CAC  and MIB the recipients of a leathering – down 1.75% and 1.70% respectively. What many found interesting was Germany signing off on the E86 billion Greek bail-out hardly caused a ripple.  Of course we all know that this agreement was insane political expediency – totally illogical from an economic perspective. To quote the ‘Vera Lynn classic’ – ‘We’ll meet again, don’t know where don’t know when but I know we’ll meet again, some sunny day!’  Yesterday saw oil and mineral stocks continue their savage downturn, with Glencore, which posted a loss and a very disappointing numbers and a colourless outlook took an absolute larruping – down 9.8% to 159.77p.  Shares have dropped nearly 70% since its public quotation in 2011. The mood was so downbeat yesterday, even the Ashtead suffered the slings and arrows of outrageous fortune – down 3.5%. Admiral’s results were just about the most cheerful note on the day. Mark Dampier of Hargreaves Lansdown pointed out very accurately this morning that the FTSE 250 probably provided a better barometer than the FTSE 100 as to the robustness of the UK’s economy – often forgotten.  The FTSE 100 is an international index with 70% earnings generated abroad.


This morning Asian markets followed in the footsteps of New York, with concerns about China mostly in the forefront of investors’ minds. The ASX closed down 1.67%, despite a miraculous recovery by Qantas; back in profit, but shares were down 2%. The Shanghai Composite and the Hang Seng were down 1.5% each at lunch and the NIKKEI closed down 0.88%.  This morning the Dutch supermarket Ahold posted a 6.8% increase in sales in the last quarter.  The FTSE 100 will probably open up down a dozen points.  There were results from WH Smith (TS) progress in line with expectation, Rank with operating profits up 16% and Premier Oil, with results a little better than expected from a sector, which is not currently vogue. UK Retail sales in July are expected to have increased by 4.3%.


UK companies posting results – Thursday – WH SMITH, RANK, PREMIER OIL, KAZ MINERALS

U.S. Companies posting interim results this week – Thursday – SEARS HOLDINGS, GAP, HEWLETT-PACKARD, ROSS STORES






David Buik – market commentator


Panmure Gordon & Co


TODAY’S FAYRE – Wednesday, 19th August 2015



We live in our own world,

A world that is too small

For you to stoop and enter

Even on hands and knees,

The adult subterfuge.

And though you probe and pry

With analytic eye,

And eavesdrop all our talk

With an amused look,

You cannot find the centre

Where we dance, where we play,

Where life is still asleep

Under the closed flower,

Under the smooth shell

Of eggs in the cupped nest

That mock the faded blue

Of your remoter heaven.”


RS Thomas – Vicar & poet – 1913-2000


Congratulations to Lord Sebastian Coe on being elected President of IAAF, an appointment he has long-coveted. His first goal must be to clean up the severely tarnished reputation of athletics. It was interesting to note that Sergey Bubka – For so many years this Russian held the pole-vault world record – has been elected Vice-President.


Yesterday was another day of market turmoil and uncertainty, exacerbated by the fact that the world and his wife was away attending to their tans around the world or selectively shooting grouse on the moors of Scotland and Yorkshire. Some of course will be at the Kia Oval on Thursday and Friday, looking to England’s cricketers to finish the job off with a 4-1 rout in the current Ashes series.


However for those interested, there was plenty for the market’s protagonists to get their teeth in to. The oil and resource sectors continued to be friendless in the ring and many large oil companies and miners continued to surrender value. On the Street of Dreams, ahead of this afternoons FOMC’S minutes from the July meeting and the consternation expressed over China’s economy coupled with Putin clearly enjoying regurgitating trouble in the Ukraine, investors took a back seat and decided to watch the world go by. The DOW eased by 0.19%, the S&P 500 by 0.26% and the NASDAQ by a measurable 0.64%. Walmart posted their quarterly numbers, which were disappointing, triggering a 3.2% fall in its share price. Net income for the quarter ending in July fell from $4.09 billion last year to $3.48 billion this year. However stores open for more than a year saw sales up 1.5% totalling $120 billion. The disappointing part of his financial report was the dire performance of ASDA, which saw like for like sales down by 4.7% in the last quarter. This will give CEO Andy Clarke something to think about, as the Lidl and Aldi continue to titivate the consumers’ taste buds. Walmart’s shares have fallen from $91 at the beginning of the year to $69 yesterday – 23%.


In Asia this morning the brittle outlook for the Chinese economy and the fact that further stimulus packages seems to have remained in the in-tray pro-tem, saw the Shanghai Composite lose another 4% before settling down -3.1% at lunchtime. This follows a 6.1% loss yesterday. Japan was faring a little bit better as Tokyo heads towards the close – down 1.29%. Japan’s exports have fallen quite sharply as the world demand seems to be slackening. In London oil stocks and resources took some more stick yesterday as the FTSE eased by 24 points to 6526 – oils down 1-1.5% and mining 2-2.5%. Glencore posted numbers this morning. Not unexpectedly EBITDA was down 29% – $4.6 bn. An operating profit for the first half was better than expected at $882 million against estimates of $728 million. There was a net loss of $680m. Shares may rally by as much as 5% today from a low of 176p – down 23% in the last month! Also Imperial Tobacco posted a trading statement in line with expectations. Carlsberg posted a significant drop in profits with sales in Russia being dire. Shares may be down 10% this morning. Hikma and Admiral also posted numbers.


There were few surprises in yesterday’s inflation number for July – +0.1%, when Zero was expected. Next month’s figure, which will include the recent fall in oil prices may see inflation dip below zero, before it starts to increase towards the end of the year. The figure the MPC is concerning itself with is wage inflation – currently heading towards 2.8%. This will trigger a rate rise, probably not before 2016 unless David Miles gets his way. The current strength of Sterling is doing the BOE’S job for it.


Nationwide posted stellar numbers yesterday, with profits for the last three months to 30th June, rising to £379m from £253m a year earlier. Gross mortgage lending has increased by 17.2% to £6.8bn and net lending was up 23.5% to £2.1bn. However CEO Graham Beale expressed his concern that the Chancellor’s plan to change the bank levy by introducing an 8% surcharge on profits could cost this building society £300m over 5 years and thus affect mortgage lending.


A $2 billion court settlement agreed by leading banks in New York has opened the flood gates to a global wave of civil actions over the industry’s manipulation of prices.


Barclays, Goldman Sachs, HSBC and Royal Bank of Scotland were among the nine institutions which agreed to compensate small investors over losses due to price manipulation. FX is the biggest market in the world and banks are very vulnerable due to the possibility of a domino effect. From broker, to fund manager, to property developer, to exporter to the consumer. If any party feels wronged they could all want a piece of the action. PPI, credit cards and ‘interest-on-interest’ will still be fertile hunting grounds for litigious predators.  


Tonight’s FOMC minutes which will be posted early this evening, will be eagerly awaited. The economic turmoil around the world will cause Janet Yellen some sleepless nights before she and the FED attempt to raise rates in the US. 70% of economists believe she will go for September with a 25 basis point increase. The Labour market endorses this theory but manufacturing and retail put the decision in doubt.

UK companies posting results – Wednesday – HIKMA, ADMIRAL, GLENCORE, IMPS (TS), Thursday – WH SMITH, RANK, PREMIER OIL, KAZ MINERALS

U.S. Companies posting interim results this week – Wednesday – TARGET, Thursday – SEARS HOLDINGS, GAP, HEWLETT-PACKARD, ROSS STORES






David Buik – market commentator


Panmure Gordon & Co