TODAY’S FAYRE – Sunday, 9th August 2015


Have seen dawn and sunset on moors and windy hills 

Coming in solemn beauty like slow old tunes of Spain: 

I have seen the lady April bringing in the daffodils, 

Bringing the springing grass and the soft warm April rain. 


I have heard the song of the blossoms and the old chant of the sea, 

And seen strange lands from under the arched white sails of ships; 

But the loveliest things of beauty God ever has showed to me 

Are her voice, and her hair, and eyes, and the dear red curve of her lips.”


John Masefield – poet laureate – 1878-1967


As a cricket ground, Trent Bridge may not be Lord’s but it has hell of a lot going for it. It is not a particularly picturesque ground but it is beautifully kept. The people of Nottingham were very welcoming. The crowd was hugely knowledgeable and not remotely corporate, which tends to dominate the scene at HQ.

Cricket enthusiasts go to Trent Bridge to watch the cricket not as a social exercise! They love it! They are boisterous, noisy, friendly and provocatively competitive. My family had a brilliant day there on Friday. The cricket, apart from when Warner and Rogers look to have dug themselves and when the obdurate Peter Nevill attempted to bore the gathered throng to death with dogged defence, was compelling, exciting and brilliant entertainment. The fact that the ground staff produced a great cricket wicket certainly enhanced the enjoyment of the occasion, as did the weather conditions, which were conducive to swing bowling. I shall go there again, the next time Trent Bridge hosts a test match. What a match! What a series! What entertainment!

Though most of the UK and Europe are in ‘idleness mode’ dreaming of the Côte d’Azur, Benidorm or Rock, there was plenty going on in financial markets to keep the responsible and the enthusiasts at fever pitch. The earning season on both sides of the Pond had enough momentum behind it. The Chinese authorities keep us guessing all week about its stock market and the strength/weakness of its economy. The reception towards controls on ‘short-selling’ was mixed though the Shanghai Composite did rally 2.3% on Friday. It is still down the best part of 30% in six weeks. On Friday to add to the confusion exports for China fell in July by 8.9% against expectations of -0.3%.  Growth is becoming an issue and the eventual devaluation of the Renminbi is not an outrageous prospect. Also Consumer prices rose 1.6% in July against estimations of 1.5%

Whilst on the subject of growth, perhaps it would be as well to consider the mixed messages from the UK’S MPC and the content of the quarterly Inflation Report posted on Thursday, all rolled in to one by the transparency obsessive Governor, Mark Carney. The vote on interest rates was 8-1 against a hike. Despite wage inflation rising by nearly 3% and growth forecast for 2015 being raised from 2.5% to 2.8%, core inflation remained at zero with the threat of a little deflation in the autumn. Against that background how could the BOE’S MPC even countenance a rate rise before 2016? Governor Carney has received some stick for the volatile presentation of forward guidance. I disagree with those pundits. Over the years the quality of forecasting by the BOE and economists in general has been lamentable; so adjusting guidance has to be the right course of action.

Fed chairman Janet Yellen will have been pleased – well she will have known – that Friday’s Non-farm Payrolls – +215k with unemployment remaining at 5.3% – were adequate and almost encouraging. Another similar readings for August and I think a 25 basis point rise in September is probably ‘done and dusted!’ Inflation or lack of it may be a concern, as might the ‘soft belly’ of retail activity, but I doubt the FED will be deterred from its goal of weening the consumer off zero interest rates. Then just to add a little icing on the cake crude oil fell away again with Brent reaching $48.97 a barrel. Commodities did not have a great week either. Gold fell a smidgen to $1089.75.



Last week was again indecently volatile with economic data, oil and commodity prices falling and a barrage of quite decent quarterly earnings allowing global indices to ‘bob around like a cork in a bath!’ – S&P -1.25%, FTSE +0.33%, Europe +0.13%, Nikkei +0.68%. Here in the UK there were quite a few story flows that kept the depleted ranks of city devotees up to the mark. Wm Hill’s shares fell over 5% when it was announced that NeoGames had become the attentions of its affections, spending $25m (£16m) on a 29.4% stake. Walt Disney, Comcast and Time Warner were clobbered last week, losing between 6-8%, when it was apparent that royalties were not a guaranteed divine right, plus evidence that television was losing ground to viewers, who preferred to watch programmes on line. Sky and ITV suffered to a lesser degree losing 1.4% and 3.4% respectively. Oil and mining stocks were laggards last week as the price of crude and commodities continued to surrender value.

Last week was an encouraging one for insurance companies, with RSA, AVIVA and L&G posting improved sets of quarterly earnings. Special praise goes to RSA, which under Stephen Hester, is starting to haul itself away from the abyss. Zurich FS will need to keep up the pressure with a competitive stance towards RSA or it will fall in to other hands such as perhaps AXA, where Cevian has a 13% stake. Shire is keen to land US drug operator Baxalta for $30 billion. However its initial bid looks to be short of the required mark. Quindell saw its shares plunge by 40% last week and it may decide to return £500m to investors as a result of a possibly adverse outcome to an investigation by the FCA. Pfizer & Flynn Pharmaceutical have been accused by the UK’s competition watchdog of charging “excessive and unfair” prices for an anti-epilepsy drug, which could affect as many as 50,000 people. Bill Ackman, the US entrepreneur has built up a 75% stake in Mondelez owner of Cadbury chocolate, Ritz biscuits and Oreo cookies. House prices have fallen 0.6% in July, according to the Halifax. RBS has issued £2billion of coco bonds as a further safety blanket for investors.


As mentioned in this missive recently it looks as though the PPI scandal which has savaged the banking sector’s coffers in the past three years is far from over. Expect more challenges and heavy settlements in the next eighteen months. It looks as though Rolls Royce’s new CEO, the very capable Warren East, who cut his teeth on branding irons at ARM Holdings, is happy to mix it with Value-Act the hedge fund manager, which has increased its stake in the company to 5.5%, accusing the maverick investor of being opportunistic in trying to gather up support for change and a break-up of the company.


U.S. Companies posting interim results this week – Monday  GAP, DEAN FOODS, HERTZ, Tuesday – SYMANTEC, Wednesday NEWS CORPN, Thursday – WALMART, APPLIED MATERIALS, JC PENNEY 






David Buik – market commentator


Panmure Gordon & Co


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