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


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