TODAY’S FAYRE – Thursday, 3rd September 2015


“A stranger has come

To share my room in the house not right in the head,

A girl mad as birds Bolting the night of the door with her arm her plume.


Strait in the mazed bed

She deludes the heaven-proof house with entering clouds

Yet she deludes with walking the nightmarish room,

At large as the dead,

Or rides the imagined oceans of the male wards.


She has come possessed

Who admits the delusive light through the bouncing wall,

Possessed by the skies

She sleeps in the narrow trough yet she walks the dust

Yet raves at her will On the madhouse boards worn thin by my walking tears.

And taken by light in her arms at long and dear last

I may without fail

Suffer the first vision that set fire to the stars.


Dylan Thomas – poet – 1914-1953


Many of the papers had that deeply distressing photograph of that 4-year old boy lying dead on that desolate beach! How brutal and poignant was that! Now it looks as though Europe is fiercely divided on the subject of immigration flows and more to the point the EU referendum debate – if there ever is one – will be dominated by immigration, understandably in the circumstances, and not by trade, excessive bureaucracy, regulation and federalism. Such is life!


In passing I make the observation that had the Western world taken a grip on Syria and Libya before both countries were beyond the pale, as well as dealing with the aftermath of the Iraq war in a proper manner, Europe’s borders may not have been over run in the manner they are today. I suspect Russia and China might have had a word in the West’s ‘shell-like!’ had there been action on the ground in those countries! Suffice to say that Afghanistan was always a bridge too far! Russia spent 30 years there and failed miserably.


…..…..And when they were down, they were down and when they were only half way up, they were neither up nor down!” Yes, New York had a measurable surge yesterday – DOW +1.82%, S&P +1.83% and the NASDAQ a sparky 2.28%, with Apple very much showing the way!  Also the ADP index for private sector employment was rather more robust than had been expected. Whether yesterday’s rally took place in the knowledge that Shanghai and Hong Kong would be shut until next Monday for a public holiday, we shall never know. However in terms of a ‘dead-cat-bounce’, it is fair to say – mission accomplished. However we must all learn to swim in a sea of volatility for some time. Certainly the military parade in Beijing this morning made me move uncomfortably from one cheek of my backside to the other. The sight was awesomely frightening, but no one will be hoodwinked in to thinking China is on the mend economically! This was just a demonstration of political strength. The growth conundrum remains unanswered and the level (6.6%) very much in doubt.


We shall know our fate in regards to interest rates in two weeks’ time, when the FOMC next meets. If tomorrow’s estimates for US payroll data is confirmed at say +223k jobs created in August and the unemployment rate dipping from 5.3% to 5.2%, then the FED may be persuaded to raise rates by a symbolic 0.25%, despite benign inflation remaining at 1.2% accompanied by unexciting wage inflation. It is interesting to note that only 30% of those economists polled think that the FED will move.


Yesterday, the IMF’s Mme Lagarde used up some of her very considerable charm in attempting to persuade Janet Yellen, the FED chairman to ‘hold her horses!’ and tarry a little time before starting with increases. The IMF, in its infinite wisdom and majesty, lowered growth in the US for 2015 from 3.1% to 2.5%. Presumably this assessment was made prior to the US upgrading 2nd quarter GDP to 3.7% from 2.3%! If a push comes to shove perhaps Mrs Yellen will pay more than lip service to the fact that may companies in the world including China are vulnerable to a drop in growth and in terms of recession, according to Simon French, our economist the following countries are not far behind following Brazil in to recession – Canada, Australia, Norway, France Italy, Japan and Argentina are all potentially candidates. I doubt ECB President Mario Draghi will have much to say on the subject at today’s rate meeting, where no change is expected. There might, of course be some tweaking done the QE programme.

Yesterday the FTSE 100 added 24 points to 6083. It was pretty much a lack-lustre performance. Ashtead’s results were very encouraging, considering its shares had fallen measurably on the back of US energy markets in recent weeks. Conversely Halford’s fell 8.8% thanks to a drop in bicycle sales and ASOS shares eased by 1.48% once news that CEO Nick Robinson’s resignation filtered through the retail market.


Asia consoled itself with not having to deal with China’s woes for a couple of days. The weakness in commodities, falling oil prices and Australia dicing with recession saw the ASX close down 1.44%. The NIKKEI was up nearly 1.5% at one time but surrendered some value to close 0.48% down. This morning easyJet provided impetus with a 94.4% load factor for August to the FTSE’s strong opening rally – +96 points at 6179 at 9.20am. The main drivers though, were oil stocks +1% and mining +2-3%. Booker’s sales in the last trading period were up 0.5%. They are in process of acquiring Londis and Budgen’s, but shares on trading statement were down 2.5% as were Go-Ahead’s as a result of a 14% drop in profits due to industrial disruption. Barclays served notice to sell its Portuguese banking and insurance operations to a Spanish buyer. Also it looks as though Tesco will accept £4 billion bid from MBK Partners for its Korean operation.


Despite the level of volatility, which is likely to prevail for some time, investors are beginning to see value in some FTSE 100 & 250 companies, as the fundamentals for the UK economy look promising. However, the current demise of Glencore’s operation is very dispiriting – down 65% to 128p today. I was somewhat alarmed that Glencore has £40 billion of borrowing and unless metal prices pick up, surely some mines will need closing or selling?


UK companies posting results – Friday – EMIS

US companies posting interim results – Thursday – JOY GLOBAL, CIENA 

Economic data – 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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