TODAY’S FAYRE – Wednesday, 9th September 2015
“Rule, Britannia! Britannia, rule the waves!
Britons never, never, never shall be slaves.
When Britain first, at heaven’s command,
Arose from out the azure main,
This was the charter of the land,
And Guardian Angels sang this strain:
The nations not so blest as thee
Must, in their turn, to tyrants fall,
While thou shalt flourish great and free:
The dread and envy of them all.
Still more majestic shalt thou rise,
More dreadful from each foreign stroke,
As the loud blast that tears the skies
Serves but to root thy native oak.
Thee haughty tyrants ne’er shall tame;
All their attempts to bend thee down
Will but arouse thy generous flame,
But work their woe and thy renown.
To thee belongs the rural reign;
Thy cities shall with commerce shine;
All thine shall be the subject main,
And every shore it circles, thine.
The Muses, still with freedom found,
Shall to thy happy coasts repair.
Blest isle! with matchless beauty crowned,
And manly hearts to guard the fair.
Rule, Britannia! Britannia, rule the waves!
Britons never, never, never shall be slaves.
James Thomson and set to music by Thomas Arne in 1740
HM, Queen Elizabeth 11 today becomes the longest serving monarch of the UK and Commonwealth – 63 years 217 days, overtaking her great, great grandmother – Queen Victoria. All her subjects are united in sending her heart-felt thanks and congratulation for her momentous achievement and emphasizing the amazing contribution she has made to the success and wealth of our special ‘Sceptred Isle!’ She will have to reign until 2024 to beat France’s Louis X1V as the longest serving monarch in Europe.
In recent times the New York equity exchanges in terms of turnover have averaged about 7.4 billion shares a day. Yesterday, though the DOW added 2.42%, the S&P 500 2.51% and the NASDAQ 2.73% only 6.7 billion shares were traded. This figure suggests that there has been some fairly aggressive ‘short-selling’ covering being executed. With a possible FOMC symbolic hike on the table for discussion next week (hope Yellen et all bide their time) and an improved sentiment towards China’s growth prospects, which some pundits felt were over-cooked, equities in New York were under a wet set yesterday. With oil prices popping energy stocks were popular with Exxon Mobil and Chevron enjoying the autumn sun on their backs. However the rally was strong across the spectrum with Apple leading the charge – up 2.8% ahead of Tim Cook opening his box of goodies to loyal acolytes this afternoon. Fitbit had its supporters – up 11.2%, more than can be said for Marissa Meyer CEO of Yahoo! It appears Yahoo! may have tax issues when selling its $23 billion stake in Alibaba – down 3.1%.
Equity bulls must enjoy this ride, but probably not take it too seriously. Many indices look fully valued. The level of M&A activity is almost rampant considering the pull-back we have experienced. Though there are some IPOS in the pipeline, sentiment will need to be stable as well positive for them to let rip on cynical investors. M&A, I think is different. As large corporations strive for growth, mergers tick the boxes of a number of problems – greater market share, cost cutting exercises and the delivery of shareholder value. UK M&A activity sailed past the £260bn mark for the year yesterday. Paddy Power and Betfair agreed their £6bn merger. Cinven posted its £2.3bn sale of UK-based AMCo and Amlin was targeted by Japan’s Mitsui Sumitomo in a massive 35% premium it was prepared to pay for the UK operation – £3.5bn. There are those who do not like the idea of foreign ownership. I am a free marketer. If the Regulators, shareholders and management believe the deal meets with the required criteria – so be it! We send our good wishes to Primark, which opens in the US tomorrow. Hopefully it will do as well as Zara and H&M, rather than get stuck in the mud like M&S, Tesco, Dixons and EMI, which did not understand US retail culture!
This morning Asian markets blazed the trail. The Shanghai Composite was up by 2.37% at 6.30am BST, with the Hang Seng up an ebullient 3.5%. Tokyo’s Nikkei had a stonker – heading towards the close up a staggering 7.71% – the biggest points gain in a day since 1994 for three reasons! – Further misplaced influence by Abenomics, a promised cut in corporate tax by 3.3% and the realisation that Chinese markets are TEMPORARILY stabilising!
After a decent day yesterday which saw the FTSE 100 add 71 points to 6146, this morning’s opening looks positive with perhaps as much as a further 100 point gain to 6246. Again this will be an improved sentiment rally on the cak of New York and Asia. Barratt Development posted stellar results – profits up 44.8% at £565.5 million with house prices outside London up 8.7% to £262,500 average. These shares have risen 74% in the last year and 538% in the last 5 years. A word of caution. This great result has been partly as a result of ‘Help to buy’ – not an endless gravy train! Ryanair is expected to open up 10% higher on much improved profit forecast – may be up as 25% on the year!
UK companies posting interim results – Wednesday – MONITISE, BARRATT DEVELOPMENT, SPORTS DIRECT, Thursday – HARGREAVES LANSDOWN, NEXT, WM MORRISON, HOME, RETAIL (TS), DARTY (TS), DIXONS CARPHONE (TS), Friday – JD WETHERSPOON.
US companies posting results this week – Wednesday – BARNES & NOBLE, KRISPY-KREME, Thursday – PEAK RESORTS, Friday – KROGER
Economic data – Wednesday – UK BALANCE OF TRADE, INDUSTRIAL PRODUCTION & MANUFACTURING OUTPUT, – Thursday BOE MPC MEETING
David Buik – market commentator
Panmure Gordon & Co