TODAY’S FAYRE

TODAY’S FAYRE – Thursday, 10th September 2015

 

 “It seems I have no tears left.

They should have fallen–

Their ghosts, if tears have ghosts, did fall–that day

When twenty hounds streamed by me, not yet combed out

But still all equals in their rage of gladness

Upon the scent, made one, like a great dragon

In Blooming Meadow that bends towards the sun

And once bore hops: and on that other day

When I stepped out from the double-shadowed

Tower Into an April morning, stirring and sweet

And warm. Strange solitude was there and silence.

A mightier charm than any in the Tower

Possessed the courtyard.

They were changing guard

Soldiers in line, young English countrymen,

Fair-haired and ruddy, in white tunics.

Drums And fifes were playing “The British Grenadiers”.

The men, the music piercing that solitude

And silence, told me truths I had not dreamed

And have forgotten since their beauty passed.”

 

Edward Thomas – poet & soldier – 1878-1917

 

The final votes for the Labour party leadership will be cast today with the result being posted on Saturday. Whether it is Jeremy Corbyn or Yvette Cooper, who hopes to come up rattling on the rails with a late burst of speed to land the spoils, the UK really does need an effective opposition to hold the government accountable. This government has all hallmarks of being a good one, but it needs to justify its existence every now and again on key issues.

 

 

I doubt England’s ODI comprehensive victory against Australia by 93 runs on Tuesday could ever have given me more pleasure in the wake of Smith’s unsavoury behaviour at Lord’s. Actions speak louder than words.  I thought Eoin Morgan and his troops performed with aplomb and behaved in an exemplary manner.

 

I have been less than convinced that the Government has had the City’s best interests at heart in recent week in terms of renegotiating terms for EU referendum. So in concert with others I was delighted that Chancellor Osborne was seeking assurances from EU regulators that changes must be implemented in the Treaty to protect the City being discriminated against with issues such as bridging loans or help for ill-disciplined countries such as Greece, clearing house requirements, bonuses and taxation. Let’s face it; most European financial centres are Mickey Mouse in comparison to London! This is a step in the right direction!

 

The market has been droning on to a point of distraction for months about the damage that the reticence of or prevarication by the Central Banks to make decisions on interest rates has global markets. Yesterday’s machinations on the Street of Dreams were a classic example of market protagonists running out of patience and throwing their toys out of the pram. The teenage scribblers had a belly-full of this monetary claptrap; so coupled with a fairly decent rally in recent days the Street of Dreams gave the left hand side of the quote a good clobbering! – THE DOW closed down 1.56%, the S&P 500 by 1.39% and the NASDAQ by 1.15%. Even Apple’s Tim Cook’s new toys or adjustments to iPhone 6 and 6S, Apple TV and the iPad failed to stop this incredible company easing in value by 1.9%. It is down 13.6% in the last 6 months. Even retail representatives posting numbers yesterday did not have a decent day – Barnes & Noble down 28% and Men’s Wearhouse -12%. Whilst on the subject of US markets, there is going to be yet ANOTHER inquiry on possible manipulation of the $12 trillion Treasury bond market! Will it ever end?

 

Though the FTSE 100 blazed the trail yesterday on a recovery mission adding 82 points to 6229, the government had a bad day. Manufacturing output slumped by 0.8% in July with the trade gap widening to £11.1 billion with exports dropping 9.2%. A strong Pound has not helped. This issue will need to be addressed though there is this uncomfortable feeling that global trade does not feel as robust as it did a few months ago. Though Ryanair grabbed most of the positive headlines with increased profits forecast after a brilliant August, the same cannot be said about Sports Direct, which was slammed in many quarters for inadequate transparency on wages and corporate governance.

 

In Asia this morning markets went in to reverse on the back of indifferent sentiment in the US added to the fact that China’s PMI fell by 5.9% as against expectations of 5.5%. Japanese machinery orders fell and didn’t exactly cover its economy in glory. At the close the ASX was down 2.42% with the NIKKEI after its 7.71% explosive rally down 2.51%. Towards the close the Hang Seng was off 2.81% and the Shanghai Composite by 1.23%. This reversal did nothing for sentiment at Europe’s opening. The FTSE 100 opened up down 54 points despite some stellar results particularly from Dunelm, NEXT and Dixons Carphone. Home-Retail are struggling a tad and as for Morrisons, the market was not impressed – down 4%.

 

Andy Higginson and Dave Potts have been in residence – both ex Tesco – for about 5 months. We hoped to see a better recovery performance. Unfortunately, unlike Tesco, it is not a juggernaut and it hard to see where Morrison is going to regain lost markets. Morrison may be closing 11 stores at a cost of 900 jobs. 140 convenient stores have been sold to Greybull Capital, which recently dug Monarch out of the manure. Morrison received £25 million but selling the operation will incur a £30 million loss plus another £20m if Mike Greene and Greybull fail to make a success of the venture. What was disturbing were the sales – like for like sales down 2.7%, revenue down by 5.1% and the profits fell by 35% to £117 million for the half year! There is much work to be done.

 

I will leave the content of today’s MPC meeting at 12 noon to the excellent Simon French. Suffice to say forward guidance is testing the market’s patience. It is looking for a decision – the feeling is “put up or shut up!”

 

 UK companies posting interim results – Thursday – DUNELM, NEXT, WM MORRISON, HOME, RETAIL (TS), DARTY (TS), DIXONS CARPHONE (TS), Friday – JD WETHERSPOON.

US companies posting results this week – Thursday – PEAK RESORTS, Friday – KROGER

Economic data – Thursday BOE MPC MEETING

 

 

David Buik – market commentator

 

Panmure Gordon & Co

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