TODAY’S FAYRE – Sunday, 4th October 2015


Once more unto the breach, dear friends, once more;

Or close the wall up with our English dead.

In peace there’s nothing so becomes a man

As modest stillness and humility:

But when the blast of war blows in our ears,

Then imitate the action of the tiger;

Stiffen the sinews, summon up the blood,

Disguise fair nature with hard-favour’d rage;

Then lend the eye a terrible aspect;

Let pry through the portage of the head

Like the brass cannon; let the brow o’erwhelm it

As fearfully as doth a galled rock

O’erhang and jutty his confounded base,

Swill’d with the wild and wasteful ocean.

Now set the teeth and stretch the nostril wide,

Hold hard the breath and bend up every spirit

To his full height. On, on, you noblest English.

Whose blood is fet from fathers of war-proof!

Fathers that, like so many Alexanders,

Have in these parts from morn till even fought

And sheathed their swords for lack of argument:

Dishonour not your mothers; now attest

That those whom you call’d fathers did beget you.

Be copy now to men of grosser blood,

And teach them how to war.

And you, good yeoman,

Whose limbs were made in England, show us here

The mettle of your pasture; let us swear

That you are worth your breeding; which I doubt not;

For there is none of you so mean and base,

That hath not noble lustre in your eyes.

I see you stand like greyhounds in the slips,

Straining upon the start. The game’s afoot:

Follow your spirit, and upon this charge

Cry ‘God for Harry, England, and Saint George!’!


William Shakespeare – poet & playwright – 1564-1616


I intensely dislike disloyalty. Much as I love the mare ‘TREVE’ – she’s a super star and every sport needs one! However if she were to be eclipsed by John Gosden’s ‘Golden Horn’ in today’s Arc de Triomphe, which seems unlikely though possible, but for being somewhat stooped in age, I would resort to backward summersaults! It would serve Mme Criquette Maarek- Head right for ‘jocking-off’ Frankie Dettori in favour of Thierry Jarnet!

World Cup Rugby! – England! That was embarrassing! Totally outclassed! No game plan! Stuart Lancaster, Andy Farrell and Graham Rowntree must go! They are clearly not a winning combination. There must be someone out there who can find 30 players out of a population of 45 million to mould in to a proper proud rugby team!


Last Wednesday saw the close of the worst quarter for equities since 2011. There were so many imponderables for investors to reflect on, which led to seismic trading gyrations across the globe. Doubt over the robustness of China’s economy and its growth prospects coupled with the FED’S inability to make up its mind about interest rate hikes above all else put equity markets to the sword for the time being. Uncertainty is a factor that markets remain unwilling to deal with. Investors should not be duped by one set of positive manufacturing data that all in China’s garden is rosy!

Regardless of Japan’s PM’S popularity, Abenomics are clearly creating next to no visible benefits for Japan’s economy. The content of last week’s Tankan report was underwhelming in the extreme. The collapse of resource prices and dormant oil prices have seen many constituent stocks in the ASX, FTSE 100, CAC, DOW and S&P take a terrible leathering. Many leading mining stocks have lost between 50-70% in value in the last seven months, with Glencore being the main catalyst for investors to vent their spleen over.

Again looking at the end-week result few would be believe that with the S&P losing 0.79%, the FTSE 100 gaining 0.34%, European stocks slipping below the Plimsoll line by 0.30% and the NIKKEI by 0.87%, that international bourses had been inflicted with seismic daily gyrations of between 150 and 400 points – staggering! Even including the 1987 crash, ‘9/11’, the Iraq War and the 2008 Credit Crisis, markets were not subjected to such visceral volatility as they have been exposed to in recent sessions.

You only have to look at yesterday’s dispiriting US Payroll data as an example. After it was announced that only 142k jobs had been created in September the DOW went in to reverse by almost 1.5%. It closed the session up 1.23%. In plain English that is a 450 point turnaround in a day!

In suppose that after Thursday’s weak U.S. Manufacturing data, the writing was on the wall for substandard US employment data to be posted on Friday, though the unemployment rate remained unchanged at 5.1% with very uninspiring wage inflation of 2.2%. Now only 29% of the market believes that the FED will move interest rates up this year. This perception triggered a fall in the Greenback and a drop in bond yields. U.S. 10-year Treasury yield fell from 2.07% to 1.99%, the Bund from 0.53 to 0.51% and gilts from 1.74% to 1.70%. But for the FED and China, which have exacerbated the level of confusion, equity markets could well have behaved in a rather less neurotic manner than they have done. Since 17th September – the FOMC day – the day Yellen failed to raise rates, thus disappointing the market, global equities have fallen by about 4%. In the last 6 weeks it has become increasing clear that IPO floats and some M&A activity has dried up due to the uncertainty that prevails. However large deals are still being considered and negotiated such the possible $170 billion AB InBev merger of SAB Miller. There was also idle gossip, though it may be well-informed tittle-tattle that Philip Morris and BATS may have a ‘pop’ at carving up Imperial Tobacco.

Returning to Glencore’s tortuous plight, regrettably Citigroup’s and Macquarie’s upbeat notes, which triggered at 14% mid-week rally, only temporarily alleviated doubts that Glencore was able to service its gargantuan debt, which hopefully will fall from $27 billion to £20 billion courtesy of the sale of some assets. The recent Glencore offering of a silver mine for a derisory £8 million was not well received. Frustratingly, it may take some time for copper and other mineral prices to rally to the cause. Hopefully evidence of Ivan Glasenberg buying over 100 million shares at circa 125p in September will provide sufficient reassurance of his long term confidence in Glencore’s future. Of course one cannot rule out the possibility of Glencore becoming a take-over target, with its value having fallen 80% since 2011, when it went public.

The VW saga will run and run. I was devastated for the reputation of ‘businesses as a whole that Matthias Meuller was appointed CEO.  As an ‘insider’ that appointment ‘cocks a snook’ at corporate governance and transparency.  Good man he may be, but his appointment is ethically wrong. We have read reams about litigation in the U.S. and China; so any thoughts that VW will recover quickly must be treated as folly.  There are 1.18 million cars in the UK that will require treatment or replacement and 4 million cars potentially to go on sale in the UK. These sales could be suspended. VW’s problems seem endless and the litigation issue may well run as long as PPI issues with many UK banks. Apparently another £15 billion could be paid out! It is interesting to note that Qatar’s investments in VW and Glencore could have costs as much as £8 billion.

Prior to Wednesday Qatar may not have been that pleased with its 26% stake in Sainsbury back in 2007. The share performance has been woeful. However a possible increase in profits and a 1.1% drop in like-for-like sales was sufficient to give those investors with ‘shorts’ out on this supermarket mogul a good slapping – shares were up 12% on Thursday. Next Wednesday Tesco’s CEO Dave Lewis is expected to inform the market that first half sales will be down 1.5% – an improvement on -4.6% this time last year, but still worryingly insipid. Profits may be no more than £350 million – a far cry from the £1 billion made a few years ago! Tesco and Sainsbury still remain very vulnerable as metaphorical ‘Butch Cassidy & the Sundance Kid’ – in other words ‘Who are these Guys?’ – Aldi and Lidl!


Also last week Vodafone called off all discussions on future cooperation with Liberty Media and Virgin Media. Diageo also may agree sell its Blossom Hill and Linderman wineries before too long to unidentified parties. Experian took a tumble on Friday – shares fell 4% – after it transpired that cyber hackers had stolen T-Mobile US customer details.

There is little doubt that programme trades and technological input by mathematical geeks has contributed greatly to the level of volatility.  Market bears have sharpened their knives in the hope that October could again be a grisly month. They could well be wrong.  Traditionally Mid-October to the end of the year is often a good time for equities. With US rates unlikely to go up in the immediate future and with other asset classes looking unappetising, selective equities may well prove to be good value in very volatile trading conditions. Good hunting!


The Tory party Conference will have plenty to consider on its plate over the forthcoming EU referendum. Firstly the PRU is thinking of moving its head office to Asia to rid itself of EU bureaucracy. Also the US industrial mogul, GE, which employs 17,000 people here in Old Blighty believes that the UK’S place within the EU does not matter, according to the Telegraph today.



U.S. Companies posting interim results – Tuesday – PEPSICO, Wednesday – YUM BRANDS!, MONSANTO, CONSTELLATION BRANDS, Thursday – ALCOA, RUBY TUESDAY




David Buik – market commentator



Panmure Gordon & Co


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