TODAY’S FAYRE

 

 

TODAY’S FAYRE – Sunday, 18th October 2015

HAMLET: Speak the speech, I pray you, as I pronounced it to you, trippingly on the tongue. But if you mouth it, as many of our players do, I had as lief the town crier spoke my lines. Nor do not saw the air too much with your hand, thus, by use all gently, for in the very torrent, tempest, and (as I may say) whirlwind of your passion, you must acquire and beget a temperance that may give it smoothness. O, it offends me to the soul to hear a robustious periwig-pated fellow tear a passion to tatters, to very rags, to split the ears of the groundlings, who for the most part are capable of nothing but inexplicable dumb shows and noise. I would have such a fellow whipped for o’erdoing Termagant. It out-herods Herod. Pray you avoid it. Be not too tame neither, but let your own discretion be your tutor.

 

Suit the action to the word, the word to the action, with this special observance, that you o’erstep not the modesty of nature. For anything so overdone is from the purpose of playing, whose end, both at the first and now, was and is, to hold, as ’twere, the mirror up to nature, to show virtue her own feature, scorn her own image, and the very age and body of the time his form and pressure. Now this overdone, or come tardy off, though it make the unskillful laugh, cannot but make the judicious grieve, the censure of the which one must in your allowance o’erweigh a whole theatre of others. O, there be players that I have seen play, and heard others praise, and that highly (not to speak profanely), that neither having th’ accent of Christians, nor the gait of Christian, pagan, nor man, have so strutted and bellowed that I have thought some of Nature’s journeymen had made men, and not made them well, they imitated humanity so abominably. Reform it altogether!

 

And let those that play your clowns speak no more than is set down for them, for there be of them that will themselves laugh, to set on some quantity of barren spectators to laugh too, though in the meantime some necessary question of the play be then to be considered. That’s villainous and shows a most pitiful ambition in the fool that uses it. Go make you ready.”

 

“Hamlet, Prince of Denmark”

 

William Shakespeare – poet & playwright – 1564-1616

 

I had forgotten that ‘Hamlet’ was 3 hours 30 minutes long; so in my case it was just as well I did not attempt to damage a bottle of Sauvignon Blanc or Pinot Noir before watching the RSC’S production of this marathon Shakespearean tragedy in a comfortable cinema seat. This is as wordy a play as one could ever wish to see and you need to be fresh and capable of getting a trip – in other words 4 miles in a bog. You need to stay longer than the mother-in-law! Benedict Cumberbatch was sensational. His portrayal of the Prince of Denmark was pithy, moving, athletic, tragic, funny and dramatic. The audience just loved his very modern 21st century interpretation. He leapt around the stage like an Olympic hurdler. He managed to bring the 14th century in to modern times without spoiling the poetry and prose. Comparing yesterday’s matinee idols with today’s is often unfair, but Cumberbatch’s Hamlet must be up with the best of them.

 

As we head into the final quarter of the year and the start of the 3rd quarter US earnings season, which we are advised may not offer much in the way of great encouragement for equity markets, last week ended up in a very bumpy and volatile ride in to the unknown. This is the second exceptionally neurotic week on the bounce, though the previous week scored some measurable gains. Was the late relief rally down to the bear operators having their pips squeezed? Could it be the fact that China’s inflation and trade data posted last week was only superficially adverse? Are the commodity markets due a bounce? Perhaps we will know more post China’s GDP, Industrial Production and retail sales data due out on Monday.

 

Maybe FED Chairman Yellen and her cohorts are clutching at straws in thinking they have sufficient upbeat economic ammunition to start hiking rates before the end of 2015. There is a school of thought that suggests the ‘labour’ market and wage inflation are sufficiently robust for the FED to take a calculated gamble. However most of the market, on balance thinks, that it will be 2016 before we see the FED act – hence another stellar end to the week for equities. Anyway to be candid there as many detractors of ‘forward guidance’ as there are supporters. The uncertainty and indecision has certainly contributed to the savaging of many emerging countries’ economies and their respective currencies. Again the final score card is far from reflective as to what transpired in an incredibly busy week. The S&P 500 closed up 0.56%, though an 8-week high, the FTSE actually closed down 0.59%, European stocks closed a smidgen above the Plimsoll line +o.20% with the NIKKEI down 0.8%, thanks to dismal data and a perception that Abenomics is simply not working.

 

US 3rd quarter earnings got off to a quiet and mixed start. JP Morgan, Alcoa and Netflix disappointed; Citibank and Wells Fargo did not and on Friday GE’S efforts were solid. The big news of the week was Walmart’s profit warning, suggesting that revenues may be cut by $15 billion, which took the value of the stock by 10% ($20 billion in value). Much of this bad news was attributed to the sustained strength of the Dollar. Add the share buy-back of $20 billion and the picture was not pretty.

 

Here in old Blighty mining stocks and the oil sector eventually had a bit of a run on the rails. At the end of the week gold stocks were on good terms with themselves with Anglo, Randgold and across the pond Newmont Mining showing the way. However some retail operators suffered. Tesco shed 14 units for £250 million – not surprising when one considers that there has been no food inflation for 18 months, especially as the price war is still as virulent as ever with Aldi and Lidl the main standard bearers. So Tesco shed a few percent as did Sainsbury and M&S. The Burberry’s numbers on Thursday simply did not pass muster. With Burberry’s share price and expectations so high, to post just a 2% increase in sales thanks to a drop in Asian demand, the luxury goods titan got its just deserts – a larruping – shares down 10%.

There were great numbers from Unilever, Bellway and Virgin Money. However the ‘yellow jersey’ in terms of magnitude and media coverage went to the proposed £68 billion acquisition by AB InBev of SAB Miller. AB InBev had to up the ante 4 times to £44 a share to get acceptance. However this is such a huge and complicated global, deal, it will be a miracle if regulators don’t spoil the party.  The IPO market looks to have come out of its temporary slumber in the UK with a successful debut for WorldPay last week and hopes and aspirations for McCarthy & Stone.

There was plenty of activity on the global economic and domestic political front. China’s trade and inflation data was a cause for concern. So we await tomorrow’s key GDP and retail offerings. Here in the UK unemployment numbers were encouraging – 1.77m unemployed (5.4%) – the lowest level since 2006. THE BOE MPC committee is massing support for a rate hike – Kirsten Forbes joined Ian McCafferty, Martin Weale and the Governor who want rates up. Ben Broadbent is apparently almost convinced and that leaves the splendid Andy Haldane in splendid isolation. The Chancellor seemed to receive universal stick over his Fiscal Charter. It seemed to be held in derision in many places. This seems to be the 4th set of rules to be introduced since 1997, the last in 2010. I take a rather different view than most. I think it is a discipline issue. We must strive for a surplus. I have no doubt that when Labour are returned to office, they will change the statute book post haste. Australia’s Greg Medcraft seems to be favourite to replace Martin Wheatley at the FCA. Gracious me! Can we not find ONE English person out of 60 million to do the job? If Andy Haldane doesn’t want it, maybe Tracey McDermott could tick all the boxes. She’s ruthless, which is required and metaphorically ‘eats nails for breakfast and spits rust out!’ Finally on the political front the government may come under fire on the nuclear pact agreed with China on security grounds.

Banking grabbed a huge number of headlines last week. Firstly the ‘ring-fencing’ bill, which will be introduced in 2019; This, is I think, was the brainchild of the excellent Andrew Bailey, who insists that there must be continuity of service in the event of a measurable bank failure. This bill is being marginally watered down and also the BOE has agreed to change the emphasis on bank management’s responsibilities in the event of criminal proceedings. In other words if serious allegations based on financial shortcomings are made to a senior bank official, he/she would would not necessarily be held liable of any criminal charge. Instead there will be a reversal of the burden of proof to the introduction of a duty of responsibility. In other words bank executives are not guilty unless proven to be. This news and also some relaxation of government policy on the bank levy may have persuaded HSBC and Standard Chartered to remain domicile do in the UK. In passing Visa may buy its former European partner for $20 billion. This initiative should benefit the UK banking sector, allowing 3000 banks to benefit from a windfall.


In closing I was amused at all the ballyhoo concerning the proposed appointment of Jes Staley as the new CEO of Barclays.  It had all the MP, the Treasury Select Committee jumping up and down like Jack-in-the-boxes. To quote the PM – ‘Calm down, dear!’ It transpires that Mr Staley has agreed to water down Barclays’ global commitment to investment banking and focus on the bank’s strength in New York, based on the brilliant acquisition of the smouldering ashes of Lehman Brothers. He would be an inspired appointment.

 

UK companies posting number – Tuesday – ASOS, ARM HOLDINGS, WHITBREAD, GO-AHEAD, INTERCONTINENTAL HOTELS, GENEL, INFORMA, Wednesday – SKY, RECKITT BENCKISER, HOME RETAIL, BHP BILLITON Thursday – LSE, DEBENHAM, GKN, PEARSON, LADBROKES, ANGLO-AMERICAN, TRAVIS PERKINS, FOXTONS, Friday – WILLIAM HILL, DECHRA PHARMACEUTICALS, SHIRE, TSB.

U.S. companies posting interim results – Monday – HALIBURTON, MORGAN STANLEY, RAMBUS, SONIC, Tuesday – OMNICOM, LOCKHEED MARTIN, UNITED TECHNOLOGIES, HARLEY-DAVIDSON, TRAVELERS, YAHOO!, CHUBB, VERIZON Wednesday – eBAY, GM, BAKER HUGHES, ABBOTT LABS, BOEING, EMC, BIOGEN, COCA-COLA, TEXAS INSTRUMENTS, DOLBY, Thursday – GOOGLE/ALPHABET, MCDONALD’S, RAYTHEON, NASDAQ, FREEPORT-McMORAN, BJ RESTAURANTS, AT&T, AMAZON.COM, PULTE, MICROSOFT, EASTMAN KODAC, Friday – WHIRLPOOL, THOMSON-REUTERS, PROCTER & GAMBLE,

 

 

ECONOMIC DATA – Tuesday – EU BALANCE OF PAYMENTS, US HOUSING STARTS, Wednesday – US OIL INVENTORIES, Thursday – ECB, US INITIAL JOBLESS CLAIMS, RETAIL SALE

 

 

David Buik – market commentator

 

 

Panmure Gordon & Co

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