TODAY’S FAYRE – Tuesday, 28th October 2015

 

“I’ve got you under my skin

I have got you deep in the heart of me

You’re so deep in my heart, that you’re really a part of me

And I’ve got you under my skin

 

I’ve tried so not to give in

You know I said to myself,

This affair ain’t gonna go so well

Oh but why should I try to resist, when baby, I know so well

That I’ve got you way under my skin

 

I would sacrifice anything come what might

For the sake of having you near I

n spite of a warning voice that comes in the night

And repeats in my ear

 

Don’t you know you fool, you never can win

Use your mentality, wake up to reality

But each time I do, just the thought of you

Makes me stop before I begin

‘Cause I’ve got you, you’re under my skin

 

I’d sacrifice anything come what might

For the sake of having you near

In spite of a warning voice that comes in the night

And repeats, how it yells in these ears.”

 

Cole Porter – Lyricist – 1891-1964

 

So the most recognisable ‘voice’ from the world of sport – Sir Peter O’Sullevan, who died in July aged 97 – was finally laid to rest at St Luke’s Church in Chelsea yesterday at a glittering memorial service brilliantly organised by the ‘Prince of PR’ Ladbrokes’ Mike Dillon, attended by over 1000 family, friends and acquaintances. His ‘Desert Island Discs’ were played before the service. There were beautiful poetry readings from Sir Terry Wogan (GK Chesterton) and Joanna Lumley (Philip Larkin).  Hugh McIlvanney gave a eulogy the like of which you are unlikely to hear in another life time and Rory Bremner’s imitation of the great man in a scintillating rendition of ‘calling his guests to his wake’ in Sir Peter’s totally distinguishable styled race commentaries was the icing on the cake! It was gloriously subtle humour with Rory at his very, very best! It was a celebration and a half! As I said there was a cast of thousands.

 

Amongst those there – JP McManus, Tony McCoy, Derek Smith, Michael Tabor, John Gosden, Rachel Hood, Paul Nichols, Nicky Henderson, Martin Pipe, David Pipe, William and Maureen Haggas, Coral Pritchard-Gordon,  Nigel Payne, Alan Byrne, Joe Mercer, Jimmy Lindley, Bruce Rayment, Clare Balding, Ian Balding, Harry Herbert, Michael Dickinson, Arthur Moore, Philip Mitchell (whose father trained Sir Peter’s horses), Francois Doumain, Lord Broughton, Robin Oakley, Mike Cattermole, John Riley, Sean Magee, Mick Fitzgerald and Alastair Down.

 

Last night the Spectator hosted another brilliant occasion with Andrew Neil interviewing former FED Chairman Ben Bernanke in a very candid and hugely enjoyable exchange of views.  The event was sponsored by 7 Investment Management.

Several interesting points were made by Mr Bernanke. It was his measured opinion that ‘panic’ exposed the fragility of the system and that regulation was wholly inadequate. It transpires that that the likes of AIG, Bear Stearns and most important of all Lehman were never properly regulated.

When asked why Gordon Brown was only mentioned once in his recently published ‘tome’, Bernanke did not really respond with a satisfactory answer. However in the grand scheme of the global banking and credit crisis the UK probably only enjoyed as ‘spear carrying’ role.

 

Why was Lehman not saved? Lehman was probably the straw that broke Congress’s back. The bail-out money was desperately needed. Lehman was probably a bridge too far. BOA and Barclays were asked to buy Lehman. BOA refused. Ironically BOA buying Merrill proved to be very catastrophic! Asked whether Alasdair Darling was right to refuse Barclays permission, Mr Bernanke thought that for the sake of the world he hoped Barclays would step up to the plate, but from a UK perspective the correct decision was made.

 

Most mature global indices enjoyed another lack-lustre session.  In London the FTSE lost 58 points to 6365. Even better than expected numbers from BP failed to ‘fire up the band’ as they say.  St James’s Place’s effort was positive but the brand not significant enough to lift spirits. Shire, thanks to an eye drug grabbed the yellow jersey. At one point shares were up 7%.  Clouds of earnings concerns continued to hover over most bourses. I suspect the UK’s declining GDP number of +0.5% for the 3rd quarter did not help.   The Street of Dreams also saw inertia set it.  Ford’s numbers did not really light anyone’s fire and the big guns on the day reported after hours – Apple Alibaba and Twitter. Twitter reported a rise in revenue for the three months to September, but missed analysts’ expectations with slow user growth numbers. The social networking site reported revenues of $569m, up 58% from $361m during the same period last year. Shares were clattered after hours down 12.7%! Alibaba posted a profit of $3.6 billion with revenues up 28% at $112 billion. Mobile use for transactions was 59%.

 

On Monday Apple’s shares dropped 3% due to concerns about key suppliers and China.  Some fears were allayed, when results were posted after hours. In the last quarter Apple increased revenue by 22% to $51.5 billion with a profit of $11.1 billion. EPS came in at 1.96 – all above expectations. A year ago revenue was $42.1 billion and the profit was $8.5 billion. Gross margins were up from 38% to 39.1%. $17 billion was returned to shareholders. iWatches sales may have reached 3.5 million and Apple TV sales have started well with no confirmed data.  Apple now has 100k employees. It’s the power of this operation that blows me away!

 

Last quarter 48 million iPhones 5&6 were sold – 39 million a year ago. Ipads sales dropped from 11 million to 10 million with Mac sales quite strong with sales up from 5.5 million to 5.7 million. It was the Chinese data that was pleasing.  There are 25 Apple shops in China going up to 40 by the middle of 2016. Apple does 25% of its business in China. Revenue in China increased by 99% to $12.5 billion.

 

Volkswagen is set to present quarterly results today. A loss of $1.6 billion is expected – the first for 15 years.  VW has taken a €6.5 billion ($7.2 billion) charge against third-quarter earnings to pay for a global recall of as many as 11 million vehicles.Lloyds Banking Group posted a net profit for the last quarter of £1.54 billion and a 9 month pre-tax profit of £6.35 billion. Tier One capital of 13.7% was excellent.  However this PPI provision number keeps going up and up – another £500m was put aside, making a total of £13.9 billion – twice as much as any other bank. The figure is likely to go up during the year.  BATS suggests that despite a 4.2% increase in revenues the outlook could be challenging. NEXT produced another set of excellent sales data with Next Brand sales up 6% with Retail up 5.9% and the Directory by 6.2%. Many will be surprised that the Competition Commission seems to be happy for BT to swallow up EE (Orange & T-Mobile) for £12.5 billion.  This could help Gavin Patterson, BT’S CEO, if he is forced to split BT’s business. It should not be necessary for this to happen.

 

UK companies posting numbers – LLOYDS BANKING GROUP, C&C GROUP, BAT (TS), NEXT, ANTOFAGASTA (TS), STANDARD LIFE, GSK, Thursday – BARCLAYS, BT, AVIVA, ROYAL DUTCH SHELL, SMITH & NEPHEW, HENDERSON GROUP, NATIONAL EXPRESS, Friday IAG, RBS, BG, PETS-AT-HOME, MYLAN, AON – Monday 2nd November – HSBC BANK


U.S. companies posting interim results – Wednesday – PAYPAL, VALERO ENERGY, HERSHEY, STARWOOD HOTELS, BOSTON SCIENTIFIC, NORTHROP GRUMMAN, MARRIOTT, AMGEN, Thursday – AETNA, GOODYEAR, BUNGE, PITNEY-BOWES, MASTERCARD, EXPEDIA, INKEDIN, STARBUCKS, Friday – EXXON MOBIL, CHEVRON, BRINKS

 

 

 

ECONOMIC DATA – Wednesday – FOMC MEETING, US OIL INVENTORIES, Thursday – US INITIAL JOBLESS CLAIMS, Friday – EU JOBLESS RATE, UK CONSUMER CONFIDENCE

 

 

David Buik – market commentator

 

 

Panmure Gordon & Co

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