TODAY’S FAYRE – if nothing else read the poem!

TODAY’S FAYRE – Thursday, 5th November 2015


These hearts were woven of human joys and cares,

Washed marvellously with sorrow, swift to mirth.

The years had given them kindness. Dawn was theirs,

And sunset, and the colours of the earth.

These had seen movement, and heard music; known

Slumber and waking; loved; gone proudly friended;

Felt the quick stir of wonder; sat alone;

Touched flowers and furs and cheeks. All this is ended.


There are waters blown by changing winds to laughter

And lit by the rich skies, all day. And after,

Frost, with a gesture, stays the waves that dance

And wandering loveliness.

He leaves a white Unbroken glory, a gathered radiance,

A width, a shining peace, under the night.


Rupert Brooke – poet & soldier – 1887-1915


I went home last might fancying a bit of Arsenal v Bayern or Chelsea v Dynamo Kiev with a glass or two of Pinot Grigio. Ah…BT Sport! I don’t have BT Sport. I was tempted to buy it, but actually I don’t need it. You might say its club rugby is second to none! My response would be that I much prefer to watch French club rugby on Sky! No offence to BT but their service would be superfluous to my parsimonious requirements!


I hope all sports enthusiasts took in the Telegraph’s Paul Hayward’s article yesterday on ‘How Sport helped him with his battle with cancer!” and how the genius of Messi and Carter gave him hope. It was such a moving, pithy, emotional and self-deprecating article. Well done Paul, you are a brave man and a wonderful sports journalist and we all wish you well!


As I said yesterday investors now believe we are now on an autumn roll with no doubt a crescendo Christmas rally in store! It is interesting to note that the Shanghai Composite is now up 20% from its August low. Central bank stimulus is to investors what cocaine is to a drug addict. Let’s hope the effect is more than just temporary. I must say I am nothing like as ebullient as the majority. Maybe that is why I sit on this side of the fence and not in a fund manager’s office.


Yesterday FED Chairman Yellen, fully supported by comments by FED honchos Fischer and Dudley, suggested that the US economy was performing well enough, supported by decent labour data plus being relatively convinced that inflation will hit the 2% target before too long, to give full consideration to a rate rise in December. That comment by ‘FED speak-talk’ standards is as close as one will ever get to saying it’s on! Set out below is Panmure’s chief economist Simon French’s assessment on interest rates with today’s MPC meeting and Inflation Report at midday today in mind –

  • Last week’s Sterling markets were impacted by the spillover from the US off the back of the October FOMC statement and upbeat leading U.S. labour market indicators. This lead from U.S fixed income markets brought forward money market indicators of the timing for an increase in UK rates.
  • By contrast this week has been a more UK-centric story as the three UK PMIs (Services: 54.9; Construction 58.8; Manufacturing 55.5) have each shown strong underlying output and new order growth at the start of Q4. Together with the recent strength of retail sales (+6.5% YoY), employment growth (140,000 QoQ), and credit growth (+2.3% YoY) the result has been a doubling in the likelihood of a Q1 hike in UK rates; albeit from a very low nominal base (Figure 2).
  • There is, in our view, more to come in the next few days with today’s MPC vote almost certain to see a further split in the MPC – we think 7-2 (Weale joining McCafferty) but with 6-3 a distinct possibility with external member Kristin Forbes the key swing voter.


  • For remaining MPC members we expect that the risk of further short term deflationary pressures from energy prices, the strength of GBPEUR, unanswered questions over the remaining slack in the UK labour market and a desire to see the reaction of EM economies to a U.S. rate increase will encourage a vote for no change. We continue to expect a Q1 2016 increase in UK rates but an exceedingly gradual trajectory thereafter.  

On the Street of Dreams last night the three main indices reflected on life and closed slightly down – DOW-0.28%, S&P -0.35% and the NASDAQ -0.05%. Though the ADP employment index for the private sector added 180k jobs in the month of October, which should augur well for tomorrow’s Payroll data, there was a reluctance to back the truck up! Facebook’s numbers were devoured by their 1.5 billion members!! 3rd quarter revenues came in at $4.5 billion (+41%) with earnings per share of 57 cents against estimations of 52 cents. The shares were up 3% after hours. Groupon fell like a stone – down 26%. Energy stocks and media surrendered a few of their recent gains.


In Asia, in response to the measurable gains made by the Shanghai Composite since August, punters are suggesting a ‘bull’ market has some traction on the back of stimulus packages. Today the ASX eased by 1.07% and the NIKKEI closed up 1.00% with the Hang Seng -0.1% and the Shanghai Composite up 2.13% near the close. There was still considerable interest in Japan Post Holdings IPO. The Holdings operation was up 3.9%, the insurance operation was up 18% and the bank by 7.5%.


London enjoyed yesterday 0.46% rally yesterday, courtesy of the mining sector with Glencore as its standard bearer – up 7%. House builders after a terrific run on the rails were friendless in the ring. This morning there were sound numbers from Tate & Lyle, Schroders, and RSA. AMEC disappointed. Astra Zeneca posted encouraging profits, which saw their shares rally by 2.9% at 8.30am. IMO Pascal Soriot, the CEO should have sold to Pfizer at £55 a share. Who knows in the current climate – ‘it’s not all over till the fat lady sings?’


EasyJet’s results were excellent based on a 91.7% load factor and a 6.3% increase in passengers. The shares were unchanged, which was a result after a good run. By the by the shares are up from 500p 5 years ago to 1732p today, having hit 1862 in January – well done to Carolyn McCall and her team! As for Morrison’s 2.6% drop in like for like sales, who can blame Andy Higginson and Dave Potts for their ‘kitchen sink’ treatment? The market was initially kind – down 1.4%. We wait on SAB Miller’s results. It is interesting to note that in the last 5 years SABB’s shares have risen from £20 to £400, the biggest rally coming from AB InBev’s bid in September when the shares stood at £29.45.


There is so much upbeat talk about PMI, growth and retail. One could be forgiven for thinking the ‘truck should be backed up.’ Yet surely it won’t be the likes of Tesco, M&S, Morrison, Sainsbury etc. that will deliver the value. Look to the likes of Amazon and Google. That’s where the deals are heading towards Thanksgiving and Christmas.




David Buik – market commentator


 Panmure Gordon & Co​


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