TODAY’S FAYRE – Thursday, 26th November 2015


“Now entertain conjecture of a time

When creeping murmur and the poring dark

Fills the wide vessel of the universe.

From camp to camp, through the foul womb of night,

The hum of either army stilly sounds,

That the fixed sentinels almost receive

The secret whispers of each other’s watch.

Fire answers fire, and through their paly flames

Each battle sees the other’s umbered face.

Steed threatens steed, in high and boastful neighs

Piercing the night’s dull ear; and from the tents

The armorers, accomplishing the knights,

With busy hammers closing rivets up,

Give dreadful note of preparation.

The country cocks do crow, the clocks do toll,

And, the third hour of drowsy morning named,

Proud of their numbers and secure in soul,

The confident and overlusty French

Do the low-rated English play at dice

And chide the cripple, tardy-gaited night,

Who like a foul and ugly witch doth limp

So tediously away. The poor condemnèd English,

Like sacrifices, by their watchful fires

Sit patiently and inly ruminate

The morning’s danger; and their gesture sad,

Investing lank-lean cheeks and war-worn coats,

Presenteth them unto the gazing moon

So many horrid ghosts.”


William Shakespeare – poet & playwright – 1564-1616


It was a brilliantly presented Autumn Report, which George Osborne delivered by the seat of his pants, underwritten by Robert Chote and the OBR, who were 50% certain that the economy would grow by 2.4% in the next couple of years.  My word it was helpful and convenient that the OBR found a spare £27 billion in the coffers, thanks in the main to unexpected higher taxation receipts, which gave the Chancellor a little room to manoeuvre himself out of a tricky jam.  This he did with a degree of dexterity, which is becoming his stock in trade as he swivelled on a huge ‘U-turn’ by leaving the tax credit issue resolved pro-tem – no change in its status.  Worry not! The Chancellor will have his way – come hell or high water. The deficit will be cut by £20 billion and the overall deficit will be reduced from £74 billion to a surplus of £10 billion by 2020. There will be a saving of £12 billion from welfare benefits cuts. Housing benefits will be curtailed for a start.


There was no real ‘give away’ in this statement. Swingeing cuts will be made in transport 37% though there will be an increase in capital expenditure. Even the NHS, despite expenditure being raised from £101 billion this year to £121 billion in 2020, will be asked to find savings on waste totalling £22 billion! If Labour had introduced an apprentice tax of 0.5% on companies with a £3 million payroll or larger there would have been howls of anger and derision. This is an ‘ouch’ tax on medium sized companies, which will raise £3.1 billion in 2015. A similar amount will be raised from local government taxation over the same period, but it is sensible that councils can keep proceeds from assets and property sold. No further culling of the police service was a sensible and necessary political interjection in the current climate. The building of 400,000 affordable homes at a cost of £7 billion circa makes huge sense – even more for those in London, who could receive help, provided a 5% deposit can be made. The sale of government assets such as the Land Registry, MOD land and 49% of NATS (air traffic service) for circa £5 billion was understandable though controversial in the case of NATS. It is hoped that a sale of £25 billion worth of shares in RBS will be completed by the end of this Parliament.


In Budgets and Autumn Statement the devil is often in the detail. No doubt Paul Johnson and his cronies in the IFS will make mincemeat of the proposals. The only observation I would make would be to say that if GDP falls to say 2.1%, it will be back to the drawing board come the spring Budget, leaving the autumn statement in tatters!


It was an understandably sepulchral session on the Street of Dreams yesterday, with the DOW closing up 0.1%, the S&P 500 down by 0.1% and the NASDAQ 0.26% to the good. Why so quiet? It’s Thanksgiving today! Turkey beckons followed by pecan pie, all washed down with a decent Cabernet or Chardonnay. Even decent durable goods orders for October failed to titivate investors’ taste buds; nor were they put off by rather bland consumer spending last month. There is definitely sufficient positive data for the FED to make their long-awaited symbolic rate increase on 16th December 2015. There was a little interest in NASDAQ stocks, with many keeping a watching brief on Amazon – up 0.62% yesterday. This stock has rallied from $500 3 month ago to $675 yesterday. eBay was somnolent yesterday but this stock has risen from $26.20 to $29 in the same period. Needless to say we wait with bated breath for these sales numbers as a reasonable barometer of the US economy. Total online sales in the US over this weekend are expected to come in at $89 billion. Panmure’s Michael Stewart makes the following observations about this forthcoming Black Friday activity here in UK –


Black Friday is set to be bigger and better than ever before. We predict that UK consumers will splash out almost £1.1bn tomorrow, a circa 30% increase year-on-year, with retail participation and awareness complementing a backdrop of support macroeconomic conditions. Approximately 65% of shoppers will shop solely online, we believe, with the majority of expenditure focussed on electrical goods and apparel and footwear. Retailers must be well prepared for the strains tomorrow will place on their IT and logistics capabilities with a fully functional mobile site and app viewed as an imperative as sales via smartphone and tablet devices grow by circa 55%.”



Yesterday the FTSE 100 put on 1%, much of it down to relief and qualified Euphoria over the ‘Autumn Statement.’ House builders initially took off, but tapered their gains by the end of the session – up 1.5% to 3%. It was good to see Thos Cook gain 10% in value after better than expected numbers including a profit! In Asia the mood was modestly positive with the ASX closing up 0.33% and the NIKKEI +0.49%. However the climate in China was not quite so bright with the Shanghai Composite heading south after lunch -0.59% and the Hang Seng -0.29%.



London’s FTSE 100 was up 0.4% at 6363 in very quiet trading conditions. The company results, though on the whole positive, apart from PayPoint, were not going to move the earth on its axis.


With just a month to go before the year is up, M&A activity blows away the all-time annual record of $4.1 trillion set in 2007, according to Thomson Reuters. US-targeted M&A activity, which accounts for nearly half of global M&A, has soared 55% from 2014 and exceeds $2 trillion for the first time ever.


Pfizer’s deal pushes global healthcare M&A to $649 billion, more than 2013 and 2014 combined! No other industry comes even close. Tech M&A, though it has more than doubled from 2014, is in distant second place. And Pfizer’s deal pushed pharma M&A to $416 billion, more than 2014, 2013, and 2012 combined.


Big Pharma is getting bigger. And Pfizer is the M&A queen among them: it engineered the largest two pharma deals ever, the Allergan deal and the $89-billion acquisition of Warner-Lambert in 1999. According to Thomson Reuters, six of the largest 20 pharma deals ever involved Pfizer.


UK companies posting results – Thursday – SEVERN TRENT, PAYPOINT, LONDONMETRIC, SSP, MARSTON’S, Friday – SVG CAPITAL, PENNON




David Buik


Market Commentator – Panmure Gordon & Co ​


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