TODAY’S FAYRE

TODAY’S FAYRE – Tuesday, 15th December 2015

 

“I have been one acquainted with the night.

I have walked out in rain — and back in rain.

I have outwalked the furthest city light.

I have looked down the saddest city lane.

I have passed by the watchman on his beat

And dropped my eyes, unwilling to explain.

I have stood still and stopped the sound of feet

When far away an interrupted cry

Came over houses from another street,

But not to call me back or say good-bye;

And further still at an unearthly height,

A luminary clock against the sky

Proclaimed the time was neither wrong nor right.

I have been one acquainted with the night.”

 

Robert Frost – poet – 1874-1963

 

I have to admire the general level of Euphoria over the Paris Climate Change Accord, though I must confess I don’t buy in to it myself. Yes every human being agrees that pollution must be cut. However the fact that the agreement is not legally binding has worrying connotations. Also the manner the world is supposed to arrive at adopting renewable alternatives is eye wateringly naïve. Finally the cost of implementing these changes will gargantuan and these ‘movers and shakers’ think this money will be just be plucked from the trees like ripe cherries! Wake up, folks, this is the REAL world we are talking about.

 

We can only hope that the political ‘wake-up’ call that took place in France at the weekend, leaving Le Pen’s NF party in third place in the local elections is replicated at the next US Presidential election. Is it unreasonable to ask that out of a population of 316 million the GOP cannot find one plausible candidate? I know it is early days, but surely the Republicans can do better than Donald Trump? The idea that Hillary Rodham Clinton should ride up Pennsylvania Avenue to The White House, unchallenged, to become the 45th President of the USA as well as being the first woman to hold that high office, is unthinkable.

 

There is nothing bogus about the mood in equity markets. It is downbeat and there seems to be very little on the horizon to rekindle its spirit, apart from fund managers being forced to buy tracker stocks at the end of the month, probably reluctantly. The FOMC starts its 2-day meeting today and if it does not implement a symbolic 25 basis point hike in the FED rate tomorrow then a degree of unnecessary volatility and uncertainty will exacerbate the downbeat mood with further equity falls.

 

Yesterday the FTSE dipped another 72 points to 5874 – that is down 10% on the year and 17% since 26th April 2015! Again it was banks, mining, oil and drugs that provided little in the way of appetising appeal for investors. The fact that Astra Zeneca may considering a bid for Acerta for $5 billion seemed to do little for its share price. Acerta’s leukaemia drug Acalabrutnib, which is not dissimilar to Abbvie’s and Johnson & Johnson’s Imbruvica, has great appeal, but this proposed acquisition is far from done. Monday morning’s headlines about the possibility of Rolls Royce’s submarine operation being nationalised for security reasons made grizzly reading. RR has made at least 4 profits warnings and many think that RR is vulnerable to a takeover. One can understand the government’s concern, but nationalisation is surely only an option. An alternative would be for this division to sit snugly in BAE Systems portfolio. When Shell bid for BG Group oil was $60 a barrel and Shell’s share price was 25% higher at £20 and BG’ shot from 850p to 1200p. It is now 919p. This deal made sense if oil was going back to its glory days. The market is not so sure now. However its final regulatory hurdle – China – has been negotiated. Let’s see what shareholders make of the deal now.

 

Cinven announced that it had agreed to buy the fashion guru Kurt Geiger for £245 million. For Reckitt Benckiser to grab the headlines over misleading packaging of its Neurofen drug in Australia provides some idea of the thinness of the news flow. Maybe there will be repercussions here in Old Blighty. It was great to see Man Group post such an excellent luminary as Lord Livingston as its new chairman. Many were amused to hear that HSBC was considering Toronto to domicile its business. HSBC is strong in Canada, but there has always been a reluctance by Canada in allowing overseas banks to have full branch status. Maybe HSBC making its home in Canada will change that rationale. We hear that Crispin Odey has his boot well and truly planted in Home Retail’s ribs as an aggressive ‘short.’ Poor old RBS will have some explaining to do about the 4500 dormant accounts which they were duplicitous over. It never rains but it pours. Its shares are down 20% in recent months

 

On the Street of Dreams a bear squeeze rally took place despite oil dipping to $35 a barrel briefly. The DOW ended the session up 0.60% with the S&P 500 +0.48% and the NASDAQ +0.38%. Dealers were ruminating over tomorrow’s FED decision and at 5.00am this morning the ASX was +0.08%, the Shanghai Composite +0.09%, Hang Seng +0.51% though the Nikkei was down 0.69%, despite a reasonable Tankan survey yesterday, which indicated that lending to SMES was increasing. China has not surprisingly overtaken the UK in FinTech. The FTSE may open up 65 points the good – a bear squeeze rally?

 

 

UK companies posting results this week – Tuesday – Imagination Technology, Carpetwright, Petrofac Wednesday – Dixon Carphone, SuperGroup, Thursday -Premier Farnell, Friday – Carnival, Trinity Mirror

 

US companies posting interim results this week – Wednesday – Joy Global, Jabil Circuits, FedEx, Thursday – Red Hat, AAR, Friday – Lennar, Darden Restaurants 

 

Economic Data – Tuesday – UK inflation, US CPI, Wednesday – FOMC meeting, UK employment Thursday UK Retail sales.

 

David Buik

 

Market Commentator – Panmure Gordon & Co

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