Monthly Archives: January 2016




TODAY’S FAYRE – Sunday, 31st January 2016


“They often murmur to themselves, they speak

To one another seldom, for their woe

Broods maddening inwardly and scorns to wreak

Itself abroad; and if at whiles it grow

To frenzy which must rave, none heeds the clamour

Unless there waits some victim of like glamour,

To rave in turn, who lends attentive show.


The City is of Night, but not of Sleep;

There sweet sleep is not for the weary brain;

The pitiless hours like years and ages creep,

A night seems termless hell. This dreadful strain

Of thought and consciousness which never ceases,

Or which some moments’ stupor but increases

This, worse than woe, makes wretches there insane.”


‘The City of Dreadful Night’


James Thomson – poet – 1834-1882


A visit to Tyndesfield, a Victorian estate, built by the Gibbs family (of Antony Gibbs fame) in the 19th century was much enjoyed last week. This house would have been the apple of John Betjeman’s eye – such was his love of Victorian architecture. However, though considered to be of enormous historical importance, it would only be fair to say that to the average enthusiast’s eye, this house is uglier than sin! However it is set in beautiful grounds and the contents of the 47 rooms are fascinating, particularly the individually bound books in a sensational library.


If I wasn’t absorbed and fascinated by London, which I believe is the finest city in the world, which I would never leave under any circumstances, I could adopt Bath, if forced to, as an alternative city to inhabit. It is stunningly beautiful and will be even more so, once the developers stop using it as a builder’s yard!


I must confess that I admire Amanda Staveley – my word she has enormous courage or a massive ego or both! – for suing Barclays Bank for £950,000 over the 2008 £5.8 billion capital call, of which £3.5 billion was made on Abu Dhabi, negotiated and introduced by M/S Staveley’s involvement in PCP Capital Partners. This capital injection probably averted Barclays requiring government help. The spat appears to be over fees or advisory services of £322m, which caught the FCA’s attention, resulting in an investigation. Should one assume that reputational damage is also an issue? We need to know more. The city’s appetite has just be wetted. Though I am not familiar with the intricate details of the deal, I am not sure I would revisit that problem if I were her.


I suspect that UBS’s Tom Hayes may feel somewhat aggrieved that whilst he is languishing in prison at Her Majesty’s pleasure for the next 5-11 years, 5 brokers were unanimously acquitted for being complicit in this LIBOR skulduggery, with only one awaiting the outcome of the jury’s verdict. It appears that the CPS and the SFO simply did not get the act together or it has finally become abundantly clear that LIBOR had been a flawed system for some years. How the pricing of $500 billion of bank loans could have been decided by a trade association, escapes me. Also how no senior manager or director of a bank, whose employees have been indicted, has not appeared before the beak astounds me? The buck must surely sit at the top.


It is rumoured that an American law firm is planning a class action suit in Europe against the major banks involved in the currency manipulations. These banks have already paid billions in fines; now comes the lawsuits. If they stay out of New York City, they might get a real court to go after the bankers. The lawyers have said that they have corporations and central banks of countries lining up as clients as well.


Even though the FTSE 100 added 3.1% in value this week, together with other international indices, January was the poorest and most inauspicious start to the year for equities since 2008. Personally I was astonished to see the S&P 500 add 0.83%, with European indices pushing on by an average of 1.18% and the NIKKEI 3.30%. The reason the FTSE excelled in comparison to many of its peers was due to oil rallying from a low of $27 a barrel to $34, mining shares, especially Anglo-American and Glencore making exceptional gains and the retail sector joining in on the festivities. As for the NIKKEI adding 3.3%, this was almost exclusively due to the idea that the Bank of Japan will introduce a negative interest policy in an attempt to stimulate its economy. Respectfully this policy is ‘old hat’ and dangerously inadequate. Japan needs to start large infrastructure projects NOW to kick star! – No further delay! It won’t happen; so it will only be a question of time before Japan faces the same old issues, with Abe-San and others refusing to face reality.


Also since the beginning of the year doubts over the robustness of China’s economy and its declining growth has been a real thorn in the side of the world’s economic activity. Not surprisingly this has been reflected in the performance of the Shanghai Composite, which has fallen 19.1% since the start of the year and in the past week it has fallen by 6.5%. Government bond yield rates in the longer end fell quite sharply on news that the FOMC, though still prepared to keep the policy of increasing interest rates on the table, it was becoming increasingly a less than enthusiastic option, with the rest of the world sinking in economic turmoil.


One has to ask oneself why these illogical, emotional and astonish gains were made last week following very average official economic data. UK GDP expanded 0.5% in final three months of 2015, up from 0.4% growth in the previous quarter and in line with consensus. Buried in this data was the unnerving analysis that the UK’s post-industrial economy showed services exports now exceed overseas sales of manufacturing. On a year earlier, GDP was up 1.9%, after growing an annual 2.1% in the third quarter. This latest quarter marks the slowest annual expansion rate since early 2013. For 2015 as a whole, GDP growth was 2.2%. The US GDP data posted on Friday endorsed the perception that the economy grew by 0.7% in the last quarter and on an annualised basis should grow by 2.5%. Could this all be a temporary lull before another storm? Such a sharp rally of this nature based on very little suggests another ‘bear-squeeze-rally!’ I sincerely hope I am wrong!


It certainly was not a great week for the banking sector. Not only was RBS forced to declare a £3.5 billion increase in impairment charges including a $2 billion provision for FX manipulation by New York regulators, but also Chancellor Osborne was forced to postpone the forthcoming sale of £5 billion of shares in Lloyds Banking Group at a 5% discount to retail shareholders for a year, due to unsuitable market conditions and negative sentiment prevailing. It then appears likely that the senior management of HBOS at the time of its collapse will be subject to a stringent inquiry. Adverse findings could lead to prosecution. It seems unfair that only Paul Cummings at HBOS was forced to pay a fine for his role in reckless lending. Barclays Bank will be releasing a further 1000 employees from its investment banking division before too long – many surprisingly from New York, including the head of rates in the US and Europe – Michael Yarian. Finally Deutsche Bank’s John Cryan formally served notice that the bank will post a full-year loss for the first time since 2008.


NAB hopes that its Clydesdale Bank IPO will receive the thumbs up to go ‘live’ this week and Metro Bank hopes to follow in its wake before too long. I would not be holding my breath, though they are small fry in comparison to Lloyds; nonetheless not inconsequential. The City was extremely pleased that Deputy BOE Governor Andrew Bailey was appointed head of the FCA. The comments that have been made are understandably universally positive. In my humble opinion Andy Haldane should be a ‘shoo-in’ as the new head of Prudential Banking Authority, as he was previously responsible for Financial Stability, though there are strong rumours that the Australian Greg Medcraft is a warm order with Governor Carney’s affections. I am sure he is competent, but surely someone English is more than able to do the job? John Kingman is also talked about in the corridors of power. Hopefully he will replace Sir Nick McPherson as the Treasury’s mandarin.


On the general news front, Ford Motor Company will be closing down large parts of its European operations. Royal Dutch Shell looks as though it has attracted sufficient shareholder support to complete its acquisition of BG Group in a £47 billion deal, despite the deal being struck in principal last April when crude oil was $60 a barrel. If Sainsbury is to be successful in landing Home Retail, it may have to up the ‘ante’ to £1.4 billion. Amazon’s earnings on Thursday did not pass muster – the bar was set very high- and shares after hours fell by 13.5%.


Iran seems to have enjoyed the fruits of Hassan Rouhani’s visit to Europe which has yielded gargantuan deals valued at a rumoured E17 billion including 118 Airbus. I wish I could be as enthusiastic as many. I have not forgotten that Iran’s best pal is Russia and Europe’s and the UK’s relationship with Russia is hardly cordial. Russia is rumoured to be in wide ranging talks with many countries about a 5% cut in global oil production. I will believe that when I see it. Apart from the rally in oil and mining stocks, it was totally understandable that IMPS hit a record high – a classic flight to quality exercise. Many, however, believed this mood was down to IMPS being a possible takeover target in the months to come. When posting updates this week BP and Shell may well show that profits have been slashed in the last quarter by 65% and 57% respectively in the last quarter to $730 million and $1.8 billion.


U.K. earnings this week –  Monday – RM Group, QinetiQ, Tuesday – St Modwen, Ocado, BP, Wednesday – Foxtons, Hargreaves Lansdown, GSK, Severn Trent, Johnson Matthey, IAG, Thursday – Royal Dutch Shell, Astra Zeneca, Smith & Nephew, Bellway, Vodafone, Compass Group, Friday – BG Group, Aon


US Earnings posted this week – Tuesday – Dow Chemicals, Exxon Mobil, Pfizer, Wednesday – Merck, Marathon, Thursday – Yum! Brands, Philip Morris, Boston Scientific, Metlife, Cigna, Marsh McLennan, Friday – Tyson Foods, Weyerhaeuser, Moody’s.


Economic data this week – Monday – US mortgage approvals and consumer credit lending, Wednesday – ADP Employment Index, Thursday – MPC Meeting, US Jobless Claims, Friday – Non-Farm Payrolls,



David Buik


Market Commentator – Panmure Gordon & Co 


TODAY’S FAYRE – Markets, Apple, FCA, IPOS & RBS


TODAY’S FAYRE – Wednesday, 28th January 2016


“Tell me not, in mournful numbers,

Life is but an empty dream! 

For the soul is dead that slumbers,

And things are not what they seem.


Life is real! Life is earnest! 

And the grave is not its goal; 

Dust thou art, to dust returnest,

Was not spoken of the soul.


Not enjoyment, and not sorrow,

Is our destined end or way; 

But to act, that each to-morrow

Find us farther than to-day.


Art is long, and Time is fleeting,

And our hearts, though stout and brave,

Still, like muffled drums, are beating

Funeral marches to the grave.”


Henry Longfellow – author & poet – 1807-1882


I was very sad to hear of the death of Lord Cecil Parkinson – probably the most courteous politician in the 20th century. Of course he broke the eleventh commandment – ‘Thou shalt not get found out!’ His well-chronicled 12-year affair with Sarah Keys resulting in the birth of their daughter Flora, put the brakes on his glittering career in the Thatcher Administration. He was at the Department of Trade and Industry at the time of ‘Big Bang’ – at the time I briefly made his acquaintance at a lunch I hosted in August 1986. The city was less than convinced that he understood the ramifications of ‘Big Bang’, which would be manifested as a result of the change in business, trading and broking culture.  Nonetheless he had wonderful interpersonal skills, which endeared him to many. At the end of that lunch he insisted on going to the kitchen to personally thank the cook and waitresses for their contribution to the occasion.  I have never seen kindness of its type from a person in high office before or since!


There seems to be some correlation between the price of oil and the performance of many global equity indices, which does not seem all that logical.  However crude oil triggering back towards $32 a barrel yesterday certainly had the desired effect of giving momentum and a little exuberance towards the afternoon session in Europe and the entire day on the Street of Dreams.  The DOW ended the session up 1.78% to the good with the S&P 500 adding 1.41% and the NASDAQ a rather more measured and muted 1.01%, as it waited rather nervously on Apple’s results, which were to be posted after hours. Wall Street was in good form, despite inclement weather conditions.  It responded to a 4% rally in the price of crude oil and some decent quarterly earnings from the likes of Johnson & Johnson and Procter & Gamble – both beat the Street’s expectations. There was also a strong perception held by investors and observers that when the FOMC ends its 2-day meeting at 7.00pm GMT today, there may be some hint or guidance that the FED has tempered its enthusiasm to raise interest rates in the foreseeable future – well certainly not another three times in 2016.  This should calm emerging markets down and take a little froth off the value of the Greenback as well as create a calmer frame of mind on global markets. Even Governor Mark Carney seems to have conceded that the FED’s decision to hike rates had spooked global equity markets.


When he presented Apple’s eagerly awaited 4th quarter interim results, CEO Tim Cook was ebullience personified about the future, particularly in China, when, despite a record quarter, Apple’s outlook suggested a flat-lining in sales and profits, particularly in China. However Apple’s revenue for the last quarter was a record $74.6 billion with a profit of $18 billion, having sold 74.8 million iPhones. The EPS was up 48% at $3.06. Gross margins increased from 37.9% to 39.9%. Last year the profit for the same quarter was $57.6 billion with a profits of $13.1 billion. The outlook for revenue for the next quarter will be between $50 and $53 billion against market expectations of $55.6 billion.


At the time of writing Asian bourses have responded quite well apart from Australia’s ASX which close down 1.20% and the Shanghai Composite which is down 2,64%, thanks in the main to international mistrust of the authorities’ market stimulation and also that Industrial profits fell 4.7% in December and by 2.3% on an annualised basis. The Hang Seng is up 1.06% and the Nikkei closed up 2.72%.


George Osborne’s idea, with the support of Mark Carney to appoint Andrew Bailey as head honcho at the FCA was inspired in such turbulent times, when public opinion and to the Treasury Select Committee are baying for blood from transgressors.  He is a man of great intellect, huge integrity, with a quiet composed and thoughtful demeanour with a very steely resolve. He ticks all the boxes and he will not be bullied but he is a listener.  That is why he is so popular amongst his peers and commands respect from all quarters. He is no pushover and will not go ‘soft’ on banks. He is more than happy to be logically confrontational, without ever being emotional in his decision making process.  He will certainly give John Mann MP a run for his money. A word of thanks should go to Tracey McDermott, who did a splendid job holding the fort in such trying circumstances.


Despite the fact that the Shell deal with BG was struck when oil was $60 a barrel, the £47 billion acquisition is expected to go through despite that lack of support from Standard Life and others. Most shareholders appear to think that in the long term BG bring much to the gas party with economies of scale of a joint savings of $2.5 billion.  The joint company will probably be valued at $250 billion, making it probably the largest company in the FTSE 100.


NAB served notice that the IPO of Clydesdale will take place next Tuesday 2nd February.  75% of this bank will be retained by NAB and 25% sold to mainly institutional shareholders. The issue price will be between 175p and 235p valuing the bank at between £1.5 billion and £2 billion. Advisors will be hoping that sentiment in equities continues to improve as there masses of banking stock potentially for sale – Lloyds, RBs, Metro tec.


Metro Bank is set to unveil plans for a massive £1.9bn float, and could possibly be listed by the end of February. Metro is also hoping to raise £500m by selling new shares to its existing investors, which will bring the total amount raised since the bank launched in 2010 to £1.1bn. The shares are to be priced at £24 each. Tomorrow Metro Bank posts results for the fourth quarter of 2015, which could reveal a 78% increase in deposits, up to £5.1bn. Losses may also have been reduced, narrowing from £10.7m in the third quarter to £10.1m.


These forthcoming IPOS will not be helped by the fact that RBS has posted a £2.5 billion provision for UK PPI (£500k), $1.5 billion fine by SEC for miss-selling of mortgages in the US pre-2008. This will put RBS in a loss situation for this year. Shares are down 4.5% at 249,15p – 251p off breakeven. There is also a charge against the valuation of Coutts & Co its private bank of £498 million. The taxpayer still owns 73%. This actually cannot come as any surprise to CEO Ross McEwan. Rumours have abounded for weeks in the US that RBS was implemented. This bank is unlikely to be fit for purpose for at least another 2 years. At least there is hardly the remnant of any investment banking left in RBS apart from a shareholding in Citizens Bank and I doubt they are big players.



U.K. earnings this week –  Wednesday – Antofagasta, Britvic, Paragon, Aberdeen Asset Management, Sage Group, Thursday – Anglo-American, 3iii, RPC, First Group, Diageo, SSP, SSE, Lonmin, DMGT, Kaz Group, Friday – Sky, AB Barr, Vedanta Resources


US Earnings posted this week –  Wednesday – PayPal, Boeing, BIOGEN IDEC, Texas Instruments, Facebook, Thursday- Ford, Caterpillar, Pulte, Baker Hughes, Microsoft, Visa, Raytheon, Hershey, Bristol Myers Squibb, Friday – Colgate-Palmolive, Chevron, AbbVie, Honeywell, MasterCard


Economic data this week – Wednesday – FOMC, BBA mortgage applications & bank lending, Thursday – UK preliminary GDP




David Buik


Market Commentator – Panmure Gordon & Co 


I have to admit that I am rather happy to be sitting in my seat pontificating about markets rather than trying to trade them. On the back of very downbeat Chinese markets – Shanghai Composite down 6.4% and a lack lustre session in Tokyo, which saw the NIKKEI close down circa 2%, the FTSE opened up down about 80 points. Traders all felt rather out of sorts in early skirmishes with oil, mining and banks bearing the brunt of the savagery.

However, come noon, a few intrepid punters decided that, pro-tem, mining stocks had been over trashed, and they waded in to the ring, not to ‘back the truck up’ as in yesteryear, but to put their toe in the water. In months gone by a daily punt could have been 1 million shares – now its 100k if you are lucky. Hence the incredible level of volatility in mining shares. Anglo-American were the subject of not only scrutiny but also action. In short order the shares rallied 12% and have settled up 10% at 3.30pm. Miners have rallied by an average of 5.5%. Oils having been sharply in reverse cracked on particularly BP – +1.75% – sector up 1%. Banks were up 2% with Lloyds showing the way – +3%. At 3.50pm the FTSE 100 was 30 points to the good at 5910, in part hanging on to the Street of Dreams’ coattails – DOW +1.5%.


Of those companies that reported figures or trading statements today, esyJet’s set back in the autumn down to terrorism in part found investors unforgiving – down 5%. Marston’s pleased their acolytes – +5.25%. Crest Nicholson also put on a good showing – +5.5%. PZ Cussons were clattered – down 9%. Shares in Card Factory having been 2% to the good are now flat as I scribe. Dixons Carphone travelled and arrived – down 2%. Tesco ‘cocked a snook’ at allegations of holding back suppliers payments – +2%. FEVER-TREE was the stock that rattled my cage today. It has a market capital of £750 million with revenues of £35 million – shares up 3%! – seems a rich valuation? Prefer Schweppes myself!


Alibaba is not expected to ‘float its shareholder’ boat’ due to intense competition from within China. Concern over tonight’s Apple results seems to have abated a tad – shares are up 1%. Johnson Control are to pay $16.5 billion for Tyco, domiciled in Ireland. That will upset President Obama, but business is business – tax or no tax!!. The FED’S Janet Yellen is expected to rescind any thoughts of further rate hikes in the FOMC minutes due tonight.


TODAY’S FAYRE – Tuesday, 27th January 2016
Thou comest, Autumn, heralded by the rain,

With banners, by great gales incessant fanned,

Brighter than brightest silks of Samarcand,

And stately oxen harnessed to thy wain!

Thou standest, like imperial Charlemagne,

Upon thy bridge of gold; thy royal hand

Outstretched with benedictions o’er the land,

Blessing the farms through all thy vast domain!

Thy shield is the red harvest moon, suspended

So long beneath the heaven’s o’er-hanging eaves;

Thy steps are by the farmer’s prayers attended;

Like flames upon an altar shine the sheaves;

And, following thee, in thy ovation splendid,

Thine almoner, the wind, scatters the golden leaves!”


 Henry Longfellow – author & poet – 1807-1882



BBC’S Panorama programme last night on President Putin was hardly an eye opener. We have suspected that his wealth grew by gargantuan proportions since he became mayor of St Petersburg in the early ‘90s. Frankly it has increased with indecent vulgarity. For the full story I thoroughly recommend a book – ‘Putin’s Kleptocracy; who owns Russia?’ by Karen Dawisha. Admittedly it has a serious US anti-Russian bias, but nonetheless fascinating.


A huge number of rumours are flying around as to Chancellor Angela Merkel’s health. Many say she is suffering from deep depression and is close to a breakdown. For the sake of her family and Germany I hope these rumours are just playful fantasy.


Last Friday night many believed that the sting had been taken out of the market’s fractious and frayed nerves! I am afraid not. Once oil started to fall yesterday from its recent pinnacle of $32.50 to below the $30 threshold, the market immediately came under the cosh. The FTSE only lost 0.39% to 5877. The chickens really came home to roost on the Street of Dreams last night with the DOW easing by 1.29%, the S&P 500 by 1.56% and the NASDAQ by 1.58%. The S&P energy index dropped 4.5%, with Conoco-Phillips getting a good slapping as it fell over 9%. It wasn’t all bad news – McDonald’s beat expectations with ‘all-day-breakfast’ meals proving a huge success – shares up 0.7% Even Exxon Mobil and Chevron suffered ‘the slings and arrows of outrageous fortune!’ – Both down over 3%. Dynergy and NRG lost 11.5% and 9.6% respectively.


The main tech brigade also went into reverse due to the Chinese conundrum of uncertainty. No one has a clue as to how bad the situation in China is. Twitter was down 4% after 3 executives slung their hooks. Apple was down 1.98%, with Facebook, Netflix, Cisco and Intel easier by about 1%. One thing that is becoming very clear is that the capital flows out of China, particularly from sovereign wealth funds, as well as from emerging nations in Asia are very substantial. The floodgates have been well and truly opened and it is having an adverse effect on sentiment. This morning Asian shares have taken a bath. At the time of writing the Shanghai Composite is down 6%, the Hang Seng is 2% below yesterday’s level and the NIKKEI closed down 2.4%. The scene has been ugly!


This morning there were decent interim results from Card Factory, Dixons Carphone, Marston’s and Crest Nicholson. easyJet was solid but there were a few worrying comments. These companies are not posing the problems that investors are currently confronted with. It is mining, energy banks and drugs that are providing the hay-maker punches to punters’ solar-plexuses


I fell upon this advice yesterday –

Advice for Europeans! You should open an account in the United States as your hedge against European banking madness. Europeans can still open in the USA. Americans cannot open in Europe. This should be the best bet until 2020. Switzerland still has approved bail-ins. Canada is not altogether great either. As for the UK its currency is in a bear market. So the best bet for now is a US bank account until the cycle reverses.


U.K. earnings this week – Tuesday – PZ Cussons, easjJet, Marston’s, Crest Nicholson, Dixon Carphone, PurpleBricks, Wednesday – Antofagasta, Britvic, Paragon, Aberdeen Asset Management, Sage Group, Thursday – Anglo-American, 3iii, RPC, First Group, Diageo, SSP, SSE, Lonmin, DMGT, Kaz Group, Friday – Sky, AB Barr, Vedanta Resources

  US Earnings posted this week –  Tuesday – 3Ms, Freeport-McMoRan, Proctor & Gamble, Johnson & Johnson, Lockheed Martin, AT&T, Apple, Wednesday – eBay, PayPal, Boeing, BIOGEN IDEC, Texas Instruments, Facebook, Thursday- Alibaba, Time Warner, Ford, Caterpillar, Pulte, Baker Hughes, Microsoft, Visa, Raytheon, Hershey, Bristol Myers Squibb, Friday – Colgate-Palmolive, Chevron, AbbVie, Honeywell, MasterCard

  Economic data this week – Tuesday – US House Price Index, BOE Financial Stability Report, Wednesday – FOMC, BBA mortgage applications & bank lending, Thursday – UK preliminary GDP, Friday – US GDP Q4.



David BUIK


Market commentator – Panmure Gordon & Co

Market update – ‘If you go down in the woods today….’

This morning, I felt uncomfortable about the opening of European markets in the knowledge that the inclement weather conditions on the US Eastern seaboard would definitely curtail activity quite dramatically, particularly as the storm took place over the weekend preventing practical contingency plans. New York’s input is fundamental in providing clear guidance


The FTSE started up about 17 points at 5917, but as soon as oil came off its better levels of $32.60 down to $31.20 the FTSE quickly saw the usual suspects surrender value – oils down 2% and mining stocks easier by 2.5%. The FTSE quickly went into reverse losing 35 points to 5682. BP was 2.5% down and has now settled down 1.8% with Shell easier by 0.9% having been up 0.5% for a brief period. On average miners were down 1% with BHP and Rio off 1.25% and 2% respectively. Dixons Carphone was up 0.5% ahead of figures later in the week. Kingfisher had a ‘mare.’ Investors were underwhelmed with their plans which included a £600 million share ‘buy back’ – down 8%. Petra Diamonds were up 1.5% having been up 4% after numbers today. Tesco eased by 0.25%. Lloyds Banking Group improved from its initial 3% markdown to being steady at -2%. The two somewhat neutral bright sparks were ARM Holdings – +1.5% and Randgold +1.3%.


At 3.00pm the FTSE 100 was down 32 points at 5687. The Street of Dreams shed a bit of value with the DOW being down 83 points at the time of writing. I have a severe dose of the collywobbles in my stomach. I feel as if we might have another movement – downwards this week. Not carnage, but the lack of positive news flow is hardly conducive for the ‘bulls’ to come out to play!


TODAY’S FAYRE – Monday, 25th January 2016
COME, I will make the continent indissoluble;

I will make the most splendid race the sun ever yet shone upon;

I will make divine magnetic lands,

With the love of comrades, With the life-long love of comrades.


I will plant companionship thick as trees along all the rivers of America, and along the shores of the great lakes, and all over the prairies;

I will make inseparable cities, with their arms about each other’s necks;


By the love of comrades, By the manly love of comrades.

For you these, from me, O Democracy, to serve you, ma femme! 10 For you! for you,

I am trilling these songs, In the love of comrades,

In the high-towering love of comrades.”



 Walt Whitman – author & poet – 1819-1892


At this late stage for the corridors of power to start flagging up Michael Bloomberg’s name as a serious Presidential candidate is confirmation to me that Donald Trump is not the US electorate’s answer to the problem to succeed Barack Obama. His candidacy, which must be unlikely, would also seriously spike Hillary Rodham Clinton’s guns. Michael Bloomberg, despite being 74 years of age, would gender great support and much interest. Bloomberg is a very rich man, but whether at this juncture he is prepared to shell out hundreds of millions of dollars from his personal fortune in his twilight years remains to be seen.


Many people truly admire Adidas’s brave decision to withdraw as the IAAF’S major sponsor four years early due to the level of skulduggery. I was pleased to see that Adidas’s shares only eased by 0.8% in response to the announcement. Lord Coe, PLEASE! Don’t make a fuss; there’s a good chap! Just go in peace and with dignity. Let us remember you as a great and world class athlete and a pioneer of London 2012!


The dear old FT, totally obsessed with remaining in the EU, has started massing its troops – the captains of big business, industry and commerce. The scaremongers have raised their game to fever pitch. Lord Rose, Sir Mike Rake, Roland Rudd and all his FTSE 100 clients and the ‘movers and shakers’ from the drug industry can only tell us about the desperate ramifications for trade, if we do pull out of the EU. What they are failing to do, is to tell us something positive. The rhetoric is all negative. I fear that apart from existing trade arrangements, they believe that the outlook for the EU’s economy looks extremely patchy. I am not in the camp of desperation. Do you know I am really looking forward to getting out on the hustings to extol the virtues of UK PLC, unless David Cameron returns from Brussels with a ‘slam-dunk’ agreement, delivering our wonderful country from the vice like grip of the European Court of Human Rights!


Over the weekend the papers did not make great reading. The cynics were there in plenty. EY confirmed what we already knew, that the number of companies posting lower profits or warnings in the UK continues to increase – over 300 companies come in that category. To add to that uncertainty it is becoming clear that the maintenance of dividends at recent levels is looking increasingly unlikely, with oil companies, miners and retail operators coming under the cosh. Though the worst of the financial storm seems to be over for the time being, few believe that we are out of the woods. Certainly the mood of the editorials was very much downbeat. Then we had the expected pro-EU rhetoric, lead by IMF’S Christine Lagarde to stir the pot of indecision up.


This coming Wednesday, the International Monetary Fund (IMF) begins the selection process for its next managing director to replace Christine Lagarde whose term will expire in early July. She was actually nominated by Obama for they were personal friends. It was Lagarde who effectively began the worldwide assault on tax havens by threatening them with isolation and the removal from the SWIFT system. She was also behind the attack on the Vatican that will force them to report all wires and parties on both sides for the tax nightmare that arrives in 2017.

The Executive Board will select three candidates from the nominations — that is unless Obama directs them to appoint another person against society to hunt down money for wasteful governments to support their pensions. The nominations should be in quickly and the selection process should be complete by March 3. The next member of the Troika governing Europe’s fate will begin their reign of economic terror on July 5.

This morning there were a few pieces of news nuggets to keep in mind this week – Firstly Kingfisher’s decision to revamp its business to include at £600 million share ‘buy-back.’ Then Tesco may be looking to repay £1.4 billion worth of debt. Deutsche Bank looks as it will need another €7 billion of fresh capital. Some of it could come from the sale of Postbank (circa €4 billion). It also looks as though ChemChina will place another bid for Syngenta. This morning the FTSE showed a touch of cautious optimism, but the price of oil soon put that rally to the sword and at 10.00am the FTSE 100 was down 30 points at 5880. Oil stocks were down about 1.5% with BP easier by 2.5% and mining stocks were lighter by 2.5%. New York may not be open this afternoon due to inclement weather conditions and if the NYSE does open it may only open to 15% capacity. We should not forget that 2 years ago first quarter GDP came in at -2.9% due to a prolonged bad weather. Everyone said that activity for the rest of the year would make up for it. It never did.


David BUIK


Market commentator – Panmure Gordon & Co



TODAY’S FAYRE – Sunday, 24th January 2016


Looking up at the stars, I know quite well
That, for all they care, I can go to hell,
But on earth indifference is the least
We have to dread from man or beast. 
How should we like it were stars to burn
With a passion for us we could not return?
If equal affection cannot be,
Let the more loving one be me. 
Admirer as I think I am
Of stars that do not give a damn,
I cannot, now I see them, say
I missed one terribly all day. 
Were all stars to disappear or die,
I should learn to look at an empty sky
And feel its total dark sublime,
Though this might take me a little time.

WH Auden – poet – 1907-1973


 I felt extremely privileged to be at the Festival Hall last night to hear the 38 year old Maltese born Tenor, Joseph Calleja in concert, singing a selection of Verdi arias interspersed with an array of overtures played by the Philharmonia Orchestra, enthusiastically though sensitively conducted by Ramon Tebar. What a splendid evening! Joseph Calleja has all the attributes to vie with all the greats – Domingo, Pavarotti, Carreras, Bjorling and Bergonzi. He has presence, the charm, the looks and above all else the most fantastic bel canto tenor voice, with a massive range which one could ever wish to hear! Mr Calleja had a slight cold last night so was probably only firing off 5 cylinders, but what a performance!


So the highly acclaimed Adam McKay film “The Big Short” has hit the cinemas with a bang with wonderful accreditations and plaudits. How the public love to bash bank traders – understandably in some quarters! The film, based on Michael Lewis’s informative book on the financial crash, has been turned almost in to a comic turn. I hope Mr McKay and the film’s stars such as Brad Pitt and Christian Bale cry all the way to the bank having made millions. What I don’t need is a lecture in morality and regulatory controls from director McKay. I can go to Governments and the SEC and FCA for that. Just get on at what you excel at – artistic direction!


The pictures from the WEF Davos jamboree were a brilliant illustration of opulence. Such a pity that for the 45th year running nothing of any consequence came out of this 4 day networking session! – At £27k a pop per person and I understand that some corporate annual memberships cost £250k! PM Cameron really did attempt to rally the ‘IN’ troops in Davos, even persuading the hugely respected Mme Lagarde to throw her ‘two cents worth’ of support in to the ring. Unless David Cameron can persuade the EU to rescind all the EU’s Court Of Human Rights’ powers, the PM has a fight on his hands.


So hard-nosed punters took stock mid-week on the Street of Dreams and decided that equities looked unrealistically oversold, and put their buying boots on and in the process painfully closed out some bear market traders. Their action took place despite continued ham-fisted open market support by the PBOC in China to underpin the value of the Shanghai Composite and the Shenzen with little evidence of success (+0.10% in the last 2 days). Then on Thursday against a backdrop of the Swiss Alps, the ECB president Mario Draghi gave us another dose of ‘whatever it takes’, which triggered another bonanza bear squeeze rally. However I doubt we shall hear anything official from the ECB until the March meeting, unless markets fall out of bed. The other major imponderable left in abeyance is the damage the Yuan carry trade with other currencies has on emerging market economies. 


Though I am not a prophet of doom, it seems inconceivable that the carnage, contagion and volatility is all over at a stroke from a remark. There will be tricky weeks to follow at best. So the rally started on Thursday, aided and abetted by an improvement on the oil price of almost 5% over 2 days from $27.5 a barrel to $32. To put some colour on the proceedings the FTSE rallied from a low of 5645 on Wednesday to 5900 at the close of business on Friday – up 4.5% representing about £120 billion in value. Call me an old cynic, but AGAIN, without anyone really understanding the overall ramifications, governments and Central banks have to revert to QE to fix, in the case of the EU, a broken economy. 


Like many other ageing geriatrics I am fearful about the increased level of debt that will manifest itself. It is terrifying. Little prospect of either governments, or companies and more to the point the consumer either being able to service the gargantuan levels of debt, let alone repay it. Last week Sterling sank like a stone once BOE Governor Mark Carney made it crystal clear that rates would not be increased in the foreseeable future against a weakening background of global economic growth or any measurable inflation. Also the idea that the FED’S Janet Yellen may have another three 25 basis point hikes in the pipeline for the US economy this year, may require a rethink and a visit to the ‘in tray.’


By the end of last week most indices managed to impair their losses from their ‘highs’ in 2015. The FTSE 100 cut its loss it’s from 20% down to 17.1% and the loss from the start of the year from 7.5% to 6%, having gained 1.65% last week, thanks to a measurable ‘Draghi/oil’ rally of over 3% on Thursday and Friday. The S&P 500 added 0.95%, European indices rose by an average of 2.7% and the NIKKEI was down only 1.1%, despite nearly a 6% gain on Friday.


Mining stocks were again not the flavour of the week and despite the FTSE gaining 2% on Friday, Anglo American eased back by 8.6% ahead of this Thursday’s update and BHP (-5.4%) and Glencore (-4.5%) did not fare very much better. Royal Dutch Shell added 5.3%, thanks to the bounce in oil. Dixon Carphone was 4.6% to the good ahead of Tuesday’s trading statement. In the US Twitter continued its fall from grace and American Express was hit hard after less than good numbers – down 12%. This week, as you can see below is a very big earnings week in the US, providing a clear barometer as to the outlook for the US economy.


After all the froth of the Draghi intervention has calmed down, it will be interesting to see how markets settle down to day-to-day business this coming week. Sir Andrew Witty, Glaxo’s CEO has a fight on his hands against Och-Ziff Capital on this drug titan’s future plans. Tesco may have to see to its debt mountain and Sainsbury will be asked not pay up for Home Retail. And finally post the Google Tax settlement of £131 million over the past 10 years will that open the floodgates for HMRC to settle with other multi-nationals? In fairness to George Osborne, at least a decent start has been made, which is more than can be said for most British governments over the last 50 years. If full taxation is required then the laws have to be changed. One cannot blame companies for delivering the best shareholder value possible. Also to keep business in the UK, we need to make the terms attractive for them to remain here.


U.K. earnings this week – Monday – Petra Diamonds, Tuesday – PZ Cussons, easjJet, Marston’s, Crest Nicholson, Dixon Carphone, PurpleBricks, Wednesday – Antofagasta, Britvic, Paragon, Aberdeen Asset Management, Sage Group, Thursday – Anglo-American, 3iii, RPC, First Group, Diageo, SSP, SSE, Lonmin, DMGT, Kaz Group, Friday – Sky, AB Barr, Vedanta Resources


US Earnings posted this week – Monday – McDonald’s Halliburton, DR Horton, Tuesday – 3Ms, Freeport-McMoRan, Proctor & Gamble, Johnson & Johnson, Lockheed Martin, AT&T, Apple, Wednesday – PayPal, Boeing, BIOGEN IDEC, Texas Instruments, Facebook, Thursday- Ford, Caterpillar, Pulte, Baker Hughes, Microsoft, Visa, Raytheon, Hershey, Bristol Myers Squibb, Friday – Colgate-Palmolive, Chevron, AbbVie, Honeywell, MasterCard


Economic data this week – Tuesday – US House Price Index, Wednesday – FOMC, BBA mortgage applications & bank lending, Thursday – UK preliminary GDP




David Buik


Market Commentator – Panmure Gordon & Co


TODAY’S FAYRE – Thursday, 21st January 2016
He thought he kept the universe alone;

For all the voice in answer he could wake

Was but the mocking echo of his own

From some tree-hidden cliff across the lake.

Some morning from the boulder-broken beach

He would cry out on life, that what it wants

Is not its own love back in copy speech,

But counter-love, original response.

And nothing ever came of what he cried

Unless it was the embodiment that crashed

In the cliff’s talus on the other side,

And then in the far distant water splashed,

But after a time allowed for it to swim,

Instead of proving human when it neared

And someone else additional to him,

As a great buck it powerfully appeared,

Pushing the crumpled water up ahead,

And landed pouring like a waterfall,

And stumbled through the rocks with horny tread,

And forced the underbrush—and that was all.”


 Robert Frost – poet – 1874-1963


It was sad to hear that Andy Murray and Novak Djokovic showed no surprise at allegations that game rigging was rife. How sad it is today that no sport seems immune from either dope or betting. I suppose Rugby comes close as the only major sport that seems totally above reproach.


When Sky’s Mark Kleinman announced that he had been briefed that Goldman Sachs had made a six figure donation to the EU ‘In’ campaign, it should have come as any surprise. After all, ever since the days of Gordon Brown’s premiership and before right up to day, Goldman has earned huge fees from government mandates – Absolutely nothing wrong with that. They are the best financial advisors and this Government has plenty of assets it wants to sell in the months and years to come. So it strikes me as perfectly sensible and pragmatic that it should make a contribution of this nature. After all PM Cameron and Chancellor Osborne have let it be known that they wish, subject to satisfactory renegotiations, they wish to remain in. So why would this august investment bank bite the hand that feeds them? So all the ‘tut-tutting’ and ‘guffawing’, realistically, is ill-thought nonsense.


No need to take you all through the pain of yesterday European session; you’ve been there and experienced the carnage. However the Street of Dreams had an equally horrible day, though it finished far better than expected. At one point the DOW was down 517 points. There was blood all over Wall Street and Broadway seeping in to the frosty gutters. However oil perked up from its darkest moments and half of the DOW’s daily loss was erased. At the end of the session The DOW was down only 1.56%, the S&P eased by 1.17% and the NASDAQ a pip under water at -0.12%.


US markets have only fallen 10% from their recent highs – mind you a loss of $2 trillion in value; so I believe this retrenchment just endorses a necessary healthy adjustment. We are not about to head in to recession. Employment data is encouraging. Global growth is a concern and analysts need to adjust their sights lower. Oil prices are of grave concern, but regulators and banks will call the shots, rather than the silly indulgent political games played in the Middle East and by Russia. Prices must rally at the end of the year. Underperforming loans to energy will eventually be pulled. Commodities will have a visceral effect on many economies, but surely much of this is priced in. For a wonderful assessment read Panmure’s Simon French’s article in this morning’s CityAM. Some key stocks took big hits – Chevron -5.9%, JP Morgan Chase -3.1%, Freeport McMoRan -10%, IBM -4.4% and Netflix -6.4%. Twitter dropped another 6.7%. This stock is down from its high of $74 to $15.57. However many now believe Twitter could be an added takeover target.


Asian markets, aided and abetted by aggressive PBOC open market intervention, put their best foot forward. However sophisticated investors refuse to be hoodwinked by the authorities. Very quickly some of them gave up the ghost. – ASX +0.46% (closed), Shanghai -3.23%, Hang Seng +-1.8% and NIKKEI -2.43% (closed).


Yesterday the market in London had to digest Royal Dutch Shell’s 40% drop in profits and the effect on its forthcoming acquisition of BG Group plus the fall in commodity prices, which savaged the likes of Glencore, BHP and Anglo American. This morning decent numbers were posted by Land Securities, Royal Mail, St James’s Place and Moneysupermarket. Halfords’ stock rallied 6.7% after its announcement. Its performance looked to have improved since its recent profit warning. Though Pearson’s numbers weren’t great, it appears that analysts think that the management is starting to get to grips with their problems – +5%. SAB Miller posted an 8% drop in profits, but since it will be falling in to the arms of AB Inbev, these numbers seem somewhat nebulous – shares +0.2%. Having sold its Spanish interest to Caixa Bank, which has 550000 customers and 262 branches, Barclays is not only keen to get rid of its 62% stake in Barclays Africa, including ABSA in South Africa, but also this bank, under CEO Jes Staley’s leadership is looking to lighten up the staff globally by 1000, which may come from investment banking and in Asia. It looks as though Deutsche Bank will be posting a loss for the year. It has become clear that new CEO John Cryan has shaken this bank’s tree branches to the core and a new plan is now underway.




US Companies posting interim results this week – Thursday – VERIZON, BANK OF NEW YORK MELLON, AMERICAN EXPRESS, STARBUCKS, SCHLUMBERGER, Friday – CITIZENS



David Buik


Market Commentator – Panmure Gordon & Co 


So the markets geeks, chartists and teenage scribblers think the FTSE 100 has entered bear market territory, finishing today’s session down 3.46% at 5673, having yielded a short £149 billion since the start of the year (circa 20%). Despite the carnage with blood running down Threadneedle Street and Canary Wharf, I am not a prophet of Doom.  I believe that this correction, though very painful, is very healthy and overdue. With so many imponderables relating to the Chinese economy, global growth, interest rate uncertainty, the threat of deflation leading to cut margins and falling profits, no one can be that surprised at the vehemence or strength of the sell-off.


Starting with oil, that sector surrendered 6% with Royal Dutch Shell which posted a 50% drop in profits, losing 7%. BP eased by 5% and BG Group by 3.7%. Mining stocks were trashed – BHP -6.5%, Anglo American -8.5%, Glencore -7.5%.  Randgold bucked the trend thanks to gold being in demand as a flight to quality – +2.5% – one of 2 stocks to finish in positive territory, the other being Sports Direct Direct +1.5%. Drugs were down 3% and banks by an average of 5%.  This is a bloody battlefield with few winners.  In New York is down 479 points at 5.15pm – just over 3%!



TODAY’S FAYRE – Wednesday, 20th January 2016
“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,

One 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


We all send our good wishes to the 1400 delegates at the WEF jamboree in Davos. We hope you are having a wonderful time. Please come home soon. It is ‘all hands to the pump’ that are required. Your assistance would be greatly appreciated.


Everyone enjoyed yesterday’s relief rally with the FTSE adding 1.68%, the DAX +1.50% and the CAC +1.97%, but no one really believed a word of it, let alone was there any conviction. Some were delighted to take profits and some lived in hope that tomorrow might bring a bit of jam. After the Martin Luther King holiday, investors returned to the Street of Dreams with concerns about global growth, China’s ailing economy and the falling price of crude oil very much on their minds, let alone the quality of the earnings season.


After a brief unsustainable rally, a reality check was staring traders and analysts in the face. All three markets drifted back and but for better than expected results from Bank of America (profits for 4th quarter +10% – share price -0.06% after hours) and Morgan Stanley, which returned to a $908 million profit (share price +0.57% after hours), these markets might well have closed lower than they did. DOW +0.17, S&P +0.05% and the NASDAQ -0.26%. Considering the mood of the market the likes of Apple, Amazon and Netflix put in resilient performances, particularly the latter – up 6% after hours.


Wednesday morning certainly did not bring anything remotely looking like a brave new dawn – far from it. This morning it was Hong Kong that was the focus of attention. The HK$ fell out of bed. There is a real concern about credit. There was talk of a hike in interest rates; so not surprisingly stocks were dumped in large quantities or market makers took prices down. The Hang Seng fell back below 2012 levels and at one point it was down by over 4%. As I write it has rallied a tad to -3.57%. By comparison the Shanghai Composite has only fallen 1.03%. The ASX closed -1.26% and the NIKKEI experienced almost as torrid a session as the Hang Seng, in closing down 3.71%. The Yen has become very strong and with international trade waning the omens look temporarily average, to say the least.


The UK economy – Inflation? – Just! – PPI in December +0.2% posted yesterday, thanks in the main to very high travel costs, though wine and spirits off-set these costs by falling by 1.3%. This data brought Governor Mark Carney to his feet. In a speech he made yesterday in Lincoln, it came as no surprise to hear that any hike in UK base rates remained in the in-tray for the time being. Great news for mortgagees but awful for savers and more to the point for the economy, which is starting to look sluggish. He spoke not unexpectedly of concern about China, falling global growth, faltering wage inflation and a lack of any inflation as reasons for a change in policy. The IMF, amongst other global utterings reconfirmed that UK’s growth would come in at 2.2%.


Though I think Mark Carney has been an excellent governor of the BOE. He has really tightened up on regulation and discipline and made some excellent appointments. However I believe the ‘forward guidance policy’ has been a disaster. Forecasting the future is virtually impossible. There are too many complex political and economic imponderables to really give meaningful guidance. The MPC meetings should by all means update us with inflation, growth and expenditure, but surely forecasting when rates are going to move is for the birds. Frankly I think the idea is unintentionally mischievous and misleading. Nothing I am going to say will change policy, but from now on we should be circumspect and wary. I send the same message to FED chairman Yellen.


This morning the FTSE is set to open down just over 100 points – oils and mining likely to feel the wheels of pain across their backs. WH Smith posted an adequate trading update but JD Wetherspoon guided to the lower end of expectations – stock may be down 5% at the opening and Pets-at- Home with sales up 2.2% were in line with expectation. Today will be a tough one and New York’s reaction this afternoon will be key.







David Buik


Market Commentator – Panmure Gordon & Co