TODAY’S FAYRE – Sunday, 3rd January 2016


THE world’s great age begins anew,     

The golden years return,

The earth doth like a snake renew     

Her winter weeds outworn;

Heaven smiles, and faiths and empires gleam

Like wrecks of a dissolving dream.


A brighter Hellas rears its mountains     

From waves serener far;

A new Peneus rolls his fountains     

Against the morning star;

Where fairer Tempes bloom, there sleep

Young Cyclads on a sunnier deep.


A loftier Argo cleaves the main,     

Fraught with a later prize;

Another Orpheus sings again,     

And loves, and weeps, and dies; A

new Ulysses leaves once more

Calypso for his native shore.


O write no more the tale of Troy,     

If earth Death’s scroll must be—

Nor mix with Laian rage the joy     

Which dawns upon the free,

Although a subtler Sphinx renew

Riddles of death Thebes never knew.


Another Athens shall arise,     

And to remoter time

Bequeath, like sunset to the skies,     

The splendour of its prime;

And leave, if naught so bright may live,

All earth can take or Heaven can give.


Saturn and Love their long repose     

Shall burst, more bright and good

Than all who fell, than One who rose,     

Than many unsubdued:

Not gold, not blood, their altar dowers,

But votive tears and symbol flowers.


O cease! must hate and death return?     

Cease! must men kill and die?

Cease! drain not to its dregs the urn     

Of bitter prophecy!

The world is weary of the past—

O might it die or rest at last!


Percy Bysshe Shelley – poet – 1792-1822


Undoubtedly the news of the week for me was ‘AP’ receiving his long-overdue Knighthood. 20 National Hunt championships with an impeccable record for decency, integrity and commitment, not forgetting a talent in the saddle I am never likely to witness again in my life time. Aficionados of the turf would not put Ruby Walsh far behind! Well done! Sir Anthony McCoy – an accolade richly deserved! Devotees of racing are also delighted to see Richard Johnson doing well this year, hopefully on his way to his first championship. I think I am right in saying he was runner up to ‘AP’ eighteen times!


As for all the ballyhoo about Sir Lynton Crosby getting his gong, why not? I’ve never heard such hypocrisy from Labour! Yes! Sir Lynton may well have been rewarded richly in his pocket for orchestrating the Conservative victory at the last election. Nonetheless it was a job done brilliantly over the years, including two Boris Johnson ‘Mayor of London’ campaigns – take a bow! In the same breath if Alastair Campbell had been rewarded for the job he did for Labour in the late nineties, no one could possibly have complained. It would have been well-deserved. He may well have turned a knighthood down for all I know!


INDEX 31/12/14 31/12/15 % rise/fall
FTSE 6566 6242 -4.9%
DAX 9805 10743 +9.7%
CAC 4416 4637 +5.0%
DOW 17823 17425 -2.2%
S&P500 2080 2044 -1.7%
NASDAQ 4736 5007 +5.7%
NIKKEI 17450 19034 +9.1%
HANG SENG 23605 21914 -7.2%
ASX 5411 5295 -2.1%
Shanghai Comp 3235 3539 +9.4%


Looking at the table above 2015 wasn’t much of a year for investors unless they had latched on to the fact the DAX, CAC, Nikkei and the Shanghai Composite were all under pinned by QE or stimulus packages, which like 2009 gave punters a chance to print some money. If you were late in to the Shanghai rally, you could of course have been destroyed – up 154% from June 2014 to June 2015! Also the NASDAQ, as one of the major standard bearers for technology also ruled OK. I should also flag up the fact that NIKE was the best performing stock in the DOW – up 31.5%

Though I am not that upbeat about the prospects of the FTSE 100 in 2016, which I have bored anyone who wanted to listen, to the point of distraction – no inflation, threat of higher rates, low oil and commodity prices, and narrowing margins resulting in no real growth, opportunities to make money will manifest themselves. Nil desperandum, folks, there will be attractive opportunities to back the truck up. M&A, provided sentiment remains relatively balanced, will throw up interesting propositions in the drug sector; we are living longer and the pipelines are becoming more competitive. Also media/mobile and technology could provide rewarding prospects to capitalise on. We need to keep our eye on Shire, Astra, GSK, Vodafone, Liberty, AT&T and copious aspiring technology operations, which provide add on value. There is already renewed speculation that Shire is in advanced talks to buy Baxalta of the US (immunology and oncology). The market also expects Astra Zeneca to complete its acquisition of Acerta, the Dutch oncologist, for $4 billion 


The FTSE 250 went quietly about its business in 2015 adding a very respectable 8.5%, which was very satisfactory considering the incredibly level of volatility and uncertainty which prevailed throughout the year. There were some astonishing performances – Betfair +151%, Bellway +83%, Big Yellow +37%, Card Factory +33%, C&W Comms +52%, Crest Nicholson +42%, Greggs +79%, Domino Pizza +52%, Dignity +33%, Just Eat +59%, Vectura +39% and Dechra + 34% to name some of the star performers. 2016 will be all about stock picking – companies that offer growth and expansion with good dividend prospects or those companies that may be takeover targets.


In summation for the first days of the 2016, the period of low oil prices looks as if it could be prolonged with Saudi Arabia concerned that Iran will attempt to flood the market. Mme Lagarde, the IMF’S CEO expressed her concern yet again at the growth possibilities for many countries. She feels that a persistently strong Dollar and the threat of higher US interest rates could damage the progress emerging nations inviting patchy and disappointing growth patterns. 


I am astonished at the speedy recovery made by VW’s share price – up 24% since the appointment of Matthias Mueller (shares fell by 32% in the year before). The same cannot be said for Toshiba, which despite making the redundancy of conceivably 10k workers a distinct possibility, as a result of an accounting scandal has seen its shares drop like a stone – down 44% in the last year. The government and the parliamentary select committee have more than a passing interest in the affairs of Rolls Royce. No doubt all will be revealed by CEO Warren East as to the plight of some of its 9000 workers – many in Derbyshire and what plans, if any, there are for the submarine business. It won’t be allowed to fall in to overseas hands, I sincerely hope. If necessary BAE Systems seem a likely haven of acceptable rest. 


In the next two weeks we shall see the extent of retail damage inflicted on the retail sector in the last 3 months in an environment where inflation is non-existent and margins relatively derisory. M&S may report a fall in sales over the Christmas trading period of between 3% and 4%. M&S have lost the services of its rising star Suzanna Broer for allegedly gross misconduct. This has not helped the sales of general merchandise. Despite refusing to discount before Boxing Day may well post reasonably robust numbers. The outlook for Home Retail is not great and John Lewis has been very reliant on line sales in this period. Debenhams are rumoured to be considering asking Sir Ian Cheshire, late of the Kingfisher parish to join their board. Holland & Barrett may be the subject of a £1 billion sale by its main owner the Carlyle Group. 


Finally on the subject of the FCA deciding not to post a review on the running of the UK’S top bank’s management and moral performances has caused considerable anxiety amongst the political classes as well as the general public, who seem remorseless in their quest to bury the bank’s without trace. There is no condoning some of the disgraceful behaviour of the banking community over Libor, FX, PPI and money laundering in recent years. However I believe we underestimate the huge progress the FCA has made in bringing the banks to book for their misdemeanours. The BOE’S Andrew Bailey is a tremendous and much respected communicator and I believe that the BOE/FCA will have greater success in dealing with conduct and moral issues dealing with each bank individually. 


UK Companies posting results this week – Tuesday – NEXT (TS), Wednesday – TOPPS TILES, Thursday – POUNDLAND, M&S, PERSIMMON, SIGNET, RATHBONE


US Companies posting interim results this week – Tuesday – FORD MOTOR COMPANY (sales), – Wednesday – MONSANTO, AUTONATION, Thursday – WALGREEN BOOTS, CONSTELLATION BRANDS, KB HOMES, BED, BATH & BEYOND, RUBY TUESDAY – Friday ACUITY BRANDS


Economic data this week – Monday – UK Mortgage approvals, Tuesday – PMI Construction, Wednesday – UK PMI Composites and Services, Thursday – UK car registrations, US Jobless Claims – Friday – US Non-Farm Payrolls (est: 210K), Unemployment data (Est: 5%) and Consumer Credit, UK Balance of Trade.


David Buik


Market Commentator – Panmure Gordon & Co


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