I must say the general public would get amusement out of a Jeremy Corbyn shadow cabinet reshuffle than they would watching a Fred Karno music hall filled with custard-pie-in-the-face gags! What is he playing at? Though I understand that Labour’s sharp change in political direction must not be taken likely, Mr Corbyn is close to be held in universal derision. Surely he must understand that it takes time to ween colleagues in to the leader’s way of thinking in the hope of uniting his party? He cannot just metaphorically throw his toys out of the pram at the first signs of dissent.


Labour is not the only party under the political cosh at present. It’s a brave move by PM Cameron to allow ministers in his Cabinet to adopt their own political stance towards the EU referendum, which is likely to be held as early as this coming June. Clearly there are a measurable number of dissenters towards official government policy, which is to remain in the EU, subject to radical changes supposedly to include quasi EU treaty alterations being implemented. Though I am for ‘Vote Leave’ I am of the opinion that had the government presented its credentials in a more cogent and ‘joined-up-thinking manner’, the average voter, who does not really like change, would have secured a ‘yes’ majority. Now the result does not feel ‘nailed-on!’ Personally, after initial disruption and uncertainty, the UK would thrive on the challenge of going it alone. The single market will still be there – scaremongering or not!


The world is in sufficient economic and financial turmoil without North Korean leader Kim Jong-un pushing the button on a hydrogen bomb test, which took place earlier today. That dastardly deed certainly rattled the cage of the already damaged Asian confidence. Whether there will be further reverberations around the world, apart from the diplomatic condemnations already made by Japan, South Korea and the US, remains to be seen. Anyway Australia’s ASX closed down 1.18% and Japan’s Nikkei, out of sorts for much of the day, in the main due to currency reverberations with the Dollar and Yuan. China seems to be persisting with an intervention policy in the markets to weaken its currency, presumably for export purposes.


Today was a classic example in the wake of marginally dispiriting PMI service data posted today, which is particularly important in China – I’m told the service sector constitutes 48% of GDP. After lunch the Hang Seng was down 0.87% and the Shanghai Composite was ploughing its own upbeat furrow adding 2.25%. Again one suspects the authorities were not asleep on the job today by providing necessary stimulus. Shares in technology companies that supply Apple were down sharply in Asia. A report in the Nikkei newspaper suggested that Apple is due to cut production of its latest iPhone models by 30% during the January to March quarter. However shares in apple closed up 3.6% yesterday. We await developments.


The Street of Dreams failed to regain much in the way of poise. There was a small degree of volatility. With concerns over global growth, it is unlikely we shall see much in the way of pick up until the content of today’s FOMC minutes are digested coupled with Non-Farm Payroll and employment data on Friday, which is supposed to be positive – +200k. Then of course next week the first quarter earnings season opens in earnest, with the main banks such as JP Morgan, Citibank and Goldman leading the charge towards the end of that week. Google Yahoo! won’t be a million miles behind!


As I reported yesterday afternoon the FTSE 100 had a roller coaster ride during a ‘bear squeeze’ rally session, ending up 43 points at 6137. It looks as though Sainsbury, which ironically sold Homebase to Home Retail looks forward to the return of their prodigal son, having presumably not given up the ghost on another attack. CEO Mike Coupe obviously sees synergies not that obvious to some observers. It appears that many Argos/Homebase small outlets will be shut and reopened in Sainsbury shops, if the bid was successful. John Lewis posted excellent Christmas sales figure – up 4%, though over a “three peaks” Christmas period, the retailer has said sales were up 5.1% Sales were boosted by online sales, which rose 21.4%, offsetting a fall in store sales. Like-for-like sales at Waitrose, which is part of the same group, fell 1.4%. As with similar food operations, Chairman Sir Charlie Mayfield said the food market remained challenging. Tomorrow – MARKS & SPENCER!! At the time of writing 9.00am the FTSE 100 was down 40 at 6079 – Investors are clean out of confidence and a peg of good news to hang its hat on!


In his article in the Daily Mail on regulatory authorities going soft on the banks. For expediency and in the hope that HSBC will be persuaded to stay in the UK, he may have a point. I think there has been an appeasement over bank regulation and behaviour,  However make no mistake on an individual basis, if Tracey McDermott gets the job and most think she will, she will be relentless in her quest to obtain that extra pound of flesh from those transgressing. She eats nails for breakfast and spits rust out! There will no hiding place!


UK Companies posting results this week – Wednesday – TOPPS TILES, Thursday – POUNDLAND, M&S, PERSIMMON, SIGNET, RATHBONE




Economic data this week – Wednesday FOMC minutes, 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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