TODAY’S FAYRE

 

TODAY’S FAYRE – Wednesday, 13th January 2016
“I need not go

Through sleet and snow

To where I know

She waits for me;

She will wait me there

Till I find it fair,

And have time to spare From company.

When I’ve overgot The world somewhat,

 

When things cost not

Such stress and strain,

Is soon enough

By cypress sough

To tell my

Love I am come again.

 And if some day,

When none cries nay,

 

I still delay

To seek her side,

(Though ample measure

Of fitting leisure Await my pleasure)

She will not chide.

 

What–not upbraid me

That I delayed me,

Nor ask what stayed me

So long? Ah, no! –

New cares may claim me,

New loves inflame me,

She will not blame me,

But suffer it so.”

 

 

Thomas Hardy – poet and author – 1840-1928

 

I always enjoy the US President’s ‘State of the Union’ address – Democrat or GOP. Regardless of political persuasion, each President just seems to trot out meaningless platitudes and hollow comments. Last night President Obama seemed reluctant to change the habit of a life time – Brilliant theatrical rhetoric, but little in the way of content. I suppose his comments are valedictory. Superficially much has been achieved to improve the US economy from a very low ebb. However what a disappointment his foreign policies have proved to be. His apparent reluctance to personally engage especially with adversaries has been frustratingly disappointing. Also when preaching to his converted I do wish the President would not break in to ‘hill-billy’ speak in the same manner as Tony Blair used to adapt to ‘Mockney.’ It is pseudo and unnecessary.

 

Just in passing it was interesting that investors felt that the market was looking a tad over-sold prior to having a real look to the earnings season really opening its floodgates. The DOW & S&P 500 ended the session 0.8% in positive territory and the NASDAQ up 1%. Asia put its best foot forward with Hong Kong and Tokyo adding 0.9% 2.8% respectively Chinese exports just went in to positive territory – +2.4% in December and the Yuan, with a little assistance had stabilised. Most observers were impressed apart from the Shanghai stock markets. The Composite dropped in to a contrary frame of mind and was down 2.4% just before the close.

 

Europe opened brightly on the back of temporarily improved sentiment. At 8.45am the FTSE was up 50 points at 5980. Sainsbury after an 3.5%% jump in its share price yesterday on the back of Morrison’s and Debenhams’ gargantuan share price rallies pleased their acolytes with today’s trading update, Shares were steady – up a penny. Like for like sales over a 15 week period to 9th January were up 0.4% excluding fuel but down 1.8% excluding fuel – rather bizarre. Sainsbury conducted 30 million transactions in the 7 days leading up to Christmas – up 2.6% on last year. CEO Mike Coupe was upbeat about sales prospects for the second half of the year. Interesting that he believes he can take on Aldi and Lisl in their own backyard. In the case of many retail operators who have seen their shares bounce sharply, that idiosyncrasy is down the visceral treatment meted out to ‘short sellers!’

 

In his defence Sainsbury’s supermarket share has risen to 17%. Sainsbury still has Home Retail it its sights. Though Mr Coupe has promised not to pay up for this ailing retailer, it will have competition from the likes of the Leahy consortium. I tend to agree with the Evening’s Standard’s Nick Goodway’s assessment that this deal makes little sense even though HomeBase will be immediately sold on to Schroder Venture Capitalists for £695 million. In mitigating circumstances perhaps Argos’ on-line prowess will help Sainsbury in that arena. There must be cost savings as Argos units will disappear in to Sainsbury. What of Argos property? – owned or rented – I suspect the latter. There would be many redundancies and mainly from Argos staff.

 

I must just wade in to the bank regulation spat. Fresh from obviously only raw meat for Christmas, the Treasury Select Committee Member John Mann MP waded into George Osborne and the government for going soft on regulation in the wake of the FCA withdrawing its review on bank manager/employee behaviour, with the Chancellor’s supposed knowledge. I think not. Though Mr Mann has access to greater information than me, I suspect that this allegation is no more than political twaddle. The Government/BOE wants a result with HSBC. For optics and credibility it is essential HSBC remain in London. HSBC only does 30% of its business here, but to send the world a strong message that HSBC will maintain its head office here in London is fundamental. However, I am of the opinion that bank behaviour and HSBC are unconnected issues.

 

In her capacity as acting CEO of the FCA Tracey McDermott has illustrated that transgressors in wholesale markets or general banking will be brought to book. She has done an amazing job – a veritable Rottweiler and that is a compliment. I think it is a great shame that she does not want to carry on. Tom Hayes’s 11 year sentence will no doubt be the first of many if the queue of alleged transgressors are found guilty. 11 await trial and though there was no obligation to turn up for the hearing at Westminster Magistrate’s Court, I think it was a strategic mistake for them not to appear. When this case has finished there are more to follow and I think the doubting politicians and public will be left in no doubt that the FCA and regulators mean business. Whether the new head honcho of the FCA is Minouche Shafik, Mark Benson or Greg Medcraft, an unrelenting tough stance is guaranteed. I say it every time but cannot we find a suitable UK candidate out of 60 million people to choose from for this job? In the Daily Mail this morning editor Alex Brummer was keeping up the anti-bank momentum with his review of the film based on Michael Lewis’s book ‘The Big Short.’ You know I don’t think Alex likes banks!

 

UK Companies posting results this week – Wednesday – BARRATT DEVELOPMENT, DUNELM, J SAINSBURY, TULLOW OIL, Thursday – TESCO, AB FOODS, BURBERRY, ASOS, WILLIAM HILL, PREMIER OIL, SIG, BOOKER, ASMORE, JD SPORTS, HOME RETAIL, MOTHERCARE, SUPERGROUP, Friday – EXPERION, BOVIS HOMES.

 

US Companies posting interim results this week – Wednesday – SUPERVALU, Thursday – BEST BUY, INTEL, Friday – GOLDMAN SACHS, JP MORGAN, CITIBANK, BLACKROCK, GE, WELLS FARGO.

 

Economic data this week – Wednesday – US BEIGE BOOK, US TREASURY BUDGET STATEMENT, Thursday – US INITIAL JOBLESS CLAIMS, PHILI-FED.

 

David Buik

 

Market Commentator – Panmure Gordon & Co

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