TODAY’S FAYRE – Thursday, 14th January 2016
“Between us now and here –    

Two thrown together

Who are not wont to wear    

Life’s flushest feather –

Who see the scenes slide past,

The daytimes dimming fast,

Let there be truth at last,    

Even if despair.


So thoroughly and long    

Have you now known me,

So real in faith and strong    

Have I now shown me,

That nothing needs disguise

Further in any wise,

Or asks or justifies    

A guarded tongue.


Face unto face, then, say,    

Eyes mine own meeting,

Is your heart far away,    

Or with mine beating?

When false things are brought low,

And swift things have grown slow,

Feigning like froth shall go,   

 Faith be for aye.


Thomas Hardy – poet and author – 1840-1928


One night last week I was suffering more than usual from insomnia.  The newspapers didn’t seem an attractive option to get me back to sleep. So I switched the dreaded TV on at about 4.45am.  It was on ITV3 I think and behold there was an ancient episode of “RISING DAMP” from 1974 with Leonard Rossiter, Frances de la Tour, a very long-haired Richard Beckinsale  and Don Warrington.  I had forgotten how funny it was – Superb, subtle very dry humour.  I was in stitches even at that time of the morning!  I know the Michael McIntyres and Ricky Gervaises are all the rage these days.  But for me they don’t hold a candle to those comedians from yesteryear!   For me, Rory Bremner is about the only one who stands tall with those giants of old.


Yesterday I went to a well-attended meeting of ‘Business for Britain.’ The main speaker was that well-known and very successful entrepreneur Luke Johnson. BREXIT or ‘IN OR OUT’ is such an emotive subject.  People tend to be very passionate about their beliefs resulting in objectivity going out of the window


In the case of Mr Johnson, if I was ever in doubt, he cleared up any misgivings I might have had, with a calculated, concise, lucid and logical argument.  There was no hint of fear, misgivings or negative thinking – just excitement, enthusiasm and a string of positive reasons why the UK should not tarry a second from bidding the EU a fond farewell, keeping it as a much loved trading partner. What I enjoyed more from these speeches was the fact that neither Luke Johnson nor the CEO, Matthew Taylor felt it was either necessary or helpful to attempt to play the migration card.  There were plenty of solid reasons for welcoming the rest of the world into the bosom of our trading aspirations.


Firstly the EU is an undemocratic process.  Secondly it is felt that PM Cameron will come back with a half-baked agreement, which will satisfy very few.  There will be no chance of any treaty change and little in the way of sovereignty returning to individual countries.  In fact to make the floundering EU work it will inevitably have to become increasingly integrated and federalist as time goes by.  Thirdly the European Court of Justice will increasingly replace the power of our courts of law.


The UK pays a levy of £20 billion a year to be a member of a club (EU) which is an economic disaster. Out of that £20 billion London contributes £4 billion.  This levy would be far better spent on hospitals, roads and infrastructure. On top of that UK companies pay £20 billion per annum towards business compliance and 9 out of 10 SMES don’t do business in Europe. As for those concerned with a levy being implemented on import export business to Europe, as a result of leaving the EU; Fear not, we are too big a customer for the EU to make life difficult.  The UK is also a far greater exporter than importer to Brother EU. As for 3 million jobs being lost – nonsense!  Any slack will be picked up doing far more broad based business with the whole world.


Concern has been expressed about Scotland remaining within the UK, which is important. Would BREXIT force Nicola Sturgeon to table another independence referendum? I don’t think so. Scotland would have to seek independent membership of the EU without the use of Sterling and the price of oil falling out of bed; that would be calculated risk she may not want to take at this juncture.


The UK offers so much more in terms of growth than the EU in the long term. Strip Germany out of the EU equation and most other member countries are struggling. It was good to hear a vote of confidence for the UK from Toyota. The other little of nugget of information I was unaware of was that London is also the legal capital of the world.


Finally as for the City of London losing out – never! London is at the centre of the time zone.  English is the international language for business. London is the leading financial centre of the world.  All international banks and their employees love doing business here.  We are better at financing foreign trade, raising capital and trading than any other centre.  We are the best!  Fact! If Frankfurt, Paris, Brussels or Milan thinks they can capture this business as a result of BREXIT, whistle! No chance.  It ain’t going anywhere! The prospect of the UK deciding its own destiny is just so very exciting!


There was further carnage on Wall Street last night with the DOW shedding 2.21%, the S&P 500 2.5% and the NASDAQ 3.83%. The visceral retrenchment of U.S. stocks certainly intensified. The latest rout in a turbulent start to the year has erased at least $1.6 trillion from equities.


An early rally evaporated for a third day as declines of at least 5.8% in Inc. Twitter -4.6% and Netflix Inc -4% paced the selloff. Banks sank to their lowest close since May 2014, and energy companies fell as crude wiped out a 4% surge after data showed stockpiles continued to grow. The Russell 2000 Index closed in a bear market, sinking 3.3% to its lowest since 2013, and down 22% from a record set in June.


The start to this year has been catastrophic. The following losses have been made since 4th January 2016 – Shanghai 15.1%, Nikkei 9.4%, DOW 7.3%, S&P 7.5%, NASDAQ 9.6%, FTSE 4.5%, DAX 7.2% & CAC 5.3%. Since April 2015, when the FTSE hit its all-time high 7104, it has fallen 16.1%. Catastrophic is one thing buy cataclysmic is altogether another proposition. Though I have great respect for Ross Walker I think it is very opportunistic of RBS to call the market cataclysmic – sell everything! Let’s face it RBS has little presence now in equity or bond markets. In the case of Albert Edwards of Societe Generale he has been a bear since he left his mother’s womb, so it’s just the same old dish of despair! They call August the silly season for politics, thus January is for investment banking when they all try to draw attention to themselves.

Asian markets looked awful two hours ago. Machine orders for Japan were dire -14.4% against estimate of -7.9%. Just afterwards the Nikkei was -4.02%. It has ralllied since then closing down 2.7% with the ASX easier by 1.57%. Heading to lunch the Shanghai Composite has breached back in to positive territory – +1.95% with the Hang Seng just below the Plimsoll line – down 0.3%.


It is all about retail stocks today. Tesco saw group like for like sales +2.1% – UK +1.3% with transactions up 3.4% on last year – good effort reflected in last week’s upgrade and share price perfomance. Burberry saw sales flat but a big improvement on -4% in the previous quarter. As for AB Foods its jewel Primark only saw sales only +3% estimate +7%.


Opening suggested calls are as follows – Ashmore -1%, ASOS -1% Booker -2%, Tesco +3/5% William Hill -2%, AB Foods -2%. MPC Meeting today at noon. Any thoughts of a rate hike by MPC can surely be shelved for months – Global growth no inflation and strong Sterling suggests any change would be folly.





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


Economic data this week – Thursday – US INITIAL JOBLESS CLAIMS, PHILI-FED.


David Buik


Market Commentator – Panmure Gordon & Co 


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