TODAY’S FAYRE – Tuesday, 16th February 2016


Before the Roman came to Rye or out to Severn strode,

The rolling English drunkard made the rolling English road.

A reeling road, a rolling road, that rambles round the shire,

And after him the parson ran, the sexton and the squire;

A merry road, a mazy road, and such as we did tread

The night we went to Birmingham by way of Beachy Head.


I knew no harm of Bonaparte and plenty of the Squire,

And for to fight the Frenchman I did not much desire;

But I did bash their baggonets because they came arrayed

To straighten out the crooked road an English drunkard made,

Where you and I went down the lane with ale-mugs in our hands,

The night we went to Glastonbury by way of Goodwin Sands.


His sins they were forgiven him; or why do flowers run

Behind him; and the hedges all strengthening in the sun?

The wild thing went from left to right and knew not which was which,

But the wild rose was above him when they found him in the ditch.

God pardon us, nor harden us; we did not see so clear

The night we went to Bannockburn by way of Brighton Pier.


My friends, we will not go again or ape an ancient rage,

Or stretch the folly of our youth to be the shame of age,

But walk with clearer eyes and ears this path that wandereth,

And see undrugged in evening light the decent inn of death;

For there is good news yet to hear and fine things to be seen,

Before we go to Paradise by way of Kensal Green.”



 GK Chesterton – author & poet – 1874-1936


So the HSBC conundrum – ‘go east or stay’ – has been satisfactorily negotiated. Good sense has prevailed. Chairman Douglas Flint goes at the end of this year to be followed by Stuart Gulliver in 2017. There is plenty of time to identify and break in a new CEO. The idea that HSBC may relocate 1000 members of staff, who would head for Paris, in the event of the UK come out of the EU, is in my humble opinion, fanciful. Gulliver has played the game and has announced contingency plans, which in his heart of hearts, knows is no more than political posturing, pandering to the fearful scaremongering from the big battalions of ‘Big’ business.

Regardless of the outcome of the vote, apart from temporary turmoil, the ‘City of London’ will grow in stature. London is the centre of the time zone; English is the international business language of the world and in terms of raising capital, financing foreign trade and trading and this great City has no peer. In the event of BREXIT, if Frankfurt, Paris, Brussels, Milan, Amsterdam, Rome or Madrid thinks that they are going to steal a piece of London’s action, they can all whistle. London is where it is at. The financial community loves doing business in London. To give you an idea, where I live in South West London, English is almost a minority language. The French, Italians and Germans are rampant. They love it and so do we love having them there!


I must confess to feeling very sorry for PM Cameron who cheerily carries on his charade with European leaders in the hope that he can deliver the ‘fatted calf’ in terms of favourably renegotiated terms of membership. With all the issues that prevail over immigration and sovereignty, he will do well to satisfy the electorate that we should remain on the terms he has achieved, which look very nebulous. However it is unfair to attempt to judge until we all have sight of the small print.


With the Street of Dreams shut yesterday for President’s day, markets were probably denied the opportunity of assessing the strength or brittleness of the recovery. Today should prove a very interesting session. Oil had a good day gaining 4% and many observers seem to be attaching some credence to the forthcoming talks between Saudi and Russia in Doha on this sensitive issue. Europe had a great day with the DAX adding 2.67%, the CAC 3.01% and the FTSE 100 2.04% – +116 to 5824. Reckitt Benckiser grabbed the ‘yellow jersey in adding 6.8%. Apart from Randgold which surrendered a bit of value thanks to a dip the price of gold, mining stocks maintained their poise as did banking stocks, though in comparison to their European cousins, their resurgence was modest.


The likes of Monte Dei Paschi+9%, Popolare +7% and Intesa +3% are of course attempting to recover from severely trashed levels. I was amazed to see the Greek stock market rally by over 7% yesterday. The Government posted a budget surplus of €1.19 billion. That looks like a temporary blip to me. Market observers such as myself were somewhat bemused by comments made by ECB President Mario Draghi on the state of European banks. Draghi believes that their recent retrenchment is down far more to the weaker than expected economic outlook than any regulatory issues. I think we are about to hear “We will do all that is required” again! One cannot help feeling that had the ECB been allowed by Merkel and her cohorts to step up to the plate over this ailing sector earlier than it did, the potential problems may not have been so acute. Also I must confess to not being a fan of negative interest rates. That policy is fraught with danger. It may cut the value of specific currencies but it also erodes margins of profit, which will increase the dole queue.


This morning the ASX closed up 0.25% and the NIKKEI attempted to crack on after yesterday’s huge surge – up 0.2% – big sell-off in the last 90 minutes (2%). Towards the close the Shanghai Composite was up 3.2% and the Hang Seng was 0.9% to the good. This Chinese rally is all the more quixotic considering that we heard that provision for Chinese banking bad debts of $195 billion had been posted. Also the Yuan posted a measurable gain against the Greenback today.


This morning the FTSE 100 opened up 50 points at 5875 at 8.25am. Mark Cutifani, Anglo-American’s CEO posted a loss of $5.545 billion, much of it down to a 24% average drop in the value of commodities and included write-offs totalling $5.7 billion. However what we were all interested in was the future. Assets valued at $4 billion are likely to be disposed of. Anglo will be focusing on platinum, copper and gold. There may also be a disposal of Kumba, which has had its problems over the years. The shares rose 5.5% from a very low base. This company has shed 80% in value over the past 2 years. Pendragon posted decent car sales – shares up 1.5%. Merlin Entertainment announced a new CFO from Dechra. Vodafone concluded a small deal in Holland involving its Dutch operation and that of Liberty Global – the start of things to come? BP +3% and RDS +2.5% responded to the overnight hike in oil prices and the latter on a decent note from Bank of America.


Inflation data fin the UK, announced at 9.30am, is likely to remain very benign at between zero and +0.2%. However we should all be keeping an eye on credit and employment data. As matters stand the UK’s economy is in good shape; so there should be little concern about the lack of inflation whilst the status quo remains.



  US companies posting interim results Wednesday – NEWMONT MINING, JACK-IN-THE-BOX, MARRIOTT INTERNATIONAL, Thursday – APPLIED MATERIALS.

  ECONOMIC DATA –  Tuesday UK CPI, RPI and US NAHB INDEX, Wednesday – UK employment data, US Housing Starts, US industrial Production & FOMC minutes, Thursday – US Phili-Fed Index, ECB meeting


David Buik


Market Commentator – Panmure Gordon & Co 


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