TODAY’S FAYRE – Thursday, 18th February 2016


“Why do I love” You, Sir? Because—

The Wind does not require the Grass

To answer—Wherefore when He pass

She cannot keep Her place.


Because He knows—and Do not You—

And We know not— Enough for Us

The Wisdom it be so—

The Lightning—never asked an Eye

Wherefore it shut—when

He was by— Because


He knows it cannot speak—

And reasons not contained— —

Of Talk— There be—preferred by

Daintier Folk— The Sunrise—

Sire—compelleth Me— Because

He’s Sunrise—and I see—

Therefore—Then— I love Thee—


Emily Dickinson – poet – 1830-1886


Having failed to make a point of seeing “Legend” when it came out on general release, I managed to catch with it yesterday. I must confess I wish I had never bothered.  I have been a fan of Tim Bevan’s work for years and I also believe that Tom Hardy is an actor of immense talent. He plays both Ronnie & Reggie Kray. I think the film was based on John Pearson’s brilliant book ‘The Profession of Violence’ – a must read for those who were around in the ‘60s.  However the film was just a compendium of gratuitous violence – there was certainly plenty of it with an excess of foul-mouthed expletives to add to the fairly unsubtle script! Two hours 20 minutes. Christopher Eccleston played the role of Det Inspector ‘Nipper Read. I was very surprised that the twins’ older brother Charlie Kray had no role in the film.  I was very disappointed with this production as I remember the book very fondly.


All of a sudden, right out of the blue from ‘left-field’, Iran decides it wants to join the oil stability pact with Saudi, Russia and others. So the price of crude in only 24 hours rallies by 7% and world stock markets wanted to believe that they have arrived at the gates of Heaven with St Peter there ready to welcome all comers.  I’m amazed, as not much has changed that materially – China’s data seems unlikely to improve in the immediate future. The minutes of the FOMC were dovish, implying that any future increase in rates will only transpire if there are increases in inflation. So the prospect of 3 to 4 hikes in rates this year is fanciful. Then Minneapolis FED director Kashkari expressed considerable concern about the state of the US banking sector suggesting that there is still the danger of there being too many banks that are not too big to fail. In all fairness, relative to China and Europe, banks in the US are in quite good shape.


In the case of Japan its latest trade figures have shown exports falling for a fourth straight month, according to official numbers. The country’s value of exports fell by 12.9% in January from a year earlier, supporting concerns that the slowdown in China – one of the country’s most important trading partners – is continuing to hurt demand. Imports, meanwhile, fell by 18%. Nonetheless the NIKKEI rallied by over 2% on the back of Kuroda-san insisting that negative interest rates will increase inflation, this stimulating growth – in his dreams. He needs to spend on infrastructure products to create jobs and therefore retail opportunities.


The net result of yesterday’s machinations is that equity markets went in to overdrive in Europe, New York and the UK – more a relief rally than anything else. It seems astonishing that the FTSE has added 6% in three trading sessions and is now down only about 3% on the year. The mining sector has rallied by 38% since 15th January. Yesterday Glencore grabbed 16%, Anglo American 17%. Sainsbury refused to be left out of the party – up 4.8%. Analysts were more upbeat about the benefits of acquiring Home Retail. BP cracked on +3% with Shell eclipsing that achievement with a 4% gain on the day. Even Vodafone for no particular reason was 3% to the good. This had all the hallmarks of a relief rally. There is still no getting away from the fact that European earnings have been poor with the US and UK just about acceptable but no better. I cannot remember the last time some good news came out of China – probably when ‘The Old King Died!’ Despite the litany of despairing news, investors remain buoyant. However one cannot help feeling that uncertainty could well deliver another bout of seismic volatility.


This morning better than expected numbers were posted by BAE Systems with the company believing it will increase EPS by between 5% and 10%. Sales were up by $1.3 billion to $17.3 billion. Centrica pleased its shareholders and saw its shares rally by 4% despite being adversely affected by a 24% drop in commodity prices. This afternoon we await results from Wal-Mart.


Finally mortgage lending in the UK on a year on year basis is up 21% with many wanting to beat the stamp duty increases, effective in April. Consumer lending also increased above levels of comfort to 3.4%. The Government and the BOE prefer lending to run in concert with GDP, which is probably at the 2.1 to 2.2% level. So expect the BOE to increase banks’ capital requirements for lending in to this sector by 0.5% to prevent any further expansion.



US companies posting interim results – Thursday – WALL-MART, APPLIED MATERIALS, MARRIOTT.

ECONOMIC DATA – Thursday – US Phili-Fed Index, Initial Jobless Claims ECB meeting

David Buik

Market Commentator – Panmure Gordon & Co

D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co

One New Change | London | EC4M 9AF | United Kingdom


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