TODAY’S FAYRE – Sunday, 21st February 2016


How clear, how lovely bright,

How beautiful to sight

Those beams of morning play;

How heaven laughs out with glee

Where, like a bird set free,

Up from the eastern sea

Soars the delightful day.


Today I shall be strong,

No more shall yield to wrong,

Shall squander life no  more;

Days lost, I know not how,

I shall retrieve them now;

Now I shall keep the vow

I never kept before.


Ensanguining the skies

How heavily it dies

Into the west away;

Past touch and sight and sound

Not further to be found

How hopeless underground

Falls the remorseful day.”



AE Housman – poet – 1859 – 1936




I doff my ‘titfer’ to PM Cameron for achieving what he did for the UK at the EU renegotiations meetings this past few tortuous weeks. For endeavour, he certainly gets four miles in a bog!  As they say in NH racing parlance – ‘He stays longer than the mother-in-law!  I think it’s a very considerable achievement, but I suspect nothing like enough to appease those who feel the UK in the long term would be far better off with a fresh start, out of the chains of bondage of EU bureaucracy; free from gargantuan levies and able to trade unimpaired with the entire free world. The headline clauses agreed by Mr Cameron sound encouraging at a first glance, but are possibly not much better than a sieve. Of course the UK can object to as many issues as it likes, but right of veto?  I somehow doubt it. 


George Osborne has also been very high profile and relentless in attempting to exempt the UK financial system from EU regulatory controls with some success. Despite the scaremongering campaign and the fact that so many large financial institutions have gagged their employees from either supporting BREXIT or declaring their concern about continued membership, the City would have done and will do splendidly either in or out! I constantly have to remind doubters that London is the centre of the time zone, English the business language and London is the BEST at raising capital and financing foreign trade and sorry! – Frankfurt, Paris Madrid etc. – eat your heart out! Finance belongs to London.  Call me arrogant!


I have to smile wryly that the FTSE 100 companies and international financiers have already massed their troops in the newspapers this morning! They, to a man, stand to lose too much of a grip, but we – the SMES and the ‘widget makers from Wisbech’ – this is our chance to make history – to make the UK a country to be really proud of.  I am sure that the BREXIT standard bearers with hopefully another ‘big beast’ in its ranks by the end of the day, will be up to the challenge.


“One swallow does not a summer make, nor one fine day; similarly one day or a brief time of happiness, does not make a person entirely happy.” Similarly, one brief rally does not make a bull market! – Aristotle (384 BC – 322 BC).


I’m always thinking about losing money as opposed to making money. Don’t focus on making money, focus on protecting what you have – Paul Tudor Jones – Private asset manager – 1954 –




The eloquent and loquacious Christine Lagarde has won another term managing Director of the IMF, holding on with a vice-like grip as an unelected member of the Troika in Europe.  There was just no competition and the world of international finance needs to keep her there because she has done a great job threatening countries to shut down all tax havens. Her reward is another 4 years as economic dictator in Europe and possibly the world.


The massive 3-day relief rally at the beginning of last week – over 6% by the FTSE 100 – was triggered by an 8% rise in the value of crude, courtesy of an accord agreed by Iraq, Russia and Iran quietly. On Thursday, the momentum had started to peter out and by Friday, it had all but dissipated. The likes of Glencore, with fresh debt arrangements in place and Anglo-American posted huge ‘double-digit’ gains during the week of the order of circa 16.5%. Oil company valuations bobbed around by as much as 3% at a time. Retail stocks were popular and banks which had enjoyed a terrible start to the year, taking some of those banks’ values below those achieved at the beginning of 2009. These financial titans enjoyed quite a renaissance at the beginning of the week, led by indecent gains made by the likes of Deutsche Bank and Commerzbank. My pea-sized brain is becoming irritated with the fact that this measurable global equity pull back, which started in December of last year, has largely been blamed on the continuing drop in oil prices and China’ economic woes and growth anxieties.  Frankly, in the words of all East-end sages – cobblers! 



The fact remains most mature indices were over-valued by the beginning of the end of the first quarter of last year. There has been no inflation to speak of. Many equity holders were highly leveraged. Some sovereign wealth funds have been heavy sellers, resulting in the financial sector suffering more than most. So all we have seen is a very sharp, painful and logical realignment – in all fairness quite healthy. Last week the FTSE 100 made a net gain on the week of 4.25%, with the S&P 500 wading in with. Again of 2.72%, Euro stocks putting on an average of 4.3% and the Nikkei grabbing the yellow jersey with huge gains of 6.8%, thanks to the relentless quest by PM Abe to brainwash Japan into adopting negative interest rates, which he insists is the only road to economic ‘Valhalla’. He’s wrong, but there you go! For an excellent insight to the dangers of negative interest rates read Panmure’s Chief economist, Simon French’s article in Saturday’s Times.


Though there has been some evidence of flight to quality this week, though gold has actually fallen a net 6% to $1260 an ounce. China’s governor of the PBOC reiterated that there was no basis for a persistent depreciation of the yuan. Bond rates steadied early in the week, but yields started to drift towards the end of the week, with the yield on Greek 10-year bonds drifting as low as 10.25%. Ah well I suppose being part of the EU helps Greece. The ECB will be there to pick up the pieces in perpetuity!


On the Street of Dreams last week many eyes were on US banks, which had been the recipient of quite a leathering since early January. Investors felt there was value in this sector going forward. On a regulatory basis these banks were in better shape than their European counterparts. Investec’s Wealth’s Charles Newsome was one wise old sage that made this observation.   It was interesting to note that Jamie Diamond had bought $26 billion worth of shares at JP Morgan. The FED’S Janet Yellen came out with quite dovish comments on interest rates in the immediate future. Of those companies that had reported Nordstrom had lost 8% in value, Shares in Deere by 4.8% and Best Buy by 3%. Walmart posted very disappointing sales numbers for the last quarter, which saw shares down 3% on Thursday. So the fact that Asda, the UK subsidiary of Walmart hit a brick wall with sales falling 5.3% over the three weeks covering Christmas, was no surprise.


In the UK last week the data on employment was fairly positive with the unemployment rate falling to 5.1%, though wage inflation remained fairly neutral at about 2%. Inflation was benign, but recorded its highest level last month of 0.2% for some time. A few UK equities were on the move, with companies such as BAE Systems (+6%) and Centrica (+2%) making measurable gains. Sainburys’ did not expect to have their party spoiled by South Africa’s Steinhoff International coming up with a competitive bid of £1.3 billion and may seek an extension to complete the deal.  Ahead of next week’s numbers Ophir Energy put on 4.4%.


We await figures from HSBC on Monday, Standard Chartered Bank on Tuesday, Lloyds Banking Group on Thursday and RBS on Friday. Lloyd’s Antonio Horta Osorio wants to pay a £2 billion dividend, which might stick in the crawl of taxpayers which are still owed circa £9 billion. The Black Horse is expected to post a profit of £1.7 billion but another £2 billion provision for PPI may also be incurred. Don’t forget RBS may post a loss of £1 billion plus £1.5 billion set aside for US mortgage security fraud and £500 million for more PPI provisions. Restructuring charges are likely to wipe out Standard Chartered Banks’s chances of showing any profit. HSBC starts the ball rolling on Monday with possibly a $3 billion increase in annual profits to $21 billion. The dividend should be maintained.  In 2014 level the dividend payable was $9.6 billion.


U.K. Companies posting results this week –   Monday – HSBC BANK, Gemfields, AB Foods, Bovis Homes, – Tuesday – BHP Billiton, Provident Financial, Drax, Persimmon, Standard Chartered Bank, IHG, Ladbrokes, Unite, Croda Wednesday – Petrofac, Barratt Development – Thursday – Lloyds Banking Group, Coats, Countrywide, Kaz Minerals, STV Group, Mondi, RSA, Merlin Entertainment, Serco, BATS, Rentokil,  – Friday – IAG, Rightmove, RBS, William Hill, Pearson

US companies posting interim results – Monday – Dean Foods, Tuesday – Toll Bros, Wednesday – Target, TJX, Dynergy, Thursday – GAP, Friday – JC Penney

ECONOMIC DATA – Monday – CBI Industrial orders, Tuesday – UK BBA Mortgage approvals, Wednesday – US New Homes sales, Thursday – UK GDP estimates, US Initial Jobless Claims


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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