TODAY’S FAYRE – Friday, 11th March 2016
“Life and Thought have gone away
Side by side,
Leaving door and windows wide.
Careless tenants they!
All within is dark as night:
In the windows is no light;
And no murmur at the door,
So frequent on its hinge before.
Close the door; the shutters close;
Or through the windows we shall see
The nakedness and vacancy
Of the dark deserted house.
Come away: no more of mirth
Is here or merry-making sound.
The house was builded of the earth,
And shall fall again to ground.
Come away: for Life and Thought
Here no longer dwell;
But in a city glorious –
A great and distant city -have bought
A mansion incorruptible.
Would they could have stayed with us!”
Alfred, Lord Tennyson – poet – 1809 – 1892
Today is the fifth anniversary of the Fukushima disaster, when an earthquake triggered a huge tsunami which triggered the death of 19,000 people on the North East coast of Japan. RIP
The removal of nuclear fuel from the Fukushima power plant that suffered triple meltdown following 2011 tsunami could take 40 years or more.
Those of you who occasionally mull over my missives will know I have a penchant for the Donmar Theatre or other equally insalubrious establishments that put on top quality theatre. One such establishment is the Park Theatre in Finsbury Park. The current production is ‘The Patriotic Traitor’ by Jonathan Lynn. This is story of the relationship between Marshall Phillippe Petain and Charles de Gaulle starting in 1913 all the way through to Petain’s trial for collaborating with the Germans and subsequently for treason in July 1945. Petain had been chief of state of Vichy France. He was found guilty but de Gaulle reprieved Petain from execution under a firing squad. Tom Conti played Petain and Laurence Fox de Gaulle. Both performances were outstanding – Conti as the compassionate pragmatic soldier and de Gaulle as the arrogant intellectually patriotic nationalist. Petain died in prison in 1951 aged 95.
ECB President Mario Draghi did not disappoint his acolytes with his well-chronicled and far ranging four part increase of his stimulus packages for the EU. However the cynics felt that comments he made implied these measures were the last ‘hurrah’ for interest rate cuts. Therefore, was the ECB’s arsenal of financial weapons dissipating? What the ECB was forced to do was in response to the shambolic state of some of Europe’s economies, was as a result of the following. In the EU 16.5 million are unemployed, which includes 3 million people under the age of 25. Deflation stares the EU in the face. Growth is minimal (1.4% in 2016 and maybe 1.7% in 2017, but don’t hold your breath) and banks are both brittle in terms of capital and at the same time reluctant to lend with such an absurd interest rate structure.
Draghi dropped the repo rate from 0.5% to zero. The ECB’s lending rate was lowered by 0.05% to 0.25% with effect from 16th March 2016. The deposit rate was eased by 10 basis points to -0.4%. The QE facility was increased from E62.5 billion to E80 billion. The ECB was also prepared to take longer dated collateral and selected commercial bonds for refinancing. Draghi maintained that inflation was likely to be close to non-existent. Will all this news affect the judgement of the FED, BOJ or the Bank of England in their decision making process – I doubt it! Also will these measures encourage bank lending? No! Will it just keep hopeless zombie loans in place? Yes!
The reception to this news was muddled. Initially equities in Europe and the US sold off. The Euro strengthened for reasons best known to itself. However late in the Wall Street session these trends flip-flopped. Yesterday the FTSE closed down 1.78% down 109 at 6036. However this morning in response to activity in New York the FTSE 100 should regain about 80 points at the opening. The Street of Dreams initially posted measurable losses, but decent initial jobless claims and the oil price rallying saw the mood change from negative to dispassionate. Having rallied strongly illogically, the Euro then sadly sagged. The DOW closed down -0.03%, with the S&P up by a similar amount +0.02% and the NASDAQ a little off colour – down 0.26%. Despite an unpleasant rebuttal by the DOJ, who described Apple’s defence of its secrecy policy as false and corrosive rhetoric, he tech giant’s share price hardly moved – -0.03% to circa $101.
In London not surprisingly it was energy and mining that lost ground with challenger banks disquieted by news from Brussels. Also Ashtead, Tullow and Premier Oil failed to please their acolytes. Home Retail’s Argos will have been pleased to see some sales had improved ahead of the decision making process which will decide which company it falls in to the ‘scratcher’ with – Sainsbury or SA’S Steinhoff for £1.3-£1.5 billion. Aviva posted decent numbers yesterday with a 20% hike in profits to £2.67 billion with a 15% increase in dividend. However 40,000 pensioners cashed in £650 million to exploit the Chancellor’s new pension arrangements. Shares rallied by 3.36%. Wm Morrison saw improved sales in the last quarter – up 0.2% and returned to profit (£272m against a loss of £792m last year). New services including dry cleaning and specialist local food requirements have helped Dave Potts’s management team’s cause. However in the last 3 months shares had rallied by 30% so not surprisingly 4.5% was shed yesterday – travelled and arrived.
It looks as though the battle for the LSE’s hand in marriage is ‘hotting’ up. Deutsche Boerse is ‘upping the ante’ by perhaps as much as £800 million. As a strategic move DB has agreed to sell its US options outfit to NASDAQ for $770 million. Don’t expect ICE to watch the world go by. I suspect there is plenty of ammunition left in their tank! Let battle commence.
Old Mutual posted profits for the year of £1.8 billion for the last year. Bruse Hemphill the CEO announced the company would be broken up.
Bruce Hemphill, Group Chief Executive, commented:
“The strategy we have announced today sets out a bold new course to unlock value currently trapped within the Group structure.
“We have four strong businesses that can reach their full potential by freeing them from the costs and constraints of the Group. As you can see from our results, these businesses are performing strongly, have excellent competitive positions in sizeable markets and the underlying growth potential to flourish independently.
“Our new strategy will allow each business to have simpler access to capital markets to fund its growth more easily and be valued more appropriately, with more straight forward regulatory arrangements. We are announcing today a strategy that will allow us to release the potential within the Group for the benefit of all its stakeholders for many years to come.
“There is likely to be a range of external influences on future Group reported earnings including slower economic growth, exchange rates and equity market volatility and how we execute the managed separation. We nevertheless believe that our four strong businesses are well placed to continue to perform strongly in their domestic markets.”
UK companies posting results today – Friday – Pace, Old Mutual, Computacenter
Economic Data –Friday – UK Trade Balance
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