TODAY’S FAYRE – Wednesday, 16th March 2016


“Looking up at the stars, I know quite well

That, for all they care, I can go to hell,

But on earth indifference is the least

We have to dread from man or beast. 


How should we like it were stars to burn

With a passion for us we could not return?

If equal affection cannot be,

Let the more loving one be me. 


Admirer as I think I am

Of stars that do not give a damn,

I cannot, now I see them, say

I missed one terribly all day. 


Were all stars to disappear or die,

I should learn to look at an empty sky

And feel its total dark sublime,

Though this might take me a little time.” 


 WH Auden – poet – 1907 – 1973


The revamped racecourse at Cheltenham looked a picture for the start of the festival yesterday, as 50,000 racing acolytes roared their heads off as the tapes went up for the SkyBet Supreme Novices Hurdle.  It was a Mullins/Ricci/Walsh barnstorming show, with ‘Annie Power’ of the three winners they had, looking a very high class act in the Champion hurdle – the first mare to win it since ‘Dawn Run’s’ effort in 1984. Could this 8-year old daughter of ‘Anno Luce’ win the RSA next year and the Gold cup in 2018? I suspect she may be a bit long in the tooth at 10 years of age and I would imagine Rich Ricci will want to breed from her!  


The general news flow is rather quiet today though there are three very large issues on the agenda – starting with a sort of peace offering from China form Premier Xi guaranteeing growth estimates for 2016 in attempt to get approval for his 5 year economic plan. I hasten to add there are probably a few cynics out there. Then, of course, there are the contents of the FOMC statement tonight. The FED is likely to resist the opportunity of hiking rates in March, though many will be surprised if it is not a distinct possibility in June, subject to the data continuing to improve, particularly employment data and wage inflation. The Dollar seems to have strengthened on the back of that possibility. The froth has come off crude oil prices, which may be responsible for investors skimming back some of their recent slew of profits. Yesterday proved to be rather an enigmatic session on the Street of Dreams, following in the wake of a very flat session in London, where the FTSE 100 eased by 34 points to 6139. The only news of interest was Canada’s Valeant losing over 51% in value, having failed to deliver satisfactory progress. Investors seem to have lost their appetite for risk or maybe it’s just good old fashioned ‘bottle’ with so many economic and political imponderables prevailing. Sainsbury didn’t have any news about Argos with its improved trading statement (like-for-like sales in the last quarter up 0.1%). Asian markets were very lack-lustre despite the Chinese PM’s reassurances. The ASX closed +0.1%, with the NIKKEI lower by 0.8% and the Shanghai Composite up 0.25% and the Hang Seng down 0.1%.


This morning there was confirmation of an agreed merger between the LSE and Deutsche Boerse. If there has to be a deal, this is the right one. The synergy is very good – cost cutting, derivatives and regulation plus making the joint venture a global operation, offering an appetising service for IPOS and corporate finance. If ICE mounts a higher bid, this would not be good news, as in time the LSE might be swept aside in to meaningless ignominy. ICE appears to be all about cost cutting and power. However, taking it as read that there is no such thing as a merger of equals I find it very hard to get my head around the fact that Frankfurt could ever be a more influential financial centre than London. So why couldn’t the LSE be the senior partner? Though Donald Brydon, aged 70, the former chairman of Royal Mail, who is doubtless the pillar of financial society, has agreed to remain NON-EXECUTIVE chairman for 3 years, what a classic springboard to blow UK influence aside for ever and a day, once he has gone. The UK will have lost its power base. Xavier Rollet has been a brilliant CEO of the LSE and fully deserves to walk off in to the sunset with £14 million. Since he joined in 2008 the share price is up from £6 to £29. We know he has political aspirations and may even dreams of becoming French President one day, but is this merger really necessary?


And finally to today’s Budget, to which I confess I bring little to the party, apart from a few comments and other people’s ideas which I fully support. Firstly it strikes me as folly to continue with long range forecasts on growth. Everyone’s guesses are inevitably wrong! When they are wrong the government dilutes any possibility of being flexible both with austerity and tax cuts. Why nail your flag to the mast when you don’t have to? I will leave the analysis of the detail to Panmure’s excellent economist Simon French.

On the way back from Cheltenham yesterday he threw me a couple of curve balls at me, which captured by imagination. He felt it must now be time for the Government to press forward with completing a single infrastructure (IT, Shared Services, Property Management, Financial Reporting, HR, Data Sharing) to service all government departments. Already conceived under the Government as a Platform program, this would enable several ministries to merge – and create super-ministries for International Services (FCO & DfID), Home Affairs (MoJ and HO) and Financial Transactions (HMRC & DWP) – or be abolished completely in the case of BIS or DCMS, thus making significant savings. Finally some real initiatives for SMES should be introduced such as a digital bureau that offers ‘start-ups’ a real tangible infrastructure for banking, regulation, exports and corporate governance with tax breaks to go with it. The modern day Enterprise Zone is virtual rather than physical. Hope springs eternal.  Chancellor put some on the table!


UK companies posting results – Wednesday – Hikma, Smiths Group, Thursday – Premier Farnell, OneSavings Bank, International Game Technology, SOCO, Kier Group, Friday – Investec, Berkeley Group 


US companies posting interim results – Wednesday – JABIL Circuits, Thursday – Adobe Systems



Economic Data – Wednesday – UK Budget, FOMC statement, Thursday – MPC minutes, Friday – BOE quarterly bulletin and US Phili-Fed.


  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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