TODAY’S FAYRE – Sunday 3rd April 2016


“He wakes, who never thought to wake again, 
Who held the end was Death. He opens eyes
Slowly, to one long livid oozing plain
Closed down by the strange eyeless heavens.
He lies;
And waits; and once in timeless sick surmise
Through the dead air heaves up an unknown hand,
Like a dry branch. No life is in that land,
Himself not lives, but is a thing that cries;
An unmeaning point upon the mud; a speck
Of moveless horror; an Immortal One
Cleansed of the world, sentient and dead; a fly
Fast-stuck in grey sweat on a corpse’s neck.

I thought when love for you died, I should die.
It’s dead. Alone, most strangely, I live on.” 


 Rupert Brooke – soldier & poet – 1887 – 1915


Friday was ‘April fools’ day’ and there some great spoofs in the media.  I particularly enjoyed the Daily Mail’s scoop that Olivia Colman would replace Daniel Craig as 007 – Nice one!


The best national April fool’s day ruse I can remember took place in April 1957, when Richard Dimbleby, on BBC’S flagship current affairs programme – Panorama – showed viewers footage of spaghetti being harvested from trees growing in the Po valley.  I can remember the ‘Old Man’ saying ‘I could have sworn blind that spaghetti was made from flour water and eggs!’ It took about an hour before we realised our stupidity.


Not many would recognise with Adolphe Adam’s music in isolation.  However many of the Royal Ballet’s loyal followers will be familiar with ‘Giselle.’  The performance at Covent Garden last night was the 577th production.  Akane Takada danced the leading role of Giselle and she was partnered by Nehemiah Kish. It was a privilege to be there.  Much as we may all have admired Fonteyn, Nureyev, Baryshnikov, Sibley, Dowell and Makarova in their ‘hay day’, respectfully in terms of athleticism, fitness and poise, they don’t hold a candle to today’s top ballet dancers.



Charles Moore in the Spectator on ‘Operation Midland’, which ironically was closed down in ‘Holy Week!’ – “Tom Watson, Labour’s deputy leader, should be carved in to one of those grotesques depicting human vice which often appear on medieval misericords, his tongue protruding  from his fat cheeks, representing Rumour!”



German establishment newspaper Die Welt (The World) has published a sympathetic article about former Conservative politician and Cabinet Minister Enoch Powell, who warned of the dangers of mass immigration – often vilified by the left as racist. Powell’s infamous ‘Rivers of Blood’ speech in 1964 saw this intellectual genius punished mercilessly for stepping out of ‘synch’ with the political correctness of the day. Enoch Powell was a man of conviction and rather than go quietly to the House of Lords following his dismissal from the shadow cabinet he preferred instead to fall on his sword to show up the folly of official policy on mass migration. He will look down on us from above and smile benignly!


The week started off confidently. Having seen most mature indices creep back over the Plimsoll line for the year, most investors nurtured aspirations that ‘hope might Spring eternal!’ In terms of the UK 4th quarter GDP for 2015, it was revised up to 0.6% from 0.5%. However the current account deficit last year increased by £12.5 billion to £32.7 billion – the largest quarterly deficit for 60 years. Consumer confidence in the UK was benign. Bank lending was indecently robust, which necessitated the Bank of England to raise capital requirements for lending by 0.5% in the hope of preventing any property bubble. As it happens most UK banks’ tier One capital percentage rate is in excess of minimum requirements. Heading up to the increased change in stamp duty for ‘buy-to-let’ purposes there has been a 71% increase in home sales to £17 billion in 2 weeks according to Countrywide. 


What of the rest of the big wide world last week? It was pleasing, though it emanated from a low level, that China’s factory activity in March. It may only be a temporary aberration but we’ll take it. Japan, despite all the Abenomics and stimulus packages, which would have sent, by way of comparison, most junkies to Valhalla and back, posted a deeply dispiriting Tankan business survey, which offered little in the way of solace. Inevitably the NIKKEI closed down 4.9%, aided and abetted by a strong Yen. 


Finally in terms of economic data let’s assess Friday’s US Non-Farm payrolls. The headline number was good in March with 215k jobs being created, though the unemployment rate crept up from 4.9% to 5%. Average earnings rose from 2% to 2.3%. Inflation remains benign below 2%. However US ISM manufacturing rose last month from 49.5 to 51.8 in March. Despite this relatively satisfactory data the FED remains very circumspect about any interest rate rises, mainly due to global growth concerns. However last week economists’ expectations of a rate rise in June rose from 20% to 26%. 


The net result of last week’s market machinations was that the S&P added 1.3% in value with the FTSE 0.65%, with European stocks attracting profit takers after a decent rally, thus easing by 0.79%. Brent Crude fell 4.3% and gold dropped $14 an ounce to $1217.


On the Street of Dreams Urban Outfitters, owner of an increasingly popular brand ‘Anthropology’, caught investor’s imaginations. Its share price has rallied by 50% in recent months. The energy sector in concert with oil prices experienced a lack lustre week. Blackberry fell 7.5% and on the plus side Tesla Motors made progress adding 3%. Anbang Insurance of Taiwan pulled out of buying Starwood Hotels, leaving the way open for Marriott Hotels to whisper sweet nothings in Starwood’s ears. Premier Foods rejected a third offer from McCormick of the US, but pressure is being brought to bear to conclude a sensible deal. Sports Direct’s Mike Ashley has been ordered by the courts to hand over texts concerning a former advisor, who is suing Mr Ashley for £14 million. In Europe, Orange is terminating talks to buy Bouygues’ telecom unit for €10 billion. Bouygues posts numbers on Monday. 


M&S posts a trading statement on Thursday and its weeping sore – general merchandise – is not expected to lift the spirits of the new incoming CEO, Steve Rowe or for that matter shareholders. Sales in the last quarter on this sector may have fallen by as much as 3.4%. The Sunday Telegraph business editor James Quinn has written a brilliantly sympathetic article on LSE’S Xavier Rolet and why this operation should be swallowed up by Deutsche Boerse in a merger of equals – With respect I don’t think so! – No such thing. Rolet dismisses the alternative bed partner ICE, as a kind of slash and burn owner. However money talks. Many still believe that the status quo should remain. However for the LSE to be the senior partner with DB would be attractive, dovetailing with London as the world’s larding financial centre. 


Finally Tata and the forthcoming closure/sale of steel works in South Wales, resulting in the loss of 20k jobs plus probably 20k more from ancillary operations associated with steel. It is a human tragedy, but no one can say that Tata did not give it its best shot having paid £6 billion for Corus in 2007 and dropped a couple more billion in attempting to revive it. However the witch hunt against the government is probably unfair, despite rumours that it did nothing but encourage the development of its relationship with China. The EU is guilty over a decade of not implementing a safety mechanism of unrealistically cheap piles of steel in terms of quotas. In the last 10 years UK production has fallen by 52%, the US by 28%, France 27% and Germany 18%. What is alarming is that Tata is looking to dump the pension scheme in to a state backed life boat. There is talk of another Indian dynasty taking a look at the steel industry and that is Sanjeev Gupta of Liberty House. It will be interesting to hear what BIS Secretary Sajid Javid has to say when the dust has settled. Steel production was always an accident waiting to happen. 


UK companies posting results – Monday – ITE Group, Tuesday – AA, IAG (TS), Tate & Lyle, Wednesday – HSS Hire, Topps Tiles (TS), Thursday – M&S (TS), Dunelm (TS) Alliance Pharmaceuticals.


US companies posting interim results – Tuesday – Walgreen Boots Alliance, Darden Restaurants, Wednesday – Monsanto, Constellation Brands, Apollo, Bed, Bath & Beyond, Thursday – Fred’s, Rite Aid, Ruby Tuesday, L-Brands, Gap.


Economic Data – Monday – UK PMI Construction, Tuesday – BRC Sales, UK PMI Services, Wednesday – Halifax house prices, Thursday – US Initial Jobless Claims, Friday – UK Trade Balances & Industrial production.

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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