Monthly Archives: May 2016


Bearing in mind that the Labour market is very strong and therefore the UK is a very good and attractive place to work and with data from the NIESR suggesting that the living wage in the UK is increasing, it would not be ridiculous to surmise that the current increased trend of migration in to the UK could not increase above the current rate of 330k per annum, unless government intervention changes or it intervenes. So forget the rate coming down to tens of thousands; frankly it is likely to go up! Over to you PM Cameron and Steve Crabb!

At present we don’t have the public services to cope with an increase in migration.  Do you have plans to cut migration over the next few years or are you going to raise taxation to pay for increased capacity?


I came in today determined to put my best foot forward, but no one wanted to play with me. The level of activity in the London equity markets was again derisory. At 4.00pm the FTSE 100 was down 25 points at 6246, having opened the session up 14 points 6285. It was the banking sector that sat up and took in some nourishment, with HSBC leading the way. However, that sector gave up the ghost and at the time of writing, banks were flat on balance, though Standard Chartered was down 2.5%. IG posted a decent trading statement but was up only 0.25% having been up 2% early on.

The Street of Dreams is currently down 50 points so there was no inspiration coming from across the pond.



TODAY’S FAYRE – Tuesday, 31st May 2016


“The Frost performs its secret ministry,

Unhelped by any wind. The owlet’s cry

Came loud—and hark, again! loud as before.

The inmates of my cottage, all at rest,

Have left me to that solitude, which suits

Abstruser musings: save that at my side

My cradled infant slumbers peacefully.

‘Tis calm indeed! so calm, that it disturbs

And vexes meditation with its strange

And extreme silentness. Sea, hill, and wood,

This populous village! Sea, and hill, and wood,

With all the numberless goings-on of life,

Inaudible as dreams! the thin blue flame

Lies on my low-burnt fire, and quivers not;

Only that film, which fluttered on the grate,


Still flutters there, the sole unquiet thing.

Methinks, its motion in this hush of nature

Gives it dim sympathies with me who live,

Making it a companionable form,

Whose puny flaps and freaks the idling Spirit

By its own moods interprets, every where

Echo or mirror seeking of itself,

And makes a toy of Thought.”


 Samuel Taylor Coleridge – author & poet – 1772-1834


Chester-Le-Street is Durham’s County ground. As discussed last week Durham has done brilliantly since being admitted to the County championship in 1992. However what a pity so few people bothered to rock up and salute Alistair Cook’s amazing achievement of being the youngest batsman (31) to reach 10,000 in test cricket. He joins an ‘august alumni’ to reach that goal, which include Sunil Gavaskar, Alan Border, Steve Waugh, Brian Lara, Sachin Tendulkar Rahul Dravid, Ricky Ponting, Jacques Kallis, Mahela Jayawardene, Shivnarine Chanderpaul and Kumar Sangakkara, who was the last man to join the club in December 2012. Cook probably has another 5 good year’s cricket in him!!


What is it with the North-East? When it comes to football they get their supporters out in droves, but other sports, the support for them seems very disappointing, considering it has an excellent catchment area. Apart from Northumberland Plate Day, which attracts a crowd of 25,000, the average race meeting at Newcastle attracts between 2,500 and 3000 people!


Superficially this week which includes the start of June, looks rather thin on the ground in terms of news but there are certainly a couple of issues, given the chance, would love to bubble over. Whilst we were enjoying Whit-Bank holiday fayre, Janet Yellen and James Bullard left the market in little doubt that a FED rate increase was very much on the cards – futures suggest a 30% chance in June and 60% in July. It is unlikely in June; to clash with the EU Referendum may not make sense, particularly as the current apocalyptical level of hysteria promulgated by the BOE, Treasury and other similar luminaries suggest there will be enough froth and volatility to contend with. Confirmation of another robust set of employment data on Friday (Non-farm-payrolls) with perhaps a really positive wage inflation number will give added capital for the FED to act. The Greenback rallied quite sharply; oil remained steady and gold continued to fall out of bed ($1213 an ounce).


The session in Europe yesterday was very quiet though positive – DAX ended the session up 0.46% and the CAC was 0.32% to the good. The outlook for the EU economy does not look quite as dire as perhaps it did in February. Thursday’s ECB Meeting is likely to record no change in inflation. However further QE or stimulus packages may be required by the ECB later in the summer. On the Street of Dreams the response to the FED’S ‘Bletchley Park Code Book’ was on the whole quite positive.


The DOW was up 0.25%, with the S&P 500 comfortable in adding 0.43% with the NASDAQ unchanged. Asian markets were cautious in their approach though China’s Yuan and the Yen welcomed the positive effect the strong Dollar could have on export business. At the time of writing the ASX closed down 0.54% and the NIKKEI closed +0.98%. Heading towards lunch time noodles the Shanghai was tripping the light fantastic +3.06% and the Hang Seng similarly +1.61%. Why such ebullience, I am none too sure part from currency gains and end of month adjustments. VW posted a 20% drop in profits – in line with expectations. It wasn’t a great day for the motor industry with Tata’s Jaguar Land Rover dropping a $1 billion, some of it due to a fire in their Chinese factory as well as a drop in demand. Talks are starting about a possible acquisition of Alliance Trust by Rothschild Investment Trust. HIKMA may make a quick return to the FTSE 100 tomorrow, having paid $2.65 billion for Roxane, at the expense of Inmarsat, which is likely to drop out.


GREECE – The fanfare and trumpeted deal announced last week to resume handing out bailout money to Greece sounded like old times: the International Monetary Fund working with European countries again as official lenders to Athens. In the end, the IMF and Dear Old Christine Lagarde replayed its brinkmanship role to perfection and have decided not to support Greece’s third rescue programme with its own financial contribution.

The IMF said it needs to see a concrete plan from the Greeks to substantially cut the country’s debt burden. Wednesday’s agreement by the Euro-Zone finance ministers failed to deliver that. But with the Greek economy still teetering with Athens owing the fund billions, can the IMF afford to stand back? Not a question of whether it can afford to or not, it has to. Ahead of the EU referendum vote if the IMF was to pull the plug, what cannon fodder that would give BREXIT! It will be another fudged deal increasing Greece’s debt to €85 billion. With a population of 11 million, as many have said so many times to a point of distraction – ‘Hell has a better chance of freezing over than Greece being able to service that debt let alone repay it and create growth at the same time.



 RIO DE JANEIRO— The state of Rio de Janeiro missed an $8.4 million payment to an international creditor as a debt crisis in Brazil’s state governments deepened amid what the federal Finance Ministry has called “out-of-control personnel expenditures. 2016 will be the second year growth in Brazil will have dropped 4%


UK companies posting results this week – Tuesday – Alpha Bank, IG Group, APC Technology, Wednesday – Halfords, Wolseley, Fusionex International, LondonMetric, Thursday – EKF Diagnostics, Johnson Matthey, Friday – Verona Pharma


US companies posting results this week – Tuesday – Zoe’s Kitchen, Wednesday – Ford Motor Company (sales), Thursday – Costco, Fred’s, Ciena, Joy Global, Gap


Economic diary for the coming week –Tuesday – BRC shop prices, US Chicago PMI, US consumer Confidence, EU employment, Wednesday – UK mortgage approvals, UK PMI manufacturing, Thursday – UK PMI construction, ECB, US Initial Jobless Claims,  Friday – US Non-Farm-payrolls & employment data, UK PMI services, EU Retail sales


David Buik

Market Commentator – Panmure Gordon & Co

+44 (0)20 7886 2775 Mobile – 0044 7788 144 877 Panmure Gordon & Co One New Change | London | EC4M 9AF | United Kingdom


TODAY’S FAYRE – Sunday, 31st May 2016


“By the merest chance in the twilight gloom,

In the orchard path he met me;

In the tall, wet grass, with its faint perfume,

And I tried to pass, but he made no room,

Oh, I tried, but he would not let me.

So I stood and blushed till the grass grew red,

With my face bent down above it,

While he took my hand as he whispering said-

(How the clover lifted each pink, sweet head,

To listen to all that my lover said;

Oh, the clover in bloom, I love it!)


I am sure that he knew when he held me fast,

That I must be all unwilling;

For I tried to go, and I would have passed,

As the night was come with its dew, at last,

And the sky with its stars was filling.

But he clasped me close when I would have fled,

And he made me hear his story.

And his soul came out from his lips and said:

(How the stars crept out where the white moon led

To listen to all that my lover said:

Oh, the moon and the stars in glory!)”


Homer Greene – lawyer, author & poet – 1853-1940



I thought the PM’S presentation at the G7 in Japan saw David Cameron at his very best – diplomatic, conciliatory and embracing – a first class polished performance. Metaphorically he attempted to throw a bucket of cold water on Chancellor Osborne’s and HM Treasury’s apocalyptic forecasts on inflation, growth, disposable income, mutilation of the Pound and the slashing of pension benefits, aided and abetted by such august bodies as the BOE, IMF, OECD! I suspect PM Cameron realises that this EU Referendum campaign could eventually be this Government’s nemesis, if international influence is brought to bear on the outcome of the Referendum. It may have felt like a body blow to the PM that his former guru and great friend, Steve Hilton, was not only critical of the way both factions have conducted themselves in recent weeks, but also that he came out in favour of the U.K. leaving the EU! I note all bookmakers are a minimum of 1/6 on for ‘REMAIN’ and 4/1 for VOTE LEAVE’ – giving nothing away, of course! However first past the post gives no indication of the political turmoil that will prevail if the vote is close! Should J-C Juncker’s chief of staff Martin Selmayr make derogatory remarks about international politicians not of his choosing? Surely it is not his job to criticise the prospect of welcoming Messrs Le Pen, Grillo, Johnson & others to his unelected federal table of bloated bureaucracy!


Chester-Le-Street’s cricket ground has grown fantastically in stature since Durham joined the county championship in 1992. The ground is very picturesque. A very good wicket has been produced; yet the crowd for the first day of the Test match on Friday against Sri Lanka was derisory. Had it been Trent Bridge or Edgbaston it would have attracted a large enthusiastic crowd. The parsimonious level of attendance looked embarrassing on TV. I was pleased to see that on Saturday the ground was all but full.


I am no fan of President Obama and nor do I think the UK has a special relationship with the US any more, despite my personal affection for the ‘Land of the Free!’ However when it comes to emotional and heart-rendering rhetoric as displayed by Mr Obama in his speech at Ise-Shima near Hiroshima on Friday, like President Clinton, he needs no coaching on presentational skills from RADA! Superb!


Despite the fact that oil temporarily nudged $50 a barrel threshold before mildly easing off towards the back end of last week and the US housing market looks to have selected another, which created a much more positive sentiment for equities on the Street of Dreams going forward after an indecently average earnings season, your scribe is far from convinced that global growth is heading north. Even the FED’s James Bullard acknowledged that GDP in the US to date was only expanding at 1.6%. The week before last the initial reaction by investors to the possibility of a rate hike in June or July was negative. However last week most felt that a rate hike could be absorbed in the US with consummate ease, but according to the futures market there is still only a 35% chance – far from nailed on!


What was also interesting was the fact that Treasury yields ended up more or less flat on the week. Gold fell 0.5% on the week to $1213 an ounce. Though the Dollar remained strong so did Sterling, which either tells us ‘REMAIN’ is ‘nailed-on’ or if BREXIT becomes a reality, markets can learn to live with it. Anyway at the end of the week the S&P was 2.17% to the good, with the FTSE up 1.86%, European stocks by an average 3.5% and Japan by 0.6%. Greece cleverly dug themselves out of another hole agreeing another bail-out with added austerity measures, which it can no way adhered to. This accord with the IMF and the EU resulted in civil demonstrations and rioting on the streets of Athens.  Mind you Greece is not alone in terms of civil unhappiness and disorder.  The French work force was again at its most virulent by closing down or blockading most petrol depots. In terms of being consistently bloody-minded, France’s work force is in a league of its own! 


Bank stocks, which have languished in the first 3 months of this year have enjoyed two spurts in the last 10 weeks – the last early last week on the back of possibly higher interest rates in the US, but by Friday the euphoria seemed to have died down. However it was encouraging to hear that Lloyds Banking Group may be looking to acquire Bank of America’s UK £7 billion credit card operation. Last Wednesday M&S caught the eye with a thoroughly dispiriting  annual results with like for like sales for the last year falling by 2.7%, fully exposing Marc Bolland’s inadequate reign.  Shares were taken down 9.5% on the day, leaving new CEO Steve Rowe thoroughly exposed and very much on his metal. Whilst M&S were getting it all wrong, how smart of Debenhams to appoint Serio Bucher of Amazon as its fashion guru! – inspired!


The Parliamentary Select Committees heard from Sir Philip Green’s and Dominic Chappell’s advisors as well as from the pension trustees of the £571 million black hole. Few of the witnesses smothered themselves in professional glory. However the fun and games won’t be completed until 8th and 15th June when the main dramatis personae appear, when hopefully Sir Philip will also write a big cheque to prevent him from further vilification – hope it’s not in my dreams and in the knowledge that legally he has done nothing wrong. It also transpired that Chappell may have used a property prowess of the sons of ‘Black Jack’ Dellal to bolster his retail consortiums’ bid for BHS.


There were some big deals flying around last week.  Firstly Bayer expressing a $62 billion interest in Monsanto.  Bayer will do well to get this deal through global regulators, though at an improved price Monsanto has not dismissed the idea out of hand. Dong Energy, the Danish titan is considering an £11 billion floatation. Philips Lighting experienced a very successful IPO in Amsterdam on Friday, with shares realistically issued at E20, valuing the company at E3 billion.  Advisors made sure that a built in profit was there on the first day with the shares closing at E21.3 – up 6.5%.


Tata is finally underway in assessing the bidders for its steel business in the UK – either wholesale or piece-meal. There may only be 3 realistic predators left – Sanjeev Gupta’s Liberty, Greybull, which bought Monarch Airlines and Endless, a Leeds based operation backed by Wilbur Ross. Tata may decide to keep Port Talbot if concessions and help from the government can be achieved including a deal on the £14 billion pension fund for 130k retired and existing members. It is hoped to get the liability down to £12 billion.  Also an inter-company loan of £900 million and its ongoing responsibility seems to be another ‘fly in the ointment!’  


Not only is Tata steel’s pension fund, as well as the trifling, in comparison £571 million black hole in the BHS scheme unresolved issues, but closer to home BT’s £10 billion pension black hole, which has apparently grown by 50% in the last 18 months is now a cause for concern, as it could affect forthcoming dividends. It will be interesting to hear what Gavin Patterson has to elucidate on the subject.


UK companies posting results this week – Tuesday – Alpha Bank, IG Group, APC Technology, Wednesday – Halfords, Wolseley, Fusionex International, LondonMetric, Thursday – EKF Diagnostics, Johnson Matthey, Friday – Verona Pharma


US companies posting results this week – Tuesday – Zoe’s Kitchen, Wednesday – Ford Motor Company (sales), Thursday – Costco, Fred’s, Ciena, Joy Global, Gap


Economic diary for the coming week –Tuesday – BRC shop prices, US Chicago PMI, US consumer Confidence, EU employment, Wednesday – UK mortgage approvals, UK PMI manufacturing, Thursday – UK PMI construction, ECB, US Initial Jobless Claims,  Friday – US Non-Farm-payrolls & employment data, UK PMI services, EU Retail sales


David Buik
Market Commentator – Panmure Gordon & Co
+44 (0)20 7886 2775
Mobile – 0044 7788 144 877

Panmure Gordon & Co

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



Now that I have rubbed the dispiriting M&S results out of my system, let’s return to today’s ‘bread and butter!’ I have to say that I am at a loss as to why the FTSE 100 leapt out of the traps this morning adding another 40 points before the first tranches of shares had hardly been crossed. And that wasn’t the end of it; as at about 2.30pm the FTSE was up 73 points at its zenith.  Yes, I know the Street of Dreams had a great day yesterday, based on very little apart from some new Home sales and a strong Dollar. But against the current economic and political background there was no case for a further upbeat consolidation.  I know the ‘REMAIN’ boys believe they are ‘home and hosed’ but there are ‘2 certs in life – rent day & death!’ I am ever the optimist. However presupposing a ‘REMAIN’ victory, and I don’t accept it, I suspect the margin will be sufficiently small for agitation to prevail.  Not from me, as I am a believer in the Democratic process.


Volumes were not great but there were some very positive players around, willing to hang on to every soothsayer’s promise. Banks were again in the vanguard – up between 2% and 5% (RBS).  Oils were also firm. The following posted results or trading statements – Dixons Carphone unchanged, DMGT +0.6%, Zoopla had an absolute ‘stormer’ – +7.8%, Intertek down 5%, waiting to drop in to the FTSE 250.  Babcock International was up 0.75%, Pennon was 2% to the good and Shaftesbury was down 0.5%. Hilton Foods, after a great run on the rails was unchanged. The FTSE 100 closed up 45 points at 6265.


At 4.35pm the DOW was up 165 points and beautiful downtown Manhattan looked not only very picturesque but also on good terms with itself.


MARKS & SPENCER CEOS! – Sir Richard Greenbury got it! Luc Van der Welde didn’t get it; Lord Rose didn’t get it; Marc Bolland certainly did not get it!  Let’s hope Steve Rowe gets it. Time is not on his side. It’s all about the fashions. Mr Rowe, Sir! M&S’S fashions are dire! In fairness Kate Bostock stayed beyond her ‘sell-by date.’ Belinda Earl did not come from a fashionable emporium (Debenhams). Why was she chosen? Frankly she does not look up to it and has had plenty of time to improve matters.  The fashions remain dowdy and against a very competitive high Street appear to be on the expensive side.  I fully admit that I am hardly known for my sartorial elegance – in fact most people who know me would describe me as a badly wrapped present lost in a double breasted suit that does not fit! However being married to fine looking mare with two daughters that have decent confirmation and walk well in the paddock, I know about attractive fashion. 


The situation is now acute and the high street is running out of patience.  Steve Rowe and his team can tinker about with the layout of the shops all they like and have clever advertising campaigns, but if the stock on the shelves has no appeal, when they are up against H&M, Primark, Top Shop, Zara and others, they have no chance! It’s time for surgery.  The medicine has not worked – so the knife must come out and do its worst.


OK the profits were up 4.8% at £689 million on a turnover of £10.6 billion in the last year.  However costs have not been severe enough. Like for like sales for the year on clothes and merchandising were down 2.9% and food sales only increased 0.2% on a like for like basis. International sales were also down.  There was a £150 million share buyback – no one is buying that, despite a slightly better dividend. M&S has only made £1 billion profits twice – in 1997 and 2007.  How have the mighty fallen. Shares were down 9.5% at 404p at 3.40pm. Steve Rowe came across well but he has inherited a hospital pass, but he must have known that having been responsible for general merchandising! Time for wholesale action – Off with their heads!


TODAY’S FAYRE – Wednesday, 25th May 2016


“Can the bald lie? The nature of the skin says not:

it’s newborn-pale, erection-tender stuff,

every thought visible,—pure knowledge,

mind in action—shining through the skull.

I saw one, a woman, hairless absolute, cleaning.

She mopped the green floor, dusted bookshelves,

all cloth and concentration, Queen of the moon.

You can tell, with the bald, that the air

speaks to them differently, touches their heads

with exquisite expression. As she danced

her laundry dance with the motes, everything

she ever knew skittered under her scalp.

It was clear just from the texture of her head,

she was about to raise her arms to the sky;

I covered my ears as she prepared to sing, roar,

to let the big win resonate in the little room.”


Jo Shapcott – poet – 1954-


 I would like to go ‘off piste’ today in terms of commenting on the political fragility of some of the key component countries within the European Union. Many of these countries look as if they are about to implode or keel over at the drop of a hat. Germany has never looked more politically unstable with Angela Merkel currently looking like she could easily be thrown out of office in September 2017 unless there is a dramatic improvement in the immigration crisis and that looks highly unlikely.


Francois Hollande is conceivably the most unpopular President France has ever had (personal popularity down to 17%). Could he be succeeded by Le Pen, Sarkozy or even Juppe at the next election in April/May 2017 – the mind boggles? Italy’s Matteo Renzi could be tossed out in a moment of Italian frenzy!  Don’t laugh he might be replaced by the Italian comedian Bepe Grillo. You think that is funny? I certainly don’t. Spain’s Rajoya still cannot form a government. Portugal’s Antonio Costa still has no overall majority and nor does the Belgian Government which was without an elected government for 589 days going back to 2010. Finally Greece; PM Tspiras governs on a knife edge and could be hurled in to ignominy in one vote, despite a deal being cobbled together last night with the EU and IMF, allowing another €5 billion loan to be made with little prospect of it ever being paid back!


 Just to finish this rant off, anyone who is not quite deeply concerned about Europe’s banking sector needs to wake up and smell the coffee! If any of my followers have looked at the recent share price charts on banks I have distributed may understand what I am driving at. From Germany, to Italy, to Spain and to Portugal, the outlook is unappetising. The European banking sector could be short of as much as €300 billion of necessary extra capital. In that kind of climate do major international banks really want to head for Frankfurt or Paris rather than stay in a proven centre for international business such as London – BREXIT or no? Think again! Just as an illustration just look at Germany’s Deutsche Bank down 44.6% in the last year and Italy’s UniCredit – down 40% in the same period. Interesting to note that Deutsche’s debt rating was downgraded a notch by Moody’s to Baa2.


So back to reality, realising that my concerns will only fall on deaf ears! Equity geeks had a great day yesterday and I really am trying to get my head around the new found euphoria. Yes, I get the learning to live with a 25 basis point US FED rate hike in June or July, though the FED’S James Bullard was less than convincing on growth prospects, conceding that GDP was currently running at a rate of about 1.6% and that Consumer sales in recent quarters were insufficient to set the world on fire. The Labour market, inflation and wages were very much on track to precipitate a hike, but I wonder! Oil prices were flirting with the $50 threshold price and the Dollar itself was having a terrific run on the rails.


However I was less than convinced that the Street of Dreams should purr like a Cheshire cat as the DOW added 1.22%, the S&P 500 1.37% and the NASDAQ a very handsome 2%. Banks blazed the trail at the prospect of higher rates with the likes of JP Morgan and Citigroup adding 1.5%. 3Ms had a decent run on the rails – up 1.5% and Microsoft scrapped for the yellow jersey adding over 3%, which gave credence to the NASDAQ’s performance. Apple grabbed 1.47% in value, which was not unhelpful. Also Alphabet added 2.2% whilst cocking a snoock at the French authorities raiding their offices for allegations of tax irregularities. Not surprisingly Monsanto turned down Bayer’s $62 billion bid. However the door has been opened for talks suggesting if Bayer significantly improved the bid, ‘Turkey could be talked!’ There is still of course global regulators to deal with!


London enjoyed the almost the same level of euphoria for similar reasons to the Street of Dreams. Just add the fact that ‘REMAIN’S’ poll lead over ‘LEAVE’ widened which gave solace to those with faint hearts, who have recently had their cages savagely rattled by Messrs Osborne, Carney, Lagarde & Co.’ That coterie of luminaries sounds like a firm of undertakers, don’t you think. Jacob Rees-Mogg was certainly not included amongst the scaredy-cats as he ripped in to Governor Carney for allowing himself to become politically embroiled in BREXIT, which The Treasury Select Committee member felt was beyond his brief. Mr Carney was having none of it. The Governor, very definitely, has a duty of care to Government and therefore is caught between a rock and a hard place. Personally I feel some of Mr Carney’s language was a tad intemperate and a tiny bit inflammatory. Beauty is in the eye of the beholder. Chancellor Osborne also posted less than encouraging budget deficit and borrowing requirements. Borrowing for April 2016 was at least down on last year. The FTSE 100 closed up 82 points at 6219. Banks played the matinee idol role, added between 2% and 4.8%. Tesco was the outstanding performer adding 6.8%.


Switzerland’s BSI had a tough time of it in Singapore with a $100 million penalty handed out over a scandal at a Malaysian state fund. The EU eventually waved through the AB InBev/SAB Miller merger. Greg Tufnell former boss of Mothercare has teamed up with a Portuguese consortium headed by Maria Soares Bento (owner of supermarket chain) and look a warm order to buy BHS. Today at the TSC we hear from Grant Thornton and Chappell’s lawyers in regard to the advice given to the forlorn entrepreneur, who bought BHS for £1. The Hinckley nuclear power deal looks a dead duck as there is little possibility of any deal being consummated or power station being built until 2025. The 12 largest investment banks have seen deal revenue drop by 25% in the first quarter such is the level of uncertainty over cross border M&A activity.


There were some good results on Dixons Carphone and Zoopla this morning, but all eyes were on M&S’s final results. Profits were up 4.8% to £689 million – a far cry from £1 billion in 2007. Revenues were up a smidgen to 2.4% to £10.6 billion. Costs were disappointingly high. Food sales for the year were adequate – +0.2% LFL. However clothing fashions remain dowdy – Clothing & merchandising sales were DOWN 2.9% LFL – Total UK -1.1% LFL – Not pretty reading. £150 million has been returned to shareholders and the dividend was slightly increased. Investors were underwhelmed – shares down 6.5% at 8.10am.

In Asia the ASX closed up 1.5% and the NIKKEI by the same amount with the US’s hallmark of temporary joy. At lunch the Hang Seng had risen like the proverbial grilse – +2.6% and the Shanghai Composite was down 0.2%. At 8.10am the FTSE 100 was up 40 points at 6259.


UK companies posting results this week – Wednesday – M&S, Babcock International, Pennon, Intertek, Dixons Carphone, Shaftesbury, Thursday – United Utilities, PayPoint, Imagination Technology Group, Tate & Lyle, DMGT, Friday – Bodycote


US companies posting results this week – Wednesday – Tiffany’s, Tilly’s, Williams-Sanoma, Thursday – Dollar Tree, Dollar General, Abercrombie & Fitch, Fred’s, Sears, Chico’s FAS, Friday – Big Lots


Economic diary for the coming week – Thursday – US initial Jobless Claims, Friday US GDP price index.


David Buik

Market Commentator – Panmure Gordon & Co

+44 (0)20 7886 2775 Mobile – 0044 7788 144 877 Panmure Gordon & Co One New Change | London | EC4M 9AF | United Kingdom


No one can be that happy about the quality of the economic data which has been submitted any of the mature countries of the world in the last few months.  Even the US cannot be entirely satisfied that its economy is firing off 6 cylinders, despite the conundrum of a possibility of a FED rate hike in July. Industrial production is still in the doldrums and retail activity remains very patchy indeed.  A rate hike in the summer is far from ‘slam-dunk’ because the vibes from other economies are far from encouraging. So there is a 34% chance of a hike according to the futures markets. However London has had a great day – at 4.21pm the FTSE is up 90 points at 6226! WOW! Why?


The EU Referendum polls have moved in favour of “REMAIN” 55% to 44%, with the fear factor working a treat fir Messrs Cameron & Osborne.  Sterling rallied, which captured the imagination of investors looking to titivate in a very dull and unresponsive bank market – Barclays +3.4%, RBS +4.9%, HSBC +2.06%, Lloyds +2.7% and Standard Chartered +2.5%.  Oil and mining have been dull as dishwater and drugs have been mixed with Astra +1.46% with the others failing really to come under starters’ orders. Retail has had terrific run on the rails with Tesco grabbing the yellow jersey – up 6.99%! This is despite the fact that 70 stores in Ireland are going on strike. Presumably there must be good vibes about its recovery process. M&S ahead of tomorrow’s numbers was only up 1%. Vodafone has been solid +0.3% and BT showing a bit more form – +2.1%.


Of those companies that have reported today De la Rue is up 4.5%, Kingfisher 3.25%, Homeserve +7.5%, UK Mail +7%, Hogg Robinson +1% and DMGT +1.5%. Only Card Factory slightly disappointed – down 2.75%. The Street of Dreams has come on to the bridle with the DOW currently up 200 points for no real reason apart the fact the market looked a tad oversold in somnolent trading conditions. My judgment has often been impaired, but I feel a correction in equities cum or ex-BREXIT! But for QE and no suitable alternate asset class, the correction could well be more pronounced.



TODAY’S FAYRE – Tuesday, 24th May 2016


“Body wears the smile of accomplishment,

The illusion of a Greek necessity


Flows in the scrolls of her toga,

Her bare


Feet seem to be saying:

We have come so far, it is over.


Each dead child coiled, a white serpent,

One at each little


Pitcher of milk, now empty.

She has folded


Them back into her body as petals

Of a rose close when the garden


Stiffens and odors bleed

From the sweet, deep throats of the night flower.


The moon has nothing to be sad about,

Staring from her hood of bone.


She is used to this sort of thing.

Her blacks crackle and drag.”


Sylvia Plath – poet – 1932-1963


Ed Woodward, Manchester United’s CEO, may be omnipotent at Old Trafford and one of the most powerful administrators in international league football, but his interpersonal skills must be approaching zero. I know in such matters as the appointment and dismissal of managers require a ruthlessly clinical approach.  However surely Woodward and the Glazers could have waited until Monday morning to send Van Gaal on his bike, suitably softened up and bought off with a cheque for £6 million as compensation, less taxation at the higher rate?  Optics and credibility? – Or doesn’t that kind of consideration hold a candle north of the Trent?


Greece’s parliament over the weekend approved a controversial bill of bailout reforms, ahead of a vital Europe group meeting on Tuesday. The bill is likely to include the last chunk of a €5.4bn ($6.06bn) austerity package which Greece will implement by 2018. I think that puts Greece in the E90 billion deficit bracket.  Call me a cynic, but ‘hell has a better chance of freezing over’ than Greece servicing the debt as well as paying it back, whilst creating growth!


The much-needed bill increases tax, creates a new privatisation fund and frees up the sale of non-performing loans in exchange for bailout loans and to qualify for debt relief.


Yesterday at 5.00pm EST Monsanto’s share price had only rallied 4.4% to $105.99 – nowhere near the premium offered earlier in the day by Germany’s Bayer of $122, valuing the US agricultural fertilizer, seed and technology titan at $62 billion.  Bayer’s share capital is currently valued at $69.8 billion. Bayer’s shares were down 5.72% at the close. The disappointing response must surely be down to the fact that regulators across the globe and in particular the EU, US and Australia will be very unhappy at the prospect of this union. Why? The Bayer-Monsanto deal is the latest in a series of high-profile mega-mergers proposed in the agricultural industry. Dow Chemical’s planned merger with DuPont, and ChemChina’s acquisition of Syngenta are both under review by regulators. This proposed merger between these two could further increase prices and limit options for farmers.


Mariyn Dekkers did a great job as CEO of Bayer from 2010 to 206.  He became chairman of Unilever in February, handing over the reins of Bayer to Werner Baumann who clearly has ambitions to make his name.  He may just have bitten off more than he can chew. I just cannot see US regulators giving this deal its blessing.  We shall see.  This deal, if consummated would be one of the largest cross-border deals involving a German operation since Vodafone’s Sir Chris Gent successfully bid E220 billion for Mannesmann.


Most equity markets yesterday were either suffering from acute indigestion, as any appetite for risk seemed to have disappeared or the prevailing concern about the FED’S interest rate decisions, or they were ruminating over such a lack-lustre outcome to the G7 finance ministers’ meeting in Tokyo, which just seemed to drone on about Japan’s clever antics to devalue the Yen or its hyped-up hysteria as to the damage BREXIT might inflict on the World’s economy. The session in London was excruciatingly boring with the FTSE closing down by 19 points at 6136. Oils and mining stocks were modest laggards.  There was a lack of news flow in New York as well, so investors decided to worry about what Janet Yellen may have up her sleeve in June or July. It was an infinitely forgettable session. This Tata steel deal looks as if it is about to wobble. It appears that the pension scheme in the needle in the haystack. Time may be running out! Here’s hoping a solution can be found.


One just cannot help feeling that these markets are beginning to look very heavy and unless there is a raft of M&A activity, a modest correction cannot be ruled out this summer. Asia experienced another lack-lustre performance, with the Yen’s strength wearing down the NIKKEI – -0.74% at 6.00am with the ASX looking to close circa +0.07%. The Shanghai Composite and the Hang Seng were both under water heading for the noodle bars – down 0.77% and 0.35% respectively. The FTSE is expected to open up DOWN about 20 points.


There were some interesting and breath-taking revelations when Goldman Sachs appeared to give evidence to the Parliamentary Select Committee. Anthony Gutman, one of Goldman’s most senior London-based partners, told the Committee that he had not been paid to provide advice and the bank had turned down an advisory role on the sale of BHS – “too small” for its portfolio. Nevertheless, Mr Gutman said that he had passed on helpful comments to Arcadia’s finance boss, Paul Budge. Despite having evidence of Mr Chappell’s previous insolvencies, Mr Gutman felt that there was insufficient reason to put up the ‘red flag.’ He also reiterated that the retail consortium was “very light on detail”, with no “financial details or business plan.”


Mr Gutman also confirmed that Arcadia was aware of Dominic Chappell’s links to convicted fraudster, Paul Sutton. Mr Budge said that he was satisfied that Mr Chappell was being advised by a reputable board, which had a plan and the enthusiasm to revive the business. It also emerged that KPMG, the adviser to BHS’s pension trustees, had highlighted concerns about Retail Acquisitions but had no power to veto a sale. “If the sale was blocked, then BHS would have collapsed earlier.” Tomorrow the news flow will start to quicken when Grant Thornton and lawyers Olswang, advisors to this flawed deal add their evidence to the jigsaw puzzle of intrigue.


UK companies posting results this week – Tuesday – Homeserve, Kingfisher, De La Rue, Keller Group, Aveva, Big Yellow Group, UK Mail, Card Factory, Hogg, Robinson, Severn Trent, Entertainment One, Wednesday – M&S, Babcock International, Pennon, Intertek, Dixons Carphone, Shaftesbury, Thursday – United Utilities, PayPoint, Imagination Technology Group, Tate & Lyle, DMGT, Friday – Bodycote


US companies posting results this week  – Tuesday – Autozone, Best Buy, Toll Brothers, Hewlett-Packard, -Wednesday – Tiffany’s, Tilly’s, Williams-Sanoma, Thursday – Dollar Tree, Dollar General, Abercrombie & Fitch, Fred’s, Sears, Chico’s FAS, Friday – Big Lots


Economic diary for the coming week – Tuesday – BBA mortgage approvals, Germany ZEW, Thursday – US initial Jobless Claims, Friday US GDP price index.


David Buik
Market Commentator – Panmure Gordon & Co
+44 (0)20 7886 2775
Mobile – 0044 7788 144 877

Panmure Gordon & Co

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



The Chancellor has certainly been relentless in his quest in cobbling together terrifyingly negative data associated with a BREXIT vote, courtesy of the good offices of HM Treasury.  This dossier, which suggests that the Pound will fall 12% in value, appears to have been put together in a rather haphazard and hurried manner. I have an enormous amount of time for Chancellor Osborne.  He’s done a great job.  This report should not have his hallmark on it!


The quality of the analysis superficially looks very basic stuff, which even my inadequate brain is happy to challenge. The paper implies that clothing and food would cost £221 more per year for a family of four as a result of a 12% depreciation in Sterling – they arrive at that Sterling number by averaging those helpful analyses from our larger banking colleagues who just incidentally help fund the ‘Remain’ campaign. Sterling may well weaken, but this dossier is not the most robust piece ever written and may flounder under close scrutiny for the following reasons.  


On an independent basis there are question marks over the value of Sterling – you would worry about the robustness of the paper for the following reasons –


  1. No estimate is made for the elasticity of demand to higher prices i.e. substituting your more expensive Indian mangoes for the unchanged cost of British rhubarb.
  2. Absorption of higher input costs by retailers into their profit margins or by any currency hedging activities.
  3. Second order bargaining pressure from buyers on non-sterling producers to reduce product costs.