TODAY’S FAYRE

TODAY’S FAYRE – Sunday, 1st May 2016

 

 

“As she laughed I was aware of becoming involved

in her laughter and being part of it, until her

teeth were only accidental stars with a talent

for squad-drill. I was drawn in by short gasps,

inhaled at each momentary recovery, lost finally

in the dark caverns of her throat, bruised by

the ripple of unseen muscles. An elderly waiter

with trembling hands was hurriedly spreading

a pink and white checked cloth over the rusty

green iron table, saying: “If the lady and

gentleman wish to take their tea in the garden,

if the lady and gentleman wish to take their

tea in the garden …” I decided that if the

shaking of her breasts could be stopped, some of

the fragments of the afternoon might be collected,

and I concentrated my attention with careful

subtlety to this end.”

 

 

TS Eliot – poet & author– 1886-1965

 

 

This spat that the junior doctors have been having with Health Secretary Jeremy Hunt, has turned very ugly.  Some of the comments on social media can only be described as disgusting and not worthy of certain supposedly educated factions of the medical profession. Those perpetrating such evil and pernicious filth should be ashamed of themselves, however aggrieved they feel.  We are now all heartily sick and tired of the level of intransigence.  The BMA now resembles Arthur Scargill’s militant members during the miners’ strike in 1984.  I thought the BMA had the medical professions’ integrity and best interest at heart. My assumption must be wrong.  It conveys the impression of being just a ‘left-wing trade union’, which surely cannot be its official designated role.

 

 

For the BMA to refuse to talk unless there are preconditions is just ludicrous. If anyone tells me that this strike is not about money speaks with forked-tongue. Many of us are left with the impression that patients’ welfare is of secondary importance.  If we want an example of true dedication just look at the dangerous and selfless work done by doctors in Syria and most recently in Aleppo.  Now that is commitment to the cause!  PLEASE get back to the negotiation table and prove your vocation is a prerequisite. Junior doctors are not exactly penniless and will one day be very comfortable, as they deserve to be. The NHS should not be ‘ring-fenced’ by any government regardless of political persuasion.  There must be so many administrative staff that are superfluous to requirement.  The problem is the NHS is a political time bomb and no government will put its head on the block for fear of losing votes! 

 

 

Three years ago Frankie Dettori’s career was in tatters.  Last year Qatar and John Gosden rekindled those smouldering embers of talent.  Frankie won the Derby and the Arc De Triomphe on ‘Golden Horn. ’ Yesterday he won the 2000 Guineas on ‘Galileo Gold’, trained by Hugo Palmer for the sponsors in great style, giving the son of Paco Boy a great ride to win the first classic of the season by 1.5 lengths. He may be 45 years old, but all his zest for life has returned and don’t be surprised if he is champion jockey, if he is prepared to do the journeyman donkey work around the gaff tracks.  How racing needs Frankie!

 

 

 

If you live in London in SW10 near Stamford Bridge you will often hear ringing around that ground shades of “blue is the colour!” It you are an aficionado of global stock markets all you would have heard at the end of last week was “red is the colour!” Last week, the S&P 500 eased by 0.75%, the FTSE 100 by 1.09%, European bourses by an average of 2.14%, the Hang Seng by 1.8% and the NIKKEI by 1.96%.

 

Market observers, practitioners and analysts had a compendium of economic and corporate issues to contend with, which have been both confusing and possibly misleading. Janet Yellen, the FED chairman and her cohorts seem to have acquired last year’s old bad habits – namely prevarication on the timing of interest rate hikes – I do wish the FED would temper its forward guidance to avoid ambiguity. Despite slightly dispiriting GDP of 0.5% the FED is still flagging up the possibility of a 0.25% rise in June, provided of course that subsequent data stacks up! What does that mean? Night following day? Few would be surprised if there were no hike in 2016. Kuroda-San, BOJ’S head honcho also blew the market way with no additional stimulus package, which traders fully expected would be announced on Thursday, to massage the ailing Japanese economy away from the brink of deflation. Equity geeks wedded to the Nikkei were incandescent with rage and consequently vented their spleens ahead of the public holiday on Friday. 

 

 

Then of course there was the small matter of the earning season in the US, UK and Europe, which to all intents and purposes, was proving to have very average content apart from a few old favourites. Apple disappointed losing 9.9% in value on Thursday with revenues down for the first time in 51 quarters or 13 years. On top of the fact that Apple looks vulnerable in China, there is the added concern that there will be no new toys until November – an issue which would probably never have happened during the Steve Job dynasty. Apple’s problems will be temporarily exacerbated by Carl Icahn’s decision to bin his total investment in the most successful brand in the world. Mr Icahn in general stated that he was very worried about the health of the US equity market unless some fiscal stimulus came on offer, there might be a day of reckoning. On the plus side, Facebook up 13% and Linked in up 15% on Thursday came to the tech sector’s rescue thanks to better than expected result. On Friday Amazon’s numbers enabled to Jeff Bezos to preen himself like a peacock with a great three month trading period, which saw shares rise like a grilse – up 9.9%.

 

It was quite hard to find positives last week, though oil prices rallied quite sharply to circa $46 a barrel. UK GDP at 0.4% was decidedly anaemic with even the EU coming in at 0.6% for the first quarter with France and Spain rallying to the cause, admittedly from an extremely low base – so we should not get that excited! One swallow does not make a summer. The fact that there were signs of early deflation (-0.2%) will have worried the ECB as will the 10.3% unemployment rate.

 

Much of last week in London was spent ruminating over UK banking results.  There were signs of a recovery by Standard Chartered Bank, whose share rose sharply by 10% on Monday.  Barclays progress seemed very slow, but Jes Staley has only had his feet under the desk for 3 months. Barclays is still too reliant on Investment banking whose profits rose 46%.  As for Lloyds Banking Group, though there was no increase in PPI claims, impairment charges grew and profits were down 6% and there is still a hangover with the stock with 9% still required to be sold when conditions improve.  Lloyds’ shares stand at 67p – still 6 pence under water.  Finally on Friday RBS’S results saw its loss doubled on last year at £968 million. What was evens worse was the fact that Williams & Glyn (branches which Santander failed to pick up) may not be sold until December 2017 with a residual cost of £50 million a month. Even though George Osborne would love to get rid of this £45 billion asset, RBS’s share price stands at 235p down 3.7% on Friday – more than half the 503p required for the taxpayer to get his/her money back. Rumours abound that the toxic ‘Goodwin’ RBS brand name may be removed.  Eventually 300 branches will carry the Williams & Glyn brand; the NatWest named branches will remain and the group will then carry the full name – Royal Bank of Scotland.

 

Even though it appears he did not break the law Sir Philip Green surely displayed the morals of an alley cat when selling BHS to the Chappell consortium for £1 plus a £571 million pension black hole, knowing the staff could be vulnerable. Chappell had no real experience in retail.  Though I feel particularly dispirited for 11000 employees, I would be equally critical of the Trustees of the pension fund, who must have seen that the fund could never be adequately funded and consequently they should have sent out distress signals. I suspect the two Parliamentary select Committee enquiries will have something to say on whether the trustees were fit and proper.

 

It is further alleged that Dominic Chappell loaded BHS with Wonga typed loans from which he may have personally borrowed £500k! Anyway it appears, according to the Sunday Telegraph, that all may not be lost for BHS’S 11k employees.  Sports Direct Mike Ashley is attempting to cobble together a deal that could work if certain issues are clarified.  There may also be competition from Edinburgh Woollen Mills Founder Philip Day. Many think that it is unlikely that Mr Chappell will be given another bite at the cherry. Apparently Goldman, Deloitte & other Green advisors only gave Chappell 28 days to due diligence. Well if that was insufficient time, Mr Chappell should have pulled away from the deal.

 

 

UK companies posting results – Tuesday – HSBC, SAB MILLER, MYLAN, ABERDEEN ASSET MANAGEMENT, JUST EAT, Wednesday – J SAINSBURY, ROYAL DUTCH SHELL, RANDGOLD, VIRGIN MONEY (TS), GLENCORE (TS), PADDY POWER BETFAIR (TS), DIRECT LINE, IMPERIAL BRANDS, IMMUOHARMA, Thursday – SAGE, BT GROUP, RSA, INMARSAT, SMITH & NEPHEW, IMI, PROVIDENT FINANCIAL, Wm MORRISON (TS), Friday – , INTERCONTINENTAL HOTEL GROUP, NUMIS, WILLIS TOWER

 

US companies posting interim results – Monday – LOEW’S, DENNY’S, Tuesday – STARWOOD HOTELS, PITNEY BOWES, SPRINT, FORD MOTOR (dales), PFIZER, ARCHER DANIELS MIDLAND, VALERO, DYNERGY, Wednesday – TIME WARNER, TASER, ZYNGA, Thursday – KRAFT HEINZ, FRED’S, KELLOGG, EASTMAN KODAK, Friday – WEYERHAEUSER, ALLERGAN


Economic Data – Monday – USPMI MANUFACTURING & CONSTRUCTION, Tuesday – UK PMI CONSTRUCTION, Wednesday – UK PMI SERVICES, ADP INDEX, Thursday – US INITIAL JOBLESS CLAIMS, Friday – US NON-FARM PAYROLLS (EST 210k)

 

 
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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