TODAY’S FAYRE – Sunday, 8th May 2016


“Of a’ the airts the wind can blaw

I dearly like the west,

For there the bonnie lassie lives,

The lassie I lo’e best.

There wild woods grow, and rivers row,

And mony a hill between;

But day and night my fancy’s flight

Is ever wi’ my Jean.


I see her in the dewy flowers,

I see her sweet and fair;

I hear her in the tunefu’ birds,

I hear her charm the air:

There’s not a bonnie flower that springs

By fountain, shaw, or green,

There’s not a bonnie bird that sings,

But minds me o’ my Jean.


O blaw, ye westlin winds, blaw saft

Amang the leafy trees;

Wi’ balmy gale, frae hill and dale,

Bring hame the laden bees;

And bring the lassie back to me

That’s aye sae neat and clean

Ae blink o’ her wad banish care,

Sae charming is my Jean.


What sighs and vows amang the knowes

Hae pass’d atween us twa!

How fond to meet, how wae to part,

That night she gaed awa’!

The Powers aboon can only ken,

To whom the heart is seen,

That nane can be sae dear to me

As my sweet, lovely Jean.”


Robbie Burns – poet – 1837-1909


So after 8 years the ‘BJ Dynasty’ is at an end and London has a new Mayor – Sadiq Khan.  Democracy has ruled and London voters have replicated their stance at the General Election last year in favour of Labour. This undignified and visceral campaign was fought out by two politicians, rather than by two personalities, as was the case at the last two mayoral elections. Mr Khan describes himself as the most pro-business mayor.  The jury is out on that prognosis. Labour politics are leaning alarmingly to the left, so may I be forgiven for being a tad cynical. I cannot help feeling that Dame Tessa Jowell would have made the most wonderful, placatory and conciliatory Mayor, appealing to everyone.  

I was privileged to contribute modestly to a debate on the EU Referendum at Mishcon & De Reya’s palatial offices last week to associates of CPA and the legal profession. There were some very distinguished speakers including Lord Howard Flight, Sir George Iacobescu and Mark Boleat. Ironically, Richard Tice of Quidnet Capital Partners, probably less well known than the other luminaries, was easily the best orator – articulate, concise and passionate – in promoting the case for BREXIT.  The audience was already very much committed to ‘remaining.’ It was not for turning, unlike the huge audience at the Spectator organised debate at London Palladium the previous week, where the quality of the speeches won the day for BREXIT handsomely! Perhaps the demographics of the attendees contributed to the rout!

The icing on the cake to Leicester City winning the Premiership yesterday, was to listen to Andrea Bocelli’s rendering of ‘Nessum Dorma’ in front of 31000 ecstatic fans before the game. That said it all – very emotional!

Friday’s Non-Farm Payroll data had elements of surprise, concern and encouragement, thus providing an interesting conundrum for investors.  The headline number of 160k jobs created in April was in line with Wednesday ADP Index for the private sector but was below the consensus number of +210k.  That was the surprise! The unemployment rate remained constant at 5%.  The encouraging element came from a better than expected wage inflation data – the hourly rate was up by +0.3% (2.5% on an annualised basis).  Finally doubts were felt across the spectrum over the timing of any interest rate hikes – if any at all. This kind of prevarication is unhealthy for markets.  The futures market now tells us that there is only a 10% chance of a hike in June. After these numbers US equity markets behaved in a most quixotic and volatile manner! It rallied to 1770 shortly after the opening fell to 17550 and finished the session up 79 at 17740.


Prior to Friday’s key US data, equity markets were very out of sorts for much of the week. The S&P eased by 1% last week. The FTSE 100 fared even worse losing 1.9% on its journey through troubled waters on commodity, energy and some retail operators. Europe was larruped by just short of 3% on average and in HK it was a bit of a blood bath on Chinese growth concerns and dispiriting data – Hang Seng down 6.5%. Japan was closed for much of the week for the ‘Golden week’ holiday.


Not surprisingly the greenback retreated over conflicting connotations or interpretations gleaned from the employment data. Oil closed down a short 5% on the week and as investors started to lose their bottle, gold received some positive attention nudging briefly through the $1300 an ounce barrier before settling at $1294. There was also some blather about UK construction Markit PMI service sector levels at a 3-year low and retail data being poor over concern of a possible BREXIT from the EU – any old excuse. Frankly the global data has been getting weaker for a few months and as for April’s shocking drop in retail activity by 6.1%, I think that can be explained partly down to bad weather and partly due to the fact that household spend their money in a more varied manner – such as eating out, holidays and hobbies rather than on retail therapy.


As for the Street of Dreams the earnings were OK – still an average of 5.7% down on last year’s parallel quarter – though some better than expected.  Alibaba was the one in everyone’s sights on Thursday, where sales were better than expected and the share price rallied a smidgen under 4% over two days. However over the week results did not make the market ‘put its sun hat on, hip, hip, hooray!’ Jack Ma’s Alibaba rallied over 4% over 2 days as it posted better than expected sales numbers on Thursday.


Here in Old Blighty, apart from the usual suspects in mining, energy and retail suffering adversely from volatility, investors were subjected to a compendium of mixed results. Royal Dutch Shell’s efforts were average at best, blaming lower oil prices.  J Sainsbury did not please its acolytes, though like for like sales were marginally above the Plimsoll line as CEO Mike Coupe waits for the Argos acquisition to reap some rewards.  Morrison CEO Dave Potts made some progress at the expense of slashing prices. Trinity Mirror jousted for the yellow jersey for the week, adding 5% in value on Thursday, despite closing its new daily newspaper after just 2 months. Centrica shed nearly 10% in value, as investors vented their spleens on the £800k rights issue to make so-called acquisitions. BT’s results were well received as CEO Gavin Patterson gave an undertaking that over the next 3 years BT would raise their game on broadband and G4 by 90% bringing its subscribers up to a total 12 million. This was in contrast to the Government taking its foot off the broadband access peddle due to cuts in public expenditure – bad news for education, business, industry and commerce. IAG’s Willie Walsh contradicted easyJet’s Carolyn McCall and Ryanair’s Michael O’Leary that airline prices would go up as a result of BREXIT.  It just goes to show how much conjecture and spin there is over this controversial issue.


The record-breaking £13 billion sale of former Northern Rock mortgages was completed on Friday and the government received the final £520 million from Cerberus as part of the conclusion of this sale. The mortgages, which were originally owned by Northern Rock and were acquired by the government during the financial crisis, were sold by UK Asset Resolution (UKAR) to Cerberus. The sale, authorised by the Chancellor and announced on 13 November 2015, is the largest ever financial asset sale by a government in Europe. UKAR sold this portfolio of mortgages for £280 million more than their book value.


Not only has Sir Phillip Green been venting his spleen in the direction of Frank Field and Iain Wright the chairmen of the Pension Select Committee and the BIS Select Committee for condemning his actions and behaviour ahead of Monday’s hearings, but he has also bent more than one city editors’ ear hole on the subject as well.  That has always been Sir Philip’s style. He loves mixing it with the financial hacks.


We have already covered the retail mogul’s controversial approach to BHS and its 11,000 workforce to a point of distraction. Most people believe he has not broken the law, but his ethics or morals are questionable and whether he has acted in good faith are bones of contention. His lack of sensitivity towards BHS’S staff must be challenged, due to the fact that BHS had been losing money for years. He has always been well advised professionally for many years.  He is too clever by half to step dramatically over the mark. No doubt Lord Myners and Sir David Norgrove will have the drains up with their commercial savvy as to who has behaved short of the professional standards required. 


The questions that need answering are as such. Firstly Sir Phillip put the £1 for sale sign up as clear as water. Everyone knew the operation was haemorrhaging from every orifice. He never hid the fact that BHS was struggling. Dominic Chappell, whose experience in retail at that level and his consortium was close to nil! Should Sir Phillip have sold the business to Chappell? Was there a duty of care issue for Sir Phillip? Should Sir Phillip’s advisors which I understand included Goldmans, have advised against the sale of BHS to Chappell? Should Chappell’s advisors have persuaded Chappell against buying BHS? Did Chappell ignore professional advice, particularly since the deal included the responsibility of the pension hole of gargantuan proportions – £571 million? 


The media seem to have been deflected away from where I fear the problem may lie. The trustees of the pension fund. They must have known the BHS was losing money. Why did they not scream from the rafters about the mounting black hole? Perhaps they did. But we must know the truth as no BHS director would be included amongst the trustees. Any way by the end of the week, after some ferocious exchanges with the Select Committees, we will hopefully be somewhat the wiser as to what happened and who is responsible. I have to say that suggesting that Sir Phillip should be stripped of his knighthood without a formal hearing is very wrong by any standards. 


Sadly Lady Tina will not be present. Let no one be in any doubt BHS was a PRIVATE company and if the owners want to squirrel away money legally that is their prerogative. We may not like it but that is the way it is.


In passing it won’t escape Sir Phillip’s notice that the public expect Sir Phillip to pay a substantial sum of money – not just £40 million – towards the pension black hole if he does not want to be vilified. It is nothing to do with what is legal or not. It’s about what is the right solution. 


It looks as though with ICE officially – well for the time being – out of the race to buy the LSE, the way looks open for Deutsche Boerse to consummate the purchase, despite the hostility of some shareholders which believe that sovereignty has been surrendered to German shareholders – no one buys joint venture! There is also a considerable concern about clearing going forward. However money talks and there is definite synergy there. London is the world’s leading financial centre. So if it were 54-46% in favour of London I suggest it would be game on. We must never forget that markets are now global. What I do like is that it appears the deal is on cum or ex EU membership!


BOE has backed down admitting that Britain did NOT have an absolute right to rapidly block damaging EU regulations. This is a massive change to what the City was led to believe!




US companies posting interim results – Monday – SOTHEBY’S, LIBERTY MEDIA, HERTZ, Tuesday – ALLERGAN, DEAN FOODS, WALT DISNEY, Wednesday – MACY’S, JACK-IN-THE-BOX, Friday – JC PENNEY




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



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