TODAY’S FAYRE – Sunday, 22nd May 2016


“I heard a Fly buzz – when I died –

The Stillness in the Room

Was like the Stillness in the Air –

Between the Heaves of Storm –


The Eyes around – had wrung them dry –

And Breaths were gathering firm

For that last Onset – when the King

Be witnessed – in the Room –


I willed my Keepsakes – Signed away

What portion of me be

Assignable – and then it was

There interposed a Fly –


With Blue – uncertain – stumbling Buzz –

Between the light – and me –

And then the Windows failed – and then

I could not see to see –“



Emily Dickinson – poet – 1830-1886


Few can argue the loss that Messrs Anderson & Broad are as potent a bowling strike force in the right conditions as Larwood & Voce, Lindwall & Miller, Lillee & Thomson, Roberts/Marshall & Holding and Ambrose & Walsh were in their hay day!


Thank goodness we are now into the real summer sporting season – FA Cup Final. Irish 2000 Guineas, Roland Garros, the test matches, Royal Ascot, Wimbledon, Henley, etc. Why? Never more have we needed such enjoyable and necessary distractions to provide some respite and a little light relief from the insane tsunami styled waves of fear, hysteria, and threats that pour out the ‘REMAIN’ propaganda machine so effectively and aggressively, spear-headed by the PM and the Chancellor. Of course I can understand where they are coming from. If the country voted to BREXIT their personal credibility would be severely damaged.


What is so frustrating is that such threats of 6% drop in GDP, house prices possibly falling 10-18% and annual take home pay contracting by £4300 by 2030 will provide sufficient ammunition to submit peace-loving, decent but naive folk in to submission – anything for a quiet life – despite much of the rhetoric being fanciful and hollow at best. 


I wondered how long it would take for J-C Juncker to enter the fray with his acrid comments and threats. What is so frustrating is that if the ‘REMAIN’ campaign were to misguidedly win the day – and by the by this campaign has a great deal of juice left in the tank – so many people will rue the finite opportunity they missed. They could come to realise that the UK will continue to be served up with the same old unappetising dish of declining economic activity and the prospect of federal gruel arriving permanently on the menu! If only! They will say – if only I had been emboldened with some courage and conviction that the UK is great and very outward looking! 


The icing on the cake came this morning predictably from the G7 finance ministers’ meeting in Tokyo and surprisingly from four retail giants of the past from the high street –Messrs Leahy, King, Bolland and Cheshire that BREXIT would ratchet up prices, and create unemployment. For those suffering from amnesia, all but Sir Ian Cheshire did not leave their emporiums in great shape. With respect, their advice is best taken with a pinch of salt in my humble opinion.


Markets have experienced another topsy-turvy week thanks to concerns expressed over US interest rates, triggered by a robust CPI number, commodity and oil prices vacillating furiously, a strong Dollar returning to the menu and a feeling that markets are starting to look fully valued in places. That was a fair bit to contend with when volumes are decidedly thin, exacerbated by the fact that investors lack conviction. For example on Thursday the FTSE 100 fell 1.8% and then rallied by 1.7% on Friday. So oil and commodities rallied on Friday and there were option maturities which may have added a little extra exuberance to the day’s fare, but nothing that could possibly warrant or justify such a disturbing level of volatility. On the question of a rate hike, the US futures indicate that the likelihood of a July rise rather than one in June, had risen from 19% to 51% over the week, aided and abetted by comments from the FED’s Dudley. 


At the end of the week, the sum total of changes to global indices amounted to the following – S&P 500 +0.39%, FTSE +0.29%, European indices average +0.80%, the NIKKEI +1.97% (thanks to an increasingly weak Yen). Life on Chinese markets was rather turgid, with the Shanghai Composite adding 0.2% and the Hang Seng +0.7% on the week.


There were plenty of nuggets and situations to feast on last week. The CMA’S report on bank competition was a fairy neutral affair.  It came and went almost without comment; suffice to say that the “Big 4” have 77% of retail clients and 85% of business accounts and those figres are unlikely to alter significantly. On the M&A front many expect Bayer to make a successful bid for Monsanto.  On the luxury goods front, Burberry having lost 36% of its share value in the last year, posted an acceptable and expected downturn in business and the shares were down only 3.5% on the week.  Richemont faired little better, down 2.2% on the week but fell over 4% on Friday – both companies suffering from China syndrome.



In the US last week it was hard to balance the fact that retail sales in April rose 1.3% against expectations of 0.8% with terrible results from the likes of Aeropostale, Gap and Macy’s.  In fairness Walmart and Target posted better than expected numbers and made decent gains on Wednesday and Thursday – 7% (after hours) and 8% respectively. As we head towards the end of this earning season the S&P constituent stocks’ profits are down by an avaerge of 5.4%. of the 459 companies to have reported 72% have beaten expectations; but lets face it expectations were not that high!  Some concern has been expressed about the robustness of the bond market – So far this year there have been 70 corporates, which have defaulted, closing in on the 113 companies that defaulted in 2015 according to Standard & Poor.

Last week the CMA approved the Ladbrokes’ merger with Gala Coral. This deal captured the market’s imagination and option trades taken out by investors in Ladbrokes look to have proved very satisfactory, as the shares rallied by 6.5% on Friday. The Egyptian Airline’s disatrous and heartbreaking crash in the Mediterranean proved very costly for travel companies and airlines – Thos Cook (-19% on Thursday) with Tui, IAG, easyJet and Ryanair suffering rather less, but still losing some value. Ryanair reports on Monday – Full year results for the Irish low cost airline could justify expectations, with Q3 profits likely to reach €103m, a 110% increase on prior year. Traffic may have grown by 20% to 25m.  However Ryanair could face a £315 million lawsuit from angry passengers over ‘hidden charges’ including £160 fees to change names on tickets.



The Sir Philip Green/Dominic Chappell/BHS saga continues at a pace with Lord Grabiner, chairman of the company that sold BHS to Sir Philip, throwing his two cents worth into the ring, implying that the desperate trading conditions that revailed between 2009 and 2015 meant that BHS would inevitably go down the tubes. All will be revealed when Sir Philip, Mr Chappell, Lesley Titcomb, Lord Grabiner et all appear before the two Parliamentary Select Comittees in June circa 15th.


With 02 now looking jilted at the altar, thanks to Ofcom and other regulators, private equity operations such as KKR, TPG, Bain, Apollo, CVC and Apax are rumoured to be courting Sky’s backing to make an audacious £9 billion bid to take 02’s mobile operation in to private ownership. This deal may be in conjunction with Sky’s intention to start its own mobile service on the 02 network. Concern has been expressed that Qatar’s increased shareholding in IAG (now 15%) is becoming too influential without Qatar’s intentions becoming clear. M&S post an update this Wednesday and it will be interesting to hear whether Steve Rowe, the new CEO, will be forced to see shop units for the purpose of greater profitability. Analysts are predicting a profit of £673 million for the year – up 1.8%. BT’s chairman Sir Mike Rake is to hang up his boots and the search for a replacement is on for September.  Ex Sky boss Tony Hall is a warm order to succeed.


UK companies posting results this week – Monday – Mitie, 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 – Monday – America’s Car Mart – 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 – Monday – CBO Industrial order expectations, 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



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