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



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