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



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