TODAY’S FAYRE + BBC CHARTER RENEWAL COMMENTS

TODAY’S FAYRE – Wednesday, 11^th May 2016

 

“He loved her and she loved him

His kisses sucked out her whole past and future or tried to

He had no other appetite

She bit him she gnawed him she sucked

She wanted him complete inside her

Safe and sure forever and ever

Their little cries fluttered into the curtains

 

Her eyes wanted nothing to get away

Her looks nailed down his hands his wrists his elbows

He gripped her hard so that life Should not drag her from that moment

He wanted all future to cease

He wanted to topple with his arms round her

Off that moment’s brink and into nothing

Or everlasting or whatever there was

Her embrace was an immense press

To print him into her bones

His smiles were the garrets of a fairy palace

Where the real world would never come

Her smiles were spider bites

So he would lie still till she felt hungry

His words were occupying armies

Her laughs were an assassin’s attempts

His looks were bullets daggers of revenge

Her glances were ghosts in the corner with horrible secrets

His whispers were whips and jackboots

Her kisses were lawyers steadily writing

His caresses were the last hooks of a castaway

Her love-trick were the grinding of locks

And their deep cries crawled over the floors

Like an animal dragging a great trap.”

 

  Ted Hughes – poet laureate– 1837-1909

 

The attack on BBC’S Laura Kuennsberg for her alleged political bias and misogynistic behaviour, featured in The Guardian yesterday, was utterly deplorable! Laura may be many things but she comes across as apolitical, criticising Jeremy Corbyn for his inept leadership or David Cameron or George Osborne for some of their ‘U-turns’, as she sees fit in a balanced way. Could these playground bullies and their petitions please back off and let her get on with her job?

 

There was some quite unpleasant invective between Ian Duncan-Smith MP and a very Teutonic German politician – whose name escapes me and I cannot be bothered to look it up; such was the sneering tone of his comments – on what PM Cameron might or might not have said about Germany’s undue influence on UK immigration policy. The temperature of the debate rises every day. I don’t care very much when politicians call each other liars! Not good news! 

 

 

I thought the UK Treasury’s economic forecast for 2030 in the event of BREXIT was at best fanciful, but yesterday’s NIESR’S doom and gloom forecast, suggesting GDP down by between 1.5% and 7.8% with wages down by 2.2% and 7% was verging on ‘Walter Mitty’ territory. In passing the guesstimates resemble a ‘coach & four’ such are the widths of these quotes!

 

 

JONATHAN HELLIWELL, Panmure’s senior media analyst comments on BBC CHARTER RENEWAL

 

 

“Various press reports suggest that the UK government also plans to publish its White Paper on BBC Charter renewal on May 12^th. Overall we expect a pretty ITV-friendly set of initiatives, revolving around maintaining the BBC’s core licence fee funding, but focusing its remit more tightly towards ‘distinctive’ programming not provided by the commercial sector, avoiding head-to-head scheduling of similar shows to commercial TV, and on discovering new TV talent rather than paying up for established talent. We expect regulation of the BBC to be stepped up, with an increased role for Ofcom and a move to a unitary management board including some government appointees. Press reports suggest that Culture Secretary John Whittingdale is keen to appoint Archie Norman, outgoing ITV chairman, as chairman of this new board. Clearly this direction of travel, if it passes through the political process into the BBC’s new operating charter, could be very helpful for ITV’s SOV in 2017 and beyond.”

 

 

Yesterday’s global equity journey was strangely optimistic when much of the economic data has been a little light in recent times. As the threat of an increase in the FED rate dissipates, investors girded up their loins buoyed by higher oil, better quality earnings and a feeling that perhaps markets had been oversold. The DOW, yesterday, ended the session 1.26% to the good as did the NASDAQ and the S&P 500 was only a pip behind +1.25%. It wasn’t so much a euphoric session; it was just a question of sentiment improving. The two stocks that captured the imagination were Allergan and Walt Disney. The Botox titan, having failed to tie the knot with Pfizer, posted some stellar numbers, having seen its share price fall 23% in recent months. But it was the $10 billion share buy-back that floated investors’ boat. The shares rose 5.8% by the time the bell tolled. Despite tow blockbuster movies in Star Wars and Zootopia, Walt Disney failed to meet analysts’ expectations with revenues of $12.9 billion when $13.2 billion was expected, though profits were up 11%. The market was underwhelmed and Disney’s shares fell by 6%.

 

Initially the FTSE performed rather enigmatically, but decided to ride on the coattails of the Street of Dreams and finished the session up 41 points at 6156 with mining, banks and Capita outperforming their peers. The UK’s trade gap widened to its worst level in the last quarter since the banking crisis of 2008. It was particularly virulent with the EU, which has benefitted hugely from its relationship with the UK rather than the other way round.

 

Though Chinese inflation figures appeared to be fairly benign yesterday and even though China’s service sector still looks remarkably robust, the Shanghai Composite (+0.15%) and the Hang Seng (-0.8%) made no progress to speak of. On higher oil and commodity prices the ASX closed up0.5% and the NIKKEI proved to be suffering from inertia, again closing flat! As I write at 9.00am the FTSE is down 15 points at 6140, with few of the company results warranting headline treatment. UK manufacturing output and Industrial production data is due out at 9.30am.

 

UK companies posting results – Wednesday – EXPERIAN, COMPASS, PREMIER OIL, BARRATT DEVELOPMENT, WILLIAM HILL, NATIONAL EXPRESS, VERTU MOTORS, Thursday – VESUVIOUS, ITV, HIKMA, TALK-TALK, OLD MUTUAL, Friday – MANCHESTER UNITED, COCA COLA HBC

US companies posting interim results – Wednesday – MACY’S, JACK-IN-THE-BOX, Friday – JC PENNEY

Economic Data – Wednesday – UK MANUFACTURING OUTPUT & INDUSTRIAL PRODUCTION, Thursday – MPC & BOE INFLATION REPORT, Friday – UK CONSTRUCTION

  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

   

TODAY’S FAYRE

TODAY’S FAYRE – Tuesday, 10^th May 2016

 

“I imagine this midnight moment’s forest:
Something else is alive
Beside the clock’s loneliness
And this blank page where my fingers move.

Through the window I see no star:
Something more near
though deeper within darkness
Is entering the loneliness:

Cold, delicately as the dark snow
A fox’s nose touches twig, leaf;
Two eyes serve a movement, that now
And again now, and now, and now

Sets neat prints into the snow
Between trees, and warily a lame
Shadow lags by stump and in hollow
Of a body that is bold to come

Across clearings, an eye,
A widening deepening greenness,
Brilliantly, concentratedly,
Coming about its own business

Till, with a sudden sharp hot stink of fox,
It enters the dark hole of the head.
The window is starless still; the clock ticks,
The page is printed.”

 

Ted Hughes – poet laureate– 1837-1909

 

Andy Murray is going to start running out of options for coaches as he ditches Amelie Mauresmo ahead of the Paris Open. Sorry I don’t buy the paternal/maternal and travel issues. They clearly aren’t getting on. I suspect our great tennis champion has become tricky to work with again.

 

The temperature over the EU referendum debate has risen sharply as Messrs Cameron & Johnson hurl veiled insults at each other over the threat of war and security issues.  Not content with that spat the PM also vented his spleen on Michael Gove. We were given a splendid European history lesson by the PM, going back to the Franco-Prussian and Napoleonic wars – fascinating stuff!  Mr Cameron seems to have all the picture cards in his hand, but one wonders if he is playing them all too early. Yesterday he had good support from UN military officials who agreed that the EU has contributed greatly towards peace in Europe since 1945. Many of us disagree and commend NATO’S and the UN’S efforts.  When called upon to stand up and be counted in Kosovo 1995-8, the EU bottled it! – Nowhere to be seen.  It was left to the US to tidy the unsavoury genocide of 300,000 innocent citizens. Few genuinely believe that the EU will prevent WW3, if Russian or North Korea decide otherwise.

 

The media and politicians seek to raise their game over the ‘Panama Papers.’ More than 200,000 offshore account details went online at 7pm last night, which sparked fresh calls for action from the UK government against offshore tax avoidance.  I am sure the drains will be hauled up but unless all global governments start to sing from the same hymn sheet, it will prove very hard to stop clandestine squirreling.

 

It is thought that West Ham are prepared to offer £25 million for Arsenal’s Theo Walcott.  Should that be the case, Arsene Wenger should not waste a nanno-second in accepting Bilic’s offer for his underperforming injury prone forward!

 

In the next day or so, it is going to become fairly obvious that the UK’s economy is not as buoyant as it was 18 months ago. On Thursday the BOE Inflation Report is likely to lower GDP for 2016 from 2.2% to 2%.  There is always a time-lag for the BOE figures; so don’t be surprised if some senior independent economists take their forecast below the 2% threshold before the Bank’s next reading.  We should attempt to carefully think why this fall in economic activity has transpired. Firstly crude oil is up from 37 a barrel to $44 a barrel – an increase of nearly 19% – so since petrol has gone up from 99p a litre to $112p it is material. Though some people are starting to benefit from the minimum wage going up that will not have filtered through to the data yet.  Sadly wage inflation is derisory – circa 2.2%.  Also pension contributions having to be increased or making personal provision for pensions is a new phenomenon for many. To add to his mesmeric compendium is the indisputable fact that the value of the Pound has declined in concert with declining PMI data particularly construction and falling retail sales.

 

I think George Osborne, supportive though most people are, should have introduced his severe austerity packages in 2013-2014, when the economy was strong and when tax cuts were being implemented.  He may just have missed the boat – hence the expected fall in growth.

 

It was another lack-lustre session in Europe yesterday, well-illustrated by the inertia experienced in London, where the FTSE 100 eased by 18 points to 6114, with mining stocks in poll position driving down its sector by an average of 5%.  Oils were also out of sorts, thanks to a drop in the price of crude.  Drugs and the tech sector fought manfully to keep the main index above water – up 1.5% each, but the appetite for risk prevailed – take heed from my opening paragraph!

 

The Street of Dreams had little to say for itself yesterday as the DOW ended the session down 0.20% with the S&P adding 0.08% and the NASDAQ +0.30% in listless trading where energy stocks surrendered ground and healthcare thrived as it had done in London. We await some of the retail companies to present their credentials before standing finally in judgement of 2^nd quarter earnings. They could be key but my heart does not currently warm to the sector. The US doughnut company Krispy Kreme has agreed to be bought by Kenco coffee owner, JAB Holding, for $1.35bn (£935m). The German investment firm JAB also owns Peets and Douwe Egberts, as well as the luxury shoe firm Jimmy Choo and beauty firm Coty.

 

In Asia further dispiriting Chinese CPI and PPI data followed yesterday’s anaemic import/export numbers.  CPI on an annualised basis came in at 2.3%, but Producer Prices continued to fall around the factory gates – down 3.4%, which I suppose was marginally better than the -3.8% forecasted. Chinese equities were not uplifted by this news. Shanghai Composite equity acolytes were rather ‘non-plus by this data, leaving this index lower by 0.60% towards lunch and the Hang Seng down by 0.20%.  The Nikkei buoyed by a weak Yen was up by a short 2% towards the close.  The ASX closed up 0.36%.

 

Martyn Dodgson, formerly of Deutsche Bank and Andrew Hind, a former advisor to Sir Phillip Green, were found guilty yesterday of insider trading.  3 others, however, were found not guilty.  The battle grounds have now been set prior to Sir Phillip Green’s visit to the two Parliamentary Select Committees he is to give evidence to.  At best they will be confrontational and fiery. It transpired that the Pension Trustees of BHS only discovered about the sale of BHS through the media.  Not good but that does not excuse them from not flagging up the pension black hole of a company that was making no money. What theatre awaits us!

 

 

Saudi Arabia is considering the possibility of a sale of 5% of Aramco ($20 billion) valued at $400 billion to cut some of its deficit. The investment banks and professional advisors will be salivating at the prospect of gargantuan fees.  However I suggest that this possible IPO is no ‘slam-dunk!’ So much of the voting rights of this company remain in Saudi and Saudi remains a political hotpot, unlike Qatar and Kuwait which are stable. So international investors may be circumspect. Ali –Al Naimi will be replaced by Khaled al-Faleh (formerly health minister) as Saudi oil minister.  It will take him some time to establish himself with the same authority as his predecessor.

 

Carolyn McCall was in robust form in presenting what she thought were decent numbers for EasyJet for the half year – a loss of £23 million on revenues of £1.77 billion.  The loss was down to a weaker Pound.  A loss of £5 million was incurred at the same time last year.  Forward bookings were encouraging and sales were up 7% and EasyJet is going for 8% growth this year. Credit Suisse posted a loss this quarter but Tidjane Thiam was pleased with progress in Asia. ThyssenKrupp, after a disappointing quarter downgraded its profit forecast for the year.

 

UK companies posting results – Tuesday – EASYJET, HISCOX, CAPITA, MARKIT, Wednesday – EXPERIAN, COMPASS, PREMIER OIL, BARRATT DEVELOPMENT, WILLIAM HILL, NATIONAL EXPRESS, VERTU MOTORS, Thursday – VESUVIOUS, ITV, HIKMA, TALK-TALK, OLD MUTUAL, Friday – MANCHESTER UNITED, COCA COLA HBC

 

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

 

Economic Data – Tuesday – UK TRADE BALANCE, Wednesday – UK MANUFACTURING OUTPUT & INDUSTRIAL PRODUCTION, Thursday – MPC & BOE INFLATION REPORT, Friday – UK CONSTRUCTION

 

 
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

TODAY’S FAYRE – Sunday, 8^th 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!

 

UK companies posting results – Monday – ITE GROUP, DIGNITY (TS), Tuesday – EASYJET, HISCOX, CAPITA, MARKIT, Wednesday – EXPERIAN, COMPASS, PREMIER OIL, BARRATT DEVELOPMENT, WILLIAM HILL, NATIONAL EXPRESS, VERTU MOTORS, Thursday – VESUVIOUS, ITV, HIKMA, TALK-TALK, OLD MUTUAL, Friday – MANCHESTER UNITED, COCA COLA HBC

 

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

 

Economic Data – Monday – RICS HOUSE PRICES, Tuesday – UK TRADE BALANCE, Wednesday – UK MANUFACTURING OUTPUT & INDUSTRIAL PRODUCTION, Thursday – MPC & BOE INFLATION REPORT, Friday – UK CONSTRUCTION

 

 
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

 

MARKET UPDATE – CENTRICA SHAREHOLDERS VENT THEIR SPLEENS

The sun may now be high on the yardarm and our bones may be creaking less as the duvet is hurled off the bed at 5.00am in the morning.  However I wish investors could show a little more enthusiasm on the daily issues at hand than they currently are!  Don’t give me BREXIT!  An ‘out’ vote may kindle some uncertainty but so does staying in, with the EU at the crossroads and less than likely to exist in a decade.

 

So as I put pen to paper at 1.20am the FTSE is down 5 points at 6105, having been up 40 points in early skirmishes, with mining and oil bobbing either side of par! Banks were up a marginal 0.25% with drugs down 0.5%.

 

Of those companies that reported today, this is how they fared as we head for the mid-day trough! – Rolls Royce – sadly CEO Warren East’s comments on profits being halved for the year was not well received – down 4.5%. BT – CEO Gavin Patterson has all the confidence and charm without the Michael O’Leary arrogance!  The punters loved his tale – broadband and BT Sports expansion – and dismissed the increased debt and the pension black hole almost with contempt – shares up 3%. Smith & Nephew – after all that M&A chat with likes of Zimmer a year or so ago – seems to be in the doldrums – down 2%. Centrica – now CEO Ian Conn did not please his acolytes with a side-winder missile in the form of an £800 million right issue for acquisition plans – down 9.6%.  Conversely Trinity Mirror, having closed down its paper – The New Day – what happened shares rose 7%! Sage posted improved conditions, but investors reserved judgement – down 2.5%. Inmarsat seem to be stuck in  a vortex of indifference – down 5.5% and finally Wm Morrison posted an increase in like for like sales excluding fuel of 0.7% for the last 13 weeks to 1^st May 2016. Punters gave Dave Potts a pat on the back – +1.75%.

 

The DOW futures are up 45 points.

 

TODAY’S FAYRE

TODAY’S FAYRE – Thursday, 5^th May 2016

“Kneel down, fair Love, and fill thyself with tears,
Girdle thyself with sighing for a girth
Upon the sides of mirth,
Cover thy lips and eyelids, let thine ears
Be filled with rumour of people sorrowing;
Make thee soft raiment out of woven sighs
Upon the flesh to cleave,
Set pains therein and many a grievous thing,
And many sorrows after each his wise
For armlet and for gorget and for sleeve.

O Love’s lute heard about the lands of death,
Left hanged upon the trees that were therein;
O Love and Time and Sin,
Three singing mouths that mourn now under breath,
Three lovers, each one evil spoken of;
O smitten lips where through this voice of mine
Came softer with her praise;
Abide a little for our lady’s love.
The kisses of her mouth were more than wine,
And more than peace the passage of her days.”

 

Algernon Charles Swinburne – poet – 1837-1909

 

 

 

Against all the odds Donald Trump has swept aside all-comers in the GOP primaries and looks unassailable to be nominated as the Republican candidate for November’s Presidential Election. The Clinton Brand is looking a little tarnished; so Trump to be elected President is, perhaps, looking an unlikely but real possibility. What would that do for world trade and diplomacy?  Perhaps punters should buy some defence stocks – Lockheed Martin, General Dynamics, Raytheon etc? Taxation is likely to be cut and public expenditure increased.  If the UK decides to BREXIT, maybe a trade agreement will be easier to negotiate? Clinton is currently 1/3 to be the 46^th President and Trump is 2/1 with Ladbrokes.  Maybe those odds will close in before too long!

 

 

Equities experienced another torrid session yesterday. Here in Europe there was little in the way of positive economic news to cheer investors. The High Street in the UK has proved to be a veritable jungle.  The fact that there is evidence of deflationary forces at work in food sold in supermarkets and clothing has not helped Sainsbury’s cause as Aldi & Lidl continue their stampede across the country. Sainsbury’s profits were down 13.8% and Mike Coupe’s management have taken the high risk route of adding Argos to its portfolio as another arrow to its rather weak bow. Shareholders were underwhelmed leaving the jury out, taking shares down 6.3% to 267.8p.  As for NEXT, Lord Wolfson only had tales of woe as he reported a drop in clothing sales by 4.7% in the first quarter, though the Directory business rose by 4.2%. These numbers, though depressing, were rather better than expected and shares rose by 3.5%.  However NEXT shares were £70 in February – down 25.4% to £52 yesterday. Royal Dutch Shell has been forced to make cuts in exploration despite oil and gas output rising by 16% but at depressed prices, presumably strategically making room for BG. Shares were down 2.1%

 

 

 

Now for scraps of good news! Imperial Brands, formerly known as Tobacco, is spreading its wings more widely and hopes to make inroads in Cuba, posted improved profits – up 18% with a 10% increase in dividend.  Shares have risen strongly in the last 2 weeks from 3571p to 3710p circa 4%. Paddy Power Betfair, despite an expensive Cheltenham, which incurred a loss of some £20 million saw profits up 16% in the first quarter. The FTSE 100 eased by 73 points to 6112.  Apart from sectors already mentioned, miners had a rough ride and banks remained out of favour.

 

 

 

On Wall Street the mood was sombre all day. Growth issues were creating cumuli nimbus clouds of concern, despite the appetite for a rate increase in June abating marginally. The ADP jobs index for the private sector for April was way short of expectation with 156k jobs created when 197k was the expected figure. That may not augur well for Friday’s non-farm payroll and employment data. The DOW closed down 0.56% dragging the S&P 500 down by 0.59% with the NASDAQ taking the greatest hit easier by 0.79%. Energy stocks were unpopular with oil and commodity stocks easing, though overnight crude oil is up to $44.69 a barrel.  Apple’s shares were down 1%, Intel down by 0.8%, though Facebook and Alphabet were up by 0.4%.

 

 

Tokyo remains closed for another Public holiday. However though Chinese PMI service sector reading was above the dreaded 50, a reading of 51.8 hardly made observers ecstatic. Rumblings about the strength of China’s banks were gathering momentum as were job vacancies for students leaving university. The ASX was just below the Plimsoll line towards the close -0.08%, perhaps due to good results from NAB whose profits were up 6.5% taking these shares up by 3%. The Shanghai Composite was down 0.11% and the Hang Seng by 0.27%.

 

 

 

BT posted 4^th quarter pre-tax profits of £1.15 billion on a 6% increase in revenues to £5.59 billion.  Debt was up by 6% and the pension hole of circa £4.9 billion does not seem to be decreasing. BT intends to spend £6 billion in the next 3 years expanding broadband and 4G operations by 90% to 12 million users by 2020. BT intends to be less reliant on Openreach and CEO Gavin Patterson does not feel under pressure to split the company. He seems to have placated the regulator by offering greater access to other telecom operators.   The dividend allocated was 8p per share.

 

 

Wm Morrison posted a trading statement for the last 13 weeks to 1^st May. Like-for-like^* (LFL) sales excluding fuel were up 0.7% (up 1.2% including fuel). Total sales^* excluding fuel were down 1.8% (down 0.9% including fuel), reflecting the impact of supermarket closures and exit of the M local chain. Online contributed 1.0% to LFL during the period. Fuel LFL was positive despite deflation of almost 11%.

 

 

 

UK companies posting results – 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 – Thursday – ALIBABA, KRAFT HEINZ, FRED’S, KELLOGG, EASTMAN KODAK, Friday – WEYERHAEUSER, ALLERGAN

Economic Data – Monday – 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

TODAY’S FAYRE

TODAY’S FAYRE – Wednesday, 4^th May 2016

Lying asleep between the strokes of night
I saw my love lean over my sad bed,
Pale as the duskiest lily’s leaf or head,
Smooth-skinned and dark, with bare throat made to bite,
Too wan for blushing and too warm for white,
But perfect-coloured without white or red.
And her lips opened amorously, and said –
I wist not what, saving one word – Delight.

And all her face was honey to my mouth,
And all her body pasture to mine eyes;
The long lithe arms and hotter hands than fire
The quivering flanks, hair smelling of the south,
The bright light feet, the splendid supple thighs
And glittering eyelids of my soul’s desire.

 

 

Algernon Charles Swinburne – poet – 1837-1909

 

 

Post the ‘Hillsborough Disaster’, Sheffield Wednesday FC was correctly severely criticised and censored for inadequate ground protection facilities, which contributed to the death of 96 Liverpool fans. However it is worth remembering that ‘The Owls’ were once a great football club with a massive following. They have won 4 league titles and 3 FA Cups. They were in the Premiership in 2000 for just one year. It would be good for football if this once proud club could plough its way through the ‘play-offs’ back in to the Premiership. No abuse now! I am talking about football, not disgraceful administrative errors!

 

 

So tomorrow Londoners vote for a new Mayor.  This has been an unpleasant campaign. Neither Sadiq Khan nor Zac Goldsmith have the personality or charisma of Boris Johnson or Ken Livingstone.  They were two powerful personalities, which attracted most Londoners to sit up, take note and vote. Mr Goldsmith has taken a little time to come in his spring coat against Mr Khan who was a very warm order to be elected in a city that is traditionally Labour, despite enjoying a Tory Mayor for 8 years who was universally liked. Zac Goldsmith looks as if he has come with a late rattle on the rails, thanks to internal Labour party divisions which have been widened by its controversial and politically unattractive leader, Jeremy Corbyn.  Does London want to be run by a Corbynistic Mayor?  I think not, but it is a distinct possibility! Londoners, you have been warned! No prizes for guessing who I shall be voting for! As for business and the city of London, the choice is a no-brainer, whilst London continues to attract wealthy investors.

 

 

Concerns over China’s growth and jingoistic rumblings from FED board members that a June rate Hike was very much on the agenda created sufficient uncertainty for investors to take some risk off the table on the Street of Dreams yesterday. The fact that oil prices had dipped and commodity prices were starting to show signs of anxiety gave credence to investors’ concerns.  Not surprisingly these facts damaged the mining and energy sectors, which had been the case in London a few hours earlier.

 

 

 The DOW closed down 0.78% with the S&P 500 easing by 0.87% and the NASDAQ by 1.13%.  Of those companies that reported yesterday Pfizer caught the eye adding over 4% in value. Today is an important day for economics, with the ADP index expected to show a gain of 196K jobs in the private sector last month, ahead of Friday’s Non-Farm payroll data. Also the antics of the US consumer is probably even more important.  So results from retailers from the likes of Walmart. Target, Abercrombie & Fitch, JC Penney, Nordstrom etc will be eagerly awaited.

 

 

Yesterday London’s FTSE was larruped by the desperate performance on the mining sector as previously mentioned, with Anglo American -12.7% and Glencore -8% at one point but closing only 4.5% lower, the most adversely affected during the session. Oil stocks also suffered and sadly Aberdeen asset Management performed poorly on falling assets under management – down 9%. Just Eat grabbed the ‘yellow jersey’ – up 7.1%.

 

 

However it was the performance of a few banks that was deeply depressing starting with ANZ in Australia – profits down 24% though its share price did recover.  Then UBS posted bad wealth management numbers which clattered the shares by 7.5% and finally HSBC did not please its acolytes, as profits eased by 14% and shares shed 1.65% in value, having at one point been lower by nearly 4%. One just gets the impression that many of these mature indices have pro-tem reached saturation point, until brighter news on the global growth front returns. I had to laugh with a degree of hysteria when ‘Vote Remain’ or ‘Vote Fear’ if you prefer blamed poor Markit manufacturing data on BREXIT threat. For the avoidance of doubt, manufacturing has been falling across the globe for some months.

 

 

 

Last night it was brought to my attention that Barclays had decided to offer 100% mortgages to those whose parents or friends would deposit 10% of the value of the house with the bank for 3 years. I know about the Bank of Mum and Dad and thoroughly approve – been there myself. I also know that for a decade Barclays relied heavily on investment banking (40-60% of profits).  Consequently the Bald Eagle surrendered high street dominance to HSBC, Lloyds and RBS. So this is an obvious gambit to attract new business.

 

However to offer 5.5 times salary with just a 3 year commitment on the 10% deposit is surely insanity.  Interest rates may remain low for another 2 years but they are not like door numbers. A 2-3% hike in the future – not impossible would bury many mortgagees.  Are we not potentially returning to the scene of Northern Rock, Bradford & Bingley etc! We don’t want the threat of that again, do we? Property prices are a problem, but the government must look for other means such as forcing local authorities to release land for building at reasonable prices for affordable housing.

 

 

This morning Siemens and Societe Generale posted encouraging results, the latter despite a wave of selling of banking stocks. AB InBev did not please their acolytes thanks to poor sales in South America, Mexico and the US.  Royal Dutch Shell posted a loss for the last quarter of $642 million on revenues of $48 billion, thanks to lower oil prices.  The CCS dropped from $4.8 billion to $0.8 billion.  The dividend was maintained at 47 cents a share. J Sainsbury saw a 13.8% drop in annual profits from £681 million to £587 million.  Sales totalled £25.8 billion. The dividend was cut marginally from 8.2p to 8.1p.  Costs cuts of £500 million are to be implemented. In the last year Sainsbury’s share price has rallied by 3.6% and since January 2016 by 18% (240p to 285p). In that period sales have fallen by 1.1% and like for like sales are down by 0.9%. Sainsbury has 601 supermarkets employing 28000 people.  Clothing sales grew by 8.5%.  

 

 

 

 

UK companies posting results – Wednesday – J SAINSBURY, ROYAL DUTCH SHELL, RANDGOLD, VIRGIN MONEY (TS), GLENCORE (TS), PADDY POWER BETFAIR (TS), DIRECT LINE, IMPERIAL BRANDS, IMMUPHARMA, 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 – Wednesday – TIME WARNER, TASER, ZYNGA, Thursday – KRAFT HEINZ, FRED’S, KELLOGG, EASTMAN KODAK, Friday – WEYERHAEUSER, ALLERGAN

Economic Data – Monday – 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

 

MARKET UPDATE

Tokyo was closed today and the performance of Asia was mixed with China’s PMI manufacturing data expanding at a the pace of a tortoise, resulting in the Hang Seng easing by 1% and the Shanghai Composite perversely adding 1.4%.

 

When the FTSE 100 opened it had no idea what it wanted to do. It was in a quandary or maybe inertia had set in or perhaps today’s banking results were not going to ‘float many peoples’ boats’; or maybe the easing of commodity and oil prices might skim a bit of cream off the top!

 

So the FTSE opened up 22 points, but before long too long the mining and oil sectors took the FTSE 100 south. By 9.00am the FTSE was down 50 points. As mining has been well and truly ‘mullered’ in the last 2 years, it is not surprising that these stocks have bobbed violently around like corks in bath! At the time of writing (3.45pm) Anglo American is down 13% and Glencore 8%. Over all, the sector has surrendered 8% in value. Oil is just 1% lower. Drugs have been strong +0.75%.

 

Banks have suffered today, courtesy of UBS, which was savaged (-7.8%). CEO Ermotti’s inability to rally wealth management underwhelmed investors. Barclays’ acolytes were unhappy about possible skulduggery in Barclays France – down 3.75%. HSBC’s share price fell 1.5%. Profits were down 14% at $6.1 billion, though better than expected. Aberdeen Asset Management had a shocker, having seen funds under management drop by £40 billion to £292 billion – shares down 9.5%. Just Eat grabbed the yellow jersey adding 7.1%. It was on the 12^th February 2016, when the share price stood at 330p that Panmure Gordon’s Michael Stewart flagged this stock up, imploring  investors to ‘stick to their guns.’ He did it again last week, implying the stock was hopeless under-valued. The share price rocketed today to 410% – up 7.1%.  He thinks there is more to go!

 

The ‘REMAIN’ mob will try and blame declining UK MARKIT manufacturing data on BREXIT. Don’t believe a word of it! It’s currently a global issue. So, in essence, it had zero influence on the FTSE performance today. At 3.58pm the FTSE 100 was down 50 at 6190. The DOW is down 190 points (1.15%).

TODAY’S FAYRE

TODAY’S FAYRE – Tuesday, 3^rd May 2016

 

 “Forth from Calais, at dawn of night, when sunset summer on autumn shone,

Fared the steamer alert and loud through seas whence only the sun was gone:

Soft and sweet as the sky they smiled, and bade man welcome: a dim sweet hour

Gleamed and whispered in wind and sea, and heaven was fair as a field in flower,

Stars fulfilled the desire of the darkling world as with music: the star-bright air

Made the face of the sea, if aught may make the face of the sea, more fair.

Whence came change? Was the sweet night weary of rest? What anguish awoke in the dark?

Sudden, sublime, the strong storm spake: we heard the thunders as hounds that bark.

Lovelier if aught may be lovelier than stars, we saw the lightnings exalt the sky,

Living and lustrous and rapturous as love that is born but to quicken and lighten and die.

Heaven’s own heart at its highest of delight found utterance in music and semblance in fire:

Thunder on thunder exulted, rejoicing to live and to satiate the night’s desire.” 

 

Algernon Charles Swinburne – poet – 1837-1909

 

Yesterday just before lunch I switched on the TV to hear a gut-wrenching interview of the Notts and England batsman, James Taylor, by Sky Sports’ Ian Ward. Taylor, aged 26, was struck down by a very serious heart condition in the early spring and was within an ace of dying but for the incredible treatment he received from the NHS as well as being down to the fact that he was fitter than a butcher’s dog! Despite being diminutive, during last winter, against all the odds he fought his way to the pinnacle of his career as an international batsman and a top-quality short-leg fielder in Abu Dhabi and South Africa. 

 

 

His zest for playing the game he loved and was obsessed with has been cruelly taken away from him. He will never play any form of competitive sport for the rest of his life. The interview, beautifully conducted by Ian Ward, was all about his recollections of his heart attack and how he is bravely coping with the necessary changes to his life style. He deserves huge credit for his stoicism. If you get a chance to see it, I strongly recommend it as a story of incredible bravery and fortitude. 

 

 

Hats off to Leicester City – a team of journeymen with two outstanding strikers Mehmet and Vardy and a superb keeper in Kasper Schmeichel and let’s not forget the genie in the bottle, their manager – ‘Tinkerman Claudio Ranieri! What a superb achievement unlikely to ever be achieved by a collection of players with such modest CVs! It’s all about the TEAM!

 

 

Though London was shut yesterday for the May Day Bank Holiday, the rest of Europe cracked on with some degree of success with the DAX adding 0.84% and the CAC a rather more parsimonious 0.31%. Sentiment was better and the Street of Dreams almost started to purr in the late spring sunshine in beautiful downtown Manhattan. Despite a fall ISM Factory Activity data, a weaker Dollar plus well held convictions that 2^nd quarter earnings would be better, with export driven stocks leading the charge. The DOW ended the session +0.66%, the S&P 500 +0.78% and the NASDAQ posted its first gain in 7 sessions – +0.88%. While first-quarter earnings from S&P 500 companies have mostly beaten analysts’ expectations, they are still estimated down 5.7% from a year ago, according to ThomsonReuters data. Baker Hughes and Halliburton called off their merger talks and Apollo rose like a grilse by 12.4% as investors improved their offer for the education titan. Though she seems to have contributed precious little to Yahoo!’s welfare in the past 3 years, rumour has it that she will receive $55 million, when the internet provider is sold. Many believe that it will fall in to the hands of Verizon.

 

 

Tokyo was closed today for a public holiday after a terrible day on Friday – down 3.1%. Asia posted a mixed session with the Hang Seng easier by 1% at lunchtime with the Shanghai Composite headed in the opposite direction – +1.4% at noodle time, despite relatively soft manufacturing data! The ASX closed +0.7%. The RBA dropped rates by 0.25% to 1.75%. Considering Australia has a potential resident property bubble on its hands, it was a brace move. ANZ posted very average results with profits down 24%. Clearly there has been some exposure to the mining sector and lower interest rates may not improve immediate profit opportunities.

 

It has been a very mixed day for banks with UBS posting a 64% drop in quarterly profits. The emphasis on investment banking has been curtailed. However wealth management has proved to be a very volatile arena and it’s contribution has been marginally disappointing. The shares are down 3.75% at 8.30am. HSBC, on the other hand, 1st quarter earnings were better than expected though profits were down by 14% to $6.1 billion. Tier One capital came in at 11.9% and the 30,000 redundancy programme due to be completed by the end of 2017 seems to be on track. The Brazil operation was sold and it appears that Hong Kong as a centre performed better than expected. We have yet to be told who replaces Douglas Flint as chairman in 2017 or Stuart Gulliver’s replacement as CEO. Shares were initially up 2.5% and at the time of writing (9.00am) were down 0.41%.

In passing a senior executive at Barclays has alleged money laundering and mis-selling failures at the bank’s French operations, casting a shadow over the British group’s plan to sell its French operations to a private equity group.

 

Aberdeen Asset Management saw its funds under management fall by £40 billion in the last quarter to £292 million. Aberdeen tends to major in the Far East where conditions have been very volatile. The shares were down 4%. Just Eat posted stellar order growth for the last quarter up 57%. Like for like orders increased by 41% to 31.5 million orders, about q0% ahead of expectation. Shares were up 8%. It was interesting to note that shares in Ladbrokes and Wm Hill were virtually unaffected by Leicester City’s Premiership win. Their satchels and those of Paddy Power/Betfair must have been bulging from money taken from Man City, Man Utd, Chelsea, Arsenal and Spurs.

After the wonderfully explicit article by Sunday Times’ Oliver Shah on Sir Philip Green’s corporate finance escapades in recent times, including his intemperate language, we much look forward to his evidence and that of Lady Tina to the two Parliamentary Select Committees. I just cannot wait.

 

UK companies posting results – 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 – 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 – 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

TODAY’S FAYRE

TODAY’S FAYRE – Sunday, 1^st 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