TODAY’S FAYRE – Monday, 6th June 2016


“Forty-two years ago (to me if to no one else
The number is of some interest) it was a brilliant starry night
And the westward train was empty and had no corridors
So darting from side to side I could catch the unwonted sight
Of those almost intolerably bright
Holes, punched in the sky, which excited me partly because
Of their Latin names and partly because I had read in the textbooks
How very far off they were, it seemed their light
Had left them (some at least) long years before I was.

And this remembering now I mark that what
Light was leaving some of them at least then,
Forty-two years ago, will never arrive
In time for me to catch it, which light when
It does get here may find that there is not
Anyone left alive
To run from side to side in a late night train
Admiring it and adding noughts in vain”


Louis MacNeice – poet – 1907-1963


So the ‘Louisville lip’ has departed to the great arena in the sky! Who will ever forget Cassius Clay’s Olympic gold medal in Rome (1960), his championship fights against Sonny Liston, Floyd Patterson, Joe Frazier, Cleveland Williams, George Foreman and the fight he had in London with the incomparably brave but outclassed Henry Cooper. Some may say with a little justification that Clay was saved by the bell from a Cooper hay maker!


What a pity the inimitable Harry Carpenter, who died in 2010 was not amongst those wonderful commentators who enriched Mohamed Ali’s career as I should always refer to him now to, was not about with a few of his wonderful anecdotes.  Of course, Michael Parkinson could not resist the opportunity of speaking to lucidly and warmly about his experiences of interviewing probably the greatest boxer of all time. Perhaps acolytes of Jack Dempsey, Joe Louis, Sugar Ray Robinson, Sugar Ray Leonard, Roberto Duran, Mike Tyson, Evander Holyfield, Floyd Mayweather & Manny Pacquiao might take issue with my assessment! I hope not! Mohamed Ali was a legend – possibly the most influential sportsman of all time. RIP


The temperature of the EU Referendum debate has been significantly raised with even Sir John Major using intemperate language in criticising Messrs Gove and Johnson. The financial argument is more dominated by hysteria than fact. PM Cameron must feel a little uncomfortable being joined on the hustings by such political foes as Messrs Khan, Farron, Harmon, Kinnock & Co, in attempt to get his message across. Few are really enjoying the tone of the debate, which was epitomised when JP Morgan’s Jamie Dimon joined Chancellor Osborne in Bournemouth, warning the staff that he may have to bin or move 4000 staff in the event of BREXIT.  Enjoy your sojourn to Paris or Frankfurt, Jamie, because you’ll be back as London is where it is at! The Chancellor preened himself like a peacock, as JD extolled the virtues of the EU!


Well, what was that all about? A very left-field set of non-farm payroll numbers – only a parsimonious 38.000 jobs were created in the month – well short of the estimated 160,0000. In a rather pathetic manner some tried to blame this anomaly on the fact that Verizon had over 40,000 on strike, which could have affected the quality of the data. Though the employment rate fell from 5% to 4.7% the worrying aspect of this set of numbers is that something in the region of 102 million people are no longer looking for jobs – given up the ghost and there is still a massive shortage of skilled technical labour.  So much for that much anticipated rebound in the participation rate. After it had managed to rise for 5 months in a row through March, hitting the highest level in one year, the disenchantment with working has returned, and the labour force participation rate promptly slumped in both April and May, sliding 0.4% in the past two months to 62.60%, just shy of its 35 year low of 62.4% hit last October. Adding the number of unemployed workers to the people not in the labour force, there are now over 102 million Americans who are either unemployment or no longer looking for work.


So the net result of the dispiriting payroll numbers, which had an adverse reaction on the Greenback, a subsequent drop in Treasury yields took equity markets below the Plimsoll line more or less across the spectrum.  It seems as though the FED’S Janet Yellen’s plans to raise rates by 25 basis points in July is now temporarily in tatters.  The S&P 500 eased by 0.20%, the FTSE by 0.98%, European bourses by 2.93% and the NIKKEI, more based on an increasingly strong Yen was 1.14% easier. Gold rallied by $30 an ounce to $1241 and the outcome to this week’s OPEC meeting was somewhat inconclusive, though most believe that Saudi Arabia is unlikely to flood the market. Mario Draghi and the ECB were left very much in the shade last week, with the President of the ECB asking for calm and patience whilst the medicine for the banks and the economy went down with another spoonful of sugar, which is always at the ECB’s elbow.

On the Street of Dreams banks headed South on Friday with JPM -3%, Citigroup -5%, BOA -4% and Wells Fargo -2.7% all being the recipients of some vigorous selling. Most of this money seemed to head for the utility sector. Though conditions were fairly sepulchral for much of last week, supermarkets saw investors vent their spleens on them based on poor efforts from ASDA, which has triggered its owner Walmart to insist on another price war, where not many winners will be found.  Mid-week Morrison, Tesco and Sainsbury all lost 4% in value. Sainsbury posts numbers on Wednesday, which likely to see a 1.2% fall in like for like sales to 22nd May 2016.  Much of this will be due to a 40% drop in suppliers’ payments down from £639m to £371m, due to a cut in their promotions, relying more on just slashing prices. Lidl and Aldi seem to have run rings round the larger supermarkets with simpler more aggressive cuts.


There will be fun and games before the Parliamentary Select Committees for the main dramatis of the BHS saga.  On Wednesday it may be the turn of the buyer, Dominic Chappell, the thrice time bankrupt, representing Retail Acquisitions to appear.  Goldman Sachs may be embarrassed by an email congratulating Mr Chappell, saying he thoroughly deserved it for being consistent.  Oh Dear! Then the following week on 15th – Its fanfare time for Sir Philip Green.  So if Royal Ascot and finding the winner for The Prince of Wales Stake fails to hold the imagination, there is little doubt that Sir Philip will, as he wriggles his way out of chipping more than he has to in to the BHS pension pot or not as the case may be.  It is thought that the 20,000 beneficiaries could have to wait 2 years for settlement. Sir Philip is attempting a settlement with the pension authority but don’t hold your breath. There is apparently an investigation as £10 million paid by Arcadia to Retail Acquisitions – £3.5m loan and £6.5 million cash. This may all be bone-fide but requires clarification.  It may have just been a loan to the Chappell Consortium.


In wanting to defend the good name of Sports Direct, Mike Ashley has finally agreed to appear before Ian Wright MP’s BIS committee to discuss it labour contracts, remuneration and working practices. Finally we are likely to hear that the final short list of bids for Tata’s steel works this week, possibly even today.  Perhaps Tata might even keep some.


UK companies posting numbers – Wednesday – Sainsbury (TS), Workspace, Boohoo, WH Smith (TS), CMC Markets, Thursday – Auto Trader, Flybe, Wincanton, Home Retail, Friday – Fuller, Smith & Turner


US companies posting interim results – Monday – United National Foods, Tuesday – Conn’s Inc, Wednesday – Brown-Forman, Thursday – H&R Block


Economic calendar – Monday BRC Retail Sales, Tuesday – RICS House Prices, revised UK GDP, Wednesday – US manufacturing, Thursday – UK goods trade balance, US initial Jobless Claims, Friday – Consumer inflation expectations. 


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



One thought on “TODAY’S FAYRE

  1. Nigel Notley says:

    Like you I am pretty angry when I hear people like Jamie Dimond saying it will cost British Jobs. What it will cost JP Morgan is the loss of UK investment. The money I manage will simply be switched to British Fund Management Groups of which there are plenty. I don’t manage funds for European clients. Money currently invested through London based Investment Houses will stay in Britain
    It will also be nice to be entertained at Cricket, Rugby or Golf again post Brexit, without it being perceived as bribery. My integrity in the decision process has never been swayed by corporate hospitality. What do do learn about on those days is the character of the individuals with whom you are going to do business.

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