TODAY’S FAYRE – Sunday, 19th June 2016


When Britain first at Heaven’s command

Arose from out the azure main,

This was the charter of her land,

And guardian angels sung the strain;

Rule, Britannia! Britannia rules the waves!

Britons never shall be slaves!


The nations not so blessed as thee

Must in their turn to tyrants fall,

Whilst thou shalt flourish great and free

The dread and envy of them all.


Still more majestic shalt thou rise,

More dreadful from each foreign stroke;

As the loud blast that tears the skies

Serves but to root thy native oak.


Thee haughty tyrants ne’er shall tame;

All their attempts to bend thee down

Will but arouse thy generous flame,

And work their woe and thy renown.


To thee belongs the rural reign;

Thy cities shall with commerce shine

All thine shall be the subject main,

And every shore it circles thine!


The Muses, still with Freedom found,

Shall to thy happy coast repair;

Blest Isle, with matchless beauty crown’d

And many hearts to guard the fair: –

Rule Britannia! Britannia rules the waves!

Britons never shall be slaves!”


James Thomson (poem) & Robert Arne (composer) – 1740




The country was rocked back on its heels on Thursday in response to the desperate news that Jo Cox MP had been heinously murdered in a most barbaric manner. Everyone’s thoughts go out to her family, particularly her husband Brendon, the children and her parents and sister. That was an act of mindless brutality against a young woman who brought so much to so many peoples’ lives. Understandably and out of respect the Referendum campaign was suspended.   When the campaigning resumes here’s hoping that the rhetoric on both sides of the argument is tapered down in the hope that more temperate language can be used to get their respective points across.  


What a stunning finale to Royal Ascot yesterday, with HM The Queen’s ‘Dartmouth’ winning the Hardwicke Stakes, which gave Sir Michael Stoute his 75th winner at the Royal Meeting, equalling the late Sir Henry Cecil’s post war effort! It was so befitting for the occasion of HM’s 90th birthday, with the splendid Gallic jockey, Olivier Peslier in the plate, producing the son of Dubawi with precision timing to win the race, ultimately defying the Steward’s Inquiry!


I think little of Ronald Koeman’s ethics in walking away from Southampton FC, not having made any contact with the club for nearly 2 weeks until he signed for the ‘Toffee Men’ left much to be desired. Regardless as to whether he had concerns about the remainder of his contract or differences of opinion with certain factions within the club, he should have done the decent thing by being prepared to discuss it. The Saints is a well-run club and I have little doubt that a suitably high-profile manager will be found to replace Koeman.


Koeman is an excellent coach and of that there is little doubt, but there are ways of terminating your employment and Koeman’s antics, shall we say, were disappointing. The trouble is there is so much money in football, little else is of any consequence.  Koeman says he didn’t move to Everton just for the money.  Apparently he clashed with Les Reed head of Southampton’s Academy. Cobblers! I think he went for another £2.4 million!


I like Everton and they have landed a top football person, but I hope Southampton rip the Goodison Park boys to pieces when Everton visit St Mary’s.  …and no I’m not a ‘Saints’ fan!


“The IMF’S managing Director Christine Lagarde says the EU makes Britain richer, vibrant & more exciting – In her dreams! Respectfully she must have come from Planet “ZOG!” I wondered how long it would take before we had the next government inspired salvo – the establishment fully coordinated – would be shot across the bows of undecided voters. Why do the Government’s overseas cronies keep persisting with grossly exaggerated prognoses of the UK’s economy?  Their findings are pure supposition or guesswork and the IMF’s economic track record for forecasting is average at best. I put it to the IMF, OECD, Treasury, BOE and CBI that in forecasting the future, their outlook may only be marginally better than mine. Frankly they are all best guesses.


I am a huge admirer of Bernard Jenkin, the feisty firebrand Conservative Member of Parliament for Harwich & North Essex, who is also chairman of the Public Administration Select Committee. Bernard cares passionately about procedure and dealing with issues of public concern.  So it came as no surprise when he clashed with Governor Mark Carney over the Bank of England’s grave warning on the ramifications of a BREXIT vote last week. Mr Carney was unambiguous is stating that ‘leaving the EU’ was the largest immediate risk facing UK financial markets and possibly global markets. If the UK left the EU, that decision could also have an increasing widespread impact on asset prices, lower growth and higher inflation! 


We know that the BOE has a duty of care over the health of the UK economy, but it could be construed that some of this rhetoric was perhaps bordering on apocalyptic hysteria. As I said earlier NO ONE actually knows for sure what the effect of BREXIT will have on the economic stability of the country. After all there will be NO CHANGES at all in the way the UK conducts business with the EU for 2 years – that is FACT – Article 50 says so.  So in the immortal words of Michael Winner – ‘Calm down, dear!’ I have some sympathy with Bernard Jenkin that Mark Carney could be guilty of over-reaching his remit as Governor, by entering the corridors of politics. It is a very narrow line.


Mr Carney’s undying support of George Osborne is wholly understandable, but the use of greater subtlety in getting the message across would be beneficial for all. The BOE is really an independent arm of the Treasury and must at all times be neutral and just make bland statements of facts.  Impassioned pleas made by senior civil servants or government appointees can easily be construed as counter-productive.  This Referendum is probably a once in a lifetime vote.  However there is no reason to ‘throw toys out of the pram’ because the message has little or no resonance with many voters.


Suffice to say that improved UK economic data has been in evidence in the last week including encouraging employment data (unemployment only 5% with just 1.6 million people out of work), a significant turnaround in retail sales in May (+0.9%) having contracted by 4.3% in April plus improved industrial output. Hence the negative outlook for the UK’s economy by many establishment luminaries in the event of BREXIT look all the more perplexing.


As we know last week brought terrible news, particularly the murder on Thursday of Jo Cox.  However even stripping out those horrific shock waves markets were very volatile, none more so than the FTSE 100, which bounced around like a cork in a bath, starting the week at circa 6100 falling below 5900 midweek and ending on Friday at 6021.  The BREXIT prophets of doom were out in force, aided and abetted by further prevarication on rate hikes by the FED, a lack of further stimulus packages by the BOJ, dire warnings from the MPC on Thursday, culmination with Mme Lagarde’s piece de resistance’ on behalf of the IMF on Saturday. During last week the S&P 500 lost 1.56%, the FTSE 1.55%, European bourses an average of 2.19% and the NIKKEI a colossal 6.03% much of it down to a very strong Yen. Most market observers must surely acknowledge that these market reversals can only be marginally attributed to BREXIT.  Let’s face it the world’s economy is only firing off 3 cylinders! Ironically the Pound closed up 0.8% against the Dollar last week. Many cynics will say that rally was down to the likelihood of BREXIT receding, according to the bookmakers, though pollsters might take issue with that assessment.  It is widely thought that the Pound will fall to $1.20 against the Dollar – so what?  It has every chance of recovering and temporarily good for exports. Also we are told that equity portfolios have been lightened up to the tune of £2.1 billion, with many believing the FTSE could fall 10%. 65% of FTSE 100 companies have Dollar related earnings! That move does not make much sense to me. Again even more money was taken from equities ahead of the 2015 election. It is folly for folk to will bad news upon themselves, when it is not necessary.


On the Street of Dreams Apple and Alphabet lost 2% and 3% respectively.  Banks and drug companies had torrid sessions. On Friday Bed, Bath and Beyond bounced 3%.  Linkedin plateaued out last week having gained 35% the week before as a result of Microsoft’s bid. The yellow jersey went to Elizabeth Arden, whose shares leapt 49% thanks to Revlon’s $14 a share bid. Here in Old Blighty it was business as usual for mining and energy shares.  This week it was mainly a ‘down’ week. Barclays has lost 27% this year and RBS 29%.  Both were up on Friday by 4.6% and 3.3% respectively.  Lloyds Banking Group rallied by 6% thanks to winning a court case in US. Poundland saw Steinhoff take a 15% stake in this retail operation, which could lead to a takeover.


It was theatre in Portcullis House on Wednesday.  The truculent Sir Philip Green did us proud with his sneering resentful attitude towards his inquisitors, whose behaviour was exemplary – no more than one would expect from Frank Field and Ian Wright, the respective chairmen. Full marks to Neil Bennett for preventing Sir Philip from losing his temper.  In an attempt to sort the wheat from the chaff, it is all down to how the pension short-fall of £571 million is going to be dealt with. If the outcome is satisfactory, which will result in Sir Philip writing a huge cheque then there may be some absolution. Since the hearing it appears that Sir Philip refused Chappell’s plea for pension watch dog talks, which slightly contradicts what Sir Philip said.  He implied that the watchdog was playing hard to get.  Perhaps there were different timings on these issues. Also it has transpired that Arcadia warned BHS pension Trustees that the retailer was being stripped to the bone, with little likelihood of the pension black hole being filled.  This news will all eventually come out in the wash.


UK companies posting numbers – Monday – Majestic Wines, Tuesday – Photo-Me, Chemring, Petrofac, Whitbread PLC, Wednesday – Debenhams, Thursday – DS Smith, James Latham, Tesco (TS), Friday – Polar Capital.


US companies posting interim results this week – Tuesday – Lennar, Adobe Systems, KB Homes, Wednesday – Barnes & Noble, HB Fuller, Thursday – Sonic Corporation, Friday – Finish Line 


Economic data – Tuesday – US PMI, services, EU PMI manufacturing, Wednesday – UK public sector borrowing, UK gfk Consumer confidence, US existing home sales, Thursday – US New Home 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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