TODAY’S FAYRE – Wednesday, 22nd June 2016
“I had for my winter evening walk-
No one at all with whom to talk,
But I had the cottages in a row
Up to their shining eyes in snow.
And I thought I had the folk within:
I had the sound of a violin;
I had a glimpse through curtain laces
Of youthful forms and youthful faces.
I had such company outward bound.
I went till there were no cottages found.
I turned and repented, but coming back
I saw no window but that was black.
Over the snow my creaking feet
Disturbed the slumbering village street
Like profanation, by your leave,
At ten o’clock of a winter eve.”
Robert Frost – poet – 1874-1963
Those like me who have been relentless in their quest to see the UK restored to its previous independent glory in today’s EU Referendum will surely know their fate in the small hours this morning. This has been a tasteless, bad tempered and graceless campaign. Perhaps it was naïve of me to expect anything else. However it appears that markets are right behind a ‘REMAIN’ victory – a little presumptuous – but perhaps some the private polls conducted have provided irrefutable evidence.
Otherwise for Cable to be at circa $1.48 – its largest daily move in 7 years and the European bourses consistently adding a few points every day would seem to have been driven up by investors’ acts of folly. Maybe there has been a late run back to the status quo by the young. However if the repulsive weather prevails, London, which has clearly provided the momentum for the REMAIN campaign, may start to worry! I suspect that the Bank of England is burning the midnight oil with stress tests and contingency plans for bank liquidity. This is clearly good housekeeping, though in the long term I think there are far more problems involving European banks which are grossly undercapitalised by maybe as much as €300 billion. Many expect Asset managers to be subjected to similar scrutiny.
Still, as the expression goes – Nil desperandum! Onwards and upwards and yes, I am a believer! Whatever the outcome of the referendum the country is now horrible as well as uncomfortably split. Win, lose or draw this problem relating to the EU is not going away. In fact this weeping carbuncle has only just been lanced and may take years to heal.
Yesterday the Street of Dreams put in a lack-lustre effort bordering on inertia. Volumes were light and most Wall Street alumni were interested in Janet Yellen’s rather anaemic presentation to Congress on the State of the US economy, interest rates, which are unlikely to go up in the immediate future and the possible adverse effect that BREXIT may have on the world’s economy. This threat should really be of no immediate concern to the US. How many more times do I have to remind people nothing material in terms of the current arrangements the UK has in place will change for at LEAST TWO YEARS. The DOW closed down 0.27% with the S&P 500 easier by 0.17% and the NASDAQ -0.17%.
Asia rode unenthusiastically on ‘REMAIN’S’ coattails and purred in to positive territory apart from the Shanghai Composite -0.53%. The ASX closed up 0.18% with the NIKKEI 1.07% to the good. The Hang Seng was up 0.35% towards the close. At 9.35am this morning the FTSE 100 was +42 points at 6300 – DS Smith +4%, TESCO +2%, ASTRA UNCH and COBHAM +2.5%. A word or two on Tesco’s trading statement; UK like-for-like sales were up 0.3% (volumes up 2.2%, transactions up 1.7%). This effort was OK if not spectacular. Tesco supermarket share has dropped to 28.3%, with ASDA and Sainsbury are in the mid-16%. Tesco has sold Dobbie’s and its Giraffe restaurant chain in an attempt to focus on core businesses. Aldi and Lidl now have over 10% of the UK market and they will be massing their troops before too long in terms of cost cutting and opening new outlets. Tesco’s shares have fallen 2% from 216p a year ago to 171p today. Dave Lewis has tough job on his hands. He has cut debt from £8 billion to £5.5 billion. Working hours have been shortened and he may be forced to eventually downsize.
Retail is not a fun arena without any inflation to speak of. Debenhams suffered yesterday and hope for great things from Sergio Bucher who is coming from Amazon. We also hear rumours that when Primark post numbers in 2 weeks they may not make particularly pretty or encouraging reading.
UK companies posting numbers – Thursday – DS Smith, James Latham, Tesco (TS), Friday – Polar Capital
US companies posting interim results this week – Thursday – Sonic Corporation, Friday – Finish Line
Economic data – Thursday – US New Home Sales
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