TODAY’S FAYRE –Sunday, 26th June 2016


Once more unto the breach, dear friends, once more;

Or close the wall up with our English dead.

In peace there’s nothing so becomes a man

As modest stillness and humility:

But when the blast of war blows in our ears,

Then imitate the action of the tiger;

Stiffen the sinews, summon up the blood,

Disguise fair nature with hard-favour’d rage;

Then lend the eye a terrible aspect;

Let pry through the portage of the head

Like the brass cannon; let the brow o’erwhelm it

As fearfully as doth a galled rock

O’erhang and jutty his confounded base,

Swill’d with the wild and wasteful ocean.”



William Shakespeare – poet & playwright– 1564-1616



It was a staggering week in more ways than one.  Setting the Referendum aside, on the sport front it was just amazing! Wales (3 million pop) beating Northern Ireland (1.8 million pop) 1-0, heading for quarter finals.  What an incredible effort – a terrible game but so exciting!  England’s crushing T-20 win over Sri Lanka by 10 wickets with centuries for Hales and Roy. Then, what an achievement by England ‘Down Under’ beating Australia by a very skinny margin 44-40 in a pulsating game to clinch the series 0-3.  Coach Eddie Jones is a wizard. However I imagine the language was fairly ripe as he admonished his side for conceding 40 points in a test match!  Finally Anthony Joshua looked invincible retaining his IBF Heavyweight title, clinically knocking his opponent out in the 7th round.  He has won all his 17 fights with a KO!


There was great deal of moaning and groaning on television as to how dispirited the young were that UK had voted to ‘LEAVE’ the EU.  It was made clear that 75% of those between the ages of 18 and 25 had voted to remain.  What a pity only 43% of that category could be bothered to go to the polls to cast their vote! What do they have to say for themselves?


What is it with M/S Sturgeon that she is so obsessed with membership of the EU?  Scotland sells some whisky and some defence products to these members and the EU steal their fish. What am I missing? I need educating.  Is it just her Anglo-phobia? Scotland cannot afford independence – no BOE/Regulation, no Pound and scant oil revenues.


It would unrealistic to think that J-C Juncker would greet the news of the UK’S forthcoming withdrawal from the EU with any degree of relish, sorrow or surprise. However his behaviour has been nothing short of boorish, unpleasant and downright rude. He has always been antagonistic towards the UK. He has clearly never majored in diplomacy. Juncker dismissed the possibility of an amicable divorce with disdain, which was probably uncalled for, since a smooth transition is desirable. I don’t know the fellow but he strikes me as petulant and the sooner his tenor as EC President is terminated, for all concerned, the better. PM Cameron, I always felt, was on the back foot with this unpleasant Machiavellian bureaucrat. Of course, David Cameron made a credible attempt to have him removed from office, but valiantly failed. So perhaps it was unrealistic to expect a sympathetic hearing.  Conversely the French European Commissioner for Economic Affairs Pierre Moscovichi was the soul of discretion, balanced and pragmatic. He encouraged the possibility of sensible negotiations, reminding everyone that the UK was still in Europe. The person who has really come up trumps has been the German Chancellor – Angela Merkel.  She has insisted that the parting of the ways must be conducted in a good natured manner.


I was less than surprised and understandably that the 6 original EU members’ foreign ministers let it be known that they want the UK to trigger the two year notice period under Article 50 sooner rather than in a few months’ time when a leader to succeed David Cameron has been elected. Apparently the UK’s position in the EU cannot start to be unwound until notice has been officially served by our PM.


Big business and London has not taken the decision of the people at all well. The ‘doom & gloom’ rhetoric has not really abated.  However it is imperative that contingency plans to implement the changes promised by the ‘Leave’ campaign become rather more transparent than they have to date. The country is now split dangerously wide open and it is essential that it is brought together again by strong leadership. Those who voted ‘LEAVE’ must now provide some clear evidence of a solid plan for change. Like it or not, the mood in many quarters in negative. It is imperative that the outlook becomes upbeat again. Voters require tender loving care.  The government has been wrong-footed and realistically it will take time to implement changes and elect a new PM. 


Notwithstanding all these challenges government must not become moribund until October. Thought must be immediately given to new trade agreements, which will need to be negotiated.   I was so chuffed to hear Lord Digby Jones so upbeat about the future on BBC Breakfast television yesterday. He was a breath of fresh air. I was dispirited to hear so much negative comment. A good amount of TLC is a perquisite for all!  Of course President Obama was wonderfully reassuring with his confirmation that the UK goes to the back of the queue – the special relationship! Daniel Hannan slightly surprised me with his stance of migration, saying that it was unlikely that the numbers would diminish. Unless I misinterpreted his comments that may not sit well with voters.


Friday was a bizarre day in London dominated by gargantuan waves of volatility unprecedented since the 2008/9 credit crisis.  Some blame for the apocalyptic hysteria, which created the tsunami waves of volatility must be attributed to the establishment for excessive negative rhetoric and dire warnings.   The initial market reaction was mitigated by the fact that the pound and stock market had risen strongly earlier this week in anticipation of a Remain victory. The pound and FTSE 100 reached £1.50 and 6,400 on Thursday night. After sharp falls – FTSE down 549 points at 5788 and the Pound being clattered to $1.35, the market regained some composure. During the day the pound rallied to touch $1.40 again before falling back to $1.36. The performance of the FTSE 100 was even more remarkable in the circumstances as it recovered during the day to a high of 6,232 and a close of 6,138.


Looking more closely at FTSE 100 there was a significant divergence in the index. Twenty seven shares rose by an average of 2.85%, while seventy three shares fell by an average of 8.82%. The winners were mostly large international companies with relatively small proportions of their revenues in Sterling and some gold mining stocks. The losers included property, construction and travel companies and the major banks and wealth managers. At one point Barclays was down 30% and Lloyds Banking group by 20%.  They made modest recoveries.  The likes of Persimmon and Barratt (between 20% and 40%) were meted out desperate treatment, based on thoughts the domestic economy would collapse – such conjecture! At one point Aberdeen Asset Management was down 32% ending the session easier by just 11%. The FTSE 250 and the FTSE AIM market fared rather worse – down 7% and 3% respectively. Gold rallied by 4.7% – flight to quality – Good Old Soros! Bond yields collapsed with 10-year gilts yielding just 1.08%. 


In New York on Friday banks suffered ‘the slings and arrows of outrageous fortune’ due to their exposure to volatility – down between 4% and 8%.  Stress tests have been tough and passed. Full marks, also to Governor Carney for his deft handling of Friday’s shock news.  He was very statesman-like in reassuring the market about liquidity and the fact that the banks had taken on board £130 billion of extra capital in recent years. Some may be worried by Moody’s threatening to downgrade the UK’s gilts from its AAA status. I think we need to be sanguine.  Their track record at best is moderate – Sub-prime lending?  They never sniffed it!  Finally I suspect that all Central banks will be on notice to increase QE or other stimulus packages if required. Volatility will prevail, but markets should calm down.  It’s the health of the UK economy in general that will require help rather than stock markets of foreign exchange.


UK companies posting numbers – Porvair, One Media, Tuesday – ULS Technology, Ocado, Wednesday – Essentra, Thursday – Tullow, John Wood, Serco, Friday – Bellzone Mining



US companies posting interim results this week – Tuesday – Carnival, Barnes & Noble, Nike, Wednesday – General Mills , Monsanto, Thursday – ConAgra, Darden Restaurants, Constellation Brands, Friday – Ford (sales)



Economic data – Monday – US M3 money supply, Tuesday – US GDP & Consumer Confidence. Wednesday – Mortgage approvals and BOE FPC Report, Thursday – UK GDP final, Friday – US PMI manufacturing



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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