Monthly Archives: July 2016

TODAY’S FAYRE

TODAY’S FAYRE – Sunday, 31st July 2016

 

 

I am that merry wanderer of the night.
I jest to Oberon and make him smile
When I a fat and bean-fed horse beguile,
Neighing in likeness of a filly foal:
And sometime lurk I in a gossip’s bowl,
In very likeness of a roasted crab,
And when she drinks, against her lips I bob
And on her wither’d dewlap pour the ale.
The wisest aunt, telling the saddest tale,
Sometime for three-foot stool mistaketh me;
Then slip I from her bum, down topples she,
And ‘tailor’ cries, and falls into a cough;
And then the whole quire hold their hips and laugh,
And waxen in their mirth and neeze and swear
A merrier hour was never wasted there.
But, room, fairy! here comes Oberon.”

 

“A Midsummer Night’s Dream”

 

William Shakespeare – poet & playwright – 1564-1616

 

30th July 1966 – what a date to conjure with! World Cup Final – England 4 West Germany 2. Sir Geoff Hurst scores a hat trick. With the exception Bobby Moore, the captain, who died in 1993 and Alan Ball, who was only 19 at the time, who tragically died in 2007, all are still alive – Thanks for the memory. We will never see the like again in my lifetime. FANTASTIC!

 

This ‘May’ government is certainly shaking off all the smoldering embers from the ‘Cameron Regime!’ Putting the £18 billion nuclear project at Hinckley Point on hold at the 11th hour, shortly after EDF had just nodded it through 11-7, was a brave move by the Government for 2 reasons. Firstly the ‘entente-cordial’ with La Belle France is not exactly glowing post the BREXIT decision and secondly and more importantly to knock China at this juncture when the UK is looking for stronger trading counterparties and friends might be construed as an act of folly – admittedly few people know the details of the on-going saga. 

 

I could understand Greg Clark being told by PM May to use the deal as bargaining point with France over future trading arrangements, particularly as Hollande is not well disposed towards the UK and Michel Barnier, just appointed EU BREXIT negotiator, is no friend of UK regulatory bodies. However China is a different kettle of fish. China needs nurturing.  Perhaps the deal will be revamped and will eventually go through.  To wait until the early autumn seems like an eternity.

 

It strikes me that any deal will be agreed for political reasons rather than economic.  The cost of £18 billion plus is gargantuan and the power station will only come in to use in 2025 and will only supply 7% of the UK with power and electricity. In the case of nuclear power France is the only country in Europe with a proven track record – hence its involvement.  I simply do not understand why the UK has been reluctant to use more gas for electricity and power – after all it is relatively cheap and clean.

 

I was greatly amused that Lord Mervyn King has taken up a consultancy with Citibank at a reputed salary of £250,000. A touch of the gamekeeper turned poacher. Do I recall Lord King often referring to bankers, particularly those with an investment banking background as ‘greedy & incompetent?’ I am sure that his influence along the political and regulatory corridors of power in Whitehall and the City will be very useful.

 

So we waited with bated breath for the EBA bank stress tests and to all intents and purposes it was a fudge job.  Maybe my eye was not eagle enough to identify any definitive findings.  Of the 51 banks tested there were no Greek or Portuguese banks considered too small.  Also it was thought that in the event of a crisis Italy’s third largest bank, Monti Dei Paschi Di Siena, would run out of cash.  We know that Italy’s banks require a E46 billion bail-out or a capital injection.  Will private Italian funds provide the money? Will PM Renzi get the Italian government too sort it or will the issue be fudged by the EU, ECB and IMF?  The IMF’s star is not exactly in the ascendancy at present. By looking at the schedule provided by the EBA, you can work out who is under the cosh and who isn’t. Frankly it should be spelled out. Deutsche should feel uncomfortable with its lot in life; the same apples to Allied Irish Banks and from the UK’s perspective RBS would be under the cosh and to a lesser degree so would Barclays, if the UK economy fell out of bed, but the BOE suggests that no extra capital is required for the 73% taxpayer-owned bank or for the ‘Bald Eagle.’  

 

Apart from ruminating over the EBA Stress tests, the market was also in Central bank decision mode, with comments from the FED suggesting that another 25 basis point rate hike before the end and some euphoric expectations that the Bank of Japan would continue to throw the kitchen sink at further stimulus. As it happened investors were disappointed by the moderate package offered by the BOJ and the Dollar fell 2.7% against the Yen. There was also a slew of earnings on both sides of the Atlantic to consider. However the imponderables seem to take their toll on global indices or more to the point put them in neutral mode. The S&P gained down 0.3% on the week.  The FTSE 100 eased by 0.9%. European stocks gained a parsimonious 0.25% and the  NIKKEI shed 0.35%,  What cheered me up was the FTSE 250 gaining 6% in July

 

In the UK Royal Dutch Shell disappointed as did BP though not so markedly. Banks were very much to the fore with a shocking effort from Deutsche Bank, dispiriting efforts from Lloyds Banking Group with improved profits but below expectations and coupled with 3k redundancies and a poor performance from Barclays – profits down 21% and a further £400 million PPI charge. Switzerland’s banks – Credit Suisse and UBS – for the first time in a few years posted much improved numbers under Tidjane Thiam’s and Sergio Ermotti’s respective leadership. The latter also posted a plan for assisting  the salvation of Monte Dei Paschi Di Siena. Rolls Royce, ITV and Sky were the pick of those companies which posted stellar results. Across the pond it was the tech sector that captured most of the headlines – Apple, Facebook, Microsoft and Alphabet also posted better than expected results. On the M&A front AB INBev looked to improve the bid for SAB Miller by £1 a share to £45 a share. In the case of Softbank’s bid for ARM Holdings there may be work to be done and it will be some time before the LSE beds down with Deutsche Boerse.

 

And so to Thursday and Friday. Thursday is expected to see the much heralded 0.25% cut in UK base rates to save the economy – the first alteration to base rates since 9th March 2009.  One can only assume that the content of the BOE Inflation report must have dire warnings about the crumbling UK economy, which is purported to be standing over a vortex of despair and staring recession in the face. It is rumoured that growth will be slashed to less than 1% for 2017 when it was previously forecasted to be 2.3%. We should get an inkling from PMI data posted prior to Thursday. All I can say is that it must be terrifying stuff, if cuts in base rates requiring radical stimulus packages to be introduced at the same time. The QE facility may be increased from the existing one of £375 billion. By purchasing more bonds and or providing cheaper loans to the banks these packages can be passed on immediately for the benefit of business. The summer is increasingly becoming the silly season; so to make full judgement on the state of the economy may prove to be folly. Talking around to a compendium of different businesses, one gets the impression that the outlook is not quite as bad as the establishment and most parts of the media would have us believe. However deficits in private pensions would appear to have increased alarmingly from £294 billion to £400 billion since the end of May 2016, according to the Telegraph.

 

On Friday the US employment data may give us, and more to the point Janet Yellen and the FED, a lead as to whether a rise in US rates before the end of the year really is on the cards. The market expects 175,000 jobs to have been created in July.

 

UK companies posting results this week – Monday – Trinity Mirror, Senior, Cenkos, Vedanta Resources, Tuesday – Meggitt, Spirent Communications, Greggs, Morgan Sindall, Travis Perkins,  Fresnillo, Direct Line, Intercontinental Hotels Group, SAB Miller, Wednesday – HSBC, Standard Chartered Bank, StatPro, Moneysupermarket, Thursday – Aviva, Inmarsat, Pets-at-Home, RPS, Johnston Press, Cobham, Ladbrokes, Rio Tinto, Next, Friday – RBS, Bellway, Ibstock, William Hill, esure Group

 

US companies posting interim results this week – Monday – Loews’s, Tuesday – Pfizer, Pitney Bowes, Procter & Gamble, Wednesday – Time Warner, Metlife, Marathon Oil, Jack-in-the-Box, Thursday – Valero Energy, Fred’s, Zynga, Friday – Kraft Heinz, Liberty Media, Weyerhaeuser

 

Economic data due this week – Monday – US PMI Manufacturing, Tuesday – UK PMI Construction, Wednesday – UK PMI services, US ADP employment Index, Thursday UK MPC and BOE Inflation Report, Friday – US Non-farm Payrolls & employment data.

 

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

TODAY’S FAYRE

  TODAY’S FAYRE – Thursday, 28th July 2016

  

“If music be the food of love, play on;

Give me excess of it, that, surfeiting,

The appetite may sicken, and so die.

That strain again! it had a dying fall: 

O, it came o’er my ear like the sweet sound,

That breathes upon a bank of violets,

Stealing and giving odour! Enough; no more:

‘Tis not so sweet now as it was before.

O spirit of love! how quick and fresh art thou,

That, notwithstanding thy capacity

Receiveth as the sea, nought enters there,

Of what validity and pitch soe’er, B

ut falls into abatement and low price,

Even in a minute: so full of shapes is fancy 

That it alone is high fantastical.”

  

“Twelfth Night”

  

William Shakespeare – poet & playwright – 1564-1616 

 

Unless you live in Sussex, Goodwood is the most inaccessible racecourse in England. However there cannot be more delightful place to spend an afternoon inhaling the joys of the very best of flat racing, than on the rolling Sussex downs. Glorious Goodwood is a none off and yesterday’s Sussex Stakes over a mile saw the most exciting and titanic struggle, which saw ‘The Ghurkha’, ridden by Ryan Moore slip through on the inside to mug Frankie Dettori on ‘Galileo Gold’ by a cosy half-length!

 

 

So J-C Juncker thinks he’s pulled ‘a fast one’ having appointed Michel Barnier, the former ‘AG & Fish’ luminary as the EU’S BREXIT negotiator. Barnier did a splendid job as an obdurate uncooperative financial regulator, who gave George Osborne and the UK government a really hard time in an arena most European capitals played a fairly ordinary role in comparison to London. Juncker thinks he’s brought off a coup. Sir Vince Cable referred to him in CityAM as smart, suave and formidable. I think truculent, obfuscate and tricky are nearer the mark. If Sir Vince thinks he’ll run rings around the UK negotiators, think again. It takes two to tango and the EU needs us rather more than we need them. Constructive negotiations to accommodate both sides if possible, are to be recommended! I think Juncker is living on borrowed time with Germany showing signs of irritation in response to his jingoistic rhetoric!

 

 

The Street of Dreams posted another rather neutral session thanks to hints from the FED that an interest rate hike in 2016 was on the cards at one of the 3 remaining meeting with September not being ruled out. With the Presidential election taking pride of place in the last quarter, Mrs Yellen could plump for September, particularly if the Labour data continues to improve and inflation does continue to be dormant. The FED will also need to be happy that the rest of the world’s economy is not going to crumble. The DOW closed down 0.01%, with the S&P 500 -0.12% with the NASDAQ up 0.58%, thanks in the main to further gains from Apple and Facebook up 4.5% after hours thanks to 186% increase in earnings. Boeing disappointed with a 63% drop in profits due to reassessing the cost of 747s and the KC-46 refuelling tanker.

 

 

 

The ONS’s surprisingly upbeat data on growth for the second quarter up 0.6% April to the end of June and 2.2% on an annualised basis gave the FTSE an initial fillip, but once it was established that the momentum was all May and June, the jury was left wondering how much credence should be taken from these numbers. Assessing progress between July and October will make more sense. There are signs that all is not lost and the fact that Boeing continues to invest as des Glaxo with a further £275 million with McDonald’s also announcing a further 5k jobs to be created in the years to come. We may also see an upturn in M&A business after the holiday period. Finally on this issue, it will be interesting to hear/see whether the MPC hikes rates by 0.25% on 4th August in conjunction with the BOE Inflation Report. If that happens and I would be against it – too precipitous – then the economy is showing signs of weakness and distress.

 

The FTSE added 26 points to 6750 yesterday with ITV rocking and rolling after its results – shares up 8%. Standard Chartered announced the appointment – an unorthodox one – of Jose Vinals the IMF economist as its new Chairman; the need for regulatory prowess being seen as a prerequisite. This morning the Yen was strong against the Greenback in Japan awaiting tomorrow’s fiscal package, which drove the NIKKEI down 1.13%. The Hang Seng eased by 0.20% with the Shanghai Composite all but moribund – -0.09%. The ASX added 0.30%.

 

 

At the time of writing (10.10am) the FTSE is down 10 points at 6760. There have been a massive slew of earnings set out below. The price dissemination on some is as follows – Rolls Royce +14%!!! – I do not understand why this stock is up so much. With oil at say $45 a barrel and CEO Warren East posting an outlook on profits for next year about 50% below 2014’s level leaves me perplexed. The shares were £12 then! Others – Diageo +1%, Sky +5.75%, BT +3%, Smith & Nephew -4% RD Shell -3.5% and Lloyds Banking Group -3.5%. I will just comment on Lloyds Banking Group’s announcement that 3k redundancies and the closing of 200 branches has ‘ZIPPO’ to do with BREXIT. It’s called FINTECH. HSBC is in the process of making 30k redundancies in the last few years and going forward. Barclays are making about 5k redundancies, why should Lloyds Banking Group be any different? The figures were OK but that is not good enough to get the share price going, with little prospect of a sale of the remaining 9% to the market out of public ownership.

 

 

UK companies posting results this week – Thursday – Centrica, Diageo, Sky, Thos Cook, BT Group, Smith & Nephew, Henderson, Astra Zeneca, Rentokil Initial, Just Eat, PayPoint, Genel, Domino Pizza, Lloyds Banking Group, Royal Dutch Shell, Weir Group Friday – Barclays, Vesuvius, Reckitt Benckiser, Pearson, Foxton’s, Paragon

 

US companies posting interim results this week – Thursday – Alphabet (Google), Baker Hughes, Ford Motor, Zimmer, Boston Scientific, Lear, Hershey, Raytheon, CME, Bristol Myers Squibb, ConocoPhillips, Colgate Palmolive, Harley Davidson, Amazon, Pixelworks, Friday – Xerox, Exxon Mobil, Chevron, Cigna

 

David Buik – market commentator

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

TODAY’S FAYRE

TODAY’S FAYRE – Wednesday, 27th July 2016

 

“The raven himself is hoarse

That croaks the fatal entrance of Duncan

Under my battlements. Come, you spirits

That tend on mortal thoughts, unsex me here,

And fill me from the crown to the toe top-full

Of direst cruelty. Make thick my blood.

Stop up the access and passage to remorse,

That no compunctious visitings of nature

Shake my fell purpose, nor keep peace between

The effect and it! Come to my woman’s breasts,

And take my milk for gall, you murd’ring ministers,

Wherever in your sightless substances

You wait on nature’s mischief. Come, thick night,

And pall thee in the dunnest smoke of hell,

That my keen knife see not the wound it makes,

Nor heaven peep through the blanket of the dark

To cry “Hold, hold!”

 

Lady Macbeth

 

 

William Shakespeare – poet & playwright – 1564-1616

 

 

Such very sad news that the Irish amateur jockey JT McNamara aged just 41 gave up the unequal struggle yesterday having broken his neck 3 years ago in the Kim Muir Chase.  He was almost totally paralysed.  A truly brave man and a fantastic jockey/sportsman and great friend of Sir Anthony McCoy and countless others in the weighing rooms on both sides of the Irish Sea. 

 

 

For the avoidance of doubt, it has been brought to my attention that Sir Philip Green is NOT a tax-exile. He is paid a salary by Arcadia in his capacity as a director and tax is deducted at source. My apologies for any misinformation that may have been circulated. 

 

 

With the sun still high on the yardarm with much of Europe attempting to get used to the idea of BREXIT, European bourses put in what could only be describes as a rather nebulous performance. There was quite a flow of results – few, if any, were earth shattering or very disappointing. I think the market was cheered by BP’s stronger than expected looking balance sheet, which ventures to suggest that despite all the trouble surrounding Deepwater from our ‘special friends’ in the US – dividends look safe enough for the time being. Though yesterday’s bottom line profit of $720 million was disappointing resulting in the shares dropping 2%, BP’s shares have rallied 12.8% in the past 3 months.  House builders lost a little shine thanks to a note put out by Deutsche Bank.  Provident Financial grabbed the yellow jersey from an enigmatic session, which saw the FTSE 100 end the trading session up 13 points at 6724. BT was 3.16% to the good, having agreed with Ofcom to have Openreach run as a subsidiary, so that the poor broadband service to date can be monitored more closely. 30 million internet users have access to Openreach which supplies 80% of the broadband market, including Sky and TalkTalk. A note about Jane-Ann Gadhia, the CEO of Virgin Money.  She’s doing a splendid job and really understands the retailer and consumer – shares up 8.7% after very encouraging numbers. AB InBev sweetened its bid for SAB Miller, as discussed yesterday, valuing the company at £71 billion and German investors just about gave Deutsche Bourse its reluctant approval to buy the LSE, though regulatory approval may not come through until next June.

 

 

There was little to get the taste buds going on the Street of Dreams yesterday as the DOW added a parsimonious 0.10%, with the S&P hardly doing much better – up 0.03% and the NASDAQ nervously awaiting results from Apple after hours.  Though profits were down some 22%, the numbers were better than expected – revenues of $50.06 billion producing a profit of $10.5 billion against last year’s effort of revenue $58 billion profit of $13.6 billion. The dividend was 10% with eps at $1.90 a share. The share buyback has been increased from $140 billion to $175 billion. iPhone 6 sales were up 35% on the last quarter.  The market seemed to like these numbers and the shares added 6.8% after hours, though they have fallen 20% this year.  Many felt that Marissa Mayer, Yahoo!’s CEO had done a very average job, which made her $65 million bonus stick in the crawl fairly uncomfortably. The earnings floodgates open today with Boeing, Coca-Cola and Facebook likely to catch most investors’ eyes.

 

 

A rumoured stimulus package of over Y28 trillion by the Bank of Japan, which may be announced today, put life back in to the NIKKEI, which weakened the end for the benefit of exports – up 1.80%.  The rest of the Asian bourses put in very mixed performances – ASX +0.10%, Shanghai Composite +2.55% and the Hang Seng -0.27%%.

 

 

There have been a slew of earning this morning. Deutsche Bank set the ball rolling this AM.  There have been some mutterings about the robustness of this bank for many weeks.  However CEO John Cryan posted a 67% drop in profits to E408 million for the second quarter.  Mr Cryan seemed to believe that the bank was making good progress with its restructuring programme, no doubt attempting to cut back on its derivative exposure. 2k new commercial clients have been identified at 10k private clients in the last trading period. Santander posted a 50% drop in profits again attributing this fall to restructuring.  Non-performing loans had fallen to 4.29%.  The ECB banking stress tests are due on Friday and will make interesting reading.

 

ARM Holdings due to fall in to the lap of Softbank before too long posted a 5% increase in profits to £95.9 million from a 9% increase in earnings to £387 million. EPS came in at 6.3p and the dividend was upped by 20%.  There was no outlook provided due to the sensitivity of the takeover procedure. GSK seem very comfortable with BREXIT as it announced a £275 million investment programme in the UK. ITV posted a decent set of numbers – Total external revenue was up 11% to £1,503m (2015: £1,356m). ITV Studios total revenue up 31% to £651m (2015: £496m).  Net Advertising Revenue was flat at £838m (2015: £838m. The adjusted Pre-tax-profit was up 9% to £425m (2015: £391m. The balance sheet looks to be in rude health.

 

The FTSE 100 is expected to open up 10 points to the good.

 

UK companies posting results this week – Wednesday – Tullow, Glaxo Smithkline, Brewin Dolphin, M&B, ITV, Marston’s, Shawbrook, Capita, Thursday – Centrica, Sky, Thos Cook, BT Group, Smith & Nephew, Henderson, Astra Zeneca, Rentokil Initial, Just Eat, PayPoint, Genel, Domino Pizza, Lloyds Banking Group, Royal Dutch Shell, Friday – Barclays, Vesuvius, Reckitt Benckiser, Pearson, Foxton’s, Paragon

 

US companies posting interim results this week – Wednesday – Boeing, Mondelez, Nasdaq, Corning, Coca-Cola, Altria, General Dynamics, Goodyear, Comcast, Facebook, Xilinx, Whole Foods, Amgen, Dolby Systems, Thursday – Alphabet (Google), Baker Hughes, Ford Motor, Zimmer, Boston Scientific, Lear, Hershey, Raytheon, CME, Bristol Myers Squibb, ConocoPhillips, Colgate Palmolive, Harley Davidson, Amazon, Pixelworks, Friday – Xerox, Exxon Mobil, Chevron, Cigna

 

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

THIS MORNING’S FAYRE

  TODAY’S FAYRE – Wednesday, 27th July 2016

 

“It happened to Lord Lundy then,

As happens to so many men:

Towards the age of twenty-six,

They shoved him into politics;

In which profession he commanded

The income that his rank demanded

In turn as Secretary for

India, the Colonies, and War.

But very soon his friends began

To doubt if he were quite the man:

Thus, if a member rose to say

(As members do from day to day),

 

“Arising out of that reply……!”

Lord Lundy would begin to cry.

A Hint at harmless little jobs

Would shake him with convulsive sobs.

While as for Revelations, these

Would simply bring him to his knees,

And leave him whimpering like a child.

It drove his colleagues raving wild!

They let him sink from Post to Post,

From fifteen hundred at the most

To eight, and barely six – and then

To be Curator of Big Ben!…

And finally there came a Threat

To oust him from the Cabinet!

 

The Duke – his aged grand-sire – bore

The shame till he could bear no more.

He rallied his declining powers,

Summoned the youth to Brackley Towers

And bitterly addressed him thus-

“ Sir! You have disappointed us!

We had intended you to be

The next Prime Minister but three:

The stocks were sold; the Press was squared;

The Middle Class was quite prepared.

But as it is!….. my language fails!

Go out and govern New South Wales!”

 

The Aged Patriot groaned and died:

And gracious! How Lord Lundy cried!”

 

  

Hilaire Belloc – poet & author – 1870-1953

 

This morning the back pages are littered with the smiling photos of ‘Big Sam!’ It must be Christmas Day for him! What a lovely bloke! However has the FA settled for mediocrity? Mr Allardyce has brought off great ‘Houdini acts’ in having moderate teams promoted or keeping even more moderate teams from relegation. Is this the CV we are looking to for England’s national side to compete at the very highest level since 1966?

 

On a really cheery note well done England! They humbled Pakistan in the most clinical manner possible at Old Trafford. Joe Root, in my humble opinion, is now one of the all-time great English batsmen – Hutton, May, Cowdrey, Hammond, Hobbs, Sutcliffe and Cook!

 

This whole Green/BHS Saga does not look as if it is going to end well. It is not helpful seeing Sir Philip partying in the South of France with the pension issues far from settled. I know tax issues only permits Sir Philip to spend 90 days in the UK. However his whole reputation is depended on a decent outcome – so Sir Philip, you should be burning the midnight oil. And if the Pension people are on holiday, come back – NOW! A stand-off at this juncture, with litigation being threatened again, this rhetoric is deeply unhelpful, unless of course, Sir Philip cares not a jot about his knighthood and his business reputation. That of course is another matter. I doubt Frank Field will either back down or resign as chairman of the Pensions Committee. I fear this spat is going to drag on through the summer months, resulting in an unhappy outcome. The bear fact remains that Sir Philip has done NOTHING illegal and is entitled to sail off in to the sunset with his coffers bulging with loot! And apart from the Knighthood, there may be little the authorities can do about it, despite the threatening official rhetoric! Also the BHS pension trustees? Where were they?

 

It has been an interesting morning with the FTSE 100 adding 10 points at 6720. Initially it rallied 29 points with BT adding 2.75% thanks to Openreach receiving greater attention in terms of independent scrutiny. AB InBev also ‘upped’ the ante by £1 per share for SAB Miller to £45 valuing the company at £79 million due to currency vagaries – up 1% and Ladbrokes were 1% better on news that only 300 shops would have to be dispensed with after the acquisition of Coral rather than 400 shops. Of those companies that reported BP posted a quarterly profit of $720m when estimates suggested $779 million. The dividend was 10 cents which suggests dividends will be maintained in the foreseeable future. The cash flow has improved, but the market was disappointed with the bottom line – down 1.52%. Virgin Money ran off with the yellow jersey adding 6.4% after great numbers and it was heartening to see GKN adding 2.6% in value with improved profits without attaching much importance to the benefit of BREXIT, the falling pound and its value to exports. Jardine Lloyd Thompson, Provident Financial posted satisfactory results, with Man Group (-1.5%) slightly disappointing. PZ Cussons was 2% better with its cheerful set of numbers.

 

Yesterday the Street of Dreams had little news to get its teeth in to and falling energy and commodity prices took the 3 main indices lower, despite Verizon paying $5 billion for Yahoo! The DOW closed 0.42% lower dragging the S&P 500 down by 0.30%, leaving the NASDAQ flat at -0.05%. Today all eyes will be on Apple’s results after the bell as well as Twitter. Asian markets closed mixed. The ASX was near enough flat – -0.07%. The Shanghai Composite rallied to the cause adding 1.14% with the Hang Seng closing 0.5% to the good. The disappointing Japanese stimulus package valued at Y6 trillion, resulted in the Yen firming, whilst taking the gild of the Nikkei’s gingerbread – down 1.43%.

 

 

UK companies posting results this week – Tuesday – BP, Man Group, Sage Group, Jardine Lloyd Thompson, Unite, P Z Cussons, Virgin Money, Provident Financial, GKN, Wednesday – ARM Holdings, Tullow, Glaxo Smithkline, Brewin Dolphin, M&B, Marston’s, Shawbrook, Capita, Rightmove, ITV, Antofagasta, Thursday – Diageo, BATS, BAE Systems, Centrica, Sky, Thos Cook, BT Group, Smith & Nephew, Henderson, Astra Zeneca, Rentokil Initial, Just Eat, PayPoint, Genel, Domino Pizza, Lloyds Banking Group, Royal Dutch Shell, Rolls Royce, National Express, Friday – Barclays, Vesuvius, Reckitt Benckiser, Pearson, Foxton’s, Paragon

 

 

US companies posting interim results this week – Tuesday – Starwood a Hotels, Twitter, 3Ms, KKR, Valero, BJ Restaurants, Apple, Match, Wednesday – Boeing, Mondelez, Nasdaq, Corning, Coca-Cola, Altria, General Dynamics, Goodyear, Comcast, Facebook, Xilinx, Whole Foods, Amgen, Dolby Systems, Thursday – Alphabet (Google), Baker Hughes, Ford Motor, Zimmer, Boston Scientific, Lear, Hershey, Raytheon, CME, Bristol Myers Squibb, ConocoPhillips, Colgate Palmolive, Harley Davidson, Amazon, Pixelworks, Friday – Xerox, Exxon Mobil, Chevron, Cigna

 

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

 

 

THIS MORNING’S FAYRE

  TODAY’S FAYRE – Wednesday, 27th July 2016

 

“It happened to Lord Lundy then,

As happens to so many men:

Towards the age of twenty-six,

They shoved him into politics;

In which profession he commanded

The income that his rank demanded

In turn as Secretary for

India, the Colonies, and War.

But very soon his friends began

To doubt if he were quite the man:

Thus, if a member rose to say

(As members do from day to day),

 

“Arising out of that reply……!”

Lord Lundy would begin to cry.

A Hint at harmless little jobs

Would shake him with convulsive sobs.

While as for Revelations, these

Would simply bring him to his knees,

And leave him whimpering like a child.

It drove his colleagues raving wild!

They let him sink from Post to Post,

From fifteen hundred at the most

To eight, and barely six – and then

To be Curator of Big Ben!…

And finally there came a Threat

To oust him from the Cabinet!

 

The Duke – his aged grand-sire – bore

The shame till he could bear no more.

He rallied his declining powers,

Summoned the youth to Brackley Towers

And bitterly addressed him thus-

“ Sir! You have disappointed us!

We had intended you to be

The next Prime Minister but three:

The stocks were sold; the Press was squared;

The Middle Class was quite prepared.

But as it is!….. my language fails!

Go out and govern New South Wales!”

 

The Aged Patriot groaned and died:

And gracious! How Lord Lundy cried!”

 

  

Hilaire Belloc – poet & author – 1870-1953

 

This morning the back pages are littered with the smiling photos of ‘Big Sam!’ It must be Christmas Day for him! What a lovely bloke! However has the FA settled for mediocrity? Mr Allardyce has brought off great ‘Houdini acts’ in having moderate teams promoted or keeping even more moderate teams from relegation. Is this the CV we are looking to for England’s national side to compete at the very highest level since 1966?

 

On a really cheery note well done England! They humbled Pakistan in the most clinical manner possible at Old Trafford. Joe Root, in my humble opinion, is now one of the all-time great English batsmen – Hutton, May, Cowdrey, Hammond, Hobbs, Sutcliffe and Cook!

 

This whole Green/BHS Saga does not look as if it is going to end well. It is not helpful seeing Sir Philip partying in the South of France with the pension issues far from settled. I know tax issues only permits Sir Philip to spend 90 days in the UK. However his whole reputation is depended on a decent outcome – so Sir Philip, you should be burning the midnight oil. And if the Pension people are on holiday, come back – NOW! A stand-off at this juncture, with litigation being threatened again, this rhetoric is deeply unhelpful, unless of course, Sir Philip cares not a jot about his knighthood and his business reputation. That of course is another matter. I doubt Frank Field will either back down or resign as chairman of the Pensions Committee. I fear this spat is going to drag on through the summer months, resulting in an unhappy outcome. The bear fact remains that Sir Philip has done NOTHING illegal and is entitled to sail off in to the sunset with his coffers bulging with loot! And apart from the Knighthood, there may be little the authorities can do about it, despite the threatening official rhetoric!

 

It has been an interesting morning with the FTSE 100 adding 10 points at 6720. Initially it rallied 29 points with BT adding 2.75% thanks to Openreach receiving greater attention in terms of independent scrutiny. AB InBev also ‘upped’ the ante by £1 per share for SAB Miller to £45 valuing the company at £79 million due to currency vagaries – up 1% and Ladbrokes were 1% better on news that only 300 shops would have to be dispensed with after the acquisition of Coral rather than 400 shops. Of those companies that reported BP posted a quarterly profit of $720m when estimates suggested $779 million. The dividend was 10 cents which suggests dividends will be maintained in the foreseeable future. The cash flow has improved, but the market was disappointed with the bottom line – down 1.52%. Virgin Money ran off with the yellow jersey adding 6.4% after great numbers and it was heartening to see GKN adding 2.6% in value with improved profits without attaching much importance to the benefit of BREXIT, the falling pound and its value to exports. Jardine Lloyd Thompson, Provident Financial posted satisfactory results, with Man Group (-1.5%) slightly disappointing. PZ Cussons was 2% better with its cheerful set of numbers.

 

Yesterday the Street of Dreams had little news to get its teeth in to and falling energy and commodity prices took the 3 main indices lower, despite Verizon paying $5 billion for Yahoo! The DOW closed 0.42% lower dragging the S&P 500 down by 0.30%, leaving the NASDAQ flat at -0.05%. Today all eyes will be on Apple’s results after the bell as well as Twitter. Asian markets closed mixed. The ASX was near enough flat – -0.07%. The Shanghai Composite rallied to the cause adding 1.14% with the Hang Seng closing 0.5% to the good. The disappointing Japanese stimulus package valued at Y6 trillion, resulted in the Yen firming, whilst taking the gild of the Nikkei’s gingerbread – down 1.43%.

 

 

UK companies posting results this week – Tuesday – BP, Man Group, Sage Group, Jardine Lloyd Thompson, Unite, P Z Cussons, Virgin Money, Provident Financial, GKN, Wednesday – ARM Holdings, Tullow, Glaxo Smithkline, Brewin Dolphin, M&B, Marston’s, Shawbrook, Capita, Rightmove, ITV, Antofagasta, Thursday – Diageo, BATS, BAE Systems, Centrica, Sky, Thos Cook, BT Group, Smith & Nephew, Henderson, Astra Zeneca, Rentokil Initial, Just Eat, PayPoint, Genel, Domino Pizza, Lloyds Banking Group, Royal Dutch Shell, Rolls Royce, National Express, Friday – Barclays, Vesuvius, Reckitt Benckiser, Pearson, Foxton’s, Paragon

 

 

US companies posting interim results this week – Tuesday – Starwood a Hotels, Twitter, 3Ms, KKR, Valero, BJ Restaurants, Apple, Match, Wednesday – Boeing, Mondelez, Nasdaq, Corning, Coca-Cola, Altria, General Dynamics, Goodyear, Comcast, Facebook, Xilinx, Whole Foods, Amgen, Dolby Systems, Thursday – Alphabet (Google), Baker Hughes, Ford Motor, Zimmer, Boston Scientific, Lear, Hershey, Raytheon, CME, Bristol Myers Squibb, ConocoPhillips, Colgate Palmolive, Harley Davidson, Amazon, Pixelworks, Friday – Xerox, Exxon Mobil, Chevron, Cigna

 

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

TODAY’S FAYRE

 

TODAY’S FAYRE – Tuesday, 26th July 2016

 

O, reason not the need! Our basest beggars 
Are in the poorest thing superfluous.
Allow not nature more than nature needs,
Man’s life is cheap as beast’s. Thou art a lady:
If only to go warm were gorgeous,
Why, nature needs not what thou gorgeous wear’st
Which scarcely keeps thee warm. But, for true need-
You heavens, give me that patience, patience I need!
You see me here, you gods, a poor old man,
As full of grief as age; wretched in both.
If it be you that stirs these daughters’ hearts
Against their father, fool me not so much
To bear it tamely; touch me with noble anger,
And let not women’s weapons, water drops,
Stain my man’s cheeks! No, you unnatural hags!
I will have such revenges on you both
That all the world shall- I will do such things-
What they are yet, I know not; but they shall be
The terrors of the earth! You think I’ll weep.
No, I’ll not weep.
I have full cause of weeping, but this heart
Shall break into a hundred thousand flaws
Or ere I’ll weep. O fool, I shall go mad!”

 

The Tragedy of King Lear

 

William Shakespeare – poet & playwright – 1564-1616

 

 

“Or take the right to vote. In principle, it is a great privilege. In practice, as recent history has repeatedly shown, the right to vote, by itself, is no guarantee of liberty. Therefore, if you wish to avoid dictatorship by referendum, break up modern society’s merely functional collectives into self-governing, voluntarily co-operating groups, capable of functioning outside the bureaucratic systems of Big Business and Big Government.” – Aldous Huxley – author – 1894-1963

 

The fact that the Bank of England and the IMF reluctantly back-tracked on the damage BREXIT would do to the economy brought a wry smile to my face. Of course the IMF could not resist dropping UK GDP forecasts for 2016 and 2017 and it helped the cause of the prophets of doom, who salivated at the prospect of poor MARKIT PMI on Friday and abysmal CBI manufacturing data yesterday and highlighted their dismay at our exit from the EU in 2 years + time. The way the economy has been talked down by the establishment over the last month+ before the referendum vote, no one can be surprised that these numbers pointed towards the vortex of recession. In 3 months’ time perhaps the outlook will look rosier. 

 

Despite the adverse economic data the FTSE remained fairly resilient adding 0.92% last week, though it did surrender 0.37% to 6705 yesterday. Admittedly whilst the Dollar remains strong many constituent FTSE 100 stocks should benefit. Ironically, yesterday the FTSE 250 added 0.63%. The current earnings season in the US was solid if not very inspiring but sufficiently encouraging for the S&P 500 to add 0.5% last week, though that was surrendered yesterday. This week the earning season floodgates will burst open in the UK. We started off quietly yesterday, but today BP and others will set the tone together with the banking sector on Thursday with Lloyds Banking Group and Barclays on Friday. However it was HSBC that saw the media draw most blood from courtesy of Messrs Johnson & Scott, two very senior FX trading managers, both of whom look like they will be indicted for foreign exchange manipulation. On 3rd August HSBC is likely to see half year profits fall by 30% to $9.9 billion, triggered by painful regulatory controls and capital requirements. Messrs Flint & Gulliver may well feel very vulnerable. It also appears that Standard Chartered Bank, which also posts results on 5th August may have been bankers to some defrauding of monies belonging to Malayan customers. This will be unwelcome news to CEO Bill Winters. 

 

The non-performing share prices of UK banks, due to onerous capital requirements, low interest rates, PPI and increased impairment charges and litigation, suggest that their results to be posted this week and next, may not make great reading.  There will be no special dividend from Lloyds on Thursday, as it seems unlikely that the remaining 9% of the bank will be sold to retail shareholders at a 5% discount. However profits may increase from £925m for the first half of last year to £1.7 billion this year over the same period. Though Jes Staley, Barclays CEO, seems more upbeat about life going forward profits from the last 6 months may have fallen from £1.34 billion to £1 billion. Rolls Royce have had currency issues which may have lobbed $2 billion from its profits.  BP, posting numbers this morning, seems still to be involved in litigation from the Deep Water disaster, which could well see profits trimmed by 25%. There are 3 corporate finance deals that have hit the rocks – Deutsche Boerse/LSE, InBev/AB/SAB Miller and SoftBank/ARM holdings. So there is much to keep an eye on this week. 

 

I think we more than roughly knew what the content of the BIS/Pensions select committees findings were in response to Sir Philip Green’s involvement in the demise of BHS and the potential loss of many of the 11,000 employees’ jobs and a gargantuan £571k pension black hole. It will come as no surprise that the ‘King of Gowns & Blouses’ was castigated and vilified by these Select Committees for milking BHS of copious hundreds of millions in to Lady Tina’s bank account probably in Monaco. BHS was a private company and the owners were entitled to syphon out as much as they liked, had it not brought the retailer to its knees due to lack of investment. What was unforgivable was the black hole of £571 million in BHS’S pension scheme, which was allowed to grow under Sir Philip’s ownership. Also the fact he sold the company to a totally unacceptable steward in Dominic Chappell for £1, which in hindsight he admits, was an appalling lack of judgement. However in all fairness it appears that advice from the likes of Goldman Sachs, PWC and Grant Thornton seems to have been short of the mark. 

 

SIr Philip can wring his hands for all he likes and scream ‘woe is me for I am undone!’ He must stop blaming everyone one else but himself. We must accept that what happened was not illegal, but it was morally wrong! His behaviour leaves something to be desired – akin to an alley cat.  HIs reputation has been tarnished, despite the many very generous charitable donations he has made over the years. There is only one answer that will prevent Sir Philip from falling permanently from grace and that is to hand over a whacking great cheque for £571 million to fill the pension black hole. I doubt any other act will placate the PM, Parliament or the general public. Also without an act of that magnitude, Sir Philip may only enjoy his gong for a very short time! C’Mon Sir Philip, pay it! You’ll still be a very rich man. 

UK companies posting results this week – Monday – Aberdeen Asset Management, Tuesday – BP, Man Group, Sage Group, Jardine Lloyd Thompson, Unite, P Z Cussons, Wednesday – Tullow, Glaxo Smithkline, Brewin Dolphin, M&B, Marston’s, Shawbrook, Capita, Thursday – Centrica, Sky, Thos Cook, BT Group, Smith & Nephew, Henderson, Astra Zeneca, Rentokil Initial, Just Eat, PayPoint, Genel, Domino Pizza, Lloyds Banking Group, Royal Dutch Shell, Friday – Barclays, Vesuvius, Reckitt Benckiser, Pearson, Foxton’s, Paragon

 

US companies posting interim results this week – Monday – Sprint, PayPal, Tuesday – Starwood a Hotels, Twitter, 3Ms, KKR, Valero, BJ Restaurants, Apple, Match, Wednesday – Boeing, Mondelez, Nasdaq, Corning, Coca-Cola, Altria, General Dynamics, Goodyear, Comcast, Facebook, Xilinx, Whole Foods, Amgen, Dolby Systems, Thursday – Alphabet (Google), Baker Hughes, Ford Motor, Zimmer, Boston Scientific, Lear, Hershey, Raytheon, CME, Bristol Myers Squibb, ConocoPhillips, Colgate Palmolive, Harley Davidson, Amazon, Pixelworks, Friday – Xerox, Exxon Mobil, Chevron, Cigna

 

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

THIS AFTERNOON’S FAYRE

  THIS AFTERNOON’S FAYRE – Tuesday, 19th July 2016

 

“It is the cause, it is the cause, my soul,–

Let me not name it to you, you chaste stars!–

It is the cause. Yet I’ll not shed her blood;

Nor scar that whiter skin of hers than snow,

And smooth as monumental alabaster.

Yet she must die, else she’ll betray more men.

Put out the light, and then put out the light:

If I quench thee, thou flaming minister,

I can again thy former light restore,

Should I repent me: but once put out thy light,

Thou cunning’st pattern of excelling nature,  know not where is that

Promethean heat That can thy light relume.

When I have pluck’d the rose, I cannot give it vital growth again.

It must needs wither: I’ll smell it on the tree.

Ah balmy breath, that dost almost persuade

Justice to break her sword! One more, one more.

Be thus when thou art dead, and I will kill thee,

And love thee after. One more, and this the last: So sweet was ne’er so fatal.

I must weep, But they are cruel tears: this sorrow’s heavenly;

It strikes where it doth love.

She wakes.”

  

The Tragedy of Othello

  

William Shakespeare – poet & playwright – 1564-1616

 

The King is dead! – Long live the King! Politics is ruthless and though Messrs Cameron and Osborne have gone with indecent haste, it might be folly and rather unfair to dismiss them and their achievements with the contempt that neither deserve!  David Cameron was on the whole a very good Prime Minister. Unemployment has been slashed. The deficit has been cut by 2/3rds and welfare is on a more even keel, with educations standards having been improved immeasurably.

 

George Osborne inherited a dire economy as could ever be imagined. To use his phrase, he did much to mend the roof for the future. Such a pity that ‘Project Fear’ was their main weapon for the EU Referendum. It was so unnecessary. A friendly BBC breakfast interview with Cameron & Osborne eating croissant with 4/5 members of the public, deftly handled would have been far more effective. Such is life and there’s no jobbing backwards! It would be unfair to condemn them just for poor referendum judgement and the fact that the lower paid used this Heaven-sent-opportunity to protest against social injustice, which they never sussed out!

 

Most people in this office and my family have given me absolutely unceasing and relentless stick for my stance on BREXIT. Sorry, everyone, I am totally unapologetic. I am pleased to see that the political brexiters are now in place to implement as smooth a transition as possible over the next few years. I am very excited at the positive comments made by the likes of Boeing, Lockheed Martin and Wells Fargo that they couldn’t care a jot about BREXIT! This may only be small beer in terms of the grand picture but they are significant players on the world stage. It would also appear that Australia, New Zealand and Canada would be only too happy to accommodate us in a trade agreement and so would the US but for the fact that Kerry is Obama’s bag boy. However the US’s attitude may change when Obama heads back to Chicago to lecture.

 

Also I have a little piece of advice for Messrs Dimon and Blankfein. Do you really want to send 5/6k staff to Paris and or Frankfurt to relocate some of your business when the EU banking sector is creaking from every seam. Italy, as we know is grabbing all the headlines, but Germany, France and Spain wait in the wings with their tales of woe! Just let them stay here where the infrastructure is proven. The system works and the regulatory controls are top drawer. What many observers may have forgotten when the banking sector comes under duress is not only the erosion of value and share capital but more to the point when depositors lose their confidence and withdraw their money. It’s like the plague or ‘Black Death!’ Trust me its toxic! Remember Northern Rock – not that long ago!

 

So far this week global markets have been relatively quiet; however there have been a few nuggets of information to cast our beady eyes over. In the wake of tolerable US bank results, Bank of America disappointed. However, Goldman Sachs’ interim results beat expectation (EPS $3.72 against expectations of $3). The shares rallied by 0.97% pre-opening. Yesterday Netflix’s efforts last night did not pass muster. Costs went up and subscribers fell way short of the mark, and investors did not hesitate for a Nano second in venting their spleens and removing 15% in value from the share price.  In Asia Line, the fresh Line IPO app lost 10% as did Softbank post their £24.3 billion bid for ARM Holdings. However Nintendo remained on fire with the addition of another 14.3% in its share value! UK CPI – Inflation, measured by the consumer price index, rose to 0.5 per cent in June after being stable at 0.3 per cent in May, according to the Office for National Statistics, thanks to fuel and airline flights. This unexpected blip saw Sterling rally a smidgen. Finally we are expecting the new UK Chancellor Philip Hammond to leave austerity in the in-tray and watch him borrow some more 10 year Gilts under 1% to fund infrastructure initiatives to keep his foot on the growth pedal.

 

Never let it be said that I was a protectionist when it comes to international business. However I am sorry to say goodbye to ARM Holdings. The reason is that the FTSE 100 has few constituent stocks that represent the future. It’s all about banks, retail, mining, oil tobacco, utilities etc. There is only Sage left to represent the brave new world. Unlike the NASDAQ and the US in general when companies like Google (Alphabet), Apple, Intel, Cisco, Amazon, Netflix, eBay, Texas Instruments etc blazed the trail, we, here in Old Blighty, have no comparable companies. We lost most them when the TNT bubble burst in 2000. Autonomy was sold to Hewlett-Packard very unsatisfactorily. So it would have been great to have a couple more operations to use as springboards for the future. In order to tuck ARM into its portfolio Softbank had to drop its stake in Alibaba (quoted in the US and Switzerland) from 32% to 28%. There seems little change in corporate culture in Japan. It remains or conveys the impression that life remains very incestuous!

 

The IMF cut its forecast for UK growth in 2017 to 1.3% from an earlier forecast of 2.2% as the impact of the vote is felt. UK growth this year is expected to be 1.7%, 0.2 points lower than the IMF’s previous forecast. Global growth is forecast to rise by 3.1% this year and 3.4% in 2017, a 0.1 point cut for both years. – Whoopee! The IMF’S forecasting has always been average at best.

 

UK companies posting numbers – Tuesday – Dairy Crest, BHP Billiton, Royal Mail Group, IG Group, SSP Group, Wednesday – Fresnillio, Anglo-American, Severn Trent, TalkTalk, Johnson Matthey, Electrocomponents, Thursday – Unilever, Babcock International, Tate & Lyle, AO World, Howden Joinery, Halma, Euromoney, SAB Miller, EasyJet, Premier Foods,  Friday – Beazley, Vodafone, Acacia Mining

 

 

US companies posting interim results this week – Tuesday – UnitedHealth, Microsoft, Lockheed Martin, Johnson & Johnson, Philip Morris, Goldman Sachs, Wednesday – Morgan Stanley, Halliburton, Northern Trust, Fidelity, Mattel, eBay, Intel, General Motors, Thursday, Pulte, DR Horton, Bank of New York Mellon, Blackstone, Biogen, Starbucks, Schlumberger, Visa, AT&T, Friday – American Airlines, Whirlpool, Honeywell

 

 

Economic data – Tuesday – UK inflation data, US Housing starts, Wednesday – UK Employment data, Thursday – UK Retail sales, Friday – CBI Industrial orders

 

 

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

TODAY’S FAYRE

 

TODAY’S FAYRE – Sunday, 17th July 2016

 

Now is the winter of our discontent

Made glorious summer by this sun of York;

And all the clouds that lour’d upon our house

In the deep bosom of the ocean buried.

Now are our brows bound with victorious wreaths;

Our bruised arms hung up for monuments;

Our stern alarums changed to merry meetings,

Our dreadful marches to delightful measures.

Grim-visaged war hath smooth’d his wrinkled front;

And now, instead of mounting barded steeds

To fright the souls of fearful adversaries,

He capers nimbly in a lady’s chamber

To the lascivious pleasing of a lute.

But I, that am not shaped for sportive tricks,

Nor made to court an amorous looking-glass;

I, that am rudely stamp’d, and want love’s majesty

To strut before a wanton ambling nymph;

I, that am curtail’d of this fair proportion,

Cheated of feature by dissembling nature,

Deformed, unfinish’d, sent before my time

Into this breathing world, scarce half made up,

And that so lamely and unfashionable

That dogs bark at me as I halt by them;

Why, I, in this weak piping time of peace,

Have no delight to pass away the time,

Unless to spy my shadow in the sun

And descant on mine own deformity:

And therefore, since I cannot prove a lover,

To entertain these fair well-spoken days,

I am determined to prove a villain

And hate the idle pleasures of these days.

Plots have I laid, inductions dangerous,

By drunken prophecies, libels and dreams,

To set my brother Clarence and the king

In deadly hate the one against the other:

And if King Edward be as true and just

As I am subtle, false and treacherous,

This day should Clarence closely be mew’d up,

About a prophecy, which says that ‘G’

Of Edward’s heirs the murderer shall be.

Dive, thoughts, down to my soul: here

Clarence comes.”

 

RICHARD 111

 

William Shakespeare – poet & playwright – 1564-1616

 

What a day for Sunday sport – The final round of the Open Golf at Troon, which looks to be between Mickelson and Stenson. Though Stenson has a one shot lead, you wonder, with 5 big trophies already in his bag, the big American may not be the man for the day. Then to Lord’s where the test match looks to be slightly in favour of Pakistan, unless England can take 2 wickets early on cheaply. 300 to win a game at Lord’s in the final innings will take some getting with Yasir’s chops already drooling at the prospect of the wicket taking measurable spin!

 

The fact that the S&P 500, and the FTSE both added 1%, with European bourses gaining on average 3% last week, despite the appalling terrorist slaughter of 84 people including 10 children on the Promenade in Nice at the hands of someone from the gutter of inhumanity plus a coup in Turkey, which cost 250 lives and serious ramifications in the future, is quite astonishing – in fact mind-blowing!  One could talk about resilience, but that is surely an over-simplification.  I suspect, if the truth be told, the world’s central banks have far more of a vice-like-grip on quantitative easing on a global basis than perhaps many of us realise. To show how nonchalant we all are the heading in the FT on page 20 puts the matter into perspective – “US AND EUROPEAN SHARES END ON QUIETER NOTE AFTER UPBEAT WEEK!”

 

Blimey! A decade ago news of that magnitude would have sent investors scuttling to the hills for cover! In all fairness the start to the US earning season has looked more promising than perhaps many feared with better than expected results from JP Morgan Chase and on Friday results from Wells Fargo (-2.5%) and Citibank (-0.75%), which were in line with expectation, rather a glittering set of numbers. Though the banking sector in the US is in a better place than its European peers the sector, as an investor, it still does not make investors tingle at its prospects! The US economy seems to be ending the second quarter on a high note, but there are still many doubters out there who think over a year BREXIT could and maybe will spoil the party. It is astonishing to think that the DOW and the S&P 500 last week crashed through last year’s all-time records in May! However in all fairness with interest rates where they are, alternative asset classes continue to look unattractive, Oil rallied a tad to $47 and change (+1.9%) and gold drifted 3.3% on the week to $1330 an ounce.

 

I had failed to notice that the NIKKEI had rallied by a monumental 9.2% last week in the hope that the Abe government would provide packages to help growth and inflation – Could these hopes again be false ones? How many times have we been promised by Japan that it would put its economic house in order and has consummately refused to do so? As a country it is already hopelessly over borrowed yet its government seems reluctant to introduce any real infrastructure projects.  China’s GDP came in slightly better than expected – 6.7% when 6.6% was the estimation.  One can never be too sure that with the Chinese authorities that there may always be some economy with the truth. Anyway this news provided some much needed stability.

 

The biggest news for us here in “Dear Old Blighty” was PM May’s Cabinet appointments, which was very much a re-enactment of the ‘night of the long knives!” The net results is that George Osborne has been booted in to the long grass of temporary ignominy. He is young with plenty of fire in his belly; so to write him off may be folly!  BREXITERS have picked up very influential appointments – Boris Johnson, David Davis and Dr Liam Fox are the leading “movers & shakers.” Let’s hope they have what it takes to implement a smooth and seamless transition from the EU vice-like bureaucratic grip on single market legislation to a FREE MARKET, which the whole world would benefit from. It is a task of gargantuan proportions and will require the services of a few thousand trade negotiators, which the UK does not have – so they must be shipped in ‘tout de suite!  Philip Hammond looks like an excellent appointment as Chancellor, a position many believe he has coveted for some time.  

 

I think the Chancellor also has the stomach to take on France and Germany who feel they can take financial services business away from London, such as clearing. They may well be temporarily successful. However London is the place to be. Everyone in financial services accepts that fact and you do not surrender 70 years of infrastructure without a hell of a scrap.  As for the FTSE 100 it is now 5% above where it closed on 22nd June, though 6% down in terms of Dollar value (£ is 12% lower against the Dollar) and the FTSE 250 is only 3% below where it was on the same day. The FTSE 250 is a far better barometer of UK economic activity than FTSE 100. House builders such as Persimmon, Taylor Wimpey and Barratt made substantial gains as the May government started to restore some stability. All Dollar earning related stocks kept their poise. For the MPC to leave rates unchanged since 9th March 2009 at 0.5% last Thursday was sensible.  The MPC will have more data to ruminate over by 4th August – the date of the next inflation Report – and there is little point in leaving too few bullets in the gun’s chamber!

 

Finally I cannot avoid having another pop at those banking CEOS who want to take their troops from London to Paris or Frankfurt.  For your guide, Gents, Italy’s banking sector is in crisis with PM Renzi fighting like a mad dog with the EU for help with a E46 billion bailout to help service E350billion of bad debts! Oh and by the way that is not the only banking sector under duress in the EU.  I think you will find the overall banking sector needs an injection of fresh capital to the tune of E300billion.  Why would it be more attractive to work in that environment? In closing it is still taking far too long for the REMAIN bad losers to accept the will of the people – media and companies alike. The country needs to make this work – so let’s get on with it!

 

UK companies posting numbers – Monday – Conviviality, Rio Tinto, British Land, Microgen, Ensor, Tuesday – Dairy Crest, BHP Billiton, Royal Mail Group, IG Group, SSP Group, Wednesday – Fresnillio, Anglo-American, Severn Trent, TalkTalk, Johnson Matthey, Electrocomponents, Thursday – Unilever, Babcock International, Tate & Lyle, AO World, Howden Joinery, Halma, Euromoney, SAB Miller, EasyJet, Premier Foods,  Friday – Beazley, Vodafone, Acacia Mining

 

US companies posting interim results this week – Bank of America Merrill, Rambus, EMC, Netflix, Yahoo!, Tuesday – UnitedHealth, Microsoft, Lockheed Martin, Johnson & Johnson, Philip Morris, Goldman Sachs, Wednesday – Morgan Stanley, Halliburton, Northern Trust, Fidelity, Mattel, eBay, Intel, General Motors, Thursday, Pulte, DR Horton, Bank of New York Mellon, Blackstone, Biogen, Starbucks, Schlumberger, Visa, AT&T, Friday – American Airlines, Whirlpool, Honeywell

 

Economic data – Monday – Rightmove housing data, US – NAHB Housing, Tuesday – UK inflation data, US Housing starts, Wednesday – UK Employment data, Thursday – UK Retail sales, Friday – CBI Industrial orders

 

 

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

TODAY’S FAYRE

 

TODAY’S FAYRE – Friday, 15th July 2016

 
Now entertain conjecture of a time

When creeping murmur and the poring dark

Fills the wide vessel of the universe.

From camp to camp, through the foul womb of night,

The hum of either army stilly sounds,

That the fixed sentinels almost receive

The secret whispers of each other’s watch.

Fire answers fire, and through their paly flames

Each battle sees the other’s umbered face.

Steed threatens steed, in high and boastful neighs

Piercing the night’s dull ear; and from the tents

The armorers, accomplishing the knights,

With busy hammers closing rivets up,

Give dreadful note of preparation.

The country cocks do crow, the clocks do toll,

And, the third hour of drowsy morning named,

Proud of their numbers and secure in soul,

The confident and overlusty French

Do the low-rated English play at dice

And chide the cripple, tardy-gaited night,

Who like a foul and ugly witch doth limp

So tediously away.”

 

William Shakespeare – poet & playwright – 1564-1616

 

After all the political machinations – the ‘blood-letting’ and the night of the long knives that go with a change in government, we felt like a belly laugh, so went to see the Lumley Saunders ‘Ab Fab’ film in style at the Electric Cinema in Notting Hill –You know the one with sofas, arm chairs, stools, blankets, drinks and food! Such a pity it was such an awful film.  Regret the two glasses of Sauvignon Blanc did for me and the lids became too heavy. I used to love those two national treasures and I still think they are immensely talented but this film, respectfully, was absolute twaddle.

 

Yesterday I introduced myself to the sunshine at Lord’s – It was quite an ordeal.  I did not quite know how to deal with it.  However nothing that a glass of Pimm’s good company and some entertaining cricket would not put right. In terms of cricket this is palpably the worst weather the lovers of this very special game have experienced since AH Kardar brought his India side over here in 1954, when it rained almost every day of the week!

 

Politics – Out with the old; in with the new! PM May certainly showed her resolve in putting in her own people, which saw 10 government casualties looking for alternative gainful employment or something to supplement the paucity of an MP’S salary. It seems extraordinary that political heavyweights such as Messrs Osborne and Gove have been cast in to the long grass of ignominy. Both were fine ministers who did much good, but both making fatal errors of judgement in the end. Certainly if you backed the wrong horse in this drama which continues to unfold on a daily basis you have paid dearly with your career.  There seems little more vile occupations than high octane politics. Quentin Letts in the Mail today on this subject is a guinea a minute.

 

A new PM and a fresh government has brought some stability to markets in recent days.  It has also contribute to an improved sentiment in the US, where there is some hope that the earnings season may not be too bad. Also in Asia, since Abe-San was returned to power in Japan with a thumping majority, the NIKKEI has been rocking and rolling. I am less than convinced that the economy has improved one scrap but if folk feel better about life, it can have a very positive effect on confidence. In the past 48 hours in Japan, Nintendo’s new game has set its share price on fire, rising 10% yesterday and another 4% today.  Japan also introduced the biggest tech company to the IPO market since Alibaba and this messaging App raised $1.3 billion today in Tokyo and this afternoon in New York, valuing the company at $8 billion.  Line’s ability to compete against apps from Facebook and WeChat seems to have some credence with the shares initially rallied by 48% in the first day’s trading, before settling up 27% at $26.61 towards the close with all to play for in New York. .

 

Yesterday on the Street of Dreams, apart from the NASDAQ, which has been held back by an indifferent performance by Apple in recent months, the DOW and S&P continue to hit new record highs – in fact the DOW has also had a 5-day run of gains – the first since March.  Yesterday the DOW added 0.73%, the S&P 500 0.53% and the NASDAQ 0.73%.  JP Morgan’s results beat expectations EPS came in at $155 against expectations of $1.42. Net revenues were up 2% at $24.35 billion with a profit for the quarter of $6.2 billion, which included a windfall of a $430m provision for litigation charges, which were released. M&A activity was down 10% from this time last year, but 23% up on the first quarter. Debt trading was up 35% but equity trading was up only 2%. JPM’S shares rallied by 2.7%. JPM’S CEO Jamie Dimon said BREXIT won’t affect the bank’s earnings.

 

Asian stocks were in quite good form today for two reasons.  Firstly 2nd quarter GDP came in marginally better than expected at 6.7% (EST: 6.6%). Also a weaker Yen helped the NIKKEI. At 6.00am BST the ASX was up 0.36%, the Shanghai Composite was near enough flat at +0.05%. The hang Seng added 0.62% and the NIKKEI 1.06%.

 

The big financial deal that was to capture everyone in the UK’s imagination was an expected 25 basis point cut in official rates by the BOE – the first since 9th March 2009 – expectations were flagged up by Mark Carney the Governor of the BOE and we all held our breaths.  It never materialised.  Now the BOE is an independent body and government is precluded from bringing influence to bear on the MPC’S guidance.  Whether Mark Carney and the committee knew that the new Chancellor Philip Hammond intended to end austerity for the time being and borrow stacks more money will remain a conundrum. Nonetheless rates remained unaltered, which made huge sense to me.  As a result of no change the Pound rallied to $1.3445, which just took the Dollar earnings geared FTSE down just a smidgen – 15 points at 6654 – a mere bagatelle. By August Carney’s committee will have more data when the Inflation Report is presented.  If he feels the economy is on its back – so be it! Cut!  But until then leave some bullets in the chamber. I know QE can be used and that Central banks seem to be cooperating on stimulus packages more on a global basis than they have in the past. Mark Carney has been a very controversial Governor as an acolyte of George Osborne’s.  Many politicians think he has over stepped the mark with his concern over BREXIT.  As an appointee of George Osborne there is a school of thought that says he should go.  I do NOT subscribe to that idea.  He has played a huge role in the last 2 weeks in stabilising the financial situation – Very statesmanlike. Perhaps he should not have been such a disciple of ‘Doom & Gloom!”

 

UK companies posting numbers – Friday – DCC

 

 

US companies posting interim results this week – Friday – Citibank, Wells Fargo

 

 

Economic data – Friday – EU trade balances

 

 

David Buik
Market Commentator – Panmure Gordon & Co
+44 (0)20 7886 2775
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Panmure Gordon & Co

One New Change | London | EC4M 9AF | United Kingdom

MARKET UPDATE

At 3.10pm the FTSE is up 0.4% points at 6701.  The FTSE 250 is up by 0.2%. The level of activity has been somnolent in the extreme.  We are waiting for David Cameron to whizz to the Palace and take his leave from HM the Queen and hand over the baton, with HM’s acquisition to Mrs Theresa May.  We are all desperate to find out who has landed the top jobs and whether the constitution of the Cabinet is sufficiently conciliatory to mend many a fence across the political spectrum. How futuristic will the signing of Article 50 (if at all) and who will lead the BREXIT negotiations with sensitivity as well as a sense of purpose. Also the result of tomorrow’s MPC meeting is also fundamental.  Many think that a 0.25% cut is on the cards, as it was so well flagged up by Governor Carney.  I don’t think it is necessary as I don’t have the data at hand.  Also the BOE won’t have that many bullets in the barrel were they to really need them, if it shoots a live round tomorrow.

 

As previously illustrated the FTSE 100 is likely to move modestly reacting to the value of the Pound ($1.3252 – slightly below $1.3307 this morning). A number of companies posted numbers or trading statements today – JD Wetherspoon was up 4% at one time – now up only 2.5%. ICAP and Fenner are unchanged though opening trades were recorded at higher levels. Burberry is up 6% – amazing how share prices react so positively with a change in CEO. Barratt Development has been steady at down 2%. The DOW is currently unchanged.  All eyes on the Palace at 5.00pm!