TODAY’S FAYRE –Friday, 1st July 2016


This royal throne of kings, this scepter’d isle,
This earth of majesty, this seat of Mars,
This other Eden, demi-paradise,
This fortress built by Nature for herself
Against infection and the hand of war,
This happy breed of men, this little world,
This precious stone set in the silver sea,
Which serves it in the office of a wall,
Or as a moat defensive to a house,
Against the envy of less happier lands,
This blessed plot, this earth, this realm, this England,
This nurse, this teeming womb of royal kings,
This land of such dear souls, this dear dear land,
Dear for her reputation through the world,
Is now leased out, I die pronouncing it,
Like to a tenement or pelting farm.”


William Shakespeare – poet & playwright– 1564-1616


Having been absolutely shell-shocked by yesterday’s political machinations culminating with the public slaying of Boris Johnson, with Michael Gove playing the ‘Albert Pierrepoint’ role dextrously, I had forgotten that BOE Governor Mark Carney would be addressing the nation. Anyway in passing I wonder if Gove’s vituperative action piercing BJ’s political heart was one in the eye in support of his friendship with the PM – Just a thought from my diseased ridden mind working overtime. The PM has never seemed very comfortable in BJ’S company and there is little doubt that BJ was one of the main architects of the ‘LEAVE’ campaign’s success.  We shall see.


Anyway back to the corridors of the Treasury at 4.00pm yesterday (did not look like the BOE). Mark Carney is a very polished performer on his feet and as smooth as silk in his delivery. He certainly has an aura about him.  With George Osborne appearing to have returned to his bunker, it was probably time for an update from the BOE. This would be a difficult task for Mark Carney – financial diligence and leadership without going over the wire in to the tacky quagmire of politics.  It would not be easy to get the balance right.


I think he did pretty well, though I have that nagging doubt in my stomach that the Governor’s insistence that the outlook for the UK economy, as a result of BREXIT was deteriorating, is not a political statement that drives down the value of the Pound. It seems self-fulfilling to me!  The outlook according to the BOE looked very uncertain


There was evidence that activity in commercial property and housing transactions had dropped substantially as has had car sales.  The Bank felt that GDP would drop from 2% to 1.6% in 2017.  To avoid the threat of recession Mr Carney said that it was imperative to adjust to the vagaries of the market place. The Governor hinted at a possible cut of 25 basis points in bank rate to 0.25% sometime in the summer if necessary.  He also reiterated that there was a £250 billion QE facility if required. It was also gratifying to hear reconfirmation that our banks had injected another £130 billion of capital since the dark days of 2009 and that our banks had passed vigorous stress tests. Banks now required 10 times more capital to transact the same level of business.  Let’s be candid our banks are in much better shape that Europe’s especially Italy and some German banks where the situation is quite dire.


Finally a word on QE. No one knows what damage its unwinding will eventually deliver to the economy.  It is a necessary evil, as is insurance – damned if you do and damned if you don’t.  I am less than convinced that we need another round at this juncture.  I understand prudence but at the end of the day the UK is not Brazil and this country may well pay a bitter pill when it is unwound – higher unemployment and a drop in GDP – the great unknown!


Anyway the intoxicated equity bulls loved the medicine and the FTSE added 2.27% late on – up 144 points to 6504 with maybe more to come at today’s opening – futures suggest another


UK companies posting numbers – Friday – Bellzone Mining


US companies posting interim results this week – Ford (sales)



Economic data – 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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