TODAY’S FAYRE – Sunday, 10th July 2016


“On the first summer day I lay in the valley.
Above rocks the sky sealed my eyes with a leaf
The grass licked my skin. The flowers bound my nostrils
With scented cotton threads. The soil invited
My hands and feet to grow down and have roots.
Bees and grass-hoppers drummed over
Crepitations of thirst rising from dry stones,
And the ants rearranged my ceaseless thoughts
Into different patterns for ever the same.
Then the blue wind fell out of the air
And the sun hammered down till I became of wood
Glistening brown beginning to warp.

On the second summer day I climbed through the forest’s
Huge tent pegged to the mountain-side by roots.
My direction was cancelled by that great sum of trees.
Here darkness lay under the leaves in a war
Against light, which occasionally penetrated
Splintering spears through several interstices
And dropping white clanging shields on the soil.
Silence was stitched through with thinnest pine needles
And bird songs were stifled behind a hot hedge.
My feet became as heavy as logs.
I drank up all the air of the forest.
My mind changed to amber transfixed with dead flies.

On the third summer day I sprang from the forest
Into the wonder of a white snow-tide.
Alone with the sun’s wild whispering wheel,
Grinding seeds of secret light on frozen fields,
Every burden fell from me, the forest from my back,
The valley dwindled to bewildering visions
Seen through torn shreds of the sailing clouds.
Above the snowfield one rock against the sky
Shaped out of pure silence a naked tune
Like a violin when the tune forsakes the instrument
And the pure sound flies through the ears’ gate
And a whole sky floods the pool of one mind.!


Sir Stephen Spender – poet & novelist – 1909-1995


So our next PM will be a lady.  I very much liked the cut of Andrea Leadsom’s jib – bright, confident, tough and compassionate as well as being a BREXITER. However I feel she oversold her professional success in the world of banking, prior to becoming a politician.  I don’t think she was that much of a ‘mover or shaker’ at BZW or Barclays Capital and few at Invesco Perpetual knew her well.  Few former colleagues at Barclays have come out to lend their support. If this support from colleagues is not there, it ventures to suggest she may well lack experience at the top end of management to make a real fist of becoming PM. I hope she can reassure her supporters sooner rather than later. The spat in the Times over parental suitability being an added asset to become PM was injudicious and unfortunate, even if she was quoted out of context.


I enjoyed Wales’s huge success in Euro2106, but as for the rest of it, apart from France beating Germany 2-0, I think this tournament has been a crashing bore – a forgettable spectacle!  Bring on the Premiership and Sky Championship. I have enjoyed Mark Pougatch’s, Slavin Bilic’s, Thierry Henry’s, Danny Murphy’s and Rio Ferdinand’s punditry.  As for the rest of the trimmings? – Very moderate fayre!  Let’s hope tonight’s final between France and Portugal lives up to expectations.


I was very sad to hear that Kieron Fallon had put his saddle in the cupboard due to bouts of depression.  Kinane, Murtagh, Dettori, Moore were/are all great champions, as were Piggott, Eddery and Cauthen from a previous generation. However in a driving finish with my dough down, give me Kieron Fallon any day. I wish him a speedy recovery. It goes without saying that LKP was from a different planet – truly a magician in getting a tune out of a horse.


It has been a strange week for markets. Bond yields have continued to fall sharply (record lows in US), as the prophets of doom continue to spread scorn and despondency about growth prospects for the future. However the Dollar earning laden FTSE 100 enjoyed the sagging Pound which languished between $1.275 and $1.30, ending the week up 0.19%. However this index had to negotiate a minefield of imponderables. Also, in passing, gold, an unimaginative flight to quality hit a 2-year high at $1375 an ounce.


The mining, oil and drug sectors took advantage of their Dollar earnings. Banks suffered and with the cost of excessive capital weighing them down, it was not surprising that Barclays fell below their low point in 2009 crisis, with RBS and Lloyds not a million miles behind. The supermarkets had a desperate couple of days with Tesco and Morrison losing about 7%. M&S had a shocker with clothes sales down 8.9% for the last quarter. I am amazed that Steve Rowe cannot see that the fashions are dowdy and that Belinda Earl and all the designers need to be replaced immediately or M&S needs to be merged with a top-class fashion outfit such as NEXT before too much high street share is surrendered. Conversely AB Foods’ Primark posted a stellar effort on Thursday with a 7% increase in sales last quarter, selling great fashions at great prices. Sports Direct continued to mesmerise us, with that retail Maverick to end all Mavericks – Mike Ashley – telling us that profits were down – no bonuses and no dividend for 2017. There was also a share buyback, which saw Ashley stake increase to 54% of the company. Initially the shares rallied by over 10%, but finished Thursday’s session just 0.5% ahead once the market has seen through his ruse! In summary the FTSE, as already stated, added a modest amount last week and 3.4% since 22nd June, though taking in to account the drop in the value of the Pound it is down 9.5%. The FTSE 250, which is a far better barometer of UK economic activity is down 8.1% in the same period.


The likes of the Chancellor, the IMF, the BOE, S&P, Moody’s and Fitch have poured so much vitriol and scorn on the UK’S economic outlook, pre and post BREXIT, one cannot help feeling they have been rather precipitous in their decision making process. I also wish IMF’S Mme Lagarde would get back in her box, instead habitually carping about BREXIT triggering a drop in global GDP – Madame, it is too early to be sure!  Whilst the IMF has its your ‘Howitzers’ targeted on Old Blighty and their decision to look for greener pastures than the barren lands that EU bureaucrats currently dominate, may I respectfully suggest you have a pop and European banks, many of which are teetering on the brink.  It’s just about the last call for Italian banks and Deutsche has enjoyed better times with its share price dropping to E11.50. Deutsche’s value has halved in a year! This bank has huge litigation claims outstanding and quite a weak revenue stream and of course it recently failed the US banking stress test.


Top effort by Mark Carney in successfully stabilising markets and for preventing the Pound from falling out of bed, when there was little sign of the Chancellor keeping his hand on the tiller. Mr Carney, euphemistically described as Mark ‘Carnage’ after his dire warnings about the damage BREXIT would do to the UK’S economy, would have been keen to lose that name tag.  He played the role of a great statesman with considerable aplomb. However rumours are very overpoweringly pungent to the affect that at this Thursday’s MPC meeting, the Bank of England could cut rates by 0.25%, even talk of zero to stimulate flagging growth. It is also felt that there could be the introduction of a further £250 billion QE facility.  I many peoples’ opinion that would leave very little left in the BOE’S monetary locker and the Pound could weaken further.


Admittedly Consumer Confidence in the UK fell to its lowest level in 22 years, though we hear that Industrial Production held up well, though manufacturing output continued to lag. However a little birdie told me that car sales in the UK have held-up up quite well. The S&P added 1.02%.  The European bourses experienced a loss of an average of 1.3%, thanks to growing concerns about the banks, particularly Italy’s trashed sector, which required the introduction of restricting ‘short-selling.’ The Nikkei was down 3.67%, due to a very strong Yen. 


Property funds have surrendered massive value since the beginning of April – slightly over 30% on average.  Many wanting to redeem their funds have had their requests temporarily put on ice – up to 28 days and until funds can be realised by insurance companies such as Standard Life, Aviva, Henderson Global, Canada Life M&G and Threadneedle. People conveniently forget that property is a very illiquid asset. These frozen property funds total about £25 billion. One suspects that once we have a government, a PM and some stability, overseas investors may well come back to town looking for bargains with the Pound likely to be down 12-15% from its high.


Friday saw some fairly robust Non-Farm Payroll data – 287k jobs created in June 2016 with the unemployment rate rose from 4.7% to 4.9% with hourly earnings rising from 2.5% to 2.6%. This gave US equities a little momentum, with banks rallying by 2-3%, which in essence just meant they regained ground they had lost earlier in the week. Next week sees the start of the earnings season.  These results will be vital to sustain stock market stability.


Two nuggets of news worthy of mention to close with.  The acquisition of the LSE by Deutsche Bourse – it is not a merger of equals (no such thing) is likely to go ahead but may require a neutral head office thanks to BREXIT.  Tata may well hold on to Tata and merge it with ThyssenKrupp’s European operation.


Now that the dust is beginning to settle, it is good to hear that New Zealand, Australia and China may be happy to come and bat for us on the trade front.  Perhaps ‘Free Market’ trading rather than the ‘Single Market’ is not pure fantasy.  Also keep an eye out for UK companies with Dollar related earnings – Pearson, Glaxo, Astra Zeneca, BP, Shell, HSBC, Ashtead, BATS, IMPS and Smith & Nephew. They could turn out to be decent ‘Arfur Daleys!’


UK companies posting numbers – Monday – Pinewood Group, RPC Group, Tuesday – Galliford Try, PageGroup, Premier Oil, Wednesday – Burberry, JD Wetherspoon, Fenner PLC, Barratt Development,  Thursday – SuperGroup, Micro-Focus, Ashmore Group, Moneysupermarket, Hays, Halfords, Workspace, Friday – DCC



US companies posting interim results this week – Tuesday – AAR, Wednesday CSX, Yum Brands, Thursday – Blackrock, Delta Airlines



Economic data – Tuesday – BRC Retail Sales, Wednesday – US Beige Book, UK BOE credit conditions, Thursday – MPC, Friday – EU trade balances



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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