TODAY’S FAYRE

  TODAY’S FAYRE – Tuesday, 12th July 2016

 

“But tell me, child, your choice; what shall I buy 

You?’—‘Father, what you buy me I like best.’ 

With the sweetest air that said, still plied and pressed,

He swung to his first poised purport of reply. 

 

What the heart is! which, like carriers let fly—

Doff darkness, homing nature knows the rest— 

To its own fine function, wild and self-instressed, 

Falls light as ten years long taught how to and why. 

 

Mannerly-hearted! more than handsome face— 

Beauty’s bearing or muse of mounting vein,

All, in this case, bathed in high hallowing grace… 

Of heaven what boon to buy you, boy, or gain 

Not granted?—Only … O on that path you pace 

Run all your race, O brace sterner that strain!”

 

Gerard Manley Hopkins – clergyman & poet– 1844-189

 

Euro2016 – What an awful spectacle this football tournament has been! The quality of football has been dire – so negative. No team wanted to play attractive attacking football. Like all bystanders I loved Wales’s tenacity and commitment and was pleased for Portugal. The rest was an infinitely forgettable experience!

 

The same cannot be said for Wimbledon and for Andy Murray’s achievement in becoming only the second British player to win this championship twice – Fred Perry winning it 3 times, I suspect in less challenging circumstances. Suffice to say Andy’s performance was imperious – a truly great champion. The fact that he let out an Anglo-Saxon expletive when Ivan Lendl went for a comfort break just goes to show what a close knit group ‘Team Murray’ is!

 

Well the Labour party may be a million miles from sorting their leadership problems, but I am pleased to say the Conservative party have not only found a new leader, but in her capacity as PM on Wednesday night, I am hopeful that her new government will no longer be moribund. It will have a fresh Cabinet by Wednesday evening to unite the country, with a plan to expedite BREXIT policies. I suspect George Osborne will flip-flop with Philip Hammond – FCO for the Treasury. Also the government needs a full-time Minister for Europe – maybe Lord Francis Maude. I am sure Mrs May does not need my guidance but advice comes gratis!

 

The moment it transpired that Mrs May would be the next PM, markets enjoyed some stability and put their best foot forward. The Pound advanced close to $1.31 against the Greenback. The FTSE 100 selected another gear heading for a year high – up 91 points at 6682. What was far more significant, as it is a better barometer of the UK economy, was the FTSE 250, which had shed the best part of 11% since the 22nd June 2016. It added 3.3% yesterday.

 

The news from the UK front seemed to hit world markets like wildfire. On the Street of Dreams the S&P closed at a record level (+0.34%), with the NASDAQ (+0.64%0 closing at its highest point in 2016. The DOW added 0.44%. I cannot help feeling that this is no more than a further relief rally. There is life after death and BREXIT – Hallelujah! Apart from the Telegraph, Mail and Sunday Times the press and media have been ridiculously negative about the future – so many folk down in the mouth, dismissing the people’s will with the contempt it does not deserve. Misrepresentation was the cry? Both sides were hugely guilty of promulgating untruths. It was the fact that ‘Project Fear’ was so acrid and toxic the public were having none of it! Let’s hope Mrs May can galvanise her government and put everyone to work – sleeves rolled up, having taken on maybe 2000 people from the private sector to negotiate ourselves out of the EU with the minimum of pain and the maximum gain. It’s a huge ask, but faint heart never won fair lady. It has been very encouraging to hear positive vibes coming from China, New Zealand and Australia.

 

There was much twaddle being circulated about Frankfurt luring away banking people from London – Really? I don’t think so! 70 years of infrastructure has been built up in the City of London. Is that really going to be surrendered?  Frankfurt and Paris can whistle. It would take them a decade to get close to building any deep financial infrastructure.  Why would anyone want to go to EU countries now to ply their banking trade with so many banks creaking under duress and lack of working capital? It is not only Italy.  You can look at Germany and France whilst you are at it.  Read Simon English’s article in the Times (page 41), which offers plenty of reassurance for the long-term.  In the US last night Alcoa posted the first of the 2nd quarter earnings season with a net profit of $135 million, or $0.09 per share. There was a 4% revenue increase from recent acquisitions and organic growth, more than offset by a 14% revenue decline due primarily to lower aluminium. Shares were up 3.6% on the day. Results from JP Morgan on Thursday and Wells Fargo and Citibank on Friday will be eagerly awaited. Though banking results in the US will be better than its European peers, stringent stress tests, low interest rates, tough capital requirements and a measurable drop in M&A activity may well suggest their results are not any more deserving than journeyman status.

 

 

On to the UK and again it was mining, energy and drugs that lead a cautious recovery yesterday. However once the political clouds were lifted above College Green commercial property companies rallied by about 7% and house builders regained some poise between 7-8.5%. After 2 years of struggle in an incredibly difficult trading environment Chris Bailey surrendered the CEO Job at Burberry to be succeeded by Marco Gobbetti ex CEO of Celine. Burberry’s shares rallied by 1.65% yesterday. Boeing posted great news with a $3 billion order 9 Poseidon surveillance aircraft order with another 2000 jobs likely to be created in UK. Grateful thanks to Boeing for showing loyalty and commitment to a 75 year relationship.

 

 

Asia hung on to New York’s euphoric coattails this morning with the NIKKEI (+2.46% at the close) particularly catching the eye, courtesy of Abe-san’s stunning electoral victory and a weaker Yen. At 9.15am the FTSE was up 5 points at 6887. It was pausing for reflection after a great run. Galliford Try +0.25%, PageGroup +2%, ASOS +3% and Premier Oil +2.5% all posted encouraging numbers. All eyes will now be focused on BOE/MPC/Mark Carney on Thursday. Will a 25 basis point cut be delivered? Will the QE facility be increased?

 

UK companies posting numbers – 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 – JP Morgan Chase, Blackrock, Delta Airlines, Friday – Citibank, Wells Fargo

 

 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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