TODAY’S FAYRE – Tuesday, 2nd August 2016


“Rumbling under blackened girders, Midland, bound for Cricklewood,

Puffed its sulphur to the sunset where that Land of Laundries stood.

Rumble under, thunder over, train and tram alternate go,

Shake the floor and smudge the ledger, Charrington, Sells, Dale and Co.,

Nuts and  nuggets in the window, trucks along the lines below.


When the Bon Marche was shuttered, when the feet were hot and tired,

Outside Charrington’s we waited, by the ‘STOP HERE IF REQUIRED’,

Launched aboard the shopping basket, sat precipitately down,

Rocked past Zwanziger the baker’s, and the terrace blackish brown,

And the curious Anglo-Norman parish church of Kentish Town.


Till the tram went over thirty, sighting terminus again,

Past municipal lawn tennis and the bobble-hanging plane;

Soft the light suburban evening caught our ashlar-speckled spire,

Eighteen-sixty Early English, as the mighty elms retire

Either side of Brookfield Mansions flashing fine French-window fire.


Oh the after-tram-ride quiet, when we heard a mile beyond,

Silver music from the bandstand, barking dogs by Highgate Pond;

Up the hill where stucco houses in Virginia creeper drown-

And my childish wave of pity, seeing children carrying down

Sheaves of drooping dandelions to the courts of Kentish Town.”


Sir John Betjeman – poet laureate – 1906-1984


Kweku Adoboli is clearly very numerate, lucid and articulate. It would not have been possible to achieve what he has in his high-profile and controversial career without those attributes. I only had a passing interest in his interview with BBC economics editor, Kamal Ahmed. Why? He is a felon, convicted of fraud to the tune of £1.4 billion from the coffers of his employer, UBS; thus sent to prison for his misdemeanours and consequently his views are of no interest to me. We already have Nick Leeson on the speech circuit. There is no need to add Mr Adoboli to the list.


His comments as to whether the culture in banking has changed and the likelihood of another huge fraud, triggered by avarice and incompetence, is a matter of wholesale indifference to me. BOE’S Andrew Bailey, whilst at the Prudential Banking Authority, Tracey McDermott when at the BBA and others have moved regulation, discipline and risk management very much to the next level. This should be recognised and saluted. However if a Brigand, for greed or bravado and for some, a need to display an excess of testosterone, wants to get below the radar, there are enough clever people around to effect it.


I must confess to being not remotely surprised at Lord Jim O’Neill’s threat to leave the Government, if the Hinckley Point deal is pulled from under China’s nose. Due to Sir Vince Cable’s indiscretion it has transpired that PM May was not keen on China’s involvement for security reasons. However I hope the diplomatic touch has been applied by Boris Johnson and the FO sensitively to the Chinese authorities, rather better than Lord O’Neill and the public have been privy to! Post BREXIT the UK needs strong trading partners and allies. China should be at the top of the agenda in terms of importance. Hobnailed boot treatment would not be sensible.


Yesterday was a typical Monday in the holiday period and if the truth be told market protagonists had no right to expect anything out of the FTSE 100, when the PMI data for Manufacturing posted at 9.30am was dire, thanks in the main to the prophets of Dooms pedalling their wares so viscerally over the past 3 months. It included the largest factory order drop for nearly four years. If influential groups of luminaries will an issue to happen, it will and so it did. I expect today’s PMI Construction numbers and tomorrow Service sector data to be equally dispiriting. So no surprise that the FTSE 100 eased by 30 points to 6693.


Across the pond the Street of Dreams did not fare much better. The fact that oil seems to drift endlessly on a daily basis will not have helped Wall Street’s cause. Oil fell 3% yesterday and the Dollar also had a pretty unproductive session against the Yen. There were a couple of decent deals posted yesterday. The one that really caught my eye was the joint venture between Glaxo and Alphabet’s (Google Verily Life Sciences), which are going to pool resources to develop technology for computerised implants for those suffering from Asthma, arthritis and diabetes, alongside conventional medicine and vaccines. This is surely one to watch as both companies commit £570 million over 7 years. The ink is hardly dry from the deeds confirming that Verizon bought Yahoo! for circa $5 billion, when yesterday it was announced that Verizon had laid out $2.4 billion for Ireland’s GPS firm Fleetmatics, resulting in the latter’s share price rallying by 39%. There talk of FED hike rates next month was on the decline as Treasury yields popped. This had nothing to do with a rate adjustment just adjusting prices to accommodate a $20 billion Microsoft bond issue to yield a parsimonious 2.177% over 30 years to finance the acquisition of Linkedin. It’s an all-cash deal at $196 a share.


There was a force 8 typhoon in Hong Kong today – so markets were closed. The RBA cut rates and the ASX eased by 0.8%. The Shanghai Composite was up 0.53% and the NIKKEI, still chuntering over an inadequate stimulus package, resulting in a strong Yen, floundered when losing 1.5%.


There was another slew of earnings today with Direct Line, IHG, Pendragon pleasing and Travis Perkins (-3%) expressing concern about lower activity in July. Rotork did not pass muster and Meggitt the defence specialist disappointed (-2%).


With Montei Dei Paschi Siena having to take a haircut (circa 33%) to accommodate the formation of its bad bank to house non-performing loans, as a result of a private rescue package, other Italian banks in need of fresh capital reacted adversely, with Unicredit losing 9%. Concern over Deutsche Bank’s well-being has not abated, as it threatens to come out of the EuroStoxx index, which is based on market cap. Tomorrow we hear news from HSBC (profits expected to fall 20%) and Standard Chartered. Then on Thursday its eyes down for a full house as digest news on a possible MPC rate cut of 25 basis points. If that is the case I think we can take it as read that the content of the Inflation Report will make uncomfortable reading.


UK companies posting results this week – 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 – 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 – 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



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