TODAY’S FAYRE

  TODAY’S FAYRE – Tuesday 9th August 2016

 

“The winter landscape hangs in balance now,

Transfixed by glare of blue from gorgon’s eye;

The skaters freese within a stone tableau.

 

Air alters into glass and the whole sky

Grows brittle as a tilted china bowl;

Hill and valley stiffen row on row.

 

Each fallen leaf is trapped by spell of steel,

Crimped like fern in the quartz atmosphere;

Repose of scultpure holds the country still.

 

What coutermagic can undo the snare

Which has stopped the season in its tracks

And suspended all that might occur?

 

Locked in crystal caskets are the lakes,

Yet as we wonder what cam come of ice

Green-singing birds explore from all the rocks.”

 

Sylvia Plath – poet – 1932-1963

 

Rarely in test match cricket do a team come from behind in a game to win comprehensively with a little bit in hand.  Such was the case at Edgbaston on Sunday.  What was so gratifying was that all eleven players made a measurable contribution towards winning the game.  Though Moeen Ali, on balance, probably deserved to be man of the match there was a case for maybe 5 other players – Cook, Root, Bairstow, Woakes and Anderson!  Great stuff!  On to the Oval, this coming Thursday – 11th August 2016!

 

The appointment by Goldman Sachs of J-M Barosso, the former President of the European Commission, as chairman of its UK branch, is very debilitating news for investment banking in London.  Mr Barosso, the former Portuguese communist dissident, has never liked this country and with his obsession about the EU there is little reason to suppose that he ever will be well disposed towards the UK.  I suspect that he will do all in his power to switch business away from London to Frankfurt or Paris. Goldman has always made a King’s ransom, earning gargantuan fees – hundreds of millions of Pounds from successive UK governments.  PM May must make sure that we do not pass Goldman’s palm with too much silver, in view of Barosso’s abrasive attitude to BREXIT.  There are other investment banks which are well disposed to the UK. They should be given a chance to tender for the UK government’s business.

 

As a fervent BREXITER I was delighted to read Evening Standard’s Russell Lynch’s piece yesterday on a record shopping spree on retail property. It comes as no surprise to me at all.  I had already been advised by BNP Paribas Real Estate’s James Max that a drop of 10% in the value of the Pound plus a drop in property values by about 15% due to BREXIT concerns, would make the retail property market irresistible to overseas buyers. Its early days, but that appears to be the case!

 

BBC’S political editor Laura Kuenssberg presented a brilliant post-BREXIT programme on BBC2 last night. It was interesting, informative and very balanced. It was also feisty, controversial and hard hitting from both camps. The only two contributors to come out of this TV debate poorly were Lord Mandelson and Nick Clegg – both whinged and failed grasp the mood of the people. When Labour eventually accept that Messrs Corbyn & Smith are hopeless candidates to aspire to become PM, I think Labour could well look to Will Straw, who would tick many of the boxes required for Labour to challenge the Conservative Government as a credible opposition. He was very impressive! I know he isn’t probably left wing enough. However Labour will learn!

 

The trading session sort of came and went with few traders and analysts responding to a very neutral agenda, which was rather void of corporate or economic interest. The FTSE 100 closed just in positive territory – up 15 points at 6809. Some mining stocks had a bit of run on the rails and banks, headed by Barclays up 3% plus on the day, are heading to pre-BREXIT levels. Personally speaking I have always thought that BREXIT has been responsible for the square route of nothing in terms of bank share valuations – All froth. The banking sector has not been a fertile hunting ground for many months, with Europe’s banks dangerously short of capital, with Italy leading the charge.

 

There has been a little light at the end of the tunnel as far as Monti Dei Paschi is concerned, with modest bail-out terms being agreed with private equity. However EU based banks are about €300 billion light on capital and very dispiriting results from Barclays, Lloyds and RBS last week exacerbated the situation. BREXIT is purely an excuse for banks to hide behind rather than being exposed to their shortcomings. The laggard of the day was the drug titan, Hikma, falling another 4.2% after Friday’s reversal. Conversely Shire’ shares were better on improved results with Baxalta, which saw product sales revenues up by 36%. The ‘big-gun’ hedge Fund Elliott seem to have taken a shine to Meggitt following a keen interest in Poundland, which may force Steinhoff’s hand to up their bid above £600 million. On the AIM front, tech start-up operation LoopUp is expected to make its bow in a £45 million IPO soon. Today BRC reported encouraging retail sales for July after -0.5% in June! – UP 1.1%, though much of this increase is down to deep discounts & price cutting prevalent. Ocado posted numbers today but they were fairly irrelevant as it was the closer tie with Morrison was top of that agenda that grabbed investors’ imagination.

 

The Street of Dreams proved to be every bit as enigmatic and inscrutable a forum as Europe had been, with the DOW easing a smidgen -0.08%, with the S&P 500 down a similar amount -0.09% and the NASDAQ fairly flat – down 0.15% though in fairness US markets nudged record levels before retreating. Oil showed a tiny amount of form due to a modest spike in oil prices $45+ a barrel and drugs were on the back foot with Bristol Myers Squibb, Merck and Allergan failing to titivate shareholders’ taste buds. Wal-Mart paid $3.3 billion for Jet.com, a modest competitor of Amazon.

 

In Asia the mood was comfortable as markets continued to digest the US’s positive employment data. The ASX closed +0.25% with the NIKKEI 0.7% to the good. After lunch, the Shanghai Composite was up 0.75% and the Hang Seng was near enough flat – -0.1%.

 

There was a slew of earning this morning with Dollar related earnings standing out – WorldPay +4% and Smiths +2.4%. L&G posted numbers in line but punters wanted more – down 4% (travelled and arrived). BP, despite the possibility of a sale of Chinese assets was easier by 0.5% at the time of writing. Despite profits being down 54% Savills’ shares rose 0.5% as the results were less awful than expected and the shares fell by 25% the week after BREXIT on 23rd June 2016.

 

UK companies posting results this week – Tuesday – L&G, Ocado, Quarto Group, Regus, Standard Life, AMEC, Worldpay, SIG, GW Pharma, Mylan, Savills – Wednesday – Prudential, Centamin, G4S, Interserve, Thursday – Coca-Cola HBC, Tui Travel, Old Mutual, Pagegroup, Cineworld, Aldermore, Glencore, DFS, Friday – Lookers

 

 

US companies posting interim results this week – Tuesday – Walt Disney, Eastman Kodak, Wednesday – Ralph Lauren, Wendy’s, Thursday – Macy’s, Nvidia, Friday – JC Penney

                                                                                                         

Economic data due this week – Tuesday – RICS, BRC sales.

 

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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