TODAY’S FAYRE – Sunday 14th August 2016

“The last year’s leaves are on the beech:
The twigs are black; the cold is dry;
To deeps beyond the deepest reach
The Easter bells enlarge the sky.
O ordered metal clatter-clang!
Is yours the song the angels sang?
You fill my heart with joy and grief –
Belief! Belief! And unbelief…
And, though you tell me I shall die,
You say not how or when or why.

Indifferent the finches sing,
Unheeding roll the lorries past:
What misery will this year bring
Now spring is in the air at last?
For, sure as blackthorn bursts to snow,
Cancer in some of us will grow,
The tasteful crematorium door
Shuts out for some the furnace roar;
But church-bells open on the blast
Our loneliness, so long and vast.”



Sir John Betjeman – poet Laureate – 1932-1963



At last, just like millions of others, I am really getting in to the Olympics.  Though Super Saturday did not quite have the same glitz that London’s effort provided four years ago, Great Britain seems to have come out of Brazil 2016 as Head of the River with many rowing medals and unquestionably ruler of the Veladrome! Also, what a fantastic effort by Mo Farrow to win 10k metres having fallen over and to Jessica Ennis-Hill for her valiant effort in the heptathlon in winning the silver medal and to the unlucky Greg Rutherford for his bronze in the long-jump! Were Andy Murray to beat Juan-Martin Del Potro to win the tennis that would be the icing on the cake for the weekend! Also Justin Rose may not be out of the golf either! 


A long-awaited visit to Sissinghurst Castle was finally made this weekend. This former home of Harold Nicholson and Vita Sackville-West, now in the loving care of the National Trust, probably has the most stunningly beautiful gardens imaginable, made all the more magical by the fact that August is not a great month for gardens.  Never in all my born days have I ever seen such an array of stunning wild flowers – breath-taking!


On Thursday I proffered an opinion on a possible, though in many people’s thoughts, an unsatisfactory out come to the Presidential election – the idea that Donald Trump could win.  I was updated by another equally good contact who made the following comments-

“Donald Trump was recently seen at an event in Virginia last week. He was not particularly impressive, he’s losing mental traction and I don’t ultimately believe he has enough personal desire to stay on top of his game.  Clinton may not be particularly likable, but she is focused, disciplined, and I think crucially: she has a very large and capable team.  She basically has to NOT mess up and she should be comfortably across the line. Yes, there are a lot of bitter Caucasians in America who will vote for him. But he’s fast losing Republic women who are better at turning up on the day – and this time will simply stay away from the polls. Without them, he’s “toast”. 



Post BREXIT the prophets of doom and a whole coterie of great economic luminaries are forecasting a bone shattering fall in the level of economic activity here in the UK. They believe that growth here in Old Blighty will fall like a stone. They are also of the opinion that there will be a ratcheting up of inflation to nudge 3% by the end of next year, with unemployment estimated to rise from 4.9% to 5.5% by the end of 2017. The Pound has also fallen by 14% since 23rd June plus the fact there has been a Base Rate cut 0.25% by the MPC. Consequently Gilt yields have fallen off the cliff – 10- year yields from 1.50% to 0.54%. Though not desirable according to BOE Governor Mark Carney, investors took a brief peek at negative interest rates in 2019/20 gilt maturities, just after the introduction of the fresh £70 billion QE facility. Yet despite this very unattractive prognosis for the future the FTSE 100 has risen like the proverbial grilse from a temporarily low of 5750 on 24th June to 6916 – up by a staggering 20% or from the close at 5982 – up 15.6%. Against that economic background that is a phenomenal rally by any standards. 


The DAX and CAC have also made huge gains in recent months with the ECB late to the party with QE (March 2015) and US markets all reached record levels last week before shedding a tiny amount of froth at the end of the week. The earning season posted fair results – far from spectacular. However the Dollar has been strong and oil prices have regained some poise ($45+ per barrel). Increased profits seem to matter very little these days with low interest rates dominating the agenda in the US and QE being rampant in The UK, EU and Japan. Surely there is a price to pay for the unknown? How much damage has QE done? It has restored confidence but weening the market away from QE coupled with higher rates of interest could have devastating effects on many economies. 


Baroness Altmann, a UK pensions expert, was brought into the British government in 2015 by David Cameron, then Prime Minister. The baroness now warns the Bank of England’s QE strategies have pushed pension schemes “over the edge” because of declining yields. The Bank of England essentially agrees, stating that it “fully” recognized that a long period of low interest rates put savers in a “very difficult position” which could result in bigger institutional savers moving to riskier assets. Nonetheless, the Bank of England says it will not change anything. Perhaps I am being naïve but it strikes me that the markets are hell-bent on buying assets, regardless of the consequences or the economic concerns and gargantuan debts that so many countries are drowning in. Europe has to be of particular concern going forward.


Last week William Hill rejected a £3 billion joint bid from 888 Holdings/Rank but a higher bid cannot be ruled out. Steinhoff was forced to increase the price on Poundland to satisfy 19% shareholder Elliott. EOne rejected overtures from ITV but do not rule out the possibility of Toys R Us coming in with a more synergistic offer. M&S and EasyJet made up some lost ground last week the latter on the back of some spurious pension fund bid. Restaurant Group surged 7.4% on the back of a change in management.  In the US it was retailers that caught the eye – Kohl’s up 16%, Macy’s up 17% despite huge cuts and JC Penney, though not in such ebullient form adding 3.6%.


Chancellor Philip Hammond made a bold statement ahead of the weekend – EU funding for farmers, scientists and other projects will be replaced by the Treasury after Brexit. In a move which could cost up to £6bn a year, the Treasury will guarantee to back EU-funded projects signed before this year’s Autumn Statement. Next week will be a week of earnings, but not many of significance. We may continue to be lulled in to a sense of false security until the holiday period comes to an end.  The AIM and SME IPO calendar looks encouraging once the leaves have turned golden! BREXIT may not yet have killed us off! I am fearful of talk that UK will remain in EU until 2019.  That being the case there will be fireworks.


UK companies posting results this week – Monday – Bovis Homes, Clarkson, BHP Billiton, Tuesday – Antofagasta, Cairn Energy, John Menzies, Mears Group, John Wood Group, Wednesday – Gem Diamonds, Balfour Beatty, Lookers, Admiral, CLS Holdings, Thursday – Evraz, Rank Organisation, Kaz Minerals, Premier Oil, Kingfisher


US companies posting interim results this week – Monday – Walmart, Tuesday TJX, Dick’s Sporting Goods, Urban Outfitters, Wednesday – Target, American Eagle, Staples, L-Brands, Thursday – Hormel Foods, Applied Materials, America’s Car-Mart, Ross Stores, Gap, Friday – Foot Locker


Economic data being posted this week – Monday – US Rightmove Housing Data, US NAHB & Empire State Manufacturing, Tuesday – UK CPI & RPI, US Industrial production, Germany ZEW, Wednesday – UK employment data, US FOMC Minutes, Thursday – UK retail sales, US Initial Jobless Claims, US Phili-Fed, Friday – UK Public Sector Borrowing



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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