TODAY’S FAYRE

TODAY’S FAYRE – Sunday 21st August 2016

 

“I remember, I remember

The house where I was born

The little window where the sun

Came peeping in at morn;

He never came a wink too soon,

Nor brought too long a day:

But now, I often wish the night

Had borne my breath away.

 

I remember, I remember

The roses, red and white,

The violets, and the lily-cups –

Those flowers made of light!

The lilacs where the robin built,

And where my brother set

The laburnum on his birthday,-

The tree is living yet!

 

I remember, I remember

Where I was used to swing,

And thought the air must rush as fresh

To swallows on the wing;

My spirit flew in feathers then

That is so heavy now,

And summer pools could hardly cool

The fever on my brow.

 

I remember, I remember

The fir trees dark and high;

I used to think their slender tops

Were close against the sky:

It was a childish ignorance;

But now ‘tis little joy

To know I’m farther off from heaven

Than when I was a boy.”

 

 

Thomas Hood – poet – 1789-1845

 

This week the Cadogan Hall produced the most riveting and enjoyable concert, celebrating the life and work of possibly the greatest composer of musicals of all time – Richard Rodgers.  In his life – 1902-1979 – Rodgers wrote 900 song scores and in conjunction mainly with Lorenz Hart (1895-1943) and Oscar Hammerstein (1895-1960) they were responsible for 42 musicals. Many of the famous songs were sung by Lesley Garrett, Michael Xavier, Ruthie Henshall and Gary Wilmot from so many classical shows including ‘Oklahoma!’, ‘Carousel’, ‘South Pacific’, ‘The King and I’, ‘Pal Joey’ and ‘The Sound of Music.’ – ‘Oh! What a beautiful Morning!’, ‘The Lady is a Tramp’, ‘My Funny Valentine’, ‘Some Enchanted Evening’, ‘The Hills are Alive’ and ‘Shall We Dance’ to name but a few.

 

 

Admittedly most of the audience were older than God, but they were ‘rocking’ as best they could, bless us!  If there is a more emotional song than ‘You’ll Never Walk Alone!’ I have yet to hear it! – Not a dry eye in the house! Also ask Liverpool FC – they still bask in it after 50 years of singing it on the Kop and other parts of Anfield! 

 

 

With Farah, Heath and Adams all winning gold yesterday and in the small hours, GB’s medal tally has eclipsed its record in London 2016 – 66!  What an incredible achievement! The abiding memory of double Olympic champions in Murray, Farah and Adams plus the achievements in rowing, gymnastics and Hockey will be talked about for years to come. And as for Usain Bolt and Michael Phelps – just brilliant icons, the like of which we will be very lucky to see again.

 

 

Last week global equity markets ran out of steam mainly due to a lack of corporate news, the mesmeric intensity of the August holiday period, which seems to send the populous into some sort of timeless torpor and a complex and not very well explained view that PM May’s reluctance to provide a date to implement Article 50 has exacerbated the level of uncertainty. I am sure about the latter but if you are an acolyte of the FT it fits in with their philosophy.  In the past five days the FTSE has lost 0.82%, the S&P on the Street of Dreams was almost flat with Euro bourses averaging a drop of 1.63%. The Nikkei lightened up by 2.1% mainly due to a strong Yen, which blunts Japan’s ability to export competitively. In the last month oil has added 20% in value to $50 and change.  The Greenback has regained some poise in the last few days and bond yields, particularly US Treasuries have ticked up a few pips. Gold added $7 last week to $1342 an ounce.

 

As has so often been discussed one swallow does not make a summer in terms of economic data. Certainly the UK’S employment data was very encouraging though it did emanate from the months before BREXIT with unemployment probably up to 5.1% in June despite the average for the last quarter being consistent at 4.9%. However it appears unlikely that any rise in unemployment will be very severe and on the face of it, recession can be ruled out for the time being. Inflation blipped to 0.6%, though 2% is unlikely to be attuned until early 2017. The UK’S seems to be spending its way out of trouble with Retail Sales rebounding in July by 1.4% as against -0.9% in June, with all sectors showing increases. Over the past 3 months supermarket volumes have dropped, with Aldi and Lidl still on the rampage to gain greater market share (sales up in double digits). On Friday public sector borrowing requirement for last month had fallen by £3 billion – not sensational news but better than nothing. Don’t be surprised if many economists change their very bearish outlook for the UK’s economy by upgrading 2016 to 1.6% and 2017 to 1%! – Not great, but better than the establishment would have us believe.

 

Forlorn members of the media still devastated by the electorate decision to leave the EU, are reluctant to acknowledge that there is life after death. Few doubt that it is going to be tough, but in the long term it cannot be any worse that being associated with an undemocratic and federal amorphous. The good people of Holland and Italy have already had their cage rattled and for two pins they would probably head for the exit. Many in Germany & France are now becoming increasingly disenchanted with the intransigence of the EU. Markets are still desperately concerned about the health of European banks.  Rumours about that the ECB may introduce further stimulus packages in the autumn. Frankly the capital shortfall – purported to be E300 billion should be dealt with NOW!

 

The fact that the Pound has fallen by about 14% may start to stimulate overseas predators’ taste buds. The idea that commercial property activity might improve in the autumn is far from fanciful, if one takes in to account the drop in property values in recent weeks. Many are also expecting M&A activity to rise from its summer slumber and inertia.  BT appears to be possible prey and operations such as IHG could become vulnerable. Some also believe that easyJet could be susceptible to a bid as well.  Rank/888 Holdings failed in their quest to land William Hill for £3.8 billion, but its stall has been set out. ITV it is rumoured may up the ante in its quest to land Eone and its star brand – Peppa Pig

 

Wall Street saw a fair few retail operators report results last week, with mixed reactions. Target seemed way off beam with sales in electronic items falling sharply – down 20% with Apple items suffering quite badly.  The shares eased by 7%.  Gap saw sales down by 2%, but investors were happy with the outlook, taking its shares up by 3.9%. Conversely Foot Locker rallied by 11% on Friday and earlier in the week Urban Outfitters pleased their acolytes – +2.8%. As for the ‘Big Daddy’ of them all – Walmart – sales were up 1.6% in the last quarter, with reported net income rising to $3.8 billion, up 8.6% from $3.5 billion in the comparable quarter. Earnings of $1.21 per share blew past estimates of $1.02. However in the same breath CEO Doug McMillon revealed that like-for-like sales in ASDA stores open for more than one year fell by 7.5 per cent for the three months to the end of June. That’s worse than the 5.7 per cent decline reported for the three months ending in March. CEO Andy Clarke was recently relieved of his duties and his successor Sean Clarke brought over from China has a gargantuan task on his hands to pull this operation round against such fierce cost cutting competition.  

 

As for activity in London, Kingfisher’s efforts shone through the gloom with sales up in the UK. Kaz Minerals and Antofagasta were the flag bearers for the mining sector and on Thursday Admiral, the car insurer blamed the uncertainty of BREXIT on its indifferent results – shares were down 7%. The Cooperative Bank saw losses cut to £177 million for the last trading session.  However Niall Booker’s successor as CEO has a Herculean task on his hand. 54 branches will be closed and despite the loss executive pay went up!

 

UK companies posting results this week – Monday – Wireless Group, Lombard Medical, Tuesday – Rank Group, Persimmon, Wednesday – Xaar, Costain, Carillion, Hikma Pharmaceutical, Paddy Power Betfair, Glencore, WH Smith, OneSavings Bank, WH Smith, Thursday STV Group, John Laing Group, PlayTech, Jimmy Choo’s, Friday – Restaurant Group, Lavendon Group, Marshalls, Computacenter

 

US companies posting interim results this week – Monday Zynex. Zoe’s Kitchen, Tuesday – Toll Bros, Best Buy, La-Z-Boy, Wednesday – Williams Sanoma, Thursday – Dollar Tree, Tiffany’s, Sears Holdings, Autodesk, Friday – Big Lots

 

Economic data being posted this week – Monday – UK Consumer Confidence, Tuesday – BBA Mortgage approvals, US New Home Sales, Wednesday – CBI Realised sales, US GDP, Thursday – US initial Jobless Claims, Germany’s IFO, Friday – UK 2nd quarter GDP estimate. 

 

 

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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