TODAY’S FAYRE – Thursday, 8th September 2016
“Take the general mumble,
blunt as the faceless gut of an anonymous clam,
vernacular as the strut of a slug or a small preamble
by snail under hump of home: metamorphose the mollusk
of vague vocabulary with the structural discipline:
stiffen the ordinary malleable mask to the granite grin of bone.
For such a tempering task, heat furnace of paradox in an artifice of ice;
make love and logic mix, and remember,
if tedious risk seems to jeopardize this:
it was a solar turbine gace molten earth
a frame and it took the diamond stone a weight of world
and time being crystallized
from carbon to the hardest substance known.”
Sylvia Plath – poet – 1932 –1963
On Saturday I spent lunchtime watching a breath-taking Manchester Derby match – full of sound, fury, excitement and high-class skill – where City completely outplayed United in virtually every department. Also in terms of tactics, I think Guardiola totally ‘out-manoeuvred Mourinho. The game as certainly a far cry from the fayre served up at Craven Cottage, when Fulham succumbed to Birmingham City in a dire encounter later on that afternoon. The difference in skill and talent was as different as chalk from cheese!
Though social media has never been more virulent in society than it currently is today, some of the comments are also becoming more putrid and pernicious than ever – horrible! I despair! Ok most people accept that David Cameron’s and George Osborne’s handling of the EU Referendum left a bit to be desired. However, I thought he did a pretty decent job as PM in very difficult circumstances – in coalition with the Lib-Dems as well as facing a mounting financial mess left by Labour. Such a pity that those of a different political persuasion as well as those supposed Tory acolytes should post such acrid comments – totally unnecessary. Mr Cameron gains nothing from remaining an MP nor do the constituents of Witney! They all need to move on with dignity!
I am very disappointed England ODI captain, Eoin Morgan, has decided not to tour Bangladesh, after positive reports emanating on security. Not only is he breaking up the continuity of a winning combination, but also he is in danger of losing the captaincy and his place. You are only as good as your last season.
Yesterday, it was great to catch up with many old friends at BGC Partners’ annual charity day – all in fine fettle and doing very well in difficult markets!
I never have liked forward guidance – probably because I am intellectually stupid. The Concern expressed by US markets on Friday was virtually wiped away by one not very innocuous comment made by M/S Lael Brainard, who I must confess I have never heard of. But her comments were sufficiently ambiguous to rattle the market’s cage yesterday as market makers’ red pens were left in the drawer, taking the US markets up by an average of 1.5%. Though the FTSE 100 remained underwhelmed and stood 76 points below the Plimsoll line at 6700, but it could have been worse.
Gains on Wall Street were across the spectrum with the likes of AT&T adding over 1.5% Philip Morris and Perrigo shining through with a 5.8% gain. Apple shareholders would have been far from discouraged with a 2.2% gain. The biggest news of the day was the possibility of another ‘agri’ merger with Potash of Canada pooling resources with Agrium. Back in 2010 Potash dismissed overtures from BHP Billiton who were keen to buy Potash. The Canadian Government were also not keen. Anyway this $30 billion proposed merger has every chance of success and follows in the wake of the $130 billion merger between Dow Chemical and DuPont, ChemChina’s $44 billion acquisition of Syngenta and the fiendishly complicated $56 billion marriage of Bayer and Monsanto. Food is all the rage on a global basis and the new deal on the table are expected to generate sales of $20.6 billion and earnings synergies which could create profits of $4.7 billion. Primark’s disappointing 2% drop in sales for the last quarter due to inclement weather conditions saw AB Food’s share price clattered by 10.8%. M&S fell 5.1% and Next another 2.8% in sympathy.
Talking of M&S many will be surprised that Laura Wade-Grey, ex-Tesco, is leaving the bridge of M&S’S technological on-line revolution after only 5 years. Laura could best be described as a mature mother and took extended maternity leave in January. I imagine she is enjoying motherhood and will re-emerge when it suits. She did a very good job though many believe M&S was late out of the internet blocks. ITV and G4s also had sessions to forget – both losing 3%. The banking sector was also still full of woes losing an average of 3%. Minouche Shafik, the deputy governor of the Bank of England will be leaving after just 3 years to take up a leading role at the London School of Economics. A strange time to be leaving at a crucial time for the City and markets post BREXIT.
Asian markets initially girded up their loins on the back of improved sentiment in New York, but rather ran out of puff at the end of the session. The ASX closed down 0.25% and the NIKKEI was easier by 0.3%. Towards the close the Hang Seng was down 0.3% and the Shanghai Composite was unchanged. At 10.00am The FTSE 100 having been up 20 points is down 10 at 6690 and is looking for guidance or good news! Unfortunately investors vented their spleen on OCADO, taking the share price down 14% thanks to concern over margins, smaller parcels of goods and debt growing. Conversely JD Sports pleased their acolytes and added 5.4%.
UK Inflation data was posted at 9.30am. Last month inflation was the same as July – up 0.3% and leaving the annualised rate at 0.6%. Don’t be fooled by this number. Behind the headline 0.6% YoY number is the pick-up in manufacturing prices in the Producer Price Index. Inflation is stirring with input costs up 7.6% YoY (chart below). It will take 3-6 months for this to feed through and as the base effect of lower energy costs starts to wane.
Our splendid economist Simon French expects inflation to hit 2% by the end of the year and 3% by June 2017. Food inflation is likely to gather momentum if the Pound maintains its current level with food possibly rising by 5% by the middle of next year. Also if the labour market remains buoyant that could put a squeeze on wages. Finally, if oil maintains its current constant level, that could also provide inflationary pressures.
UK companies posting results this week – Tuesday – Ocado, Hilton Foods, IQE, JD Sports, Wednesday – Alliance Pharma, Dunelm, Galliford, Martinco, Thursday – Booker, Poundland, Next, Wm Morrison, Premier Farnell, Ophir Energy, Friday – Investec
US companies posting interim results this week – Thursday –Oracle
Economic data this week – Tuesday – UK inflation (PPI & RPI), Germany ZEW, Wednesday – UK Employment data, Thursday – UK Retail Sales, MPC, Friday – US Michigan Consumer Confidence
David Buik Market Commentator – Panmure Gordon & Co D +44 (0)20 7886 2775 Mobile – 0044 7788 144 877 Panmure Gordon & Co One New Change | London | EC4M 9AF