TODAY’S FAYRE – Monday 3rd October 2016


“I speak not, I trace not, I breathe not thy name;
There is grief in the sound, there is guilt in the fame;
But the tear that now burns on my cheek may impart
The deep thoughts that dwell in that silence of heart.
Too brief for our passion, too long for our peace,
Were those hours – can their joy or their bitterness cease?
We repent, we abjure, we will break from our chain, –
We will part, we will fly to – unite it again!
Oh! thine be the gladness, and mine be the guilt!
Forgive me, adored one! – forsake if thou wilt;
But the heart which is thine shall expire undebased,
And man shall not break it – whatever thou may’st.
And stern to the haughty, but humble to thee,
This soul in its bitterest blackness shall be;
And our days seem as swift, and our moments more sweet,
With thee at my side, than with worlds at our feet.
One sigh of thy sorrow, one look of thy love,
Shall turn me or fix, shall reward or reprove.
And the heartless may wonder at all I resign –
Thy lips shall reply, not to them, but to mine.”


George Gordon, Lord Byron – poet – 1788-1824


I have always been a massive fan of ‘Marcus Wareing at the Berkeley.’  However I made my first visit to the The Ledbury this weekend! I have never had a better meal in London.  On being confronted with ‘l’addition’ I had to sit down in the hope that it would prevent me from suffering cardiac arrest. However I prefer to pay a ‘full dollar’ for a sublime meal than excess for mediocrity.


‘Postponed’ was the red hot jolly for the Arc de Triomphe, being run for the next three years at Chantilly whilst Longchamps goes under a facelift. Roger Varion’s charge was clearly not right on Sunday and ran no sort of a race, allowing ‘The Master of Ballydoyle’ to train the first three home – ‘Found’, ‘Highland Reel’ and ‘Order of Merit’ – all I think sired by ‘Galileo.’


The European Ryder Cup team were on the end of serious leathering in Minneapolis yesterday – 17-10. I would not in any circumstances describe myself as a golf aficionado, but gracious me, over a period of 6 hours I have never seen such a sustained, inspire and brilliant golf as the quality served up by the US team! 


PM May’s speech at the Conservative party conference gave another heaven-sent opportunity for the prophets of doom to mass their troops again. Mrs May served notice that Article 50 would be invoked by March 2017. The media decided very quickly what interpretation to put on the term ‘Hard Brexit’, when most of us are none the wiser as to what BREXIT means yet. I am all for civilised and courteous negotiations and for building up relationships with all European countries, but if voters have decreed that we leave the EU, why would we possibly expect to be part of the single market when there is absolutely no ‘give’ on controlling some levels of immigration as well as the European Court of Justice remains omnipotent? Perhaps a transition period to avoid unnecessary uncertainty might be the order of the day, certainly for the financial sector. It appears that antagonism and arrogance are creeping in to the negotiations, which is a great pity!


No one would ever underestimate the importance of a solid global banking system. The world’s economy relies upon it. Whether CEO John Cryan or anyone else associated with Deutsche bank, the Bundesbank or the German Government like it or not, there has been whispering in every coffee shop and wine bar since 2009 over Europe’s most influential bank’s stability and viability. A combination of Deutsche Bank’s gargantuan involvement in derivative trading – some say to the tune of $60 trillion – a deafening silence and a lack of clarity from official regulators in recent times have contributed to the trashing of this titanic bank’s share price.


No one doubts for one minute that John Cryan is the paragon of virtue and the pillar of financial society.  Unfortunately investors require more than his reassurance in these sensitive circumstances. Some say that Deutsche’s inability to generate organic capital, despite having no liquidity problems, have exacerbated this bank’s problems. The German bankers’ association complained bitterly that the problem had been blown up out of all proportions. There was some clarifications on Friday, which triggered a 15% turn around in the share price to E11.55.  However I suspect the market will require more clarification in the weeks to come to be fully placated. Rumours that a deal rather less than $15 billion claimed by the Department of Justice for trading and sales irregularities, has been negotiated by Deutsche Bank, may certainly help, subject to confirmation.


Last week with imponderables such a Deutsche and the outcome of the OPEC meeting to contend with, investors made hard work of the conditions that prevailed.  Many feel equities could be fully priced.  However again they are faced with no other attractive asset class. The S&P closed a smidgen above the Plimsoll line (+0.19%), with the FTSE easier by a similar amount (-0.15%).  European bourses were down by an average of 0.65% and the NIKKEI by was down 1.82%, thanks in the main to a strong Yen. US market protagonists on the whole are keeping their powder dry ahead on the US election on 8th November. Neither candidate fills Wall Street with joy, though Clinton is marginally the more attractive option. The 3rd quarter earnings season does not really get under way until next week. We have non-farm payroll data on Friday. The mean estimate appears to be 173k jobs will have been created in September 2016 with the unemployment rate of 4.9% remaining unaltered. There was little M&A activity last week though talk of a merger between Viacom and CBS was on the table. It was good to see that U.S. consumer sentiment climbed for the first time in 4 months. Here in London, it was oil companies, the mining sector and house builders that thrived with banks and insurance companies suffering at the hands of the Deutsche Bank saga.  Capita eased by 27% on a poor profits warning. Germany’s DAX is closed today. 


Just under 15 years ago BT demerged 02 from its portfolio – previously known as BT Cellnet. It was then sold to Spain’s Telefonica in 2005 for $31.5 billion. In May of this year Ofcom refused Telefonica permission to sell 02 UK to CK Hutchison for £10.3 billion on complex issue involving networks. 


So Telefonica has decided to go the IPO route. Those close to Morgan Stanley, UBS and Barclays believe it will be offered for sale with shares valued at £10 billion in the first quarter of 2017. O2 CEO Mark Evans suggests that its 25 million customers would make a sound springboard to offer shares to retail investors across the spectrum. 


Though 02 and its financial advisors will have done their homework, I have always had doubts about regurgitated assets coming up for sale again and again. As Lady Bracknell of ‘The Importance of Being Earnest’ fame suggested – ‘once OK, twice a ‘misfortune’ and perhaps she might have said three times a misjudgement. Why do Telefonica want to sell? Cutting back huge debt, by disposing of assets is understandable but mobile operators are cash cows! The European mobile market seems saturated and with EU phone tariffs dropping – in the UK’S case for at least 2 years. So as regards growth I have my doubts. A successful, clean and efficient IPO will be down to price – representing really good value in other words cheap – and upbeat market conditions. 


    UK companies posting results this week – Monday – James Halstead, ITE Group, Tuesday – Quantum Pharma, Greggs, St Ives, Wednesday – Tesco, Topps Tiles, Thursday – DFS Furniture, EasyJet, Centamin, Dunelm, Friday – Xpower


    US companies posting results – Monday – Ford Motor (Sales), Tuesday –Micron Technology, Darden Restaurants, Wednesday – Constellation Brands, Monsanto, Thursday – Costco, Ruby Tuesday – Friday – Angie’s List Inc





Economic data this week – Monday – UK PMI Manufacturing, BOE FPC meeting, Tuesday – UK PMI Construction, Wednesday – BRC Retail sales, UK Manufacturing output and Industrial production, Thursday – ECB meeting, Friday – RICS & Halifax House prices and US Non-farm payrolls, unemployment



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


David Buik

Market Commentator


D +44 (0)20 7886 2775

Panmure Gordon & Co 
One New Change | London | EC4M 9AF | United Kingdom



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