TODAY’S FAYRE – Thursday 27th October 2016  


“How happy is he born and taught

That serveth not another’s will;

Whose armour is his honest thought,

And simple truth his utmost skill!  

Whose passions not his masters are;

Whose soul is still prepared for death,

Untied unto the world by care

Of public fame or private breath;  

Who envies none that that chance doth raise,

Nor vice; who never understood

How deepest wounds are given by praise;

Nor rules of state, but rules of good;  

Who hath his life from rumours freed

Whose conscience is his strong retreat

Whose state can neither flatterers feed,

Nor ruin make oppressors great;  

– This man is freed from servile bands O

f hope to rise or fear to fall:

Lord of himself, though not of lands,

And having nothing, yet hath all.”      


Sir Henry Wotton – poet – 1568- 1639


Thank goodness the Western world is just starting to wake up to the very real danger Russia imposes, as ‘The Big Bear’ threatens the very fabric of a peaceful society! I think the general public has been awake for years to this problem, but the West’s political paralysis and lack of real leadership has exacerbated this problem. Many admire John Kerry’s tireless efforts, but his futile attempts to win over Lavrov (and ergo Putin) make America look flaccid and impotent. President Obama should be very disappointed with his personal efforts on this most vital of roles he has, as Commander in Chief of the US! The efforts of Merkel, Hollande and Cameron have also been pitiful!


So there is a God! The head of the World Trade Organisation, Roberto Azevedon has vowed to ensure Britain will not face a trade “vacuum or a disruption”, however tough its exit from the European Union. He did not believe for one moment the Brexit vote was “anti-trade” and dismissed fears that Britain could suffer a sudden seizure of trade during or after its negotiations with the EU. At last someone in authority is starting to get it!


I have always been a huge fan of The John Lewis Partnership, Chairman Sir Charlie Mayfield and its exiting CEO, Andy Street. I have always admired their business ethics and culture and the way they involve all the staff as partners. It really works in retail. So the appointment from within of 43 year old Paula Nickolds, who will take over from Andy Street in January 2017, will be well received. She has worked for the retail group for 22 years, joining as a graduate trainee in the haberdashery of the Oxford Street store in London. She is perfect casting to modernise this very popular retail operation.


I fail to see how someone who falls to the ground against his/her will was not pushed or shoved.  Isaac Newton proved that perception to be impossible with that splendid apple.  So the EU and French police are right to have the drains up over Steven Wolfe’s misfortune.


Mark Carney was rather wistful and playful when recently talking to the House of Lords Committee. Will he or won’t he see the UK through the travails of BREXIT in his capacity as Governor of the Bank of England? Who knows?  People say that PM is at odds with Mr Carney.  I doubt that.  Her Birmingham speech was for the party faithful.  I doubt they have met more than a couple of times. The relationship between Osborne, Cameron and Carney is totally different to Mrs May’s rather arms-length relationship with Philip Hammond. I wish the Governor did not occasionally get sucked in to the political debate.  However he’s a fine diplomat. His chances of political appointment in Canada have rescinded with Justin Trudeau now very popular.  I think Mr Carney just needs to be loved and appreciated.  Put an arm round him and he’ll stay. The UK does not need a new Governor.  It would send out the wrong signal to the rest of the world.


This week has seen an amorphous of quarterly results on both sides of the pond – the good the bad and the indifferent. Yesterday Nintendo, despite its massive influence slightly disappointed. Santander was OK, though its UK earnings suffered under the fall of the Pound. SAP, Phillips and Bayer seemed to excel; Novartis disappointed and Heineken does not seem to be the force it once was. In London yesterday Lloyds Banking Group was the first bank to post its numbers. A profit of £1.9 billion was acceptable. A further £1 billion provision for PPI taking the total to £17 billion was unacceptable. The PPI game finishes in 2019, but hopefully the Black Horse can see the end of the tunnel before then. Tier One capital above 14% was comforting. Antonio Horta Osorio seemed full of the joys of spring in exhorting the government to spend on infrastructure to protect the economy. He also felt that the bank had not been adversely affected by BREXIT. The share price is still dire – down from 79p a year ago to 56p today. At least HM Treasury has sold another 1% of its stake taking its holding down to 8.99%. How retail investors will be pleased that they did not pick up the final 9% of the taxpayer’s stake at the 70p level, even with a 5% discount!  In the US, Apple’s efforts were hugely disappointing with the first quarterly fall in sales for a decade.  That was surprising as Samsung will have their Galaxy 8 ready to go by February 2017. Apparently some of the equipment required to make Apple iphones, like the glass front is made by Samsung. Christmas is important for Apple.  What a time to capitalise of Samsung’s temporary misfortune.

Yesterday the US main indices eased a smidgen over slight concern about the healthcare sector and Apple’s disappointing results (NASDAQ -0.5%). In London the FTSE 100 fell by 59 points to 6958 thanks in the main to a drop in value of the mining and oil sectors.  Whitbread also failed to satisfy its acolytes and eased by 4%. The fall has continued today – at 10.00am the FTSE 100 was down 20 at 6940, having hit just above 7000 at 9.25pm. The mood is sepulchral despite much better than expected GDP numbers – 3rd quarter +0.5% thanks to the robustness of the service sector and the forecast for the year is 2.3%. BT’S Gavin Patterson posted great numbers – profits +24% and dividend up 10%. BUT the pension deficit has risen to £9.5 billion.  Mr Patterson seemed ambivalent about the issue – totally unconcerned.  Analysts tend to disagree! Shares down 1.96%

Before commenting on Barclays, Deutsche Bank returned to profitability in the last quarter – a profit of €619 million – not spectacular but a start. Shares dipped a little to €13.29.  Let’s not forget the share price has rallied 30% in the last month or so. Barclays’ numbers were competent with a gross profit for 9 months of £2.9 billion. Tier One Capital was lower than I would have liked at 11.6%.  It must get above 12%. There was a £600 million PPI impairment cost.  The bank is selling property and cutting expenses with many redundancies completed and in the pipeline. New York remains the spearhead for investment banking which remains very profitable. Until this morning Barclays share price had fallen 27% in the last year.  However there had been a  22% rally in the last 3 months admittedly from a very low level – just below crisis level of 148p in 2009. Today the shares are up 1.98% at 185p. CEO Jes Stayley is slowing making a very favourable impression.


UK companies posting results this week –Thursday – Barclays, Debenhams, BT, DS Smith, C&C, Bloomsbury, Kaz Minerals, Inchcape, Friday – WPP, RBS

US companies posting interim results this week –Thursday – Raytheon, Amgen, Altria, Blackstone, Bristol Myers Squibb, Conoco Phillips, Marathon Oil, Amazon, Linkedin, Friday – Xerox, Abbvie, Exxon Mobil, Chevron, MasterCard, Hershey, Weyerhaeuser   Economic data this week – Thursday – UK 3rd quarter GDP, Initial Jobless Claims, Friday – UK lending & money supply, US Michigan Consumer Confidence, US GDP



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]]6 Market Commentator

D +44 (0)20 7886 2775 Panmure Gordon & Co  One New Change | London | EC4M 9AF | United Kingdom


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