TODAY’S FAYRE – Monday, 21st November 2016



“If you can keep your head when all about you

Are losing theirs and blaming it on you,

If you can trust yourself when all men doubt you,

But make allowance for their doubting too;

If you can wait and not be tired by waiting,

Or being lied about, don’t deal in lies,

Or being hated, don’t give way to hating,

And yet don’t look too good, nor talk too wise:


If you can dream—and not make dreams your master;

If you can think—and not make thoughts your aim;

If you can meet with Triumph and Disaster

And treat those two impostors just the same;

If you can bear to hear the truth you’ve spoken

Twisted by knaves to make a trap for fools,

Or watch the things you gave your life to, broken,

And stoop and build ’em up with worn-out tools:


If you can make one heap of all your winnings

And risk it on one turn of pitch-and-toss,

And lose, and start again at your beginnings

And never breathe a word about your loss;

If you can force your heart and nerve and sinew

To serve your turn long after they are gone,

And so hold on when there is nothing in you

Except the Will which says to them: ‘Hold on!’


If you can talk with crowds and keep your virtue,

Or walk with Kings—nor lose the common touch,

If neither foes nor loving friends can hurt you,

If all men count with you, but none too much;

If you can fill the unforgiving minute

With sixty seconds’ worth of distance run,

Yours is the Earth and everything that’s in it,

And—which is more—you’ll be a Man, my son!”


Rudyard Kipling – poet & author – 1865-1936


Gina Miller’s affluence gave her the where with all to challenge the Government in the High Court, forcing it to vote on the content of BREXIT through the House of Commons. The Government unsurprisingly appealed against their Lordship’s findings. The process adopted by M/S Miller and her cronies was legal and if you voted ‘REMAIN’ it was irritatingly duplicitous but effective. If nothing else it will delay the BREXIT process. As far as they are concerned – job done, regardless if the appeal is reversed or not.


However as for Sturgeon & Jones jumping on the bandwagon by grabbing Miller’s coattails; that is maverick behaviour of the worst type. Sturgeon’s confrontational antics are consistent. Sturgeon needs to understand or refuses to accept, whether she likes it or not, the UK voted to leave and Scotland is part of the UK and only 1.7 million people in Scotland voted to stay. Despite Wales voting to LEAVE, Jones has decided to delay the due-process for the implementation of Article 50 in the High Court. That decision strikes me as disreputable pranks. These two Charlatans are in danger of offending the majority and if they are not careful they could trigger civil unrest.


As if that was not sufficient inflammatory action for one week – not a bit of it! Lord Kerr – quintessential establishment – foreign office – Ambassador in Paris and Washington – scrounging Non executive director of Royal Dutch Shell and finally obsessive Europhile who worked along-side Sir Geoffrey Howe, another obsessive Europhile at the Treasury made some unacceptable, banal and deeply offensive remarks.  These comments may well have reflected why he was incandescent with anger at the UK’s decision to leave the EU. However to infer and state unequivocally “We native Brits are so bloody stupid that we need an injection of intelligent people – young people from outside who come in and wake us up from time to time!” That is the kind of comment you make in the pub or slouching in an armchair after a very good Sunday lunch with plenty of decent claret on board! If people like Lord Kerr cannot see that there is a political transition being adopted here in Old Blighty, then he’s not as intelligent as he would have us believe! That was an embarrassingly poor effort.


Considering after the previous week’s euphoria over the Trump’s victory from a business perspective rather than from an aesthetic point of view, markets were always likely to suffer from a bit of inertia.  Equity markets probably over-reached themselves, as was suggested by that much respected Wall Street raider Carl Icahn.  However the DOW did hit its all-time record. For the S&P 500 to end the week 0.77% to the good was quite a remarkable feat.  The FTSE 100 was not far behind – +0.67%. European bourses’ gains were relatively parsimonious – +0.44%. The Nikkei enjoyed a blockbuster week – +3.41%, much of the progress was down to a much weaker Yen, which of course stimulated its essential export based stocks.  However much of the week was spent pondering over the international bond markets, where yields have shot up in recent weeks and will probably continue to do so! US Treasury 10-year yield has rallied from 1.60% to 2.33% in the last 6 weeks and Gilts are up from 0.52% to 1.41% last Friday. It is thought that $1 trillion has been wiped off the value of bond portfolios in the last week! Assessing Trump’s commitment to infrastructure spending is one thing. That may have triggered the recent increase in yields.  However many observers and traders have their eye on China’s banks, which must be very close to staring over a precipice of financial carnage. Gargantuan sums have been over-lent to property as well as to the consumer.  China is the largest buyer of US Treasuries.  However, if their banks come under duress, the Chinese government’s love affair with US Treasuries could come to an abrupt ending or at least some sort of retrenchment.


The European Union is feeling rather arrogant and smug.  It has little reason to do so.  Italy’s Renzi could lose his Referendum.  I wouldn’t back against Le Pen to win the French Presidential election in April. Merkel is far from ‘home & hosed’ in October next year.  Greece is a basket case! Europe’s banking sector is under massive duress and probably under-capitalised by as much as E300 billion. German Finance Minister Schauble might eventually laugh on the other side of his face.  His contempt for the UK may be misplaced as may Juncker’s.


A number of key US retail operators posted interim results last week. Two well-known household names failed to pass muster with disappointing efforts – Abercrombie & Fitch eased by 13% and Gap was larruped by an even greater amount in losing 16% in value on Friday. Walmart also stepped up to the plate and slightly disappointed with like for like sales increasing by only 1.2%. However the size of Walmart’s revenue was eye watering. $120 billion in the last three months with a profit of $5.1 billion. Its shares fell by 3%. Walmart’s UK subsidiary ASDA had another shocker with sales down 5.8% – marginally better that the 7.5% drop in the previous quarter. Walmart has 2.2 million employees and does 62% of its business in the US. beat expectations with its interim numbers with its shares rising by 3%. BAT failed it its attempt to buy the remaining 60% of Reynolds American. More money will be needed to increase the bid. Also we await news of forthcoming IPO Snapchat.


Here in the UK last week the dollar remained very strong; so it was not surprising that the mining, oil and drug sectors surrendered a little ground last week. Banks and financials performed well, with the exception of RBS. Sky hit a 3 year low as CEO Jeremy Darroch failed to allay investors’ fears over on going sports rights. WM Morrison pleased its acolytes as it bedded down with Amazon in agreeing a 2-hour delivery service for £6.99, which hit Ocado’s share price hard on Wednesday – down 9.3%. Ocado needs to find another customer perhaps European, which seems unlikely in the current BREXIT climate. 


It was brought to the market’s attention that RBS may be subject to a huge fine – between $5bn and $12bn courtesy of the US regulators for the miss-selling of mortgage related securities. So it is fair to say that any plans Chancellor Hammond for seeking the taxpayers’ 73% stake in this deeply flawed bank will surely be shelved for some years unless the Government decides to split the bank in to a ‘good’ and ‘bad bank’, giving the RBS/NatWest brand some chance of recovering its reputation. Ever since RBS’S £12 billion rights issue in 2008, this bank has been on the back foot. Many of you will remember that the share price halved within weeks of the rights issue with shareholders rightly felt very aggrieved – in fact knee-capped! It currently stands at 208p – well below 503p breakeven!


On Wednesday Chancellor Hammond presents his first autumn statement.  It is likely that he will have a £25 billion borrowing black hole and of course the ‘REMAIN’ press – FT, Times, Guardian and Independent would have us believe that there will be a £100 billion shortfall, though there is no real evidence to support such a theory.  However the OBR is likely to drop GDP forecast from 2% to 1.2% in 2017. £1.2 billion is likely to be spent on infrastructure to create jobs during the uncertainties of the BREXIT negotiations. Though there will be no attempt to have a budget surplus by the end of this Parliament, Mr Hammond is unlikely to loosen the purse strings too much. A cut in Stamp duty is unlikely.  A rise in the threshold of zero taxation may be raised from £11k to £12.5k to pander to those who are categorised at JAMS. It would not surprise me if some sort of mansion tax was implemented, though the emphasis of this statement will be to help business.



UK companies posting numbers this week –  Monday – Mitie, International Game Technology, Tuesday – De La Rue, Intertek, HomeServe, Compass Group, Babcock International, Mitchells & Butler, Telecom Plus, AO World, Kingfisher, Spirax-Sarco, Wednesday – Thos Cook, United Utilities  Thursday – Countrywide, PayPoint, Caledonia Investments, Marston’s, Severn Trent, Pets at Home, HSS Hire, Mothercare, Friday – Pennon 


US Companies posting interim results today – Monday – Jack-in-the-Box, Tuesday – Urban Outfitters, Campbell Soups, Dollar Tree, Hewlett-Packard



Economic data this week – Monday – Rightmove HPI, UK Public Sector Borrowing, Tuesday – US Existing Home Sales, Wednesday – FOMC Meeting, ECB Financial Stability Review, Thursday – Gfk UK Consumer Confidence, US Initial Jobless Claims, Friday – University of Michigan Consumer Confidence.

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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