TODAY’S FAYRE – Tuesday, 6th December 2016


On either side the river lie

Long fields of barley and of rye,

That clothe the wold and meet the sky;

And thro’ the field the road runs by

To many-tower’d Camelot;

And up and down the people go,

Gazing where the lilies blow

Round an island there below,

The island of Shalott.


Willows whiten, aspens quiver,

Little breezes dusk and shiver

Thro’ the wave that runs for ever

By the island in the river

Flowing down to Camelot.

Four gray walls, and four gray towers,

Overlook a space of flowers,

And the silent isle imbowers

The Lady of Shalott.


By the margin, willow veil’d,

Slide the heavy barges trail’d

By slow horses; and unhail’d

The shallop flitteth silken-sail’d

Skimming down to Camelot:

But who hath seen her wave her hand?

Or at the casement seen her stand?

Or is she known in all the land,

The Lady of Shalott?


Only reapers, reaping early

In among the bearded barley,

Hear a song that echoes cheerly

From the river winding clearly,

Down to tower’d Camelot:

And by the moon the reaper weary,

Piling sheaves in uplands airy,

Listening, whispers ” ‘Tis the fairy

Lady of Shalott.”


Alfred Lord Tennyson – poet laureate – 1809-1892


I won’t attempt to hide my feelings – a BREXIT man through and through without the immigration tag, provided there is some sensible policing. Immigration is, on the whole, great for this country.  However, I feel the 11 senior members of the judiciary from the Supreme Court have been handed a hospital pass, not of their making. The law is the law and BREXIT is BREXIT.  So regardless of their political persuasion, they will give their verdict on Parliament’s role in the implementation of Article 50 based on the law and nothing else.  They each have 20,000 pages of documentation to sift through.  They have heard from the Attorney General Jeremy Wright QC and James Eadie QC representing the government today and will do so again tomorrow. By Thursday they will have had heard submissions from Mrs Gina Miller’s and her crew’s legal representatives. There is unlikely to be decision until the middle of January – yet more delay, which like it or not, is damaging for sentiment and maybe the economy. I am not sure in the circumstances if they will receive a fee or whether this hearing is just part of their role as judges. Notwithstanding this anomaly, the judiciary will have earned their corn.

Though Italian PM Matteo Renzi’s defeat was emphatic, if not resounding, culminating with the Mr Renzi’s promised resignation – 68% voted – 59.1% voted No! and 40.9% voted yes! Initially the futures market indicated that the MIB could lose 3% of its value at the opening.  Overnight the Euro fell 1% against the Greenback and early morning skirmishes the yield on 10-year Italian bonds jumped 10 pips above the 2% threshold. When the market drew stumps one might have wondered what all the fuss was about, apart from the performance of the main banks, which is creating ripples of concern.  The MIB closed -0.21% just below the Plimsoll line and the 10-year yield drifted back to 1.98%.  The markets just shrugged off this news and its potential ramifications as just irrelevant.  And so did other global indices throughout the day.

However going forward the banking sector is in bad shape and in need of fresh capital and plenty of it. At yesterday’s close Intesa was down only 1%, having been down over 4% at the opening. Monte Dei Paschi Di Siena eased by 4.2%, which will provide some headaches as they urgently seek to inject E5 billion debt in to equity. Qatar may be the white Knight in shining armour, but don’t hold your breath. UniCredit, despite having made contingency plans to hopefully sell Pioneer Investment Unit to Amundi for E3 billion saw its share price ease by 3.36%, as it seeks E11 billion fresh capital and Banca Popolare had a shocker – down 7.9% – making any deal/merger with BBVA or Santander look very unlikely in the immediate future. There is of course a tier below the big banks also looking very vulnerable – such as Veneto Banca and Popolare di Vicenza. It is generally acknowledged that 20% of Italian banking loan are in the non-performing category. This problem is not going away and now that Italy still has major political hurdles to jump, injecting much needed fresh will be a task of Herculean proportions. The other disquieting issue is Italy’s debt ratio to GDP – 140%! Anyway I am confident that the great God “ECB” will find a way through this quagmire to help Italy in its hour of need with consummate ease!

Yesterday the FTSE 100 added 16 points to 6746.  It would have been more but for the UK banks, which were tainted by exposure to Italian debt. RBS was down 1.9%, Lloyds and Barclays by 1% and HSBC by 0.46%.  Burberry shares shot up initially by 6% when rumours abounded that a takeover by US Coach to make a $16 billion conglomerate. The rumour was rebuffed and it shares eased back to being up just 2%. The DAX took the heat out of Italy’s kitchen adding 1.63%.  In New York the DOW closed up 0.24% – another record. The S&P 500 added 0.53% and the NASDAQ 1.01%.  Again it was banks and tech that tickled investors’ fancy.  In Asia as we head towards the close the ASX was +0.74%, Shanghai +0.08%, the Hang Seng +0.82% and Nikkei +0.48%.

RBS CEO Ross McEwan has been seeking good news for some time.  He still has the prickly issue of a possible $12 billion fine by regulators in the US over miss-selling mortgage backed securities. However he had a small result yesterday when 3 out of 5 claiming groups settled to receive £800 million in compensation for the £12 billion rights issue shambles in the summer of 2008. The share price halved within weeks of that issue. Unfortunately the RBS Shareholder Action Group have not settled.  About 60,000 shareholders exercised their option to buy their rights but only 27K joined the action group. This group refused to settle until the management of the day has been brought to book. That of course means Fred Goodwin. It will be some months before there is a final outcome, but progress has been made and until this problem has been settled the taxpayers’ 73% stake will probably not be sold to back to the public.


UK Companies posting results this week –Tuesday – Victrex, Ashtead, Wolseley, Imagination Technologies, Wednesday – DS Smith, Kromek, Carillion, Stagecoach, Thursday – Mulberry, Sports Direct, Ocado, Capita, Friday – Photo-Me, John Laing


US Companies posting interim results this week – Tuesday – Barnes & Noble, Toll Bros, Wednesday – H&R Block, Thursday – Ciena, Dell Technologies,


Economic data this week – Tuesday – BRC Retail Sales, US Trade Balance, Wednesday – UK industrial production & manufacturing output, NIESR UK GDP, Thursday – UK Trade Balance, ECB Press Conference, Friday – RICS Housing Data, UK Consumer Inflation & Construction Output


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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