TODAY’S FAYRE – THOUGHTS ON SPORTS DIRECT

 

TODAY’S FAYRE – Wednesday  7th December 2016
  “I come from haunts of coot and hern, 

I make a sudden sally 

And sparkle out among the fern, 

To bicker down a valley. 

 

By thirty hills I hurry down, 

Or slip between the ridges, 

By twenty thorpes, a little town, 

And half a hundred bridges. 

 

Till last by Philip’s farm I flow 

To join the brimming river, 

For men may come and men may go, 

But I go on for ever. 

 

I chatter over stony ways, 

In little sharps and trebles, 

I bubble into eddying bays, 

I babble on the pebbles. 

 

With many a curve my banks I fret 

By many a field and fallow, 

And many a fairy foreland set 

With willow-weed and mallow. 

 

I chatter, chatter, as I flow 

To join the brimming river, 

For men may come and men may go, 

But I go on for ever. 

 

I wind about, and in and out, 

With here a blossom sailing, 

And here and there a lusty trout, 

And here and there a grayling, 

 

And here and there a foamy flake 

Upon me, as I travel 

With many a silvery waterbreak 

Above the golden gravel, 

 

And draw them all along, and flow 

To join the brimming river 

For men may come and men may go, 

But I go on for ever. 

 

I steal by lawns and grassy plots, 

I slide by hazel covers; 

I move the sweet forget-me-nots 

That grow for happy lovers. 

 

I slip, I slide, I gloom, I glance, 

Among my skimming swallows; 

I make the netted sunbeam dance 

Against my sandy shallows. 

 

I  murmur under moon and stars 

In brambly wildernesses; 

I linger by my shingly bars; 

I loiter round my cresses; 

 

And out again I curve and flow 

To join the brimming river, 

For men may come and men may go, 

But I go on for ever.”    

 

Alfred Lord Tennyson – poet laureate – 1809-1892

 

I think someone turned the page in terms of the Bank of England’s role as an arm of the Treasury responsible for monetary policy, when I wasn’t looking. There are plenty of Governor Mark Carney’s views on social injustice, the imbalances of wage structure and the dark decade of no growth, ladled all over the newspapers and on television in recent weeks. Then we saw Andy Haldane, BOE Chief Economist accompanying BBC’S Kamal Ahmed around North of England on an economic fact finding tour. These ‘off-piste’ speeches and presentations would appear to me to be not part of the Bank’s remit. Personally I have absolutely no objection at all to these intrusions, as these observations are fact and in need of constant repetition. However in the case of Mark Carney it is political rhetoric, though I doubt he cares one jot what some members of Parliament think of his interventions to the political debate.

 

Allow me to doff my ‘titfer’ to PM May. Her move to pre-empt Supreme Court’s judicial review by agreeing to tell Parliament the BREXIT plans without blocking the implementation of Article 50 was inspired and sensible. Only ‘Little Timmy’, the SNP and a few Labour firebrands remained truculent in the extreme.

 

As I write Keaton Jennings has just scored a hundred in his first test match against India in Mumbai. What a fabulous achievement! It was a great toss for Cook to win! Here’s hoping for a famous victory on a wearing pitch that will take spin!

 

I think I might be missing more than a few grey cells. Perhaps senile dementia has set in? Yesterday’s astonishing rally – I suppose it’s the Santa rally that I thought had taken place last month – has really rocked me back on my heels. The DOW and the S&P 500 breached new record levels and the NASDAQ was not that far away from achieving the same goal. The Trump rally opened up the back burners, yesterday as telecoms & tech lead the charge to these record levels on Wall Street. Volumes on the Street of Dreams were 15% higher than the norm for this time of year. The prospect of a 25 basis point hike by the FED next week did nothing to deter the bulls. Prior to the Street of Dreams opening the FTSE 100 selected another gear post poor UK construction data, which saw the Pound dip, which resulted in mining stocks selecting another gear with banks not far behind. The FTSE added over 100 points to 6902.

 

It was interesting to note that in conjunction with Qatar Investment Authority, Glencore has bought a 19.5% stake in Rosneft for circa €10.5 billion. This deal is either breathtakingly inspired or political suicide. I like the former. Let’s face it Ivan Glasenberg is nobody’s fool. It would seem that BP or its CEO Bob Dudley did not seem to know much about this or perhaps being the soul of discretion was a pre-requisite! A year ago Glencore’s share price was 83p. Today, as I write it stands at 298p! After Italy’s referendum debacle you would be forgiven for thinking that Italian markets did not have a care in the world. Bank shares are back to June values. 10-year Italian bond yields have fallen 10 pips since Monday to 1.88%. Italy has asked the ECB for time to rescue Monti Dei Paschi di Siena, ahead of today’s monthly meeting.

 

National Grid has agreed to sell 61% of its UK gas distribution business to a group of infrastructure investors for £13.8 billion. £4 billion will be returned to shareholders. The acquirers include Macquarie Infrastructure and Real Assets, Allianz Capital Partners, Hermes Investment Management, CIC Capital Corporation, Qatar Investment Authority, Dalmore Capital and Amber Infrastructure Limited/International Public Partnerships.

 

It was a good day for Port Talbot steel workers and those in Scunthorpe and in Scotland, as Tata agreed to a 5 year deal with a £1 billion investment promised. The quid pro quo will mean that the £15 billion Pension scheme is likely to close. Many of the 130,000 beneficiaries are unlikely to be adversely affected, but new employees may suffer.

 

The drug competition watch dog slapped a £85 billion fine on Pfizer, the world’s largest drug company for inflating the price of an epilepsy drug by as much as 2,500%. Flynn Pharma, the distributor was also fined £5 million. Pfizer will be appealing.

 

This morning Ocado posted an inconclusive and lack lustre performance which took their shares down by 3.4%. Mulberry, despite acceptable numbers saw shareholders take profits, after a decent run – down 4.38%. Capita posted another profits warning – down 4%. However the domestic story of the day was Sports Direct’s half year numbers, which saw profits down by 33.5% to £145.3 million for the last six months. Forget the headline number and just focus on the other issues. Sports Direct’s share price has fallen from 675p a year ago to 298p (-5.4% today). This company continues to have corporate governance problems. The Shirebrook warehouse employment issues were disgraceful and are being dealt with – so we are told. There is no reason to suppose that the company does not have a good business model. However the board needs shaking up. Mike Ashley must stop being autocratic. Keith Halliwell is not a strong or experienced enough chairman. He must go.

SD has not had a proper finance director for 3 years. In recent times CEO Dave Forsey has resigned and Matt Pearson, the acting financial officer has gone. I am sure Herbert Monteith is the pillar of financial probity, BUT interim head of Finance? – You jest! Had there been a really experienced FD the currency vagaries might have been avoided with hedging. The appointment of the experienced David Brayshaw as a non-executive director is OK. His experience at Barclays, HSBC and Pilkington will help. BUT he’s part time. SP needs a proper experienced full time board of experienced directors, knowledgeable about finance corporate governance and retail. Without that criteria being met, SP will struggle.

 

At 9.30am the FTSE 100 was flat at 6901

UK Companies posting results this week – Thursday – Mulberry, Sports Direct, Ocado, Capita, Friday – Photo-Me, John Laing

  US Companies posting interim results this week – Thursday – Ciena, Dell Technologies

  Economic data this week – 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

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