TODAY’S FAYRE – Sunday, 11th December 2016


When cats run home and light is come,

And dew is cold upon the ground,

And the far-off stream is dumb,

And the whirring sail goes round,

And the whirring sail goes round;

Alone and warming his five wits,

The white owl in the belfry sits.


When merry milkmaids click the latch,

And rarely smells the new-mown hay,

And the cock hath sung beneath the thatch

Twice or thrice his roundelay,

Twice or thrice his roundelay;

Alone and warming his five wits,

The white owl in the belfry sits.”


‘Poetry is the voice of spirit and imagination and all that is potential, as well as of the healing benevolence that used to be the privilege of the gods.’


Ted Hughes – poet laureate – 1930-1998


With Michael Gove knowing that in some circles that an act of treachery is often known as ‘Doing a Gove!’ agreed in an interview with BBC’S ‘World-at-One’ that the PM was correct to fire him with the benefit of hindsight Mrs May was “the right leader at the right time” and that “if the chance came to serve again” in the cabinet, he would “happily say yes”. But he was “very happy” on the back benches and would be standing again at the next election as MP for Surrey Heath, which he has represented since 2005. It will take time for the wounds to heal.  Nonetheless Mr Gove remains a big beast in Tory ranks.

It can only have been three weeks that our most famous and revered restaurant critic, AA Gill announced his engagement and at the same time he told us that his cancer was ‘the full English!’ He was not exaggerating.  Very tragically he passed away yesterday. As a writer and a wit, AA Gill was a legend with a turn of phrase few could ever match. RIP.


At present Mumbai is no place to be if you are playing for England against India. England is being handed a real lesson in batting in relatively testing conditions with Captain Kohli leading the charge 183 not out in a mammoth score of 529 for 7. England bowlers seem rather anaemic and lacking in penetration.  With 5 + sessions still remaining, for England to draw this match seems a highly unlikely outcome.  


It is still quite a daunting prospect attempting to work out where this new found euphoria for equities emanates from.  Most people accept the premise that a Trump administration will stimulate spending on infrastructure and cut taxes virulently over the next few years, but global growth forecasts are hardly exciting.  Maybe Trump’s policies will stimulate growth. We have the prospect of mildly higher rates in the US, likely to start with the implementation of a 25 basis point hike in the FED rate next week, with inflation forecasted to rise in Europe and the US next year. It is also taken as read that there are no other attractive asset classes, with bond yields at the longer end having risen quite sharply in recent weeks. These yields are unlikely to drift off with governments and countries displaying a voracious appetite to raise fresh funds.


By Friday night global indices were preening themselves with contentment with the following gains – S&P 500 2.8%, FTSE 3.3%, European stocks by an average of 4.8% and the NIKKEI by 3.2%.  It was quite a week and the start of a ‘Santa rally’ was very much in evidence. Banks have enjoyed a wonderful run on the rails.  I suppose the comfort of higher rates and widening margins is an attractive prospect, particularly for UK based and European banks that have been severely trashed in recent years. However the immediate prospect for Italian banks is hardly encouraging. Monti Dei Paschi di Siena has seen its share price fall from E120 a year ago to E19.50 on Friday (it fell 10.5% on Friday).  This bank is still looking to shore up its balance sheet by E5 billion and Unicredit, Italy’s largest bank, will hope to successfully mount a E13.5 billion rights issue next week. In the US the entertainment sector was buoyant with banks and technology enjoying a mini renaissance. Here in London mining stocks and oils have backed up banking in the last week and it was encouraging to see the likes of Astra Zeneca (+4%) and Smith & Nephew (+3%) doing well as the overall performance of the drug sector has been hugely disappointing this year.


The big news of the week was Rupert & James Murdoch ‘returning to the well’ to have another bite at the cherry – for the remaining 61% of Sky (News Corpn already owns 39%),  This time it was 20th Century Fox that expressed its undying love for this TV and media mogul. In June 2010 the Murdoch Empire bid a miserly £7 a share for the remaining 61%.  It was considered derisive in terms of price. Shortly afterwards came the ‘hacking scandal’ with Andy Coulson, Rebekah Brooks and many Sun journalists sitting in the dock and some eventually spending time at Her Majesty’s pleasure.  There was also an outcry from the usual suspects – BBC, Telegraph, DMGT, Guardian, Trinity Mirror et all – all complaining that there would be too much media power in one set of hands. MP Tom Watson was incandescent with rage at the prospect of Rupert Murdoch building an even more influential empire.


Then there was the Leveson Report to consider. Rupert Murdoch and his cohorts strategically backed off. Mr Murdoch may be an uncompromising business man but his efforts have created and maintained great levels of employment in the UK.  I am an unabashed fan and I will take the stick.  Yes the News of the World was an unsavoury episode, but net, net, the Sun, Times, Sunday Times and Wall Street Journal have been kept going and the country would be a poorer place without them.  In isolation away from print journalism, Sky is increasingly powerful particularly from a sport perspective.


Up until Friday morning Sky shares had drifted from circa £11 to circa £7 (down about 35%) since the beginning of the year.  Also with the Pound having surrendered at 18% against the Greenback, Sky looked cheap to Murdoch.  So back 20th Century has come and the shares rallied 31% to 1034p on Friday.  A bid of 1075p has been accepted by the company, though to date it appears that few shareholders have yet to be consulted. The Murdoch bid values the whole of Sky at about £18.5 billion. There will be concern about Fox News being to the right of centre, but that does not mean Sky has to be. Also UK TV is supposed to have no political bias, presenting news scrupulously balanced.  Sometimes it suits not to observe that stance.  If a push comes to a shove, I think this deal will be consummated. Sky shares were looking unloved with football rights looking vulnerable. Sky needs to broaden its base globally both in Asia and Europe and can use some Murdoch clout. Jeremy Darroch’s family will be keen on this deal as he may walk out of the ring with £24.5 million.


Spread betting companies, especially IG and CMC Markets have taken a leathering last week losing about 38% in value, courtesy of tighter controls being implemented by FCA of CFD trading.  The two large companies feel they have been discriminated against and insist that their many of clients may have been unfairly labelled as thieves and charlatans. I am none too sure if there was much in the way of consultation over this process.  We shall find out soon.


UK Companies posting results this week – Monday – Ensor Holdings, Tuesday – Carpetright, Bellway, Wednesday – Dixon Carphone, Micro-Focus, John Wood, Thursday – Petrofac, Tungsten, PZ Cussons, Go-Ahead, Centrica, Astra Zeneca pipeline, Friday – Trinity Mirror


US Companies posting interim results this week – Monday – Johnson Outdoors, Tuesday – Hollywood Media Corp, Wednesday – Jay Global, Thursday – Oracle, Adobe Systems


Economic data this week – Monday – US Federal Budget Balance, Tuesday – UK House Prices, ZEW, Wednesday – FOMC, Thursday – MPC Meeting, UK Retail Sales, CBI Industrial order expectations, Friday – US Housing starts & Trade Balance

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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