TODAY’S FAYRE – Sunday, 18th December 2016


“The Owl and the Pussy-cat went to sea

In a beautiful pea-green boat,

They took some honey, and plenty of money,

Wrapped up in a five-pound note.

The Owl looked up to the stars above,

And sang to a small guitar,

“O lovely Pussy! O Pussy, my love,

What a beautiful Pussy you are,

You are,

You are!

What a beautiful Pussy you are!”



Pussy said to the Owl, “You elegant fowl!

How charmingly sweet you sing!

O let us be married! too long we have tarried:

But what shall we do for a ring?”

They sailed away, for a year and a day,

To the land where the Bong-Tree grows

And there in a wood a Piggy-wig stood

With a ring at the end of his nose,

His nose,

His nose,

With a ring at the end of his nose.



“Dear Pig, are you willing to sell for one shilling

Your ring?” Said the Piggy, “I will.”

So they took it away, and were married next day

By the Turkey who lives on the hill.

They dined on mince, and slices of quince,

Which they ate with a runcible spoon;

And hand in hand, on the edge of the sand,

They danced by the light of the moon,

The moon,

The moon,

They danced by the light of the moon.”


Edward Lear – poet & author – 1812-1888


Yesterday, I spent a wonderful afternoon racing with friends at the Ascot Christmas meeting.  However my judgement was impaired in all races but one! There was a horse of JP McManus – ‘Regal Encore’, trained by Anthony Honeyball, ridden by Barry Geraghty, with an appalling record – PPO-PP!  But I heard he was potentially a decent tool. So I invested a parsimonious sum of £3 each way just to say I was – It netted me a £134.40p from the Tote!


As we start the final week leading up to Christmas, I am extremely happy that I am not PM May and more to the point she, as a human being, has my sympathies.  Her problems pile up by the day. Firstly we seem to have the most inept set of world leaders, who have just watched Putin’s hob-nailed-boots stamp deep and uncomfortable prints all over strategic places of importance without the West taking any kind of meaningful action and no!, I am not suggesting anything remotely jingoistic as military engagement. There been many conversations between the avuncular John Kerry and the austere Sergey Lavrov – Both respectfully are oily rags and not engine drivers. Maybe the new Secretary of State Rex Tillerson will break the ice allowing Putin and Trump to have some sort of sensible dialogue – though the mind boggles! Security and cyber-hacking surely comes somewhere near top of the agenda. One wonders what President Obama has been doing with his time over the past eight years. He seems to have abrogated any responsibility towards foreign policy.


However for Mrs May her problems domestically seem to be growing by the day. Firstly the RMT and other affiliates are giving it their very best shot to bring the government to its knees. Their attitude towards the public is a disgrace. I am less than convinced that the public gives a tinker’s damn about guards, if a push comes to a shove. This current and tiresome disruption takes us back to the miners’ strikes in 1981. We seem to have heard very little from TUC boss Frances O’Grady. The silence has been deafening. Frankly Mrs May could have missed a trick by not imposing emergency laws to curb crippling strikes.


The vacuum over the decision to leave the EU is beginning to gather momentum. Many in her party are frustrated with the lack of progress.  The opposition is starting to mass its troops in an obstreperous manner. We read in yesterday’s FT that the Japanese banks have demanded clarity or they will move parts of their operations within 6 months.  Thirty years ago that would have been a real blow – there were 26 banks making a huge contribution to the city’s expansion and relevance.  Today, though regrettable, it may not be an insurmountable problem, as the emphasis of much of Japan’s financial business, not associated with car assembly in UK, has headed back ‘East’ or in New York. Nonetheless any impulsive action by these Japanese institutions would be regrettable.


Finally this week on the feisty subject of EU membership there is growing evidence that those powerful factions devastated by the decision to leave the EU – both political, business and diplomatic – are doing such a fine job to subvert the will of the electorate.  They have been very clever, totally legally, in attempting to sabotage or postpone indefinitely the process. Many in the country now believe that the whole procedure to leave the EU may be become so complicated, that it might prove to be impossible to deliver without wrecking the UK’s economy! God help democracy if that is the case!  Happy Christmas, PM!


Though the advances made by global stock markets were fairly modest last week in comparison to the week before, sentiment remained fairly positive as investors seemed very confident to hang their hats on the Trump peg of ‘ Make America Great Again!’ It may be an isolationist’s approach, but it certainly has attracted money from funds which previously seemed more than happy to sit on their hands by continuing to invest in indices which have enjoyed P/E ratios of between 18 to 21 times earnings. Last week it was reported that no less than $20.5 billion of funds moved from US bonds to the equity markets.  The trump dream of progressive growth lives on despite a somewhat worrying undiplomatic and scornful approach in its relationship towards China. I hope Mr Trump learns quite quickly that China’s continued rate of growth is an integral part of the success of the world’s economy. Nonetheless it appears a rather bizarre attitude seems to be prevailing – let’s just think about today and to hell with ‘jam tomorrow!’


In summary last week the S&P 500 ended the week just above the Plimsoll line, though the DOW broke new record ground. The FTSE was 0.83% to the good in the same period and European stocks improved by 1% with Japan’s Nikkei adding a very measurable 2.13% thanks in the main to a weaker Yen which benefited export stocks such as cars. Gold had a torrid time falling by $21 an ounce to $1137. Oil, after a significant rally post the non-OPEC agreement settle as follows – Nymex at $51.50 and Brent at $54.99. After the FOMC eventually raised the FED rate to between 0.5% and 0.75%, the bond market saw yields move uncomfortably higher. In London the FTSE pushed its head through the 7000 threshold with the usual suspects making their presence felt – oil and mining playing a decent spear carrying role.  However many of our banks have crept up on the rails adding between 15% and 20% since the US Presidential election, with the exception of Lloyds (11%) and HSBC (6%).



There were two major deals – one fact; the other maybe a figment of imagination and gossip – that captured investors’ interest with 21st Century bidding probably successfully for the remaining 61% of Sky hitting the neon lights.  There has been criticism that Sky’s directors capitulated too easily to the 1075p bid, valuing the company at £18 billion.  However prior to the bid, Sky shares had drifted from 1100p to 690p until last week’s bid.  Admittedly the drop in the Pound made Sky look cheap, but the pressure was on against BT relentless push in to the sporting arena.  Frankly BT should have put some of this cash in to providing the country with a decent broadband and internet service.  What we have in this country is virtually mediaeval. Many politicians are very concerned that too much power in the media has fallen in to Murdoch’s hands.  All I can say is that Murdoch, News Corpn and Sky have created thousands of jobs, giving the public what they want.  Others have struggled to provide the same service on a commercial basis.  Whilst this deal was on I think James Murdoch should have backed away from being chairman of Sky temporarily – conflict of interest.  I am also quite surprised that Sky’s interest in its German and Italian subsidiaries was not challenged by their respective governments, particularly as Mediaset is fighting off Vivendi’s overtures. Apparently ValueAct, the US hedge fund, provided added assistance its 6.3% stake in 21st Century.


Mondelez International Inc. jumped in extended trading on a report that the global snack giant may be acquired by Kraft Heinz Co., the food company backed by Warren Buffett’s Berkshire Hathaway Inc. and Jorge Paulo Lemann’s 3G Capital. Mondelez surged 9.7 percent to $47 at 4:27 p.m. in New York. Kraft Heinz advanced 1.9 percent.

Deutsche Bank will be cutting most bonuses this year to help pay for the toxic loans fine. That will help marginally appease “bank haters!” On the good news from BP has agreed a deal with Abu Dhabi worth £1.9 billion to secure its share of oil output for the next 40 years.




Economic data this week – Monday – US Markit PMI services, Tuesday – BOJ Rate Meeting, Wednesday – US MBA Mortgage applications, US Existing Home Sales, Thursday – Gfk Consumer Confidence, US Initial Jobless Claims, Friday – US NEW Home Sales and Univ 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


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