Monthly Archives: January 2017

TODAY’S FAYRE

 

TODAY’S FAYRE – Tuesday, 31st January 2017

 

I am—yet what I am none cares or knows;

My friends forsake me like a memory lost:

I am the self-consumer of my woes—

They rise and vanish in oblivious host,

Like shadows in love’s frenzied stifled throes

And yet I am, and live—like vapours tossed

 

Into the nothingness of scorn and noise,

Into the living sea of waking dreams,

Where there is neither sense of life or joys,

But the vast shipwreck of my life’s esteems;

Even the dearest that I loved the best

Are strange—nay, rather, stranger than the rest.

 

I long for scenes where man hath never trod

A place where woman never smiled or wept

There to abide with my Creator, God,

And sleep as I in childhood sweetly slept,

Untroubling and untroubled where I lie

The grass below—above the vaulted sky.”

 

John Clare – poet – 1793-1864

 

Fulham played some glorious football against Hull City in the FA Cup last Sunday. They have been rewarded with a home tie against Spurs on the weekend of the 18th February.  They don’t come much tougher than that! Last time Spurs came to Craven Cottage they were beaten 4-0 in the FA Cup in 2012, thanks to a moment of madness from Michael Dawson, who just completely lost the plot and was subsequently sent off!

 

I totally understand about 1.5 million people in the UK registered their contempt and abhorrence of President Trumps ‘shoot from the hip’ immigration policy and have implored the PM to withdraw Her Majesty’s invitation of a State visit.  This powerful statement follows in the wake of ferocious protests all over the US. I understand and sympathise with the reasoning behind this feeling of forlorn despair.  However I do not comprehend why people are surprised. Donald Trump has been totally consistent for about a year. There have been no ‘left-field’ policies introduced or Exocet missile statements made.  Over 50% of voters knew about Trump’s plans and agreed with his policies, thus voting for them!

 

US business particularly the tech sector and Silicon Valley have totally condemned Trump’s immigration policies with the likes of Facebook, Microsoft, Apple, Netflix and Microsoft making their positions abundantly clear.  Most have made contingency plans such as they can to protect immigrant employees.  It was good to see that Starbucks’ CEO Howard Schultz, announce that 10,000 immigrants would be hired worldwide. Starbucks has 25,000 outlets in 75 countries. Amazon and Expedia have also backed a law suit against the implementation of immigration restrictions.

 

Yesterday the political confusion that prevails globally hit equity markets rather hard as positive sentiment dissipated.  On the Street of Dreams the DOW fell by 0.61%, the S&P 500 by 0.60% and the NASDAQ by 0.83%. Banks such as Morgan Stanley and Bank of America suffered – down 1.2% and 1.7% respectively.  Others to receive some harsh treatment included – Caterpillar and Dupont – both down 2%0 and Chevron by 1.7%. On the tech front Alphabet eased by 2.5% with Facebook and Microsoft easier by 1%. In London the FTSE 100 fell by 66 points to 7118. Losses were more or less across the board. L&G lost 1.64% and Lloyds Banking Group, despite taking taxpayers’ holding down 1% to 4.99% was lower by 1.46%. Not surprisingly Trump’s travel ban hammered many airline stocks – American Airlines -4.4%, Delta -4%, United -3.6%, Air France -2.6% and BA easier by 2.5%. Short-haul carriers were not so adversely affected though Ryanair was down 1.4%. Despite the generally downbeat mood there was still evidence of M&A activity with rumours abounding that US engineering consultant CH2M had approached UK’s WS Atkins over the possibility of a $4 billion merger.  Atkins’ shares were up 4.9%. Whilst so many feathers were being ruffled by the prospect of Tesco and Bookers pooling resources even though the CMA will have its two cents worth to say, there is idle gossip that J Sainsbury and Wm Morrison may pool resources. In recent years Vodafone has struggled in India.  There are plans afoot to merger resources with Ideal Cellular, having written off $4.3 billion.

 

Two former HBOS bankers and four other people were found guilty yesterday of a $307 million (£245 million) fraud trial. They are among the first people to have been found guilty for contributing to losses that led to taxpayer-funded rescues of several of Britain’s top banks during the financial crisis. Former HBOS bankers Lynden Scourfield and Mark Dobson, businessmen Michael Bancroft, David Mills and his wife Alison Mills and accountant Tony Cartwright were convicted for various crimes following a five month jury trial in London. Prosecutors had alleged businessmen Bancroft and Mills arranged sex parties, exotic foreign holidays and provided cash in brown envelopes for Scourfield between 2003 and 2007. We all recall that HBOS was rescued in a state-engineered takeover in 2008 by rival Lloyds Banking Group, despite a £5 billion rights issue a few months before. Lloyds subsequently needed a 20 billion pound bailout of its own.

 

Deutsche Bank has been fined nearly $630m over alleged money laundering in Russia worth $10bn. US and UK regulatory authorities issued the fine yesterday over claims the money was moved out of Russia using so-called mirror trades among the bank’s Moscow, London and New York offices, said New York State’s Department of Financial Services (DFS). The US Department of Justice also is investigating the matter. The fines are the latest development in a string of legal woes for the German banking giant, coming less than two weeks after the bank finalised a $7.2 billion settlement with the Department of Justice over its role in the 2008 global financial crisis.

 

Finally the City was surprised that Tracy McDermott, once the FCA fierce enforcer of discipline in the banks responsible for PPI and LIBOR misdemeanours was appointed as head lobbyist responsible for regulation, having previously overseen disciplinary action against this bank which was alleged to have behaved poorly in terms of money laundering (fined $300m by US authorities) and other regulatory issues – gamekeeper turned poacher at £500k a year – Nice work!

 

 

UK companies posting interim results this week – Tuesday – Carpetright, Ocado, SSE Britvic, Pentair, Wednesday – TalkTalk, Centamin, AG Barr, Thursday – Astra Zeneca, Royal Dutch Shell, Vodafone, Compass, Aberdeen Asset Management, Johnson Matthey,  Friday – Beazley

 

 

US companies posting interim results – Tuesday – Pfizer, Apple, Aetna, Zimmer, Xerox, Sprint, Exxon Mobil, Valero Energy, UPS, Mastercard, Nasdaq, Wednesday – Ford, Altria, Metlife, Fidelity, Thursday – Fred’s, Amgen, Philip Morris, Merck, Cigna, CME, Ralph Lauren, Motorola, Friday – Hershey, Weyerhaueser

 

 

Economic data posted this week –  Tuesday – Gfk Consumer Confidence, UK mortgage applications & lending, Wednesday – BRC shop prices, UK PMI Manufacturing, FOMC meeting, Thursday – UK PMI Construction, BOE Inflation Report & MPC, Friday – UK PMI Non-manufacturing, US PMI Services

 

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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TODAY’S FAYRE

 

TODAY’S FAYRE – Sunday, 29th January 2017

 

On afternoons of drowsy calm
We stood in the panelled pew,
Singing one-voiced a Tate-and-Brady psalm
To the tune of “Cambridge New.”

We watched the elms, we watched the rooks,
The clouds upon the breeze,
Between the whiles of glancing at our books,
And swaying like the trees.

So mindless were those outpourings! –
Though I am not aware
That I have gained by subtle thought on things
Since we stood psalming there.”

 

Thomas Hardy – author & poet – 1840-1928

 

I thought PM May gave an exemplary account of herself during her visit to Washington to meet President Trump.  She may not have come away with any concrete agreements but she left a very favourable impression, which gives the UK a bit of momentum in dealing with the EU and hopefully some respect which has not been that obvious since last June.  Such a pity that many of the media still refuse to give her the plaudits she richly deserves.

 

Ever since I saw Natalie Portman appear as a twelve year old in that fantastic thriller “Leon” with Jean Reno, I have been an unabashed fan of this actress’s talent.  How she was ever persuaded to take the role of Jackie Kennedy in “Jackie”, which is a truly dreary and uninteresting adaptation of a historic moment in time, only she and the God Lord know.  Despite some wonderful small cameo parts played by Richard E Grant and Sir John Hurt, this film is a real turkey. Such irony that Sir John Hurt should sadly die on Friday aged 77. He was one of the great actors of the last century, with the most resonate smoke-induced gravelly voice. Who will ever forget ‘A Man for all Seasons’, ‘The Elephant Man’, ‘Midnight Express’ and Alien’, not forgetting his portrayal on television of Quentin Crisp.

 

I had a job staying awake in ‘Jackie’, despite Natalie Porter being nominated for an ‘Oscar’ as best actress.  It is the story of Jackie Kennedy’s interview with ‘Life’ magazine on the days surrounding and after her husband, John F Kennedy’s assassination. Though Porter looked the part and had Jackie’s voice ‘off pat’, the script was absolutely lifeless.

 

After watching a riveting Cotswold Chase at Cheltenham on the box won by the Grand National winner ‘Many Clouds’ all NH racing acolytes were devastated to hear that he died of a heart attack shortly afterwards. We all send condolences to Trevor Hemmings, Oliver and Tanya Sherwood and all who looked after him at Rhonehurst.

 

Considering it was politically and economically momentous week, markets behaved with the utmost resilience and poise. We keep seeing bond yields creeping up consistently reacting against the threat of inflation and a couple of possible rate hikes this year in the US. However we all could have been forgiven for thinking that the erratic behavior of the 45th President of the US could have made markets considerably more volatile than they turned out to be! Last week saw the S&P 500 add 0.99%, with the DOW breaching the 20,000 threshold for the first time in its history. The FTSE finished the week easier by just 0.19%, thanks to Sterling having had its best run for seven months, which of course adversely affected its Dollar earning constituent stocks.  European bourses added an average of 1% and Japan’s Nikkei pushed on by 1.72%, despite the strength of the Yen.

 

On the economic front UK GDP excelled – up 0.6% in the fourth quarter of 2016, thanks in the main to a really buoyant service sector.  However the threat of higher inflation which could restrict consumer spending, could dampen prospects later this year.  Such is the durability of the UK economy it is rumoured that the BOE may consider upgrading GDP forecast for 2017 from 1.4% to 1.7%. As for the US’S recent GDP reading, it could only be described as a disappointment – a figure of 1.9% was posted on an annualised basis when expectations threw up a figure of 2.2%. In the 8 years of his administration President Obama is the only President in living memory never to post a figure of 3% or higher for a quarter. In fairness that was probably down to the adverse effects of the credit crisis in 2008/9.  However it is fair to say that recent readings of PMIS across the spectrum have looked encouraging.

 

The earnings season on both sides of the Pond picked up last week. Boeing, General Dynamics, Microsoft, Intel and Johnson & Johnson put in strong performances. However Lockheed Martin and Chevron disappointed. Over hear in Old Blighty there were pleasing efforts from Diageo, WH Smith and Whitbread. Unilever’s effort was lack-lustre and there were real issues with EasyJet and most of all BT. BT’S CEO Gavin Patterson unveiled distasteful allegations of skulduggery in its Italian operations which may have thrown up a loss of £531 million over 10 years.  Shareholders were underwhelmed and vented their spleen by skinning 17% off the value of its stock.  The news was bad enough but the gravity of the situation was exacerbated by a poor outlook for the next 2 years.  Business sales are sluggish and it is possible that there may be profit shortfalls to the tune of £175 million in each of the next 2 years.  EasyJet seems to have had FX issues costing £35 million and costs do not appear to have been kept under control.  Shares fell by 9% during the week. Royal Bank of Scotland deemed it necessary to make a further provision of £3.1 billion against a DOJ’S expected fine for misdemeanours for the miss-selling of mortgage backed securities, making a total provision of £6.7m.  It is dispiriting to think RBS has posted a loss every year since 2009. There was also news from the front that all may not be well with the Cooperative Bank, which could necessitate the BOE intervening, due to a capital shortfall. Unless there is a dramatic change in circumstances, it could be wound up by the end of the year.

 

On the M&A front Johnson and Johnson announced that it is to buy Swiss biotech titan, Actelion for $30 billion.  The market also eagerly awaits details of Snapchat’s forthcoming $25 billion IPO due in March of this year. On the home front investors were consumed by news that Tesco were going to pay £3.7 billion for Booker, the cash and carry wholesale food provider, which also owns Londis and Budgens. Bookers’ tentacles as a supplier are as far and wide as M&S.  The CMA, with the assistance of influential retail operators such as Lord Rose, chairman of Ocado, will be all over this deal like a bad rash.  Concern was expressed that small shopkeepers will now have their food provided by Tesco. The real issue today is the price war, which Lidl and Aldi started about 4 years ago, when there was no food inflation.  The consumer was the winner but the likes of Tesco, Sainsbury and Morrison were badly damaged. Tesco is trying to redress the balance by remaining competitive with the addition of a wholesale operator. Tesco’s rivals and small shops may not like it but the city certainly did – Tesco +9% and Bookers +14.25%. Finally such is the complexity of the Trident costs of £41 billion, it is possible that Rolls Royce and BAE Systems will be put on a cost saving bonus system for its production.

 

UK companies posting interim results this week – Monday – Filtronic, Flybe, Conviviality, Tuesday – Carpetright, Ocado, SSE Britvic, Pentair, Wednesday – TalkTalk, Centamin, AG Barr, Thursday – Astra Zeneca, Royal Dutch Shell, Vodafone, Compass, Aberdeen Asset Management, Johnson Matthey,  Friday – Beazley

 

US companies posting interim results – Monday – Rambus, Tuesday – Pfizer, Apple, Aetna, Zimmer, Xerox, Sprint, Exxon Mobil, Valero Energy, UPS, Mastercard, Nasdaq, Wednesday – Ford, Altria, Metlife, Fidelity, Thursday – Fred’s, Amgen, Philip Morris, Merck, Cigna, CME, Ralph Lauren, Motorola, Friday – Hershey, Weyerhaueser

 

Economic data posted this week –  Monday – US Pending Home Sales & Personal Income, Tuesday – Gfk Consumer Confidence, UK mortgage applications & lending, Wednesday – BRC shop prices, UK PMI Manufacturing, FOMC meeting, Thursday – UK PMI Construction, BOE Inflation Report & MPC, Friday – UK PMI Non-manufacturing, US PMI Services

 

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

TODAY’S FAYRE

  TODAY’S FAYRE – Thursday, 26th January 2017

 

“What passing-bells for these who die as cattle?

— Only the monstrous anger of the guns.

Only the stuttering rifles’ rapid rattle

Can patter out their hasty orisons.

No mockeries now for them; no prayers nor bells;

Nor any voice of mourning save the choirs,—

The shrill, demented choirs of wailing shells;

And bugles calling for them from sad shires.

 

What candles may be held to speed them all?

Not in the hands of boys, but in their eyes

Shall shine the holy glimmers of goodbyes.

The pallor of girls’ brows shall be their pall;

Their flowers the tenderness of patient minds,

And each slow dusk a drawing-down of blinds.”

 

 Wilfred Owen – soldier & poet – 1893-1918

 

 With about four hours it was interesting to note that 82,000 had endorsed President Trump’s tweet on his perceived successful meeting with senior executives from the US automobile industry. Will this trend continue? Will tweeters head in their droves to twitter to be updates on the President’s policies? President Donald Trump is due to sign off on a tsunami styled waves of executive orders on national security, including measures to start the construction of a wall on the Mexican border and the imposition of a ban on refugees from the Middle East. The new US president is expected to sign orders setting out federal funding for the wall during a visit to the Department of Homeland Security on Wednesday, two administration officials told the Associated Press. I cannot believe for a minute that he will get that controversial policy initiative through Congress.  President Trump has as many enemies as well as supporters in the GOP. However I am reliably informed that potentially dissenting GOP Congressmen have had their lapels tugged!

Downing Street today confirmed plans to publish Article 50 bill today.

 

A word on the Oscar nominations for 89th Academy Awards at the Kodak Center in Los Angeles on 26th February 2017 – We all know ‘La La Land’ will clean up grabbing a high percentage of its 14 nominations. I don’t think Ryan Gosling deserves best actor, despite learning to be a top notch jazz pianist.  I think Casey Afflek should receive that coveted gold statuette for his performance in ‘Manchester by the Sea’ – outstanding!  I sincerely hope that Naomi Harris receives best supporting actress award for her performance in ‘Moonlight.’

 

The idea of a US isolationist approach to business and trade could significant appeal to investors may seem unlikely. Notwithstanding that thought, the DOW, yesterday, blazed through the 20k threshold for the first time. It was only a few days ago that the S&P reached its record level with the NASDAQ breaching through the 5K threshold. It is interesting to note that not once in his 8 year presidency did Obama post a 3% quarterly growth for the US. He is the only President not to do so in living memory. Part of the reason will be down to the financial crisis in 2008/9.  So a combination of tax cuts, infrastructure spending and the slashing of regulation is an intoxicating cocktail for investors to enthuse over! I just hope President Trump does not go ‘all-out’ for a trade war with China. If he does, all the positive reaction to his initial initiatives will dissipate.

Anyway the market believes those new measures are good for business – hence the appetite for risk. Just look at the list of those stocks that benefitted yesterday – Boeing +6.9% (aided by good interim results), Caterpillar +1.9%, Apple +1.9%, Goldman Sachs +3.5%, IBM +2.9% and Johnson & Jonson +1%.

 

I know I should show some humility but 4th quarter UK GDP was better than expected – +0.6%. The economy is still too unbalanced with the service sector absolutely rampant – + 0.8%, with construction rising by 0.1%. PMI’S around the world are stronger – so let’s hope manufacturing output gets a leg up in the months to come. Inflation will rise and disposable income may not rise fast enough; hence retail may look a little vulnerable by the autumn. The robustness of consumer spending has been very important in the last year, as has the car assembly, which is at a 17 year high! The prophets of doom will tell you that cumuli nimbus clouds hang in a threatening manner over BREXIT. So what? There is 2 years to go – so as the expression goes a la Michael Winner – ‘Calm down, dear!”

 

RBS has deemed in prudent to make provision for a further £3.1bn ($3.8bn) provision in relation to various investigations and litigation matters relating to RBS’s issuance and underwriting of US residential mortgage-backed securities. This takes the total aggregate of such provisions to £6.7bn ($8.3bn) as at 31 December 2016. This further provision would have reduced RBS’s Tangible Net Asset Value, leaving its Tier One capital ratio at a sensible level of 13.6%. This is another blow for the taxpayer, but no a shock in terms of what could have been levied by the DOJ in New York.

 

Asia had a grand session today, hanging on the coattails of US euphoria, with the Yen remaining unchanged – Markets closed as follows – ASX (closed), Nikkei +1.8%, Hang Seng +1.4% and Shanghai Composite +0.3%.

 

A slew of earnings have been presented this side of the Atlantic today and later in the day it will be the turn of US companies to step up to the plate. Diageo did really well considering the currency vagaries which will have been a minefield for this titanic drinks operator – +4.5%. Unilever’s efforts were very lack-lustre with Paul Polman complaining that markets would be very challenging! How often have we heard that excuse? – Its shares down 4.5%. Acolytes of Whitbread would have been disappointed with the sales forecast of Premier Inns – down 4.1%. Sky’s share price was near enough flat. Today’s decent numbers have little to do with anything. What everyone wants to know is if, where and when 21st Century’s £18.5 billion bid (1075p per share) for the remaining 61% will be accepted.

 

Since Kate Swann took over the reins at SSP it has really come together as a food conglomerate – shares up 40% in the last year. Today they fell 0.9% – probably profit taking. Other companies reporting include – Sage -5%, Card Factory +3%, Kier +0.8%, DMGT -6.2%,St James’s Place -0.37%, Renishaw -2.3% and Rank unchanged. The FTSE is up 12 points at 7172 at 13.05pm.

 

 UK companies posting interim results this week – Thursday – Whitbread, DMGT, Diageo, Unilever, Sky, SSP, Card Factory, Rank, Kier Group, PayPoint, Great Portland Estates, Sage, Renishaw, Jimmy Choo, St James’s Place – Friday – BT Group

 

US companies posting interim results – Wednesday – Boeing, Freeport McMoRan, AT&T, eBay, Thursday – Xlinx, Alphabet, Whirlpool, Baker Hughes, Ford, Caterpillar, Pulte, Bristol Myers Squibb, Raytheon, Biogen, Intel, Microsoft, Friday – American Airlines, Abbvie, Colgate-Palmolive, Chevron, Honeywell, General Dynamics.

 

Economic data posted this week –  Thursday – UK index of Services & BBA Mortgage approvals, Friday – US GDP estimate

 

 

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

BT SORT IT! – OR BEATIE WILL HAVE CONTINGENCY PLANS!

As the sun rose above the yardarm I was sure that market talk would be all about Dixon Carphone, easyJet and maybe some Trump Gossip and the Supreme Court’s judgement on BREXIT. The FTSE was scheduled to open up +35 points. Then there was silence; enter stage left a statement from BT Group’s CEO Gavin Paterson.  Not only was he rather downbeat about the UK in the coming year, particularly business and the public sector, but he metaphorically blew our brains out, in telling investors that its Italian offshoot had been indulging in accountancy irregularities for some time – it appears that as much as €300 million has not been properly accounted for over quite a protracted period of time.  The market was very unhappy and vented its spleen taking BT’S shares down 17% without them touching the sides. As I speak BT’S shares are down 21% – £6 billion in value at 302p. 142 million shares have been traded – average daily turnover is 19 million.  This will have been an embarrassment for Gavin Paterson, who was groomed by Lord Ian Livingstone for the job.  Mr Paterson is very personable, smooth as silk and the epitome of a matinee idol.  He is quintessential dream marketing, PR and media man. When Lord Livingstone took over the reins from Ben Verwaayen the shares stood at 80p in 2008. The shares were near enough 400p at the end of 2016. So the company was perceived to have done well.

 

What went wrong? I think there were several issues.  Clearly the skulduggery in Italy has been going on for some time. So the management must be questionable. Mr Paterson may have had all his ducks in a row but maybe some were not up to the job in hand. Secondly BT Openreach has produced a disgraceful service on broadband and the internet which affects many providers.  The UK’s broadband is third world in quality and wholly unacceptable. This news may trigger the breaking up of BT.  Gavin Patterson has spent far too much on sport and in particular football.

 

Shareholders will have lost confidence in Patterson’s leadership – hence the share price cascading downhill.  It is all very well hosing out the Italian CEO Gianluca Cimini.  But let’s be honest he’s the oily rag not the engine driver. Mr Patterson will be under huge duress to put new management in place and respond quickly by implementing changes quickly with a better thought out business plan – if not I suspect he will be for the high jump!  

 

As for the rest of the session at 3.15pm the FTSE 100 is up 15 at 7165.  Miners have been very popular – up 4.5% with oil stocks slightly disappointing – +0.5%. As for those companies that posted numbers today – easyJet is down 9% (foreign exchange & cost issues). Dixon Carphone disappointed (-5%). PZ Cussons are really under pressure with poor sales – shares down 9.8%. Marston’s were OK -1.75% with Crest Nicholson -0.5% and IG, having had approval for their results, saw their shares slip by 2.5%.

THE DECISION OF THE SUPREME COURT WAS AS EXPECTED – I SUSPECT IT CHANGES NOTHING!

I accept the 8-3 ruling by the Supreme Court unreservedly. Post the Government losing its historic legal battle over Brexit, the Supreme Court published the full 43,000-word judgment online. Their Lordships ruled that Prime Minister Theresa May cannot lawfully bypass MPs and peers by using the royal prerogative to trigger Article 50 of the Lisbon Treaty and start the two-year process of negotiating the UK’s divorce from its EU partners. Well done Mrs Miller! – Hope you got £60k’s worth.

 

However with respect it is NOT a victory for democracy.  It is a decision, I hope, based on law, without political bias or wishing to sabotage the will of the people. These legal luminaries are 11 good men/ladies true.  It is now up to the PM and more to the point Parliament, to eventually pass the legislation delivering the democratic decision of the people taken on 23rd June 2016.

 

I do not recall seeing ‘single market’ of ‘custom union’ on the ballot paper.  Perhaps my eyesight has deserted me.  I thought we were asked to make a ‘YES’ or ‘NO’ decision.  Whether David Cameron, our then PM, asked the wrong or inadequate question, is a matter of conjecture. Also would there any need for a referendum, had a decent job negotiating in February been done.  Even though about 430 MP are ‘remainers’, I would be surprised and amazed if they finally voted against the decision taken last June.  For me that would be the end of democracy that I know and respect. So in essence the Supreme Court has potentially delayed the inevitable, which leaves far too much uncertainty for both UK and EU.

 

However there may be no delay. Why?  The Government could introduce fresh legislation as it sees fit.  Also it seems incompatible to me that since the vote to leave was constituency based that MPS would vote against their constituencies. I can see M/S Sturgeon’s SNP (56 seats) being a thorn in the backside of Mrs May for ever and a day plus 8 tiresome Lib-Dems, 10 Ulster MPS and 20 Labour London MPS and a few mavericks – that is say 100-120 MPS – Job done! – BREXIT achieved – that’s it in total. Once Article 50 is invoked, the decision is irreversible. Nothing has changed – However the world, as we know it, is far from a perfect place! 

TODAY’S FAYRE

  TODAY’S FAYRE – Tuesday, 24th January 2017

 

“They are waiting for me somewhere beyond Eden Rock.

My father, twenty-five, in the same suit

Of Genuine Irish Tweed, his terrier

Jack Still two years old and trembling at his feet.

My mother, twenty-three, in a sprigged dress

Drawn at the waist, ribbon in her straw hat,

Has spread the stiff white cloth over the grass.

Her hair, the colour of wheat, takes on the light.

 

She pours tea from a Thermos,

the milk straight From an old H.P. sauce-bottle, a screw

Of paper for a cork; slowly sets out

The same three plates, the tin cups painted blue.

The sky whitens as if lit by three suns.

My mother shades her eyes and looks my way

Over the drifted stream. My father spins

A stone along the water. Leisurely,

They beckon to me from the other bank.

I hear them call, ‘See where the stream-path is!

Crossing is not as hard as you might think.’

I had not thought that it would be like this.”

 

Charles Causley – schoolmaster & poet – 1917-2003

 

England at last salvaged some respect out of a hard fought 3 match ODI tournament in India, by winning the final game in Kolkota by 5 runs. Most of the team made a contribution with Jason Roy, Jonny Bairstow, Ben Stokes and Chris Woakes to the fore with the willow and David Willey, Jake Ball, Chris Woakes and Ben Stokes sharing the wickets under some astute captaining from Eoin Morgan.  We seem rather more competitive in the sub-continent when the pitch is less conducive to spin as was the case last Sunday.

 

So Bernie Ecclestone, after 4 decades in formula One, at the age of 86 has been sent upstairs by the new owner Liberty Media, with Chase Carey, hired from FOX assuming the role of CEO. Like him or not you have to hand it to Bernie, in the world of F1 he is a legend and without him it may well have folded. I just loved the way he bought his way out of a bribery allegation in Germany with a quick cheque for $100 million. Who ever said money was not influential?

 

President Trump promised to leap out of the traps and hit the ground running on corporate issues, supporting his catch-phrase – America first! On those issues he kept his word. He, to the dismay of the world looking on, tore up the Trans Pacific Partnership Agreement. He promised measurable tax cuts for companies who manufactured goods or provided services in the US, rather than capitalise on tax efficient facilities in overseas countries. In the same breath those not complying with those requests would be met with punitive tariffs and draconian taxation.

 

Since the turn of the year the FTSE has dropped about 2.5% from its high point, thanks to an improvement in the fortunes of Sterling, but more to the point the gathering gloom surrounding uncertainty over President Trump’s policies, which feel more isolationist as the days roll by. Consequently we have seen evidence of a flight to quality – in other words investors have been buying bonds, awaiting more clarity on some more of Trump’s plans. We have also seen gold rally in recent sessions from $1180 to $1215 an ounce. US markets have been rather more robust with the DOW 30 points (+0.19%) to the good and the S&P an acceptable 28 points (+1.18%) and the NASDAQ (+3.1%).

 

Yesterday McDonald’s posted interim results with its strongest global growth in five years — despite the fact that sales in the United States fell from a year ago. The home of the Big Mac is doing extremely well in the U.K., Japan and Latin America. That helped McDonald’s post overall sales and profits that topped forecasts. Same-store sales, which measure how well restaurants open at least a year are doing, were down 1.3%. Operating profits fell too. Shares fell nearly 1% on the news. McDonald’s CEO Steve Easterbrook didn’t express much optimism about a turnaround in the first quarter either.

 

McDonald’s is also facing tougher competition from rivals like KFC, Taco Bell and Pizza Hut owner Yum! Brands, Burger King parent Restaurant Brands and fast casual chains like Panera and Shake Shack

 

Macy’s, Sears, Target, Kohl’s, and JC Penney are among the many companies that have reported lack-lustre sales during the critical holiday period. In the wake of the disappointing season, Macy’s and Sears are now collectively closing more than 200 stores, and analysts say JC Penney could shut down as many as 300 stores within the next couple years.

Target has slashed its fourth-quarter sales and earnings outlook and the mall-based retailer The Limited just shut down all 200 of its stores. This sales period seems to have been “the worst results since the recession,” according to Morgan Stanley analysts.  In fact, overall holiday spending rose 4% in the US to $658.3 billion, compared to last year, according to the NRF. That number includes $122.9 billion in online sales, which jumped 12.6% over last year. Yahoo!’s interim results were a little better than expected but its $4.9 billion sale to Verizon is likely to be delayed thanks to cyber hacking.

 

I won’t dwell too much on weekend news though suffice to say that the Green Investment Bank may seek an IPO rather than being asset stripped by McQuarie, who had more than passing interest in buying it. Also if Spotify does not want to incur increasing interest rate charges, they better get the lead out with its proposed $8.5 billion IPO before the end of March. Weetabix, sadly will be falling in to Italian hands for $1.5 billion – Barilla. Weetabix currently has 1.3% of the cereal market against Kellogg’s 22%!

 

This morning we looked as though we might see a bit of a rally until it transpired that BT Group had uncovered a major accounting error in Italy – shares are down 16% as I speak. Traders are very unforgiving these days for misdemeanours. I suspect that BT’S lack of attention to its internet and broadband operation, which has been very shabby, has not helped matters. easyJet slightly disappointed thank to exchange issues where £35 million may have been surrendered from profits. Dixons Carphone made steady progress and share were up 1% at 8.10am. The FTSE 100 is currently up 9 points.

 

 UK companies posting interim results this week – Tuesday – Crest Nicholson, PZ Cussons, IG Group, Genel, EasyJet, Dixon Carphone, Wednesday – Fresnillo, Antofagasta, Restaurant Group, WH Smith McCarthy & Stone, Thursday – Whitbread, DMGT, Diageo, Unilever, Sky, SSP, Card Factory, Rank, Kier Group, PayPoint, Great Portland Estates, Sage, Renishaw, Jimmy Choo, St James’s Place – Friday – BT Group

 

US companies posting interim results – Tuesday – Travellers, 3Ms. Lockheed Martin, DuPont, Corning, Johnson & Johnson, Alcoa, Texas Instruments, Wednesday – Boeing, Freeport McMoRan, AT&T, eBay, Thursday – Xlinx, Alphabet, Whirlpool, Baker Hughes, Ford, Caterpillar, Pulte, Bristol Myers Squibb, Raytheon, Biogen, Intel, Microsoft, Friday – American Airlines, Abbvie, Colgate-Palmolive, Chevron, Honeywell, General Dynamics.

 

Economic data posted this week – Tuesday – UK Public Sector Borrowing Requirement, Wednesday – Nationwide House Prices, Thursday – UK index of Services & BBA Mortgage approvals, Friday – US GDP estimate

 

 

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

TODAY’S FAYRE

 

TODAY’S FAYRE – Sunday, 22nd January 2017

 

They flee from me, that sometime did me seek

With naked foot, stalking in my chamber.

I have seen them gentle, tame, and meek,

That now are wild, and do not remember

That sometime they put themselves in danger

To take bread at my hand; and now they range

Busily seeking with a continual change.

 

Thanked be fortune it hath been otherwise

Twenty times better; but once, in special,

In thin array, after a pleasant guise,

When her loose gown from her shoulders did fall,

And she me caught in her arms long and small;

Therewith all sweetly did me kiss,

And softly said, ‘Dear heart, how like you this?’

 

It was no dream: I lay broad waking:

But all is turned, thorough my gentleness,

Into a strange fashion of forsaking;

And I have leave to go of her goodness,

And she also to use newfangleness.

But since that I so kindly am served,

I would fain know what she hath deserved.”

 

 

Sir Thomas Wyatt – poet – 1503-1542

 

 “Some people get rich studying artificial intelligence. Me, I make money studying natural stupidity!”  – Carl Icahn – business man, entrepreneur and philanthropist – 1936-

 

‘La La Land’ was an enchanting movie and Ryan Gosling and Emma Stone were beautifully cast.  The music and the cinematography were very special and it produced a really positive ‘feel-good-factor!’  But in no way was it an all-time great movie warranting garlands of ‘Oscars.’ I am sure the glitterati will see it rather differently from me. 8/10 marking!

 

The WEF delegates preening themselves like peacocks in Davos, a closeted meeting of the aloof, is a classic illustration why populism has grasped the nettle and has taken up arms against the establishment.  The establishment, big business and politicians only have themselves to blame for BREXIT, the election of Donald Trump and the possibility of a not to be dismissed lightly Le Pen victory in France in April. The intransigence of the EU over reform and its deafening silence towards the cries from the wilderness for change are breath-taking in its arrogance!  

 

The ‘great & the good’ have distanced themselves from everyday life and are totally out of touch with reality.  Their moaning and carping at these dramatic changes in the political landscape is totally consistent. The UK taking its leave of the EU in 2019 may only be the first of others to follow. So if the EU and the average delegate in Davos does not only wake up and smell the coffee and be prepared to reform their thinking and the EU its legislation, the day of reckoning will surely come. What I still abhor is the lack of humility of the victors and the refusal of the 48% to accept the democratic decision.  Both camps are wrong and should come together to make BREXIT work!

 

The rest of the world, away from the EU, is warming to the prospect of negotiating free trade deals, not only with the UK but also elsewhere. It will simplify matters globally.  As a percentage of UK trade they are modest, but very important in setting down the UK’S stall for the future.

 

As for the future of the City of London, regardless of the comments made by Gulliver, Weber and Blankfein and the City of London Corp’s negative Mark Boleat, who admittedly has a job to do, I believe looks very positive. 70 years of infrastructure will not be surrendered without a hell of a scrap.  It will take both Paris and Frankfurt, a town of 750k people, a decade to compete with London in terms of infrastructure. The tax is all wrong in France and the European banks are about E300 billion short of working capital. Do existing banking operations really wish to bail out of London against a background of fearful uncertainty, not forgetting the monumental cost? Daft I’d call it!”  

 

 

Considering markets had to contend with Donald Trump’s inauguration, Theresa May’s two major speeches on Brexit, one at Lancaster House and one to the not so good and the not so great in Davos, they behaved really rather well. The S&P eased by only 0.23%, though the NASDAQ briefly flirted with the 5000 threshold for the first time.  The FTSE 100 saw profit takers and it eased by 1.9% on the week, with European bourses down by just 1%. The Nikkei moved like a barometer as to whether the Yen showed signs of weakness or strength. Energy stocks girded up their loins on the back of stronger Oil prices – Brent $55.49 and gold pushed through the $1200 an ounce barrier – $1203. It will take time for Trump’s administration team to be approved by Congress but assuming their nominations are accepted, the world will be watching to see whether there is a perceived thoroughly negative issue with China over trade, resulting in China dumping Treasuries, which would send yields sharply north inflicting adverse inflationary damage, as well as damaging growth in the US. The US earning season has already produced decent efforts from the banks. GE saw profit takers after a decent run – down 2.1% and conversely IBM pleased its acolytes – up 1.9% and ‘Big Blue’ is up 30% in the last year after a couple of years in the doldrums. Netflix reached its all-time high adding 7 million subscribers – up 38% in the past year.  This week the US earnings floodgates open in earnest (set out below)

 

UK Retail Sales in December dropped 1.9% from the previous month, according to ONS. Sales across all main retail sectors declined, with the heaviest falls coming at non-food stores. It was the largest monthly fall for more than four and a half years. The Black Friday discounts in late November made it very difficult to keep shoppers spending during December. Experts had predicted a much smaller 0.1% monthly fall. However, when compared with a year ago, retail sales were up 4.3% in December. Shoppers also bought more online, spending about £1bn a week, which was 21.3% higher than in December 2015. The 18% fall against the Dollar and 13% against the Euro since June 2016 contributed significantly to the recent rise in inflation to 1.6% heading towards the official estimate by BOE of 2.7% by the end of 2017. This will of course mean that there is less disposable income, as wage inflation is running at 2.6%.  A drop in retail activity will mean a contraction of GDP.  Talking of GDP China’s estimate for 207 came in at a satisfactory 6.7%

The £671million settlement agreed between Rolls Royce and global regulators for bribery and corruption issues in Brazil and Indonesia may not yet be ‘done and dusted.’ Understandably major fund managers want a fuller explanation from management at the time of the misdemeanour back in 2010 – Explanations are required from Sir John Rose, CEO for 12 years, the chairman at the time Sir Simon Robertson and perhaps some meat on the bone from John Rishden.  That is a huge sum of money and cannot be swept under the carpet without fulsome reasons. The buck sits at the top! So what happened please? There was another desperate profits warning from Pearson last week.  Education sales in the US seem to have gone awry.  The shares fell 23% on Wednesday.  It seems strange that CEO John Fallon is unmoved by the drama and still remains in situ!  As Sky & BT scrap for football rights I note that BT intends to put up its charges. This is a bad idea unless BT Openworld sharpens up by providing a broadband/internet service that is marginally better than third world. The UK so needs for business and educational purposes. One suspects that CEO Gavin Paterson is upping charges to prevent BT Openworld from being split from the group.  The current service which affect many providers is frankly not good enough. Schroders would appear to be pushing for a merger between Bovis Homes and the Berkeley Group post Mr Ritchie’s departure and the subsequent profits warning.

 

UK companies posting interim results this week – Computacenter, Petra Diamonds, Tuesday – Crest Nicholson, PZ Cussons, IG Group, Genel, EasyJet, Dixon Carphone, Wednesday – Fresnillo, Antofagasta, Restaurant Group, WH Smith McCarthy & Stone, Thursday – Whitbread, DMGT, Diageo, Unilever, Sky, SSP, Card Factory, Rank, Kier Group, PayPoint, Great Portland Estates, Sage, Renishaw, Jimmy Choo, St James’s Place – Friday – BT Group

 

US companies posting interim results – Monday – McDonald’s, Halliburton, Yahoo!, Tuesday – Travellers, 3Ms. Lockheed Martin, DuPont, Corning, Johnson & Johnson, Alcoa, Texas Instruments, Wednesday – Boeing, Freeport McMoRan, AT&T, eBay, Thursday – Xlinx, Alphabet, Whirlpool, Baker Hughes, Ford, Caterpillar, Pulte, Bristol Myers Squibb, Raytheon, Biogen, Intel, Microsoft, Friday – American Airlines, Abbvie, Colgate-Palmolive, Chevron, Honeywell, General Dynamics.

 

Economic data posted this week – Tuesday – UK Public Sector Borrowing Requirement, Wednesday – Nationwide House Prices, Thursday – UK index of Services & BBA Mortgage approvals, Friday – US GDP estimate

 

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

TODAY’S FAYRE

  TODAY’S FAYRE – Thursday, 19th January 2017

 

“They shuddered to think that the chase might fail,

And the Beaver, excited at last,

Went bounding along on the tip of its tail,

For the daylight was nearly past.

 

‘There is Thingumbob shouting!’ the Bellman said.

‘He is shouting like mad, only hark!

He is waving his hands, he is wagging his head,

He has certainly found a Snark!’

 

They gazed in delight, while the Butcher exclaimed,

‘He was always a desperate wag!’

They beheld – their Baker – their hero unnamed-

On the top of a neighbouring crag,

 

Erect and sublime, for one moment of time,

In the next, that wild figure they saw

(As if stung by a spasm) plunge into a chasm,

While they waited and listened in awe.

 

‘It’s a Snark!’ was the sound that first came to their ears,

And seemed almost too good to be true,

There followed a torrent of laughter and cheers:

Then the ominous words, ‘It’s a Boo…’

 

Then silence. Some fancied they heard in the air

A weary and wandering sigh

That sounded like ‘…jum!’ but the others declare

It was only  a breeze that went by.

 

They hunted till darkness came on, but they found

Not a button, or feather, or mark,

By which they could tell that they stood on the ground

Where the Baker had met with the Snark.

 

In the midst of the word he was trying to say,

In the midst of his laughter and glee,

He had softly and suddenly vanished away-

For the Snark WAS a Boojum, you see.”

 

 

 

                                                                                                                                                     

Lewis Carroll – poet, mathematician & Anglican deacon – 1832-1898

 

 

I have tried to avoid any coverage of Davos, but it is almost impossible to avoid it. TV and the papers are full of it. I think it is the detachment between the good and the great, affectionately known as the establishment and we, the common urchins, known as ‘populism’, that I find so offensive. It’s the inability of the establishment attending this jamboree, to communicate anything that would be beneficial to society. I am sure the delegates, who pay £22,000 to attend, will tell us constructive the whole forum is, but there is like evidence to justify taxpayers and shareholders money.  I did enjoy China’s President Xi’s comments on global trade and the damage disengagement could do to world growth – a veiled threat aimed at President Elect Trump.

 

 

I was irritated that HSBC, which does 20% of its business with Europe, announced at Davos that staff will be shifted to the hinterland of Europe.  I understand contingency plans, but this announcement seems too precipitous to me.  There’s 2 years to go and probably six months before we know that the financial services agenda will look like. Also Mr Gulliver knows only too well that the expertise and infrastructure is in London and the cost of moving experienced staff to Frankfurt and Paris will cost an arm and a leg.  I also let me repeat myself; Bankers don’t want to work in Paris – taxation and regulatory controls and Frankfurt is too small.  Gulliver says coming out of the single market means HSBC needs to protect 20% of its European based business which will necessitate moving 1000 highly paid staff probably to Paris and UBS, which employs 5000 in London, will probably move 1000 for similarly strategic reasons to Frankfurt. Lloyd Blankfein also indicated that the great foot print of Goldman would find its way to the hinterland of Europe, with 1000 voracious bankers said to be on their way. Que sera, sera as they say in Spain – So be it here!  The real action, they will find, will remain in London!

 

 

Though the FTSE 100 closed up 27 points at 7227, it was a shocking day for three companies – Pearson (-23.9%), Premier Foods (-11.9%) and Mitie (-4.7%, having at one time been down 13%) – all three metaphorically had the skin ripped from their respective faces.  Pearson was well run in the past by Dame Marjorie Scardino. She and her predecessor changed the culture of the company, selling off Chateau Latour, Madame Tussaud and Lazard Bros, determined to focus on education books in the US.  It was working well for a few years. However under John Fallon, progress has been stunted. Pearson sold off the FT to the NIKKEI for $1.3 billion. Then the education business has come under the cosh, as students have found Amazon and hiring books cheaper. Today’s profit warning may affect profits for 2 years.  Pearson may be forced to sell its remaining stake in publisher Randon House, which owns Penguin books for $1.3 billion, possibly to Bertelsmann to help the recovery.  Almost £2 billion was wiped off the value of Pearson.  It is generally understood that Fallon has no intention of resigning. As for Premier Foods, it suffered the slings and arrows of outrageous fortune with higher prices for basic food and sluggish sales, courtesy of a weak Pound. A three year cost cutting programme will be implemented for the makers of Oxo, Mr Kipling, Amrosia, Bird’s and Angel’s Delight. Many will recall that Premier rebuffed an approach from McCormick of the US – mmmm!

 

Yesterday on the Street of Dreams, though activity was limited ahead of tomorrow’s inauguration of President Trump as the 45th President of the USA, there was a consistent theme on bank earnings. Goldman and Citibank stepped up to the plate with strong revenue growth, which saw profit takers pushing their share prices down by 1.24%% and 1.70% respectively, but let’s not forget the 20% most banks have gained in value in the past two months. Netflix did not disappoint its acolytes with its Q4 earnings for 2016, Netflix picked up over 7 million subscribers. That’s a significant spike from the 5.59 million the company did the year prior. Of the 7.04 million, over 72-percent—or 5.12 million—was the result of international growth. This translates into Netflix reeling in more revenue that last year with 2.48 billion or a 36% bump. The shares price climbed 7.9% to $143.80 – an all-time high. At the end of the session the DOW was -0.11%, S&P +0.18%, NASDAQ +0.31%. In Asia the main corporate news was the Samsung scandal appears to have dissipated with no arrest made. The ASX closed +0.2% with the Nikkei, on a weaker Yen, up 0.94%.

 

There are a slew of earnings today. Royal Mail has disappointed and the shares may be easier by 4% at the opening. The FTSE is expected to open -4 at 7243.

 

UK companies posting interim results this week – Thursday – Royal Mail Group, Workspace, NCC Group, Pets at Home, British Land, Moneysupermarket, Acacia Mining, Chemring, Fusionex, Halfords, Friday – Character Group, Bonmarche, Close Brothers

 

US companies posting interim results – Thursday – Bank of New York Mellon, HB Fuller, American Express, Friday – Citizens Financial, Schlumberger

 

Economic data posted this week – US Phili-Fed, ECB Press Conference, Friday – EU Retail Sales & Consumer Confidence – inauguration day

 

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

TODAY’S FAYRE

  TODAY’S FAYRE – Tuesday, 17th January 2017

 

“You did not walk with me

Of late to the hill-top tree

By the gated ways,

As in earlier days;

You were weak and lame,

So you never came,

And I went alone, and I did not mind,

Not thinking of you as left behind.

 

I walked up there to-day

Just in the former way;

Surveyed around

The familiar ground

By myself again:

What difference, then?

Only that underlying sense

Of the look of a room on returning thence.”

                                                                                                                                           

Thomas Hardy – poet & author – 1840-1928

  

In normal circumstances having made 350 in the allotted 50 overs, you’d be quite confident of not having that score chased down, particularly when India was 64 for4. However with Virat Kohli in your side aided and abetted by Kedar Jadhav playing more than just a supporting role, anything is possible. They won by three wickets with 11 balls to go and more than a bit in hand!

 

‘Manchester by the Sea’ starring Casey Afflek and Michelle Williams had been hailed by many cinema acolytes as a film not to be missed. I’m very glad I saw it and I can understand why Casey Afflek may or has been nominated for the ‘Oscar’ as best actor.  But dear God in Heaven was that the most depressing of films! It was a real tear jerker and a brilliant advertisement for mental illness caused by trauma. I cannot say I enjoyed it, but I would have been irritated to have missed it.

 

Well you certainly would not call yesterday and today a regular Monday or Tuesday. The front page of the Times yesterday made great reading – Michael Gove and President-Elect both giving it ‘the thumbs up!’ No one is naïve enough to believe that a trade deal between the US and the UK will be completed at the flick of the fingers but it is good for the soul to hear that we may have friends with the greatest of influence. People lacking grace carped at Michel Gove’s motives. He’s no angel, but he is a great journalist – his profession before going in to politics. The mood and rhetoric on both sides of the BREXIT divide has been acrid and distasteful. So maybe the prospect of a good trade deal in the future will stop the likes of Juncker, Tusk and to a slightly lesser degree recently, Barnier, making caustic and unhelpful comments. Of course why should they do a sweet deal with the UK? But on the other hand why throw the baby out with the bath water? 400 odd million people have to eat drink and trade. So let’s be civilised.

 

Yesterday BOE Governor Mark Carney told a receptive audience at the LSE that had the Bank not stepped in after 23rd June with a cut in rates down to 0.25% with accompanying softening of monetary policy 250k jobs may well have been lost, such was the potential damage to growth. I am not so sure about that! However he also flagged up the BOE’S dilemma – interest rates at 0.25%. With inflation likely to hit 2.7% by the end of the year, that level is not conducive with zero interest rates. In normal circumstances a hike in rates would be on the cards. Mr Carney, though, has a balancing act, if he believes growth in the UK will fall. So he must be confident that hiking rates does not trigger unemployment. Conversely the IMF upgraded the UK’s growth from 1.1% to 1.5% for 2017.

 

PM May speaks to diplomats about her plans for BREXIT at lunchtime, which many believe includes leaving the single market and the customs union to protect immigration controls. This will come as little surprise. At last she can say with conviction that BREXIT means BREXIT – no half measures. The atmosphere for negotiations looks a little more appetising than it did. Mrs May could well have a bit of a spring in her heals! It was good to see Chancellor Hammond courteously telling the EU not to mess with the UK over trade deals particularly the financial sector or he might be persuaded to show his teeth, which on this occasion may not be made of rubber. If a push came to a shove he might be prepared to declare the UK a tax haven for foreign companies to come and bed down with easy regulation than that experienced in Europe! – Boom! Boom!

 

It came as no surprise that President-Elect Donald Trump let rip with a few more ‘exocet missiles’ in the direction of NATO, the CIA, Germany and anyone else not in synch with his ideas. All this turmoil prevails, with his inauguration to come on Friday. Times are hardly somnolent!

 

In view of the fact that New York was shut yesterday for Martin Luther King Day activity in London was very measured with the FTSE falling by just 10 points to 7327. There was little activity though investors vented their spleens modestly on the banking fraternity. However GM had time to announce a $1 billion investment in their operation. This morning we also heard that BATS had agreed to pay $40 billion ($59 a share) for the remaining 40% of Reynolds American.

 

Regardless of the high degree of circumspection about the future, M&A activity rules OK with Luxottica, the owners of Ray Bans, Oakley and Sunglass Hut deciding to pool resources with France’s leading lense maker Essilor in a €50 billion deal. This deal may have been precipitated by Luxottica’s main shareholder and chairman Leonardo Del Vecchio being quite a senior citizen at 86. The shares had fallen 14% in the last year out of concern for the long-term management’s future. Mr Del Vecchio will be restricted from owning more than 31%.

 

Rolls Royce finally agreed to settle with global regulators on allegations of unorthodox behaviour in conducting business in Brazil, Indonesia and China. CEO Warren East agreed that the company would pay £671 million in fines in full and final settlement with the ‘quid pro quo’ being no prosecutions. I hasten to add that these shenanigans did not take place under Warren East’s watch. The trouble with Rolls Royce is that it is dwarfed in size by the United Technologies/Pratt & Witney and the GE/Boeing associations. These two groups provide sales financing and administration all packaged up. Maybe it might be an idea to allow Pratt & Witney to swallow RR up. I suspect that idea will go down with Mrs May like a long drink of cold water – I don’t think!

 

In closing, a great article by Hugo Duncan in the Mail on executive remuneration was published this morning. If the WEF wanted to persuade millions that this networking jamboree was nothing better than a self-indulgent expensive waste of shareholders’ and taxpayers money (£22k per person), let the delegates agree a resolution on executive pay. I suspect hell has a better chance of freezing over! Now that the decks have been clear, Rolls Royce’s share price rallied by 5%. At 9.03am the FTSE 100 was down 20 points at 7307. Standard Chartered Bank was up 6%. They have completed a huge $1.6 billion shipping deal, plus it has been upgraded by BOA and may gain entry to the Hang Seng. UK inflation will be posted for last month – est 1.2%.

 

UK companies posting interim results this week – Tuesday – Provident Financial, HIS Markit, Cairn Energy, Greggs, Wednesday – JD Wetherspoon, Burberry, Ladbrokes Coral, Premier Foods, Game Digital, Experian, Thursday – Royal Mail Group, Workspace, NCC Group, Pets at Home, British Land, Moneysupermarket, Acacia Mining, Chemring, Fusionex, Halfords, Friday – Character Group, Bonmarche, Close Brothers

 

US companies posting interim results – Tuesday – Morgan Stanley, UnitedHealth, Wednesday – Goldman Sachs, Citibank, US Bancorp, Charles Schwab, Netflix, Thursday – Bank of New York Mellon, HB Fuller, American Express, Friday – Citizens Financial, Schlumberger

 

Economic data posted this week – Tuesday – US NAHB Housing Index, Germany’s ZEW, Wednesday – US Beige Book, Thursday – US Phili-Fed, ECB Press Conference, Friday – EU Retail Sales & Consumer Confidence

 

David Buik

 

Market Commentator – Panmure Gordon & co D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co

One New Change | London | EC4M 9AF

 

TODAY’S FAYRE

 

TODAY’S FAYRE – Sunday, 15th January 2017

 

My heart is like a singing bird
Whose nest is in a water’d shoot;
My heart is like an apple-tree
Whose boughs are bent with thickset fruit;
My heart is like a rainbow shell
That paddles in a halcyon sea;
My heart is gladder than all these
Because my love is come to me.

Raise me a dais of silk and down;
Hang it with vair and purple dyes;
Carve it in doves and pomegranates,
And peacocks with a hundred eyes;
Work it in gold and silver grapes,
In leaves and silver fleurs-de-lys;
Because the birthday of my life
Is come, my love is come to me.”

                                                                                                                                         

Christina Rossetti – poet – 1830-1894

 

OBITUARY – The Times – LORD SNOWDEN – Photographer and husband of Princess Margaret for whom a day without work or sex was a day wasted! – What a headline!

 

Readers of my missives know only too well that I am not a fan of the WEF in Davos.  However to a man/woman I am confident that they will get over it! However I understand that no supporter of BREXIT has been asked to contribute to the debate apart from PM May, who I am confident will not be hanging around for the ‘DP’ and ‘Cristal’ afterwards.  Regardless of agreement or opposition to BREXIT, one could be forgiven for thinking that delegates would like to hear balanced presentations.  When will the establishment learn the errors of its ways?

 

 As Jeremy Corbyn continues to slip and trip up on any political banana skin going, support for Labour will continue to go in to free-fall. Tristram Hunt behaved very diplomatically as he threw in the towel as MP for Stoke. His background as a distinguished historian surely suggests that he will undoubtedly be much more in his element as Director of the V&A.  When the Corbyn charade eventually runs out of steam, surely Labour will look to Sir Kier Starmer or Hilary Benn to pick up the pieces from the smouldering ashes of the Labour party and attempt to put them together again?  In the case of Benn, he comes across very well as a balanced thinker, who has a fair bit of charm.  I was impressed by his interview with BBC Radio 4’s John Humphrys in his capacity as chairman of the Parliamentary Select Committee on Brexit. Perhaps I am naïve, as the composition of the Committee is unfairly loaded in favour of ‘Remainers’; nonetheless I believe that Benn is a man of integrity, who will not be subversive in holding up the will of the people from leaving the EU at the earliest sensible opportunity! We shall see!

 

 As the FTSE 100 continued to blaze the trail, adding 1.7% last week, the culmination of a 14 consecutive sessions of gains, US markets trod water nervously, easing a smidgen by 0.09%. The reason for rumination and inertia was the astonishing allegations surrounding President-Elect Donald Trump, who will officially be inaugurated as the 45th President this coming Friday, which caused investors to stop in their tracks. The allegations were so salacious and incriminating that the wind was taken out of the sails of investors and political observers alike. Russia, the CIA, MI6, Christopher Steele and Donald Trump are all currently sitting very uncomfortably in their own dock. Assuming these allegations prove groundless, the President-Elect will be out for a decent chunk of retribution. There will be no hiding place. European stocks also selected a neutral gear, up by a parsimonious 0.16% on the week. Life in Asia was just as somnolent – the Nikkei fell by a mere bagatelle – 0.86%. The Yen was painfully strong for much of the week, which not very constructive for exporters.

 

 In London last week it was all about retail activity over the Christmas and New Year holiday sales.  Clearly the demographics for retail have changed and will continue to do so.  Black Friday has become the most important sales period on both sides of the Atlantic, thus sales around Christmas are less fulsome.  Also moving forward sales executed on smartphones and iPhones are becoming increasingly dominant.  It was interesting to note that John Lewis Partnership acknowledged the change in retail culture and saw sales on smartphones/iphones increase by 80.9% in their last trading period. M&S for once almost pleased their acolytes with a 2.3% increase in general merchandising sales – the first quarterly gain for all but two years.  However shares are down 21% in the past year. Morrison probably grabbed the yellow Jersey for the supermarket sector. The Bradford based emporium has seen its shares price gain 40% in the past year, even outstripping Tesco – up 30%.  Like for like sales were up 1.5% over Christmas – marginally disappointing, nonetheless as results go, in comparison to 18 months ago, they were satisfactory. 

 

 Bohoo and ASOS have been the real winners last week – respective shares up 314% and 71% in value respectively in the last year – both classic examples of a very successful on-line operations. AO World lost 9% on Thursday with Panmure’s Mike Stewart still believing the valuation of the company is still looking a little rich. Next week investors are hopeful that Burberry will deliver the goods with China back as an acolyte of this brand.  In terms of contribution to the increased value of the FTSE in recent sessions, look no further than mining and oil stocks. PM May’s rather nebulous comments about membership of the single market or not, skimmed some cream off the top of Sterling – not that there was much to skim! Falling sterling has proved a decent trigger point for the FTSE 100 to put its best foot forward.

 

 It took the Street of Dreams a few days to crank itself up last week, apart from endlessly ruminating over a Trump Presidency. JP Morgan Chase, Bank of America and Wells Fargo posted their interim results on Friday.  All three banks plus Citibank and Goldman Sachs have seen their respective share prices rally by over 20% in the last 2 months.  So Friday’s results were expected to be encouraging, having seen one rate hike and the promise of two more in 2017, as well as the possibility of the Dodd/Frank act being repealed. The market was not disappointed with JPM. Its share price added 1.5%, with Wells Fargo grabbing 2% and BOA 1% plus change.

 

 There is a significant amount of chuntering going on amongst fund managers over what is consistently described as undeserved fat-cat pensions as well as bonuses, which bear little resemblance to performance.  Maybe we will see major shareholders in FTSE 100 companies making a real stand on this subject rather than consistently abrogate their responsibilities. Blackrock has promised to play its role and one of the first CEOS not to already have come under the cosh, may be IMPS’S Alison Cooper. Despite the grey cumuli nimbus clouds of BREXT, it appears that LOGICOR will take its IPO bow in the next few months with a £13 billion valuation. LOGICOR owns about 600 warehouses in 17 countries, with Amazon an important customer.  Blackstone is the seller and Goldman Sachs and Eastdil Securities are the advisors.

 

 UK companies posting interim results this week – Ashmore, Rio Tinto, Tuesday – Provident Financial, HIS Markit, Cairn Energy, Greggs, Wednesday – JD Wetherspoon, Burberry, Ladbrokes Coral, Premier Foods, Game Digital, Experian, Thursday – Royal Mail Group, Workspace, NCC Group, Pets at Home, British Land, Moneysupermarket, Acacia Mining, Chemring, Fusionex, Halfords, Friday – Character Group, Bonmarche, Close Brothers

 

US companies posting interim results – Tuesday – Morgan Stanley, UnitedHealth, Wednesday – Goldman Sachs, Citibank, US Bancorp, Charles Schwab, Netflix, Thursday – Bank of New York Mellon, HB Fuller, American Express, Friday – Citizens Financial, Schlumberger

 

Economic data posted this week – Monday – Rightmove House Price Index, Tuesday – US NAHB Housing Index, Germany’s ZEW, Wednesday – US Beige Book, Thursday – US Phili-Fed, ECB Press Conference, Friday – EU Retail Sales & Consumer Confidence

 

David Buik

 


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