TODAY’S FAYRE – Sunday, 8th January 2017


My Soul, there is a country

Afar beyond the stars,

Where stands a winged sentry

All skillful in the wars;

There, above noise and danger

Sweet Peace sits, crown’d with smiles,

And One born in a manger

Commands the beauteous files.

He is thy gracious friend

And (O my Soul awake!)

Did in pure love descend,

To die here for thy sake.

If thou canst get but thither,

There grows the flow’r of peace,

The rose that cannot wither,

Thy fortress, and thy ease.

Leave then thy foolish ranges,

For none can thee secure,

But One, who never changes,

Thy God, thy life, thy cure.”


Henry Vaughan – poet – 1621-1695


If I lived in France I certainly would not be a supporter of Marine Le Pen, despite the fact that she seems to have toned down her rhetoric, now that she sees that she has a real chance of landing the spoils in April’s Presidential election, despite the polls giving daily credence to Messrs Fillon and Macron.  The ‘left’ will surely feel uncomfortable ever bedding down with Thatcherite policies of Francois Fillon. Surely France has had enough of socialism under Hollande. Le Pen is short of financial support with no bank being prepared to provide financial assistance. However if French voters look over their shoulder and see how well the UK’s economy is performing, they may well be encouraged to take a bold leap.  I can see a BREXIT/Trump styled vote prevailing. Relatively speaking we, here in the UK, do not have an acute immigration issues; France does!



Here we are at the end of the first week of the New Year with the FTSE 100 at 7200 without really trying, though probably buoyed by excellent PMI numbers posted last week on manufacturing, construction and the services sectors. The quality of the data triggered comment from Andy Haldane, the BOE Chief Economist that the profession of forecasting was in crisis and that it was having a ‘Michael Fish’ moment. Leading economists suffered sense of humour failure, but most admired Mr Haldane’s honesty and candid comments. So far so good, but one swallow does not make a summer. Though the UK’s economy is the second best performing economy in the Western world, there are signs that heading forward the economy does not look as robust as it did. With inflation rising we have seen evidence of duress in retail with NEXT (shares down 12% on Wednesday) posting a dispiriting outlook for the next few months. This news may not augur well for the likes of M&S and Debenhams, which set out their stall this Thursday, though there is informed gossip that general merchandising sales at M&S may have increased by 0.2% (only 2nd time in 23 quarters). Pre-emptive action was taken by the market last week, which took both shares down by 6% last Wednesday as a precaution against indifferent results being posted. Boohoo and ASOS may well be the darlings of the week with sales up 30% and 45% respectively. It is hard to believe that since last year’s low point on 24th June 2016, the FTSE 100 has added the best part of 20% in value.


We also hear from J Sainsbury on Wednesday. This supermarket does not appear to have made as much remedial progress as Tesco (statement Thursday) and Wm Morrison (statement Tuesday) – its shares only having risen only 4% in the past year as it beds down Argos, as against 50% in the case of Tesco and 44% by Morrison, though the latter two recovering from a very trashed base. We shall see what CEO Mike Coupe has to say. Last week in London, oil operators, house builders and mining were the main contributing sectors to the FTSE 100’s advance in adding 1.9% on the week. With DJT only 2 weeks away from becoming the 45th President of the US, BAE Systems metaphorically licked its chops at the prospect of US contracts plus its pension and dividend issues look less challenging than they did – shares up 3%. There was another Sports Direct shareholders meeting.  Despite the mood of the meeting and a wave of minority shareholders wanting Keith Hellawell, Tony Blair’s former drugs baron, to step down as chairman, CEO Mike Ashley dismissed their wishes with contempt informing the meeting Hellawell had his full support.


Lloyds Banking Group added a short 2% on Friday to 65p +change – still way below break-even of circa 73p. It looks as though CEO Antonio Horta-Osario will be docked bonus pay for the under-performance of the bank and an alleged tryst he enjoyed last year. I suppose the word trust in the circumstances of Lloyds’s parlours state is important, but I am not sure that Mr Horta Osario behaved with any professional impropriety apart from offending wife Ana. So to dock the CEO pay for that would be unreasonable in my opinion. Easily the most dispiriting issue in terms of Lloyds’s performance last year was the fact that PPI claims reached the eye-watering level of £16 billion! Let’s hope most of those dark days are over.


The DOW closed the week within spitting distance of breaching the 20,000 threshold. But for a rather poor performance from a number of retail stocks such as Macy’s and Kohl’s (sales over holiday period -2.1%), Barnes & Noble, Sears and JC Penney, that goal would have undoubtedly been reached.  On Friday non-farm payrolls of +156k were acceptable for a December, though the unemployment rate ticked from 4.6% to 4.7%.  Wage inflation accelerated encouragingly from 2.5% to 2.9% on an annualised basis. Based on current facts the market is expecting at least another two 25 basis point hikes this year. The earnings season gets off to a slow start this week until Friday when JP Morgan Chase, Wells Fargo and Bank of America post their results.  The market is expecting these results to be good.  Rates have risen, margins are increasing and the US economy is in good shape.  In the last two months US banks with the exception of Morgan Stanley (-1.6%), have made tremendous gains – Wells Fargo – +21%, JP Morgan – +23%, Citibank – +29%, Bank of America Merrill – +33% and GOLDMAN – +32%



Its bonus season next week. The large US based banks such as Goldman Sachs and JP Morgan Chase may well see their bonuses increase by 20% on last year’s efforts. The global pool is purported to be $15 billion with US banks conceivably distributing $10 billion.  European banks will fare quite poorly in comparison, as they are not as influential as their counterparts.  Also regulatory controls in terms of bonus distribution are much tougher. There have also been endless fines imposed on European banks.  If part of the Dodd-Frank legislation is repealed under a Trump administration, bank bonuses could head for the moon, with New York grabbing business from London rather than London surrendering its share to the EU!



 UK companies posting interim results this week – Monday – William Hill, Boohoo, Tuesday – Wm Morrison, Topps Tiles, Majestic Wines, Just Eat, Wednesday – J Sainsbury, Fenner, Pagegroup, Tullow Oil, Thursday – Tesco, M&S, Debenhams, AB Foods, Premier Oil, ASOS, AO World, Henderson Group, Dunelm, SuperGroup, Friday – SIG


US companies posting interim results – Wednesday – KB Homes, Thursday – Delta Airlines, Friday – Blackrock, JP Morgan Chase, Wells Fargo, Bank of America


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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