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



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