Monthly Archives: February 2017

MARKET MORNING UPDATE

It’s TRUMPINGTON DAY today, with the great man not getting to his feet until 2.00am GMT to address both Houses in Congress. Markets are so geared up for this speech.  Markets in the US hit record levels yesterday.  Let’s hope he delivers.  Any sign of serious disappointment in the content of his speech and it could be ‘tin-hat syndrome!

 

Here in London despite the plethora of companies reporting numbers today, market trading has been moribund, ‘waiting for Godoh!’ at 11.46am the FTSE is up a parsimonious three points at 7256.  Markets totally lack direction.  It is easier to gage US movement with defence stocks and those involved in building and technology threatening to blaze the trail.

 

Of those companies that reported today – Greggs -3% – travelled and arrived – Virgin Money – great numbers but only up 0.5% travelled and arrived. Interserve -1% in line with expectation. Bodycote took an hour to please its acolytes – +7% on a great improvement. Taylor Wimpey has had a good run on the rails and punters are taking a breather – +0.75%. Meggitt put in a storming performance +12% much improved outlook. St James’s Place sees the retirement of its long standing CEO David Bellamy – -2%. Moneysupermarket.com did not pass muster -6.25% and Boohoo excelled +3%. M&S down 43% in 22 months NEXT down 42% in the last year mind your eye!

TODAY’S FAYRE

TODAY’S FAYRE – Tuesday 28th February 2017

 

O ‘Melia, my dear, this does everything crown!

Who could have supposed I should meet you in Town?

And whence such fair garments, such prosperi-ty?” —

“O didn’t you know I’d been ruined?” said she.

 

— “You left us in tatters, without shoes or socks,

Tired of digging potatoes, and spudding up docks;

And now you’ve gay bracelets and bright feathers three!” —

“Yes: that’s how we dress when we’re ruined,” said she.

 

— “At home in the barton you said thee’ and thou,’

And thik oon,’ and theäs oon,’ and t’other’; but now

Your talking quite fits ‘ee for high compa-ny!” —

“Some polish is gained with one’s ruin,” said she.

 

— “Your hands were like paws then, your face blue and bleak

But now I’m bewitched by your delicate cheek,

And your little gloves fit as on any la-dy!” —

“We never do work when we’re ruined,” said she.

 

— “You used to call home-life a hag-ridden dream,

And you’d sigh, and you’d sock; but at present you seem

To know not of megrims or melancho-ly!” —

“True. One’s pretty lively when ruined,” said she.

 

— “I wish I had feathers, a fine sweeping gown,

And a delicate face, and could strut about Town!” —

“My dear — a raw country girl, such as you be,

Cannot quite expect that. You ain’t ruined,” said she.”

 

 Thomas Hardy – author & poet – 1840-1928

 

Ever since Sir John Major lost the 1997 election, I have felt he has grown in stature as a statesman and diplomat. He never received the recognition for the incredible work he did in Northern Ireland, with Tony Blair grabbing all the glory. He also held a very truculent Conservative government together very shrewdly with a wafer thin majority.

However Sir John’s track record was not perfect. The ERM/EU membership and the Euro was a disastrous episode. For all the wrong reason the UK removal from the ERM in 1992 has turned out brilliantly for the country.

Sir John clearly feels very passionate about membership of the EU but his choice of phrase describing BREXIT as “the tyranny of the majority” last November was injudicious as well as intemperate. He has lashed out again at the Government and in the same breath I believe he is wrong to say BREXITEERS have blundered & are over optimistic. He and most ‘Remainers’ are obsessively pessimistic!

 

I was very privileged to be at Wembley last Sunday to watch EFL Cup Final, which Manchester United undeservedly won 3-2. Southampton played much the better football and was unlucky to have a Gabbiadini goal ruled off side. It is irritating in the extreme that Wembley does not do replays of the goals and also that inadequate technology is used to meet the game’s modern day requirements. The player ruled off-side was not interfering with play!

 

A professional conflict of interest prevents me from commenting objectively and offering a real opinion on the LSE/Deutsche Boerse merger, which is threatening to abort, thanks to some regulatory insistence by the EC in Brussels for the LSE to sell its majority stake in MTS, the Italian bond platform. Everything else was apparently agreed. We are told that this impasse is probably a deal pooper! Suffice to say that Xavier Rolet has done a sterling job in the past 8 years, when the LSE was in a bit of a parlous state run rather listlessly by Dame Clara Furse.

 

In 2009 LSE’s share price stood at 1000p. It is now 3000p and change. Since the deal was presented in February last year LSE’s shares are up 19%. Since the threat of abortion, they only fell 3%. Both bourses are still very strong stand alone possibilities and both could merge with other counter parties – NASDAQ, ICE/NYSE and CME. If this merger is finally called off, my preference would be for a CME liaison with the LSE. It would offer greater scope to other international futures and derivative markets. The London Clearing House is likely to remain in situ here in London – hence Euronext’s share price falling 3.5% yesterday.

 

The de-monetisation drive may have slowed India’s economic growth to about 6% or lower during October-December from 7.3% in September quarter. While a Reuters poll of 30 economists forecast Q3 GDP growth at a 3-year low of 6.4%, some analysts fear a sharper slowdown to less than 6%.

 

Saudi Aramco is to invest $7 billion in Petronas’s Rapid oil refinery.

 

Was it Bing Crosby that sang “Now is the hour when we must say goodbye?” That is a possible song that global stock markets could sing to President Donald J trump if he does not deliver a really robust economic plan, when he speaks to Congress this evening. US markets are at record levels, having added 20% plus, in the hope and expectation that there will be a $1 billion infrastructure spending plan in the next 4 years plus tax cuts from a corporate perspective from 35% to 15% in the next 2 years.

 

President Trump does not need twitter to get his message across. Many fund managers don’t use twitter. They want a clear strategy plan, which will meet with congress’s approval and therefore drive growth. It is rumoured that defence spending will increase by 10% to $54 billion and that savings will be found and there will be cuts to overseas aid, the countryside and health to pay for this change in political and economic emphasis. Over to you Mr Trump – our lives in your hands!

 

US markets hit record levels yesterday if a little nervously with today’s achievement with YTD changes – DOW: 20,837+0.08% +5.44% S&P: 2,369 +0.10% +5.85%, NASDAQ: 5,347 +0.08% +9.95%. Asia today enjoyed a resoanble session set out below with & YTD change – NIKKEI 19,118 +0.06% +0.24%, HANG SENG 23,827 -0.43% +8.32%, CHINA 3,447 +0.03% +4.14%, ASX 5,712 -0.21% +0.82%

 

Yesterday the FTSE 100, after a strong showing ended the session up 7 points at 7260. The headlines were grabbed by car insurance issues – Direct Line down 7.1% and Admiral down 2.5%. This morning, despite the plethora of company results the FTSE 100 is sown 3 points at 7250. Moneysupermarket failed to deliver – down 6.3% and conversely Meggitt after issues, was up 10.7% on good results. St James’s Place shares fell 3.5% on news that the CEO David Bellamy was leaving after years of titanic service.

 

UK companies posting interim results this week –  Tuesday – Meggitt, Laird, Interserve, Jardine, Lloyd Thompson, GKN, Direct Line, Provident Financial, St James’s Place, Taylor Wimpey, Moneysupermarket, Fresnillo, Go-Ahead, Babcock International, Wednesday – Elementis, ITV, Evraz, Carillion, Admiral, Man Group, Inchcape Thursday – Spirent Communications, Capita, Travis Perkins, Melrose, Vesuvius, RPS, Merlin Entertainment, Schroders, Johnson Matthey, Cobham, Friday – STV Group, London Stock Exchange, WPP

US companies posting numbers this week – Tuesday – Target, Autozone, Liberty Media, Taser, Ross Stores, Wednesday – Dollar Tree, Shake Shack, Thursday – Fred’s, Abercrombie & Fitch, Barnes & Noble, Costco

 

 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, 26th February 2017

 

The usual boredom of patrols.

The endless orbiting at twenty grand;

The growing pins and needles in the arse,

The endlessness of time, the crawling clock,

And nothing to relieve monotony.

The necessary plague of oxygen,

The routine checks of fuel, pressures, temperatures,

Oil, coolant guns-

(as if there is any chance of using them!)-

Browned off with looking round, above, behind,

Conducive to no rational thought or act

But the conditioned reflexes of fear.

 

The ships below, sculling like water-beetles on a pond

In white-tracked zig-zags, escorts on the flank.

And the careful, modulated tones

Of the directing officer: ‘Steer One Fife Eight!’

Bogey at fifteen miles.’ Turn onto course-

Another bloody Sunderland for sure.

And still half-an –hour to go. ‘Blue two-

Open to five. And keep a good watch out.’

 

Last time – an 88 it was – above the fleet;

We picked him up at dusk at thirteen grand,

Chased him as he dived into the dusk:

Somebody hit him, saw the bits come off.

Then the last light went. We lost him

To the eastward, going like hell

Right down on the drink. And can those pockers go.

We only got a probable for him. He might

Have made it home. Not the clean, concise

Explosion of the bastard that you jump,

Two quick sure bursts –and there an end.

 

But here, the mainland a dim shadow

In the haze, there’s not much chance.

‘Blue two: we’ll start going down, I think’-

Blow out your ears and spiral down. Thank God,

The bar should be open when we land.”

 

Philip Larkin– poet – 1922-1985

 

It was wonderful to see Scotland play to their full potential by beating Wales 29-13.  Considering Wales dominated possession, Scotland showed how much flare their backs have, with Finn Russell dictating affairs with guile and aplomb.  However I suspect Ireland will prove the greatest threat to England’s 6-Nations championship aspirations.  With Johnny Sexton restored to Ireland’s ranks, the boys in green gave a clinical account of themselves in disposing with a very physical French team at the Aviva by 19-9.

 

Before shipping out from being Deputy Governor of Bank of England responsible for markets to the London School of Economics, Dame Minouche Shafik has sent a veiled but courteous reminder or threat to Chancellor Philip Hammond not, under any circumstances to relax banking regulation, as President Trump is proposing. She was also warning against making the UK in to a low-tax business environment for multi-nationals, as a precaution to meet a potentially hostile reaction from the EU against BREXIT.

 

US Treasury Secretary Steve Mnuchin seemed to wake from his slumber last week. He commented on the strength of the Dollar and his dislike of China’s ability to manipulate its currency almost with impunity. However what he and the Trump administration failed to do was to establish a plan for introducing their tax cutting or infrastructure spending. Though US stock markets established new records early last week, by Friday market professionals and traders were sending out signals to the effect that they were losing some confidence that these wide-ranging and far-reaching changes would be delivered quickly enough. It is essential they are to justify the measurable bounce US equities have enjoyed since 8th November 2017. Also political populism is unsurprisingly starting to leave a very strong footprint across the European Union with Holland’s right wing candidate Wilders and France’s Le Pen gathering quiet support, with discontent boiling over in Italy and Greece.  Those who do not think that these issues have any significance to EU unity and its economy delude themselves. However European equity funds attracted the largest weekly inflows in more than a year as institutional investors staked a recovery with funds valued at E1.1 billion. Retail investors were not as ebullient about life as several lightened up their portfolios. There has also been a rise in the sale of gold assets by the UK to countries like China.  There is a school of thought that believes that these sales may have distorted the UK’S positive export and trade figures. Gold rallied last week to $1256 an ounce and with investors’ appetite for risk in equities diminishing smidgen, the natural correlation was for bond yields to ease and they did.

 

The net movement of the major global indices was far from dramatic, last week, but there was a feeling that investors needed a bit more encouragement to remain on board as committed bulls. The S&P 500 finished the week in record territory – +0.87%.  The FTSE lost a little shine and eased by 0.77%, much of it down to poor results from HSBC, Standard Chartered Bank and RBS. European stocks just lost a thin layer of recently acquired cream – -011% and the Nikkei finished the week above the Plimsoll line – +0.25%. Much has been written on the banking results last week.  Suffice to say that RBS posted its ninth loss in succession – £6.9 billion – making a total of over £100 billion, if the £45 billion bailout by the taxpayer is included in the total of annual losses of £58 billion. CEO Ross McEwan says the bank will be in profit by 2018, though it is hard under the current circumstances to visualise that happening.  However in fairness the trading profit for the year was £4 billion. A large cumuli nimbus cloud in the form of a multi-billion Dollar fine for miss-selling mortgage backed securities of $3.5 billion+ remains an uncomfortable imponderable.  

 

In hindsight, had we known what we know today perhaps RBS should have been split in to a good bank and a bad one.  RBS, NatWest, Coutts and Ulster are decent brand names and perhaps their recovery time might not have been so hindered. There is no doubt that Standard Chartered’s CEO Bill Winters has had the drains up and thrown the kitchen sink at this bank.  However results were disappointing on Friday with no dividend.  Initially shares fell by 5% on Friday but closed the session down 2.7%. However it should not be forgotten that Standard Chartered’s share price has risen from 430p to 723p in the last year – UP 68% and the UK’s main banks apart from RBS have added over 20% in value since US Election day on 8th November.  Finally on banks, the major hedge fund owners are running out of patience with the Cooperative Bank, which may not be able to meet its capital requirements.  Management changes may be made to stave off pressure from the Bank of England to close or sell.

 

Last week on the Street of Dreams much of the emphasis was on retail, where efforts by Wal-Mart, Home Depot, Nordstrom and Macy’s  passed muster.  Hewlett-Packard from the tech sector failed to live up to expectation and on Thursday its shares eased by 6%. On Friday JC Penney did not please their acolytes and shares fell by 5.8%, but Foot Locker blazed the trail adding 9.38%!

 

Having successfully staved off the aggressive overtures from Kraft Heinz, Unilever has quickly regrouped and is looking very carefully at a strategic plan to break the company up, hiving off its food business in to a £30 billion operation, which could include, Hellman’s Knorr, Ben & Jerry’s etc. It is thought that Unilever’s main 14 fund manager investors which include Warren Buffett’s Berkshire Hathaway and 3-G Capital would approve of such a move, as greater shareholder value would be delivered.  

 

UK companies posting interim results this week –  Dechra Pharmaceutical, Bunzl, Trinity Mirror, Persimmon, Hiscox, Keller, MJ Gleeson Tuesday – Meggitt, Laird, Interserve, Jardine, Lloyd Thompson, GKN, Direct Line, Provident Financial, St James’s Place, Taylor Wimpey, Moneysupermarket, Fresnillo, Go-Ahead, Babcock International, Wednesday – Elementis, ITV, Evraz, Carillion, Admiral, Man Group, Inchcape Thursday – Spirent Communications, Capita, Travis Perkins, Melrose, Vesuvius, RPS, Merlin Entertainment, Schroders, Johnson Matthey, Cobham, Friday – STV Group, London Stock Exchange, WPP

US companies posting numbers this week – Saturday – Berkshire Hathaway, Monday – Sotheby’s, Tuesday – Target, Autozone, Liberty Media, Taser, Ross Stores, Wednesday – Dollar Tree, Shake Shack, Thursday – Fred’s, Abercrombie & Fitch, Barnes & Noble, Costco

 

 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

MIDDAY UPDATE ON UK EQUITIES

It’s been like pulling teeth during this session! – Duller than dish water! – deader than the proverbial witch’s nipple! The FTSE 100 has dropped a whole 6 points at 7296 by 12.20pm. However there were some good export numbers for cars from the SMMT – up 7% last month though domestic sales were flat. US Treasury Secretary Steven Mnuchin is slowly coming to hand, by making the odd sound and grunt, suggesting he might be interested in the economy.  However he feels that the US economy may not select a measurable gear until early 2018.

 

Barclays rose initially by 3% but then it dawned on investors that the bank had yet to settle with the DOJ on litigious issues and it had also cut its dividend, which was not a great surprise, but nonetheless annoying. BAE Systems posted decent numbers but as I write they are off their best level – Up 1.5%. Glencore opened lower but having had a decent butcher’s hook investors felt there was more left in the tank, despite having risen 184% in the last year. Centrica’s effort did not pass muster.  It lost customers and the dividend was light. Relex was up 0.5% after decent numbers but investors will be far more interested in what CEO Rakesh Kapoor takes out of the ring for remuneration.  The guess is about $15 million. Finally RSA posted an upbeat effort.  The shares rose 3%, but the FD collapsed at the meeting bringing it to an abrupt close.  However he made a good recovery, I am told.  The DOW is set to open relatively flat.

TODAY’S FAYRE – LLOYDS MUCH BETTER! – (amended)

 
TODAY’S FAYRE – Wednesday, 23rd February 2017

 

Thou still unravish’d bride of quietness,

Thou foster-child of silence and slow time,

Sylvan historian, who canst thus express

A flowery tale more sweetly than our rhyme:

What leaf-fring’d legend haunts about thy shape

Of deities or mortals, or of both,

In Tempe or the dales of Arcady?

What men or gods are these? What maidens loth?

What mad pursuit? What struggle to escape?

What pipes and timbrels? What wild ecstasy?

 

Heard melodies are sweet, but those unheard

Are sweeter; therefore, ye soft pipes, play on;

Not to the sensual ear, but, more endear’d,

Pipe to the spirit ditties of no tone:

Fair youth, beneath the trees, thou canst not leave

Thy song, nor ever can those trees be bare;

Bold Lover, never, never canst thou kiss,

Though winning near the goal yet, do not grieve;

She cannot fade, though thou hast not thy bliss,

For ever wilt thou love, and she be fair!

 

Ah, happy, happy boughs! that cannot shed

Your leaves, nor ever bid the Spring adieu;

And, happy melodist, unwearied,

For ever piping songs for ever new;

More happy love! more happy, happy love!

For ever warm and still to be enjoy’d,

For ever panting, and for ever young;

All breathing human passion far above,

That leaves a heart high-sorrowful and cloy’d,

A burning forehead, and a parching tongue.

 

Who are these coming to the sacrifice?

To what green altar, O mysterious priest,

Lead’st thou that heifer lowing at the skies,

And all her silken flanks with garlands drest?

What little town by river or sea shore,

Or mountain-built with peaceful citadel,

Is emptied of this folk, this pious morn?

And, little town, thy streets for evermore

Will silent be; and not a soul to tell

Why thou art desolate, can e’er return.

 

O Attic shape! Fair attitude! with brede

Of marble men and maidens overwrought,

With forest branches and the trodden weed;

Thou, silent form, dost tease us out of thought

As doth eternity: Cold Pastoral!

When old age shall this generation waste,

Thou shalt remain, in midst of other woe

Than ours, a friend to man, to whom thou say’st,

“Beauty is truth, truth beauty,—that is all

Ye know on earth, and all ye need to know.”

 

John Keats – poet – 1795-1821

 

Apple’s war with the EU over the €13 billion tax demand will shortly reach new levels of controversy, despite the Irish government’s assistance in supporting their objection. I venture to suggest until there is a water-tight tax policy for all EU members, Apple should be allowed to exploit its benefits. Morally it is probably not right, but we have been down this road and it’s up to global legislators to sort the situation out or there will be hell to pay, resulting in Apple spreading its pleasure elsewhere.

This whole commercial rating system needs sorting out.  It is archaic.  How can it be possible be right to rate businesses entirely on the value of their property in a digital age, where technology will continue to be more rampant by the day? Surely Sajid Javid, his Civil Service advisors and the government know this? The whole system needs revamping and hauling in to the modern age.

I must say I am very surprised that ‘Snap’s’ entourage are coming over to London for a road show. Not that many moons ago, I think Facebook offered Evan Spiegel, the founder, $3 billion for SnapChat. I would describe myself as anything approaching the fountain of all knowledge on technology, but raising money at between $14-16 a share puts a valuation of $20-$25 billion for an app that has yet to make money. That price tag seems to have a very rich valuation attached to it. With the quality of advisors – Goldman and Morgan Stanley – One ventures to suggest there is mileage in this company. Let’s hope there is a sense of realism, a lack of avarice and the required luck needed that market conditions will be conducive for punters to enter the fray.

 

Having supported Kraft Heinz in an abortive attempt to buy Unilever, it might just be that the Warren Buffett/3G Capital juggernaut, which has a $15 billion war chest at its disposal, may sortie again in to the food market, with perhaps an appetite for the likes of Kellogg, Campbell Soups or General Mills. They are also invested in Burger King and AB InBev. It is also felt that Kraft Heinz may go back for Mondolez to whom they sold Cadbury. 

 

 I was highly amused to hear that French presidential candidate Emmanuel Macron wants to lure bankers from London to Paris in the aftermath of Brexit. In his dreams!  There are a few incontrovertible issues – language, taxation and lack of infrastructure for a start. If bankers are going to leave in droves from London, they ain’t going to Paris or Frankfurt, they are off to New York or Hong Kong!

 

Having enjoyed the President’s Day public holiday on Monday, US stock market luminaries returned to the Street of Dreams in a positive frame of mind without too many Trump tweets and the appointment of a new head of National Security – Lieut Gen McMaster. Retail captured most of the headline with Wal-Mart posting its best results for four years. Shares rose by 3%.  There were also good efforts from Home Depot (+1.41%) and Macy’s (unch).  Wal-Mart’s profit was $3.76 billion, or $1.22 per share in the three months ended Jan. 31. That compares with $4.57 billion, or $1.43 per share, a year ago. Sales totalled $129.75 billion.

 

 

 

I was beginning to wonder if the US had a Treasury Secretary as the silence has been deafening.  Low and behold yesterday Steven Mnuchin rose from his slumber and urged the IMF to use its surveillance powers to police the exchange-rate policies of its members, part of the Trump administration’s broader effort to challenge some of America’s biggest trading partners. It’s good to know he’s alive and on the case. I think it is also imperative that we hear something very positive about infrastructure spending and corporate tax cuts before too long.  Otherwise investors could take flight.  These stock markets have come a long way since 8th November 2016. The US markets closed with year to date gains as follows – DOW: 20,743 +0.58% +4.96%, S&P: 2,365 +0.60% +5.65% NASDAQ: 5,350 +0.49% +10.01%.

 

 

As we all know yesterday’s session in London was dispiriting thanks to a poor effort from HSBC, which saw the FTSE 100 lose 25 points to 7274.  This morning we had a far better effort from Lloyds Banking Group, which posted a profit of £4.2 billion – up 158% – net £2.41 billion.  Tier One capital came in at a healthy 13.8%. MBNA have bedded down nicely and synergistically. Lending margins are at 2.7%.  SME lending grew by 3% and by 30% in the last 6 years. The bonus pool was 4.9% of profits and came in at £392.9 million across all staff. Antonio Horta Osario’s salary will be increased by 8% to £1.22 million. That seems very reasonable by modern day standards.

 

Mark Carney indicated to a Treasury Select Committee that a smooth Brexit process would lead to a faster rate of interest rate increases. He also said that if Britain achieves a “bold, ambitious trade deal” without significant obstacles “that is a scenario that is consistent with faster growth relative to forecast, higher inflationary pressure relative to forecast and tighter monetary policy relative to forecast. Bank’s chief economist Andy Haldane was also present and added that Prime Minister Theresa May’s plans for Brexit are not expected to affect growth over the next three years.

 

 UK companies posting interim results this week –  Wednesday –Lloyds Banking Group, Barratt Development, Weir, Serco, Hays, McBride, Metro Bank, Thursday – Barclays, Intu, Rathbones, Monetise, Howden Joinery, BAE Systems, BATS, Glencore, National Express, Centrica, RSA, Kaz Minerals, Friday – Standard Life, Pearson, Wm Hill, Standard Chartered Bank, RBS, Jupiter Fund Management, Rightmove

 

 US companies posting interim results – Wednesday – Toll Bros, TJX, L-Brands, Tesla, Thursday – Kohl’s, BJ Restaurants, Dynergy, Nordstrom, Friday – JC Penney, Foot Locker,

 

 

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 – Wednesday, 23rd February 2017

 

Thou still unravish’d bride of quietness,

Thou foster-child of silence and slow time,

Sylvan historian, who canst thus express

A flowery tale more sweetly than our rhyme:

What leaf-fring’d legend haunts about thy shape

Of deities or mortals, or of both,

In Tempe or the dales of Arcady?

What men or gods are these? What maidens loth?

What mad pursuit? What struggle to escape?

What pipes and timbrels? What wild ecstasy?

 

Heard melodies are sweet, but those unheard

Are sweeter; therefore, ye soft pipes, play on;

Not to the sensual ear, but, more endear’d,

Pipe to the spirit ditties of no tone:

Fair youth, beneath the trees, thou canst not leave

Thy song, nor ever can those trees be bare;

Bold Lover, never, never canst thou kiss,

Though winning near the goal yet, do not grieve;

She cannot fade, though thou hast not thy bliss,

For ever wilt thou love, and she be fair!

 

Ah, happy, happy boughs! that cannot shed

Your leaves, nor ever bid the Spring adieu;

And, happy melodist, unwearied,

For ever piping songs for ever new;

More happy love! more happy, happy love!

For ever warm and still to be enjoy’d,

For ever panting, and for ever young;

All breathing human passion far above,

That leaves a heart high-sorrowful and cloy’d,

A burning forehead, and a parching tongue.

 

Who are these coming to the sacrifice?

To what green altar, O mysterious priest,

Lead’st thou that heifer lowing at the skies,

And all her silken flanks with garlands drest?

What little town by river or sea shore,

Or mountain-built with peaceful citadel,

Is emptied of this folk, this pious morn?

And, little town, thy streets for evermore

Will silent be; and not a soul to tell

Why thou art desolate, can e’er return.

 

O Attic shape! Fair attitude! with brede

Of marble men and maidens overwrought,

With forest branches and the trodden weed;

Thou, silent form, dost tease us out of thought

As doth eternity: Cold Pastoral!

When old age shall this generation waste,

Thou shalt remain, in midst of other woe

Than ours, a friend to man, to whom thou say’st,

“Beauty is truth, truth beauty,—that is all

Ye know on earth, and all ye need to know.”

 

John Keats – poet – 1795-1821

 

Apple’s war with the EU over the €13 billion tax demand will shortly reach new levels of controversy, despite the Irish government’s assistance in supporting their objection. I venture to suggest until there is a water-tight tax policy for all EU members, Apple should be allowed to exploit its benefits. Morally it is probably not right, but we have been down this road and it’s up to global legislators to sort the situation out or there will be hell to pay, resulting in Apple spreading its pleasure elsewhere.

This whole commercial rating system needs sorting out.  It is archaic.  How can it be possible be right to rate businesses entirely on the value of their property in a digital age, where technology will continue to be more rampant by the day? Surely Sajid Javid, his Civil Service advisors and the government know this? The whole system needs revamping and hauling in to the modern age.

I must say I am very surprised that ‘Snap’s’ entourage are coming over to London for a road show. Not that many moons ago, I think Facebook offered Evan Spiegel, the founder, $3 billion for SnapChat. I would describe myself as anything approaching the fountain of all knowledge on technology, but raising money at between $14-16 a share puts a valuation of $20-$25 billion for an app that has yet to make money. That price tag seems to have a very rich valuation attached to it. With the quality of advisors – Goldman and Morgan Stanley – One ventures to suggest there is mileage in this company. Let’s hope there is a sense of realism, a lack of avarice and the required luck needed that market conditions will be conducive for punters to enter the fray.

 

Having supported Kraft Heinz in an abortive attempt to buy Unilever, it might just be that the Warren Buffett/3G Capital juggernaut, which has a $15 billion war chest at its disposal, may sortie again in to the food market, with perhaps an appetite for the likes of Kellogg, Campbell Soups or General Mills. They are also invested in Burger King and AB InBev. It is also felt that Kraft Heinz may go back for Mondolez to whom they sold Cadbury. 

 

Having enjoyed the President’s Day public holiday on Monday, US stock market luminaries returned to the Street of Dreams in a positive frame of mind without to many Trump tweets and the appointment of a new head of National Security – Lieut Gen McMaster. Retail captured most of the headline with Wal-Mart posting its best results for four years. Shares rose by 3%.  There were also good efforts from Home Depot (+1.41%) and Macy’s (unch). I was beginning to wonder if the US had a treasury Secretary as the silence has been deafening.  Low and behold yesterday Steven Mnuchin rose from his slumber and urged the IMF to use its surveillance powers to police the exchange-rate policies of its members, part of the Trump administration’s broader effort to challenge some of America’s biggest trading partners. Its good to know he’s alive and on the case. I think it is also imperative that we hear something very positive about infrastructure spending and corporate tax cuts before too long.  Otherwise investors could take flight.  These stock markets have come a long way since 8th November 2016.

 

 

 

 Wal-Mart – Macy’s – Carney

 UK companies posting interim results this week –  Wednesday –Lloyds Banking Group, Barratt Development, Weir, Serco, Hays, McBride, Metro Bank, Thursday – Barclays, Intu, Rathbones, Monetise, Howden Joinery, BAE Systems, BATS, Glencore, National Express, Centrica, RSA, Kaz Minerals, Friday – Standard Life, Pearson, Wm Hill, Standard Chartered Bank, RBS, Jupiter Fund Management, Rightmove

 

 

US companies posting interim results – Wednesday – Toll Bros, TJX, L-Brands, Tesla, Thursday – Kohl’s, BJ Restaurants, Dynergy, Nordstrom, Friday – JC Penney, Foot Locker,

 

 

David Buik

 


Market Commentator – Panmure Gordon & co

 
+44 (0)20 7886 2775


Mobile – 0044 7788 144 877


Panmure Gordon & Co

MARKET UPDATE – HSBC HAS GIVEN THE MARKET AND ME THE HUMP!

I have found today’s equity session thoroughly irritating and dispiriting. I leapt out of bed with a spring in my heels, but by 6.00am I had the raving ache, thanks to HSBC. No excuses – that was a poor set of numbers. BREXIT, TRUMP and LE PEN used as part excuses! PLEASE! Mr Flint you’ll have to do better than that! That does not wash. Also HSBC account in Dollars – Sterling has fallen 19% against the Dollar since 23rd June 2016! Anyway greater luminaries than me have more insight in to these numbers than I have – shares are down 7% and that says it all. This morning HSBC’S shares were up by 58% since this time last year. Anyway that lame number had a modestly adverse effect on other banks which are down an average of 1% – By the by the FTSE at 1.35pm is down 19 points at 7281 – all attributable to HSBC!

 

Drugs bubbled away unenthusiastically – up 0.5% with Shire the best of the bunch. Tobacco was asleep – sector up 0.25%. Retail was fairly miserable – M&S unch, Next +0.5%, Dixon Carphone +0.75% with AO World the main loser on the day thanks to a negative note from Morgan Stanley – down 4%!

 

Of the other companies reporting today – Anglo American and BHP Billiton were up 2% at the opening and are now unchanged – a question of travelled and arrived. Galliford is 0.75% to the good and Intercontinental Hotel Group bounced out of the traps with profits up 4% triggering a 3% rise in its share price. It did not last – now up only 0.3%.

 

The DOW is set to open up 60 points. Wal-Mart posted reasonable results – eps $1 a share against expectations of 96 cents. Home Depot was also good with Macy’s also in fine form. Their respective shares are expected to open +3%, +2.5% and +2%.

TODAY’S FAYRE & HSBC’S POOR RESULTS

  TODAY’S FAYRE – Tuesday, 21sth February 2017

 

“Much have I travell’d in the realms of gold,

And many goodly states and kingdoms seen;

Round many western islands have I been

Which bards in fealty to Apollo hold.

Oft of one wide expanse had I been told

That deep-brow’d Homer ruled as his demesne;

Yet did I never breathe its pure serene

Till I heard Chapman speak out loud and bold:

Then felt I like some watcher of the skies

When a new planet swims into his ken;

Or like stout Cortez when with eagle eyes

He star’d at the Pacific—and all his men

Look’d at each other with a wild surmise—

Silent, upon a peak in Darien.” 

John Keats – poet – 1795-1821

 

Whenever I hear Lord Mandelson I keep thinking to myself that his is a modern day Malvolio! – Devious and duplicitous but thoroughly plausible. He did know his Europe and may still do so from a trade commissioner’s perspective, but my Dear Lord, we have moved on and you must stay up with the pace of public opinion and help rather that attempt to throw a spanner in the works with a negative outlook.

I much enjoyed watching PM May overlooking proceedings in the Lords yesterday, greatly comforted by seeing Lord Fowler, hopefully doing all he can as Leader, to stop matters getting out of hand!

 Yesterday there was an excellent interview by BBC’S John Humphrys of Lord John Hill, David Cameron’s EU Commissioner, who threw his toys out of the pram when UK voted BREXIT. It is such a pity that such a quality diplomat resigned. He was crystal clear that a deal could be struck with the EU, but it would be very difficult. At least he was not like Sir Ivan Rogers, who implied it was impossible. What a pity he is not there to help, particularly with the financial sector.

 

With New York shut for President’s day, European bourses were suffering from inertia yesterday, with the FTSE closing all but flat. Let me blaze straight in to HSBC’S thoroughly disappointing results, with profits down 62% from circa $18 billion to $7.1 billion. Now I understand that the cost of capital has increased with banks needing double the amount to do the same business as they did 8 years ago. I ‘get it’ that low interest rates don’t help; nor do litigation, PPI and money laundering fines. I also realise that that divesting from Brazil was an expensive occupational hazard. But for Chairman Douglas Flint to have blamed the vagaries of BREXIT, Donald Trump and the French election on HSBC’S indifferent performance is ludicrous. The effect of BREXIT, Mme Le-Pen and isolationism won’t be felt for some months. Also the fall in the value of the Pound and the strength of the Dollar should have really helped HSBC’S earnings. Also what ever happened to this wonderful Asian base for earnings?

HSBC UK has a new chairman in Dame Clara Furse and a new CEO in Ian Stuart. Flint confirmed that 1000 people would be moved as a precaution re BREXIT to Paris in the next 2 years. 8,000 jobs will go in the UK and 50,000 globally from 2015 over a 5 year cycle. HSBC is to close another 62 branches in the UK on top of 223 already closed last year. HSBC hopes to save another $5 billion of costs annually. The shares have risen by 58 in the last year until these results were posted. The shares fell 6.5%. I was VERY disappointed – poor effort. Chairman Douglas Flint goes this year and CEO Stuart Gulliver the CEO next year. Maybe it is time for a change. Other banks fell by an average of 2% in sympathy.

 

There were great results from BHP Billiton and Anglo-American both up 2%+ and also IHG pleased its acolytes – +3% at 9.00am. The FTSE 100 -25 points at 7275, thanks to HSBC!

 

Asian Markets today & YTD at 8.00am – NIKKEI 19,381 +0.68 +1.4%, HANG SENG 24,029 -0.48% +9.22%, CHINA 3,483 +0.35% +5.21%, ASX 5,791 -0.07 +2.21%

 

 UK companies posting interim results this week –  Tuesday – InterContinental Hotels Group, Vernalis, HSBC, Anglo American, BHP Billiton, Galliford, Wednesday –Lloyds Banking Group, Barratt Development, Weir, Serco, Barratt Development, Hays, McBride, Metro Bank, Thursday – Barclays, Intu, Rathbones, Monetise, Howden Joinery, BAE Systems, BATS, Glencore, National Express, Centrica, RSA, Kaz Minerals, Friday – Standard Life, Pearson, Wm Hill, Standard Chartered Bank, RBS, Jupiter Fund Management, Rightmove

 

 

US companies posting interim results – Monday – American Car-Mart, Tuesday – Macy’s La-Z-Boy, Wal-Mart, Wednesday – Toll Bros, TJX, L-Brands, Tesla, Thursday – Kohl’s, BJ Restaurants, Dynergy, Nordstrom, Friday – JC Penney, Foot Locker,

 

 

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, 19th February 2017

 

 

“Bright star, would I were steadfast as thou art-

Not in lone splendour hung aloft the night,

And watching, with eternal lids apart,

Like Nature’s patient sleepless Eremite,

The moving waters at their priest-like task

Of pure ablution round earth’s human shores,

Or gazing on the new soft-fallen mask

Of snow upon the mountains and the moors-

No- yet still steadfast, still unchangeable,

Pillowed upon my fair love’s ripening breast,

To feel for ever its soft fall and swell,

Awake for ever in a sweet unrest,

Still, still to hear her tender-taken breath,

And so live ever- or else swoon to death.”

 

John Keats – poet – 1795-1821

 

“There is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than the creation of a new order of things. … Whenever his enemies have occasion to attack the innovator they do so with the passion of partisans, while the others defend him sluggishly so that the innovator and his party alike are vulnerable.” –  Niccolo Machiavelli – Philosopher – 1469-1527

 

If you are a blind and passionate ‘Remainer’ and regardless as to whether you think Tony Blair is a toxic ‘busted flush’, it was an excellent speech the former PM gave, when preaching to the converted, at Bloomberg on Friday. Even though Mr Blair has plenty of ‘previous’, his passion and the delivery of his powerful rhetoric had to be admired. The problem was there was absolutely no balance in his speech. Listening to him one could be forgiven for thinking that everything in the EU garden was rosy.  Who would guess that the EU has political cracks appearing on every part of its veneer – both economic and political? Holland, Greece, France and the impregnable Germany could all have different administrations by the end of October. Where was he last April, May and June?  That was the time to say his bit, with his considerable powers of oratory.  The people have made their decision.  There is no turning back.  It is also unreasonable to suggest that PM May and her Government will deliver Brexit at any cost.

 

‘Cue Card’ was back to his ebullient best in winning the ‘Betfair Ascot Chase yesterday, doing hand springs. Colin Tizzard’s exuberant staying chaser won by nearly 20 lengths over 2 miles 5 furlongs.  I still don’t think that ‘Cue Card’ will get 3 miles 2 furlongs in the Gold Cup. However it is astonishing to think that Tizzard has THREE live contenders entered in this race – ‘Native River’ my idea of the winner, ‘Thistlecrack’ and ‘Cue Card.’

 

GM’s proposed disposal of Vauxhall to Peugeot/Opel has certainly put the cat amongst the pigeons for the 4500 car workers at Ellesmere Port and Luton. The nerves of these employees and their union representatives will certainly be out to the test.  Not only has it triggered Industry Secretary Greg Clark to shuttle himself between London and Paris to see the CEO of GM and his political counterpart in the French capital, but it will also see PM May intervene with conversations with GM next week, which hopefully will have been reassuring, with perhaps some guarantees, similar to those offered to Nissan.

 

However France & Germany are not exactly enamoured with UK re BREXIT, which makes a cordial and sympathetic approach to negotiations unlikely. It should not be forgotten that Peugeot/Opel have 24 manufacturing units/factories in Europe – 22 in France 8 in EU and 2 in UK (Ellesmere Port & Luton) employing 4,500.  Also it costs a great deal more to make French workers redundant! If you were Peugeot/Opel – what would you do without a significant sweetener! Finally the fact that the Pound has fallen 12% against the Euro and 18% against the Dollar in the last 8 months is not helpful in terms of the competitive pricing of vehicles. An unhappy outcome to this deal could rattle the cage of workers and Unions at BMW (Mini) and Rolls Royce.

 

 With so much political turmoil manifesting itself on either side of the Atlantic, the last thing many people in the City expected last Friday was the prospect of £205 billion deal involving Kraft Heinz bidding for the hand in marriage of Unilever! Unilever’s Paul Polson and his board have turned the offer down out of hand, believing that it grossly undervalues the Anglo-Dutch conglomerate. Kraft Heinz is reputed to have bid £105 billion or £40 a share. Considering Unilever’s share price rose 13.4% on Friday with Heinz Kraft rallying by 7% suggests this deal still has smouldering embers, with KH likely to raise its bid, perhaps in a hostile manner, with the backing of Warren Buffett and 3-G Capital. Were this deal to come off, it would probably be the largest deal involving a European company since Vodafone bought Mannesmann for E220 billion in 2000. This deal could run for some weeks. Unfortunately the drop in the Pound makes Unilever look cheap to KH.

 

There is synergy with these two household goods titans with Unilever perhaps providing that little bit extra in terms of non-food products.  In Unilever’s portfolio are Marmite, Dove, Dermologica, Flora, Ben & Jerry’s, Hellman’s, Knorr and for Kraft cheese, spaghetti, Ketchup, beans etc!! Kraft CEO Bernard Hees is every bit as robust as Unilever’s Paul Polson. What is unnerving is the jobs factor with Unilever in UK and Ireland employing 7000 workers. The cost saving possibilities must be colossal.

 

This week sees the main 5 UK banks post their results. Apart from RBS, we should see their profits jump substantially. Starting on Tuesday with HSBC, which has just appointed Ian Stuart as head of UK Banking, the ‘local’ bank may see profits up from $10 billion to $13.2 billion for the year. On Wednesday Lloyds Banking Group is expected to raise its profits to £4.7 billion from £1.6 billion, though the CEO Antonio Horta-Osorio’s pay will drop from £8.8 million to a mere £6 million.  The taxpayers’ stake is down to 4.99% and the PPI claims which reached £16 billion are quietly abating. Barclays Bank steps up to the plate on Thursday with Jon Macfarlane Jes Staley likely to up profits from £1.1 billion to £3.75 billion.

 

On Friday RBS will be shaking all the skeletons out of the cupboard in posting its ninth loss running – maybe as much as £6 billion including fines from the US, PPI and non-performing loans. It is hard to see the taxpayer getting his money back for another 5 years. However one potentially interesting and good piece of news may transpire. RBS could abandon the sale of its Williams & Glyn unit, under government plans, after struggling to offload the small-business lender. Eight years ago RBS had been ordered by the European Union to sell 300 odd branches with 1.8 million customers by the end of 2017 to address competition concerns. The bank failed to sell the business to Santander last year and talks with Clydesdale Bank also stalled. These branches are now likely to remain in RBS’S portfolio.  The quid pro quo is that about £750 million will be made available by RBS to assist challenger banks lend money to SMES. This exercise at the behest of the EU, which no one ever understood, was part and parcel of bail-out terms, which as far as I know never affected the EU.  Anyway RBS has wasted hundreds of millions of pounds in an abortive and unnecessary attempts to sell perfectly valid profit making branches. No doubt CEO Ross McEwan will clarify matters later next week.

 

Despite the vagaries of ‘Trumpism’ equities kept hold of their poise last week, though towards the end of the week sentiment turned negative in the Eurozone. I must say it does look like a political and economic minefield. The S&P 500 added 1.18%, the FTSE +0.57%, European Stocks by an average of +0.8% with Tokyo after a bright start to the week saw the NIKKEI ease by 0.74% on the week.

 

UK companies posting interim results this week –  Monday – Gemfields, Hammerson, Bovis Homes, Vedanta Resources, Tuesday – Inter Continental Hotels Group, Vernales, HSBC, Anglo America, BHP Billiton, Galliford, Wednesday –Lloyds Banking Group, Barratt Development, Weir, Serco, Barratt Development, Hays, McBride, Metro Bank, Thursday – Barclays, Intu, Rathbones, Monetise, Howden Joinery, BAE Systems, BATS, Glencore, National Express, Centrica, RSA, Kaz Minerals, Friday – Standard Life, Pearson, Wm Hill, Standard Chartered Bank, RBS, Jupiter Fund Management, Rightmove

 

 

US companies posting interim results – Monday – American Car-Mart, Tuesday – Macy’s La-Z-Boy, Wal-Mart, Wednesday – Toll Bros, TJX, L-Brands, Tesla, Thursday – Kohl’s, BJ Restaurants, Dynergy, Nordstrom, Friday – JC Penney, Foot Locker,

 

 

 

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

 

MARKET UPDATE

Despite the US markets adding an average of another 50 basis points yesterday, taking all three of their main indices into uncharted waters to record heights, the level of activity on London’s main index was measured, bordering on dull. At present markets seem immune from political fall-out, with a President seemingly having difficulty in deciphering the difference between right and wrong. Yesterday we enjoyed a measurable renaissance by the banks.  The start of today’s session saw the FTSE 100 on the back foot, needing to make up 29 points for EX Dividend payments made by Astra, BP, Shell and Imperial Brands, before opening the batting.  At 2.45pm the FTSE was down just 25 points at 7275. Needless to say BP, Shell and Astra have adjusted to marginally lower levels.

Cobham reported its fifth profits warning in 15 months – down 15%. Shire posted excellent results at lunchtime with the acquisition of Baxalta looking as if it is starting to pay dividends. Its shares are up 5.5%. Coca-Cola Bottling – up 40% this past year made a slow start after posting solid numbers, but is currently 3% to the good. Heineken’s bid for Punch Taverns will be subject to a regulatory review.  Many think it will go through – down 1.4%. Drax failed to please its acolytes – down 6% and finally the ‘yellow jersey’ goes to a mid-cap – Lancashire – up 10%. The DOW is down a somnolent 10 points.