TODAY’S FAYRE – Wednesday, 1st February 2017


“When we climbed the slopes of the cutting

We were eye-level with the white cups

Of the telegraph poles and the sizzling wires.

Like lovely freehand they curved for miles

East and miles west beyond us, sagging

Under their burden of swallows.


We were small and thought we knew nothing

Worth knowing.

We thought words travelled the wires

In the shiny pouches of raindrops,

Each one seeded full with the light

Of the sky, the gleam of the lines, and ourselves

So infinitesimally scaled


We could stream through the eye of a needle.”


 Seamus Heaney – poet – 1939-2013


Before the US Presidential Election Warren Buffett’s Berkshire Hathaway’s portfolio had stocks valued at circa $102 billion. Since then, mainly at his behest he has added another $12 billion worth believing that growth could eventually reach 4% in the US.

In the lead up the EU Referendum in June 2016 the rhetoric on both sides of the argument was toxic, resulting in an economy and distortion of the truth. ‘Leavers talked of massive payments that could be made to the NHS as a result of not contributing any more to an already bloated EU Budget. ‘Remainers’, which included the government, the establishment and the Bank of England were bordering on hysterical in forecasting an economic Armageddon with mammoth unemployment. Both sides failed to support their argument.


However, under our democratic process, the country voted to leave the EU. I am sure that Jo Maughan is an august and highly respected lawyer.  I am sure he feels aggrieved that he and the 48% of voters have been duped. However filing a case in Ireland that he hopes will go to the European Court of Justice (ECJ) in Luxembourg, to establish that Britain can reverse the exit process without requiring permission from the other 27 EU members would be an act of acute folly. Those who voted to leave were equally mistreated by the acrid stench of fear promulgated by ‘Remain’.  I fear the majority of the electorate must now be respected.


Most of us won’t need to be furnished with all the lurid details of the skulduggery, bribery and corruption that went on with the two HBOS managers Messrs Scourfield and Dobson plus their accomplices – the Millses, Bancroft and Cartwright – resulting in fraud allegations totalling £245 million for which they have been found guilty and will shortly be sentenced with long custodial sentences.


However looking at the history of HBOS and its management there are so many unanswered questions going back to 2003/7 when this fraudulent activity took place. The only member of the management team to be brought to book for any business at HBOS was Peter Cummings who was fined £500k and banned in November 2015 – 7 years later. Even Paul Moore, the whistle blower felt Cummings was unlucky to be singled out in isolation.  The chairman James Crosby was eventually stripped of his knighthood.


The quality of management and the absurdly low quality of credit allocation was abysmal going back to 2008. HBOS required a rights issue in for £4 billion in April 2008. However by September HBOS was in ‘dire straights’ and was sold ‘force majeur’ to Lloyds Banking Group for £12 billion,  Shortly after that Lloyds Banking Group required a £20 billion taxpayers’ bailout and the rest is history.


Frankly we require an in depth explanation from James Crosby and Andy Hornby the CEO who came direct from ASDA to become CEO of HBOS on the capitulation of this once grand bank. Hornby left after the debacle and joined Alliance Boots in June 2009 before moving to Corals as CEO.  Corals were taken over by Ladbrokes and I think Mr Hornby remains in gainful employment at a senior level. Hornby may not have known about this skulduggery – if not why not? I suggest that the buck should always stick at the top!


Political turmoil left its mark on markets yesterday, with inertia playing a matinee idol role. The FTSE eased by 19 points to 7099. But for the mining sector, it might have been worse, especially as airlines continued to carry a monkey on its back. BT lost another 0.5% yesterday as investors mulled over the growing pension black hole of £10 billion. However rumours abounded that management and relations had backed the truck up to buy stock at these lower levels.  At least that shows some faith in the company.


There were some interesting results, with Ocado attracting attention having increased its revenue by 14% though the profit was only £12 million. Ocado seems to have followed the same path as Amazon without the clout of Jeff Bezos’s juggernaut – years of development with little profit.  These numbers were good, but Amazon waits in the wings as do the supermarkets themselves.  Perhaps a large overseas client would give a bit more substance to the business. Britvic also pleased its acolytes with good numbers given some momentum from improved sales of Pepsi – shares up 6.2%. Royal Dutch Shell posted its $4.7 billion disposal of assets much of it concerning oilfields around Shetland. CEO Ben Van Beurden promised a disposal of $30 billion of assets by 2019 and this part of the package to accommodate the $47 billion paid for BG Group last year at an enormous premium. In the last year Shell’s shares are up 43%!


Deutsche Bank was hit with a £500 million fine by the regulators for allegedly washing Ruble denominated bonds issued in Moscow, valued at £8 billion into Dollar and Sterling bonds.  This is unorthodox activity as has been confirmed by the authorities. Hannes & Mauritz saw sales rise by 11% in the first 29 days on this year – Good news.


Across the Atlantic markets were more interested in Trump’s ideology – he might call it policies. Hence the market suffered from inertia for most of the day. Markets closed as follows – DOW: 19,864 -0.54% +0.51% (Y/O/Y)) S&P: 2,278 -0.09% +1.79% (Y/O/Y), NASDAQ: 5,116 -0.24% +5.2% (Y/O/Y). After hours Apple lightened a few heavy hearts with much improved results over the holiday period. Sales of iPhones were up overall by 5% in the last quarter to 78.3 million, though in China they were down by 11% to 16.2 million. Record revenue of $78.4 billion was posted with EPS at $3.36.  $15 billion was returned to shareholders with the share capital remaining at in excess of $200 billion. News from the FOMC will be posted tonight. The market still expects two rate hikes later in the year.  Chairman Yellen will keep her powder dry until she has more of the measure of the Trump regime.


Asia saw better PMI numbers for China, though Shanghai remained closed for Chinese New Year. NIKKEI: 19,148 +0.56% +0.18% (Y/O/Y), HANG SENG: 23,202 -0.67% +5.41% (Y/O/Y), CHINA: 3,387 CLOSED +2.35% (Y/O/Y), ASX: 5,653 +0.57% -0.22% (Y/O/Y). At 9.00am the FTSE 100 was up 53 points at 7154.


UK companies posting interim results this week – 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 – 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 – 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


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: