TODAY’S FAYRE – Thursday, 9th February 2017

 

“The first blossom was the best blossom 

For the child who never had seen an orchard; 

For the youth whom whiskey had led astray 

The morning after was the first day. 

 

The first apple was the best apple 

For Adam before he heard the sentence; 

When the flaming sword endorsed the Fall 

The trees were his to plant for all. 

 

The first ocean was the best ocean 

For the child from streets of doubt and litter; 

For the youth for whom the skies unfurled 

His first love was his first world. 

 

But the first verdict seemed the worst verdict 

When Adam and Eve were expelled from Eden, 

Yet when the bitter gates clanged to 

The sky beyond was just as blue. 

 

For the next ocean is the first ocean 

And the last ocean is the first ocean 

And, however often the sun may rise, 

A new thing dawns upon our eyes. 

 

For the last blossom is the first blossom 

And the first blossom is the last blossom 

And when from Eden we take our way 

The morning after is the first day.”

 

Louis MacNeice – poet– 1907-1963

 

Despite the unwarranted attack on the BBC for its dramatisation of the disappearance of Shannon Matthews aged 8 at the time, for three weeks in Dewsbury eight years ago, orchestrated by her mother and partner for financial gain, I enjoyed the wonderful acting. It was particularly pleasing to watch Sheridan Smith’s portrayal of Julie Busby, a friend of the Matthews family. It was great to see her back firing off six cylinders. She is a fabulous Thespian.

 

I had to laugh at the ‘huffing & puffing’ of the IMF, threatening Greece that if it did not get its financial act together, no more money or financial assistance would be forthcoming – oh really?

 

Everyone, in hindsight, probably accepts that Greece should have gone solo five years ago this February, but Merkel and her troops were having none of it. Had the EU said ‘Sayonara’ to Greece the Drachma would have been devalued by 40%, enabling Greece’s economy to recover and prosper, whilst attracting international companies to the Piraeus. Ah well, many of us dreamed!

Today the last thing the EU wants to see is any more cracks in their political unity ahead of elections in Holland and France. So, as sure as night follows day, the EU will step up to the plate with any shortfall that Greece requires to meet the financial criteria.

 

Sajid Javid’s Housing ‘white paper’ was given a luke-warm reception, which perhaps is a little unfair. Housing has been a massive problem since the WW2 and few administrations have taken the problems it poses seriously. Margaret Thatcher, under Sir Keith Joseph’s guidance, did what she could by enabling council houses to be bought cheaply. However not only is house building drowning in bureaucracy and red tape, with land sales difficult to complete, but also there is a much more pressing concern and that is the UK’s expanding population, which many believe could expand by 19% in the next 25 years to circa 75 million. Minister Javid’s plans will help alleviate this acute problem, but it won’t be anything like enough. However, house-building stocks rallied by between 2.5% and 3.2% yesterday. Many will recall that ‘Project Fear’ trashed the sector after 24th June and since then, Persimmon has rallied by 50%, Taylor Wimpey by 40% and Redrow by 70%. So it may take time for this sector to push on measurably.

 

It was another horribly frustrating session yesterday. To get orders executed was like pulling teeth. With so much political uncertainty prevailing either side of the Pond, with controversial waves being created by President Trump and the electorates of Holland and France promising to throw up a grandstand finish to their elections in March and April, it was hardly surprising that inertia set in. The FTSE 100 gained 2 points on the day – the barometer in a very narrow range being decided on the Dollar/Sterling exchange rate. Rio’s figures were good. An increased dividend made sure that progress was made, allowing this stock to record a 90% gain in the last year. It was good to see Sir Andrew Witty, the retiring CEO post his last set of results with his head held high, before handing over next month to Emma Walmesley. Group sales were up 6% at £27.9 billion. New products sales doubled to £4.5 billion with the exciting prospect of Advair, an asthma drug, being accepted by the FDA in the US. Shares are up 13% since a year ago – better than some peers. Today there were another slew of earnings, but few of them really captured the imagination apart from Thos Cook’s update. The winter bookings have reached 82% capacity. However summer bookings remain at 31% – above last year effort but concern that real progress has yet to be made.

 

The Street of Dreams put in another very neutral effort. Oil triggered a rally on some energy stocks. Banks were weak and markets closed as follows with YTD performance as stated – DOW: 20054 -0.18% +1.66%, S&P: 2,294 +0.07% +2.49%, NASDAQ: 5,196 +0.21% +6.85%. Time Warner posted results. Revenues increased 4% to $29.3 billion and adjusted operating income grew 10% to $7.6 billion with record results in each of their divisions. Intel, the world’s largest chipmaker announced a $7 billion investment in factories in Arizona, potentially creating 10,000 jobs.

 

The FT threw up a very interesting piece of data. Investors have had a big bet on $10 billion on junk bonds since December. Bulls have been undeterred by risk warnings, in the hope that Trump’s legislative initiatives will deliver a stronger economy.

 

UK companies posting interim results this week – Thursday – Smith & Nephew, Ashmore, Henderson, Thos Cook, Pennon, Grainger, Enterprise Inns, Manchester United, Dairy Crest, Enterprise Inns, DFS, Friday – Electrocomponents, Aon, Greene King

 

US companies posting interim results – Thursday – BGC Partners, Kellogg, Twitter, KKR, Viacom, Yum Brands!, Coca-Cola, Zynga

 

Economic data posted this week – Thursday – US initial Jobless Claims, US FOMC, Friday – RICS Housing data, UK Manufacturing, UK industrial Production, UK Goods Trade Balance

 

 

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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