TODAY’S FAYRE – Sunday, 12th February 2017


“When I was but thirteen or so

I went into a golden land,

Chimborazo, Cotopaxi

Took me by the hand.


My father died, my brother too,

They passed like fleeting dreams,

I stood where Popocatapetl

In the sunlight gleams.


I dimly heard the master’s voice

And boys far-off at play,

Chimborazo, Cotopaxi

Had stolen me away.


I walked in a great golden dream

To and fro from school–

Shining Popocatapetl

The dusty streets did rule.


I walked home with a gold dark boy,

And never a word I’d say,

Chimborazo, Cotopaxi

Had taken my speech away:


I gazed entranced upon his face

Fairer than any flower–

O shining Popocatapetl

It was thy magic hour:


The houses, people, traffic seemed

Thin fading dreams by day,

Chimborazo, Cotopaxi

They had stolen my soul away!”

WJ Turner – poet – 1889-1946


What a fantastic game of ruby at the Millennium Stadium last night!  I have to say that Eddie Jones is the most inspirational team coach and leader imaginable – tough, resolute, uncompromising, funny and greatly respected. He ticks all the boxes.

Regardless of the possibility of Francois Fillon or Emmanuel Macron having any skeletons in their respective cupboard, the French press just won’t countenance the possibility of Marine Le Pen becoming the next President of France. It seems extraordinary that the polls and research done are comfortable that either Fillon or probably Macron will see her off. I am far from an expert on French politics but it must be possible that Fillon, having admitted paying his family for political services rendered, will damage his chances and more likely Macron’s chances, if he refuses to gracefully leave the hustings. Also, like it or not, France has a very severe immigration crisis, unlike the UK, which my comparison is not acute. Macron is fiercely EU supportive and as the days roll by, Le Pen may not only be prepared to ditch the Euro, but she may also take France out of the EU.  That may be an attractive proposition to many voters.


I knew that Charlotte Hogg, aged 46, was persuaded by Governor Mark Carney to come to the Bank of England in July 2103 from Santander to totally reorganise and upgrade its daily workings and its operations.


I knew M/S Hogg is a top drawer intellect with degrees at Oxford and Harvard plus a brilliant business CV with experience as an economist at McKinsey and Morgan Stanley.  However I was unaware of her Central banking credentials that have made her a very warm order to succeed Mark Carney as Governor in June 2019. Her appointment as Deputy Governor of the Bank of England, responsible for markets and banking, succeeding Minouche Shafik, was richly endorsed by Chancellor Philip Hammond. She will also be on the MPC and Financial Stability Committee.


She certainly has the right political conformation, being the daughter of Douglas Hogg, QC, 3rd Viscount Hailsham, the former Tory MP and minister and Dame Sarah Hogg and granddaughter of Quentin Hogg QC, 2nd Lord Hailsham and whose maternal grandfather was John, Lord Boyd-Carpenter. She has clearly made a very great impression in her four years at the BOE. Many thought that the excellent Andrew Bailey, who is MD of the FCA or the Bank’s highly regarded Chief Economist Andy Haldane, were the likely probable front runners to succeed Mr Carney, but this may not look to be the case anymore.


There was more jingoistic rhetoric from EU luminaries. Dr Andreas Dombret of the Bundesbank insisted that ‘BREXIT’ could result in London losing its status as the financial “gateway to Europe. He further said that any deal struck between the UK and the European Union following Brexit would be “miles away from access to the single market”. I hope he’s not under any illusion that Germany might pick the business up.  If so he is wrong. It will go to New York of the Far East.


The first three days last week stock market activity seemed rather turgid, with investors becoming frustrated, thus giving the impression that they had ‘a monkey on their back’, despite the fact that the DOW and NASDAQ rather surreptitiously reached record levels.  President Trump, despite his twitter account booming, seemed to be making little progress in the areas he wanted to and the cumuli nimbus clouds of political uncertainty seemed to gather over Brussels Strasbourg, Amsterdam and Paris. The Wilders juggernaut is definitely on a roll and those contemptuous of Le Pen’s chances in April/May are becoming more nervous by the day, as they move uncomfortable from one cheek of their backsides to the other. This is clearly illustrated in France by the fact that French bond yields have increased and seem to be decoupling from Bunds.


So after a quiet start to the week, the S&P ended +0.75%, thanks to suggestions made on Thursday evening that Trump would shortly announce radical tax cuts.  The FTSE 100 cracked on and ended the week 0.98% to the good.  European bourses added a smidgen less – 0.85% and Japan’s Nikkei, thanks to a softer Yen, gathered in ‘ye rosebuds whilst ye may!’ – _2.44%.  It is interesting to note that the FED is still sending signals that are not that obtuse than rates may go up next month by 0.25% and that another hike is highly likely in 2017. This did not deter equity geeks.  China’s economy also seems quite robust with imports in January up 16.7% and exports by 7.9%. Gold was up $5 on the week to $1234 an ounce, Copper bounced by 4% and crude oil by 2.2%.


In London last week commodity stocks took their lead from Rio Tinto which reported a profit of $4.6 billion against a loss of $866 million last year.  The shares rallied by over 5% and are up over 90% since this time last year. Reckitt Benckiser raised a few eyebrows when bidding $18 billion for baby milk titan Mead Johnson. Shares dipped 3%. There are likely to be protestations from shareholders over remuneration and bonuses. Rakesh Kapoor, the CEO, who earned £23 million last year may well incur the wrath and indication for his and his colleagues’ emoluments. Mr Kapoor could earn another £15 million if shareholders’ earnings are boosted by 10% – ridiculous for a manager!  Reckitt posts numbers on Monday.


Sir John Rose former CEO of Rolls Royce has been interviewed under caution over the bribery scandal that has dogged this very special British brand for the last 4 years. Several other directors and managers have also been interviewed. Rolls Royce paid a fine of £621 million to the regulators to bring the curtain down on this unsavoury affair. Current CEO Warren East seems to have thrown all the skeletons out of the cupboard and hopefully has this Derby based operation back on the bridle. On Tuesday, Rolls Royce may declare a £4 billion – some of it due to a 17% drop in the value of the Pound against the Dollar and the £671m fine for bribery in countries like Indonesia and Brazil.  

Across the pond markets stayed ahead of the game. Twitter’s results were very disappointing only growing its users by 4% to 319 million with inadequate advertising revenue to sustain the business model, resulting in a loss of £133 million resulting in the share price tumbling by 12.6% on Thursday night. I suspect that Jack Dorsey’s company will eventually be taken over. In the next two weeks we should get a handle on retail results, which is a reliable barometer to measure the robustness of the US economy.


When RBS comes to post its results on 24th February, these are likely to be another horror story with a 9th annual loss in a row – £5 billion, which includes copious fines and PPI payments. CEO Ross McEwan has already implemented £2 billion annual savings. However this is not enough.  Therefore another 15,000 jobs are likely to be lost with a view to cutting costs by another £1 billion a year, according to the Sunday Times. Despite a £12 billion rights issue in 2008 and a £46 billion taxpayer bail-out, the likelihood of RBS paying the taxpayer back in the next 10 years is remote.


UK companies posting interim results this week – Monday – Reckitt Benckiser, Fidessa, Tuesday – Acacia Mining, Rolls Royce, Wednesday – Qinetiq, NEX, Thursday – DRAX, Coca-Cola HB, Shire Pharmaceuticals, Friday – Millennium Copthorne, Kingspan, Segro, Essentra


US companies posting interim results – Tuesday – Molson Coors, Dr Pepper Snapples, AIG, Wednesday – PepsiCo, Marriott, Kraft Heinz, AMAT, Groupon, Thursday – MGM Resorts, Wendy’s Dean Foods


Economic data posted this week – Tuesday – BRC Retail Sales Monitor, UL CPI & RPI, Germany’s ZEW, Wednesday – UK Employment data, UK Average Earnings, US Retail Sales, US Empire State Index, US CPI, Thursday – Phili-Fed Index, Initial Claims, Friday – UK PSBR, UK Retail sales M/O/M


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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