TODAY’S FAYRE – Sunday, 12th March 2017


“An omnibus across the bridge
Crawls like a yellow butterfly
And, here and there, a passer-by
Shows like a little restless midge.

Big barges full of yellow hay
Are moored against the shadowy wharf,
And, like a yellow silken scarf,
The thick fog hangs along the quay.

The yellow leaves begin to fade
And flutter from the Temple elms,
And at my feet the pale green Thames
Lies like a rod of rippled jade.”


Oscar Wilde – poet & Playwright – 1854-1900


My daughters whizzed us around the David Hockney exhibition at Tate Britain last week. When it comes to art, I would describe myself as a bit of a Philistine. However my daughters bring exhibitions alight with their appreciation and knowledge of that specific culture. Hockney depicts his relationships, experiences and his background with massive splashes of colour. This fellow is a total genius. Even I more or less understand what he is driving at. Having always had a deep love affair with God’s own county – Yorkshire – I tend to enjoy even greater affinity with some of his landscape work.


Patrick Garber’s National Theatre production of Henrik Ibsen’s play ‘Hedda Gabler’ was screened in a number of cinemas last week. The play was directed by Ivo Van Hove and he updated this late 19th century ‘pot-boiler’ to the 21st century. The action of this play takes place in the dark, bleak under furnishes attic apartment of ‘Hedda Gabler’, brilliantly played by the often very sinister Ruth Wilson – she of ‘Luther’ and ‘The Affair’ fame – and her new husband in whom she has scant romantic interest.


This play is deeply depressing and tells the story of a woman, who is the model of destructive discontent, jealousy and malice who is still in love with her new husband’s best friend. Ruth Wilson is a combination of a paranoid schizophrenic and being just breathtakingly and mendaciously evil as well and mentally unbalanced in to the bargain. It would be best not to take this challenging play on board after a few glasses of Pinot Grigio! To say that this play is heavy duty theatre would be an understatement.


What a weekend of sport, culminating with England’s emphatic destruction of Scotland 61-21. This demolition job was due partly through injuries to a host of Scottish players, but mainly down to inspired and brilliant back-play by the men in White plus a fair bit down to Scotland failing to turn up, which it has most certainly done during the rest of the 6-Nations!


It appears that with or without assistance from the House of Lords and to a lesser degree the Commons, PM May could serve Article 50 to leave the EU in two years’ time as early as next Tuesday.


Considering the weight of political, economic and corporate news that manifested itself last week, many will find it astonishing that most global bourses were seemingly so comfortable in their own skins with investors appearing ambivalent to the possibility of any turmoil. Oil fell by 7%. Gold was lack-lustre all week falling by 2.5%. US non-farm payroll came in way in excess of expectations with 235,000 jobs being created in February.  This was the last and probably most significant piece of data required by Janet Yellen and her FED cohorts to hike rates next week by 25 basis points. Bond yields dipped on this news and a little bit of froth was skimmed off the Dollar.


The content of the UK Budget was generally neutral, which made sense with contingencies being made for any unexpected vagaries that could transpired from negotiations over BREXIT with the EU, in the event of them turning ugly.  However the party faithful were totally downcast over a manifesto broken promise. The Government had given its word not to raise income tax, VAT or NIC in this Parliament.  Chancellor Hammond put NIC up for some of the self-employed, which will only glean a parsimonious £145 million with potentially huge reputational damage. Surely it cannot be worth biting off the hand of your voters, when their continued support is desperately required. By his standards President Donald Trump was relatively quiet, though his battle with sections of the press on ‘fake news’ continued to rage. He sat up and took a little interest in Syria and talked in platitudes about the Mexican Wall, as well as his immigration plans to keep undesirable people coming in from countries that are perceived to cultivate ISIS culture. Last week the major equity bourses eased by parsimonious percentages – S&P 500 -0.53%, FTSE 100 -0.43% and European stocks by an average of 0.71%.


On the Street of Dreams last week it was energy, healthcare and some retail outlets that felt the wheels of pain on their backs. Retail is certainly conveying the impression that the previous few weeks have not provided halcyon times for the shopping sector in the US. Here in the UK we saw a decent but not spectacular set of numbers from Wm Morrison. Shares came back by 5% but in the past 15 months they are up over 40%. Aviva posted stellar numbers last Thursday.  CEO Mark Wilson has revitalised this insurance/fund management group in the past 4 years. Profits were up 12% with M&G’s contribution up 30%. In 16 months the shares are up 50%. Mr Wilson is taking Aviva’s business along the digital track as fast as possible.


Royal Dutch Shell sold its sand oil projects to Canadian Natural Resources for $7.25 billion, which goes some way to justifying paying £47 billion for BG Group. Gas appears to be the main matinee idol going forward.  There was loose talk that EXXON had their eye on BP. Panmure’s Colin Smith thinks this idea is very unlikely. He says “BP is more likely to be interested in Anadarko (which is also a recurring rumour) given its recent deal to take 25% of Area 4 offshore Mozambique from ENI (it needs exposure to Area 1 to make the whole thing meaningful in XOM terms). BP is currently trading on a forward debt adjusted cash flow multiple of 9.8 for 2017 which is probably even higher than for XOM (ie it would be dilutive before the premium). Moreover, if you look at BP’s portfolio, the growth is coming from ADCO (which XOM turned down because it was too low margin), North Sea oil which from an XOM perspective is a mature basin and gas production in Trinidad, Oman and Egypt which is interesting but not the sort of thing you do a US$130bn equity deal for – BPs entry cost to Zohr last November was circaUS$500m.”


It was only a question of time before OFCOM and the government were no longer prepared to put up with third world broadband service.  Broadband is essential for education and business. It had been encouraged that BT and Openreach should come under separate management. After more than a year of wrangling, BT has finally agreed to legally separate from the Openreach part of its business. BT CEO Gavin Patterson had been criticised for spending an excess of BT’S largesse on sport and football in particular, having topped up by £1.2 billion their involvement in European football.   This decision will see Openreach become a completely separate entity with its own staff, management and strategy to increase competition in the industry. Openreach will now have to consult with its customers, which includes Sky, TalkTalk, Vodafone, Plusnet, on investments and serve all of its customers equally. BT’s shares closed up by 4.9% on Friday.


The Sunday Times tells us that Redrow will be casting its beady eyes over Bovis as a possible bed partner.  It is also possible that Whitbread Chairman Richard Baker is being considered to replace Robert Swannell as chairman of Marks & Spencer.




UK companies posting interim results this week – Monday – Computacenter, Clarkson Tuesday – Antofagasta, Ocado, Close Brothers, Prudential, French Connection, TP ICAP, SIG, Applegreen, Wednesday – Gem Diamonds, Robert Walters, Marshalls, Hikma Pharmaceuticals, PolyMetal, Thursday – J Sainsbury, Balfour Beatty, OneSavings Bank, Friday – Berkeley Group, Investec


US companies posting numbers this week – Wednesday – Christopher & Banks, Oracle, Thursday – Adobe Systems


Economic data this week – Tuesday – BRC Retail Sales, US NAHB Housing Data, Germany’s ZEW, Wednesday – US FOMC meeting, UK BOE Quarterly Report, Thursday – MPC Meeting, Friday – US Industrial Production, University of Michigan Consumer Confidence


 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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