TODAY’S FAYRE – Thursday, 30th March 2017

A cold coming we had of it,
Just the worst time of the year
For a journey, and such a long journey:
The ways deep and the weather sharp,
The very dead of winter.’
And the camels galled, sorefooted, refractory,
Lying down in the melting snow.
There were times we regretted
The summer palaces on slopes, the terraces,
And the silken girls bringing sherbet.
Then the camel men cursing and grumbling
and running away, and wanting their liquor and women,
And the night-fires going out, and the lack of shelters,
And the cities hostile and the towns unfriendly
And the villages dirty and charging high prices:
A hard time we had of it.
At the end we preferred to travel all night,
Sleeping in snatches,
With the voices singing in our ears, saying
That this was all folly.

Then at dawn we came down to a temperate valley,
Wet, below the snow line, smelling of vegetation;
With a running stream and a water-mill beating the darkness,
And three trees on the low sky,
And an old white horse galloped away in the meadow.
Then we came to a tavern with vine-leaves over the lintel,
Six hands at an open door dicing for pieces of silver,
And feet kicking the empty wine-skins.
But there was no information, and so we continued
And arriving at evening, not a moment too soon
Finding the place; it was (you might say) satisfactory.”

 

TS Eliot – author, playwright & poet – 1888-1965

 

So one of the great political ‘red-letter-days’ for decades to throw up exciting challenges for the UK electorate – BREXIT DAY – came and went yesterday.  There was an excessive, almost unacceptable, degree of concern, surprise, hatred, acrimony and divisiveness. The uncertainty was brilliantly fuelled the divergent support of the media – written and visual.  They were given a great opportunity and they capitalised on the electorate’s mixed feelings with alacrity and adroitness almost to a point of saturation. It will be almost two months before any meaningful negotiations take place with succulent meat on the bone to chew on.  The EU has other pressing business to consider and deal with such as the French Presidential election.

 

I think we should all calm down and reflect before doing a ‘Lily Allen!’   In passing I just make the following observation.  Surely people do not expect our government to behave like a ‘shrinking violet?’  Do people really expect PM May to lie down and have her tummy tickled or have J-C Juncker’s or Michel Marnier’s ‘size-12’ hobnailed boots launched in to her rib cage? These negotiations must be dignified.  However we have a massive amount to offer the EU in not only trade, financial services, but also in security and defence.  The EU needs to be told this courteously. The UK wants to negotiate; to find common ground and not just be told how it is. EU politicians know this and will respect the UK negotiators’ perspective.  Hence we must expect just a smidgen of jingoistic friendly veiled threats just to keep the balance at the right level – level eyeball to eyeball contact!

  

Clearly there are frayed nerves from business leaders in Europe, Japan and the United States at the level of uncertainty that has been thrown up – totally understandable.  However the EU refused to allow any discussions to take place – formal or informal – until Article 50 had been invoked. So that was an effective delaying tactic.  I must confess to being a little nervous at the inordinate length of time it is taking to set these negotiations rolling. It is folly just to blame the UK government.  The longer the EU can prolong its ‘delaying tactics’ the greater the pressure on the UK.  Tusk, Juncker and the likes of Verhofstadt will be salivating from their chops with relish! It is generally felt that M Barnier will be as tough as teak as the lead negotiator.  He is experienced and the EU will expect his very best shot.  Initially I doubt he will offer the scraps from Lazarus’s table. At the end of the day 400 million people have to eat and trade. So a pragmatic approach by both sides will be preferable.

 

A long walk in the spring sunshine to clear the cobwebs and a few glasses of Sauvignon Blanc tonight is surely the order of the day!

 

Equity markets hardly blinked yesterday, though later in the day on the back of  a measured Wall Street surge the FTSE 100 closed 30 points to the good with oil stocks waking briefly from its slumber – to 7373.  Positions in equities were taken months ago and the valuation of the FTSE is dependent far more on the Dollar and Trump, rather than BREXIT.  Sterling has enjoyed its 17% fall against the Dollar and 12% against the Euro in the last 9 months, thanks to the BREXIT cloud of uncertainty.  Bond yields across the globe has risen gradually.  The US may tighten interest rates again. The UK and EU are still pondering, awaiting fresh adverse inflation data.  GDP in the UK looks OK at around 2% currently for 2017, but is likely to drift later this year. There were good results from James Halstead and Alliance Pharma and indifferent efforts from Tui Ag and Saga.

 

It was the cancelled merger between Deutsche Boerse and the LSE that grabbed most headlines. A rather pathetic rejection was offered by EU regulators, probably fuelled by some spurious 9% LSE involvement in MTS, an Italian bond trading platform. What will raise a few eyebrows will be the £97 million of professional fees due to Goldman, JP Morgan, Linklaters and Deloitte. Even though the deal was aborted a high percentage of these fees will be due! I suspect Xavier Rolet will have contingency plans for the LSE.  Perhaps an association with CME might suit both parties.  Who knows but there certainly appears to be a degree of synergy in their respective businesses. Shares closed up 2.63% at 3103p. LSE shares have rallied from £10 in 2006 when Rolet took over from Dame Clara Furse – a job well done!

 

Yesterday US markets responded in places maianly thanks to a strong Dollar and higher oil prices – Here is how they closed and positions to date DOW: 20,659 -0.20% +4.54%, S&P: 2,361 +0.11% +5.46%, NASDAQ: 5,430 +0.43% +11.65%, Asian markets were experiencing a rather nebulous session. –  NIKKEI: 19,046 -0.90% -0.3%, HANG SENG: 24,281 -0.47% +10.33%, CHINA: 3,432 -0.92% +3.68%, ASX: 5,896 +0.39%% +4.07%. The FTSE is expected to open up 4 points

 

UK companies posting interim results today – Genel, Booker

 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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