Monthly Archives: April 2017

TODAY’S FAYRE

TODAY’S FAYRE – Friday 28th April 2017

 

“The first blossom was the best blossom
For the child who never had seen an orchard;
For the youth whom whisky 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 Ever 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 best blossom
And when from Eden we take our way
The morning after is the first day.”

 

 

Louis MacNeice – poet & playwright – 1907-1963

 

One of the great hidden secrets of London and part of its indubitable charm is the CHELSEA PHYSIC GARDEN, tucked next to the Royal Hospital in Chelsea. The blossom and colours are a sight for sore eyes in April through to June. Entrance is far from a pittance but a visit is a great experience and there is a splendid picnic-styled lunch to be enjoyed! Just down the road is the Army Museum, which has just been revamped in brand-new premises – an inspired piece of modern architecture.  This incredible labour of love is also a must for anyone from four to a hundred! So much to engage with for not just those who are military minded but also for those who have a voracious appetite for knowledge.

 

The Spectator sponsored debates on political issues are always good value. Wednesday offering on the French Presidential Election, brilliantly hosted by Chairman Andrew Neil proved to be no exception to the rule. Though the result seems to be a ‘no-brainer slam-dunk’ win for Macron, the contributors and speakers seemed in little doubt that Emmanuel Macron would achieve very little, as he is an establishment candidate with ‘En Marche’, a new party with rather woolly watered-down Hollande policies. However come 2020 M Marine Le Pen was more than a live candidate to land the spoils for the Elysee Palace.  There is a school of thought, which believes she is not quite ready to be France’s first female President of the 5th Republic this time around!

 

It may not be pistols at 25 paces but it’s certainly handbags at five paces!  Maybe I should not make light of the infantile jingoistic rhetoric and demands that EU leaders such as Juncker, Verhofstadt, Timmermans and Barnier are making on the UK, when they won’t even sit down and negotiate officially with the UK until the end of May.  Clearly the dinner that PM May hosted at No:10 with Juncker and Barnier on Wednesday was a decidedly moderate affair, despite the official communique that it was constructive.  Yesterday was the first occasion I have seen the PM irritated.

 

Of course the EU has to defend its position as it threatens to crumble, but EU Head Honchos are stretching matters a bridge too far.  I was highly amused that Merkel came out with all guns blazing for Macron.  Frankly it is none of her business and it just goes to show that the EU is hell bent on Federalism. The German Chancellor is far from done and dusted in October’s German Election, though Shultz, were he to win, is an even more unattractive prospect for the UK. Finally I think all of us – ‘Remainers or Leavers’ – would be obliged if the EU stayed out of our sovereign affairs by suggesting a merger between Ireland and the North would be acceptable to the most undemocratic union in the Western World. Let battle commence! The EU thinks it holds all the aces – wrong! They need the UK for trade and business – SO GROW UP! Stop demanding before negotiations start!  Of course it will be tough but the conversations will made easier by those who keep a civil tongue in their head. It doesn’t have to be ‘dog-eat-dog’ but if that is what the EU wants, so be it!

 

Despite the fact that Wall Street was somewhat underwhelmed by President Trump’s over-ambitious tax cutting plans, which many think will struggle to get through Congress, the NASDAQ breached its all-time records and would probably have pushed on even further thanks to stunningly stellar results from Amazon and Alphabet after hours. Alphabet posted EPS of $7.73 against estimations of $7.39 a share on revenues of $24.7 billion ($20.26 billion last year) with ad revenues up 18.8%. Most component companies from Android to Jump to YouTube seem to blaze the trail. Many, understandably, believe there is a moral obligation for Alphabet to help clean up the fake news and the threat of criminal behaviour. Shares were up 4% after hours.  In the case of Amazon, Jeff Bezos socked it to his acolytes yet again – EPS was $1.48 against expectations of $1.14 on revenues of $35.7 billion (EST: $35.3 b an) with sales up 23%. Web sales for small businesses to iCloud increased by 42% to $3.66 billion. A net-profit of $724 million was posted. On the domestic front Amazon will be opening a new warehouse in Warrington, which will create 1200 new jobs and the relationship with Wm Morrison is proving lucrative. Ford slightly missed – -1.2%, with Microsoft posting a solid effort -0.31%. Intel’s chip business sales were disappointing – shares down 3.5%. Raytheon looked chipper – +0.64%.  New York markets closed as follows – DOW -0.03%, S&P +0.06%, NASDAQ +0.39%.

 

Yesterday in London the FTSE 100 finished down 51 points at 7237. The Strength of Sterling did not help mining oil and drugs. The good news came from Lloyds Banking Group whose profits doubled at £1.3 billion. It appears that the show is back on the road. PPI costs were down to £350 million and Tier One Capital remained very strong at 14.5%. The shares rose by 1.6% yesterday to 68.54%. This morning Lloyds announced that the Government’s shareholding in Lloyds Banking Group has been reduced by another 1%. It is now down to 0.89%, having been at 43% at its peak. WPP is always a decent barometer of economic activity and yesterday sir Martin Sorrell announced at 17% increase in revenues to £3.6 billion. The last quarter of 2016 had been very flat but activity had started to pick up and the outlook for he second half of the year was encouraging. U.S. and Chinese markets had been very disappointing.  These numbers were better than Publicis overall.

 

This morning UBS started the ball rolling by announcing a 79% increase in 1st quarter profits, most of it attributable to fund and wealth management success. Barclays posted a pre-tax profit of £1.68 billion – net £190 million, thanks to impairment one off charge of £884 million on its African bank. Tier One Capital came in at 12.5%. Corporate and international banking was responsible for £1.356 billion of profit. There was a £290 million charge for the Libor fine. Non-performing assets on the balance sheet have been cut by £5 billion. There are two outstanding issues to be resolved – the 2008 funding for Qatar’s increased stake in Barclays. Then of course CEO Jes Staley’s role in the whistle-blowing misdemeanour. Most reasonable people hope that he will just have his wrists slapped rather than lose his job. The improvement in Barclays’ welfare has been measurable and this should be acknowledged. Shares have risen from174p a year ago to 224p before the opening.  They are expected to rally by 2%.

 

Finally to RBS – a quarterly profit at last of ££259 million – the first quarterly one since 2015 – and against a loss this time last year of £893 million. There was a £557 million provision for restructuring. RBS has posted billions of Pounds of losses since 2008. We still don’t know how much the DOJ will fine RBS for miss-selling – circa $5 billion? RBS had an operating profit of £1.3 billion and net lending increased by £3.37 billion. Tier One Capital was strong at 14.5%. The taxpayer still owns 73% of this bank – breakeven 503p – current price 253p. These shares have rallied from 148p in July of last year. We look forward to Philip Hammond putting some more meat on the bone over taking a loss on this bank. Again shares should rise by 2% at the opening. Progress has been made but RBS is far from out of the woods despite the positive efforts by Sir Howard Davies’s and Ross McEwan’s team.

 

 

 

UK companies posting numbers this week – Friday – Barclays, RBS, Rotork, Hastings – 2nd May BP, 3rd May Royal Dutch Shell, 4th May HSBC

 

 

US companies posting numbers – Friday – General Motors, Goodyear, Exxon Mobil, Chevron, Colgate-Palmolive, Weyerhaeuser

 

 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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MARKET UPDATE – ITS BEEN LIKE PULLING TEETH!

Equity markets are achingly boring today, despite the DOW, S&P 500 and the NASDAQ flirting with new records (DOW currently up 58 points) – NASDAQ broke the 46-year-old record yesterday. Treasury Secretary Steve Mnuchin is expected to post tax cut ideas for dissemination today or tomorrow, which are now virtually expected rather than hoped for. Let’s hope he does not disappoint the market place. Even though jets from US and South Korea have been on bombing exercises, equities have been calm and tranquil with no trader moving uncomfortably or nervously from one cheek of their backside to the other.

 

Towards the close the FTSE 100 is up 20 points at 7293. Oils are a little better with BP leading the charge – up 1.2%. Pharmas were disappointing with GSK down 1.9%, despite reasonable numbers at noon. Astra reports tomorrow. Banks have kept their poise with Lloyds, Barclays and RBS posting their findings tomorrow and Friday. Metro Bank fell short of expectation – down 1.5%. Boohoo did well but punters took the shares down initially by 8%. Fortunately they have rallied – down 2.57%. Standard Chartered Bank seems back on an even keel thanks to influence from Bill Winters. Four years ago the shares were at 1600p – now 758p – up 4%. The LSE posted great numbers – up 1.1%. Many like me expect to another predator to knock on the door – CME would be a good fit. GKN was down 1.67%, slightly missing expectations.

TODAY’S FAYRE – Tuesday 25thApril 2017

 

“I found a ball of grass among the hay

And progged it as I passed and went away;

And when I looked I fancied something stirred,

And turned again and hoped to catch the bird —

When out an old mouse bolted in the wheats

With all her young ones hanging at her teats;

She looked so odd and so grotesque to me,

I ran and wondered what the thing could be,

And pushed the knapweed bunches where I stood;

Then the mouse hurried from the craking brood.

The young ones squeaked, and as I went away

She found her nest again among the hay.

The water o’er the pebbles scarce could run

And broad old cesspools glittered in the sun!”

 

John Clare – poet – 1793-1864

 

“Their Finest” is a terrific film and it really captured my imagination. I am not a great fan of Bill Nighy. However as an aging and eccentric actor (Ambrose) he was superb in this delightful film, which had everything – humour, action and sorrow.   Gemma Arterton stole the show giving such a beautifully sensitive performance as a Welsh girl from Ebbw Vale, ably supported by Sam Claflin, sporting a rather sarcastic dry disposition, as her co-script writer. In 1940, with London being hammered in the Blitz and with the country’s morale at stake, Catrin (Gemma Arterton), an untried screenwriter, and a makeshift cast and crew, work under fire to make a film to lift the nation’s flagging spirits; and inspire America to join the war. This film was such a heart-warming experience. In passing, does critic Camilla Long of the Sunday Times, ever like anything she sees? Life seems so miserable for her!

It’s all getting rather silly this rhetoric between the EU and the UK. The EU won’t even start negotiations officially until the end of May, which is ludicrous. The latest missile to come from Brussels, certain to damage relations, is that the UK must pay its full dues until the end of 2020! Why? Then I read with considerable alarm, as well as incredulity that France’s SNCF wants a piece of HS2’s action. I don’t care how good Alstom and other French rail manufacturers are, I think any contract awards should be dependent on whether France and M Macron are going to tone down their jingoistic rhetoric and stop being so tiresome over BREXIT negotiations! I am sure Canada’s ‘Bombadier’ would love the contract, as would some of their workers here in Derby! And if Bombadier cannot meet the specifications, then we’ll find a friend, who can – not difficult!

 

Despite the temperature around the Korean peninsula rising, requiring an unscheduled meeting of advisors at the White House today and despite China’s warning to Kim Jong Un, US markets headed towards record levels with the NASDAQ, which started trading in 1971, achieving that goal, as it breached the 6k threshold. We wait with awe and trepidation for Trump’s tax cut plans, which should receive a brief outline from Treasury Secretary Mnuchin in the next day or so, which should include plans for corporate tax cuts down from 35% to 15% in the next 2 years. The market has quite a serious element of expectation premium, which investors expect to be turned in to reality, assuming Congress is in the mood to play ball. This would be a tremendous fillip for business.

 

Notwithstanding that key element for progress, MacDonald’s posted great numbers with sales over-all up over 4% on the day. The company put improved results down to ‘Big-Macs’ and its breakfast meals. I think it may be down to disposable income falling. It is interesting to note that restaurant visits in the US dropped by 2.16% in 2016, with MCD filling some of the breach with affordable food. MCD’S shares were up over 5% on the day and have risen by 8.4% in the last year. Caterpillar also posted decent numbers, but the shares travelled and arrived – down 0.4%. Lockheed Martin slightly missed – down 2.2%. Texas Instruments pleased their acolytes – +1.5%. The tech sector that had a bit of spring sunshine in its heel, included Apple +0.6%, Facebook +1%, eBay +2.3%, Microsoft (reporting today) +0.4%, Alibaba +0.5% and Alphabet +1.1%. Yesterday New York markets closed as follows including year to date performances – DOW: 20,996 +1.12% +6.24%, S&P: 2,388 +0.61% +6.69% NASDAQ: 5,548 +0.73 +14.075% (46 year high inception 1971). In Asia markets attempted to follow the upbeat sentiment in New York – NIKKEI 19,256 +0.96% +0.788%, HANG SENG: 24,628 +0.71% +11.896% CHINA: 3,453 +0.37% +4.298% ASX: 5,916 +0.75% +4.45%.

 

London and Europe enjoyed rather nondescript sessions yesterday, having blazed the trail on Monday. The FTSE 100 lost 11 points at 7275. Whitbread’s CEO Alison Brittain would not have been very enamoured with the market’s reception for Whitbread’s latest set of numbers. For the first time in a decade Costa coffee saw a fall in sales (-0.8%), which considering the competition form independents on the high street is hardly surprising and despite those Costa units being open for more than a year, experiencing sales up by 2%. Analysts were not placated by the fact that Premier Inns had ambitious plans to build up the number of hotel beds by 3800 in the next year to add to the circa 68k they already have. Cost saving of £150m had been made and profits were up 6.2%. It was the outlook and ONS’s data which said retail sales had fallen 1.8% in March that rattled analysts’ cage – shared down 7%. Bernard Arnault, France’s richest entrepreneur announced plans to tighten the family’s grip on LVMH by paying €12 billion for the remaining stake in Christian Dior. It is extraordinary that luxury brands still have an amazing premium attached to them.

 

There have been a slew of earnings this morning. Banco Santander posted results slightly better than expectations. There were solid efforts from GKN. GSK reports later in the morning as does Standard Chartered Bank, which reports at 9.30am. The LSE saw revenue up 19% and profits by 17% in the last quarter, despite no deal being consummated with Deutsche Boerse. Bahoo’s results were good but expectations were very high. The shares initially fell an unnecessary 8%, but are down only 2.5% as I write. As an on-line retailer, Boohoo has been outstanding.

 

UK companies posting numbers this week – Wednesday – LSE, GKN, Croda International, Standard Chartered Bank, Proactis Holdings, Glaxo SmithKline, Boohoo, Metro Bank, Tullow Oil Thursday – Persimmon, Jardine, Lloyd Thompson, Cobham, Aggreko, Harvey Nash, Travis Perkins, C4X Discovery, Lloyds Banking Group (TS), Weir Group, Schroders, Astra Zeneca, WPP, Kaz Minerals, Howden Joinery, Friday – Barclays, RBS, Rotork, Hastings – 2nd May BP, 3rd May Royal Dutch Shell, 4th May HSBC

 

US companies posting numbers – Wednesday – Nasdaq, PepsiCo, Boeing, Twitter, Procter & Gamble, Hershey, General Dynamics, PayPal, Amgen, United Technology, Thursday – Ford, Raytheon, Zimmer, Bristol Myers Squibb, Mead Johnson, CME, KKR, AbbVie, Intel, Microsoft, Amazon, Starbucks

 

 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 ​

MARKET UPDATE – PERHAPS A DEGREE IN NON-FERROUS WELDING MIGHT BE MORE APPROPRIATE

As for Mme Le Pen; according to those who know about these things, she will be destroyed at the polls in 2 weeks. France is an extremely conservative country with a small ‘c’ and its dislike of change knows no bounds. The Front Nationale’s ticket is unabashedly an immigration and anti-EU ticket. I don’t think she will win, but whilst France fails to get a grip on immigration and security issues, Le Pen will grow in popularity and stature. Anyone who thinks that Macron is a serious reformer, desperate for change delude themselves. It will be ‘play it again-Sam!’ He will have massive problems getting any legislative programme through with so many different parties. He is just very easy on the eye with a modern ‘Ryan Gosling’ appeal! Macron himself will feel a bit of a Blair ‘third way’ ticket and I suspect the majority that seem to want change will see very little. A bullet dodged – but only for a while!

 

The Euro has rallied – up 1.5% against the Pound, but Sterling has done OK against the Greenback. But as for equities; well we expected a relief rally, but what has happened today is off the scale and almost beyond comprehension. I think I might attempt a degree in ‘non-ferrous welding’, such is my understanding of equity behaviour.

 

So the world and his wife expects ‘come-to-bed-eyes’ Macron to know ’em dead on 8th June and we know that growth in the EU has picked up. However for the DAX only 30 stocks – to be up 3% at 2.45pm is beyond comprehension as is the 40 stocks in the CAC which has posted a gain of 3.9%, having been up 4.5% at one time.

 

The FTSE 100 has held its own adding 125 points to 7241, with banks, oils, mining and drugs blazing the trail. Despite Sterling looking a tad better against the Dollar, Greenback related stocks have not yielded. Banks are up significantly with Barclays grabbing the ‘yellow jersey’ – up 5%, with the others up an average of about 3% ahead of results at the end of this week and early next week. BP is 1.5% to the good with RD Shell outshining its cousin – up 2%. Both are off their best levels. Astra shone through the drug gloom – +1.9% with GSK and Shire better by an average of 1%. The only dampener was the utility sector, thanks to the Government’s incomprehensible policy on pegging energy prices – Centrica down 5% and SSE -3.5%. National Grid and DRAX were both slightly above the Plimsoll line – both +0.5%.

 

The DOW opened the session 1% to the good and what pleased me above all else was the fact that the FTSE 250 broke the intra-day record nudging 19581. It is now at 19575. This index is a real barometer of UK economic activity and endorses the brilliant news on manufacturing and exports, posted by the CBI today, some of this good news is down to a weak Pound So all you ‘Doubting Thomases! – Hope springs eternal.

FRENCH ELECTION UPDATE – THE EUPHORIA MAY BE OVER-PLAYED!

Simon French, Chief Economist of Panmure Gordon & Co clarifies the situation in the French Election in saying that ‘the dynamics in round 2 are totally different to the Trump/Clinton and Brexit/Remain elections, where pollsters posted a 2-4% gap. The latest polling suggests Le Pen is 24bp behind. She will need to hoover up a mass of socialist votes from Melenchon and Hamon to have any chance – not an easy task with Fillon, Melenchon and Hamon ‘nailing their respective flags to the Marcon mast!’ While she may get a few of the disenchanted, she is unlikely to get as many as she would require under a run-off vs Fillon who was more of a Thatcherite in outlook.’

 

As I have already said France loathes change.  There may be a huge amount of ‘huffing and puffing’, but little it terms of radical change will be achieved. Simon French goes on to say ‘As for the UK, Macron is a slight negative regarding Brexit as he is a Europhile who wants to do “more Europe”. I wouldn’t overstate the impact as it was already going to be a tough gig for the UK to get a credible trade deal. For equities and GBP the “safe haven story” of the UK is slightly diluted by Macron, but again it is not seismic.’

 

At 8.35am the FTSE is up 125 points (+1.4%), the DAX 250 points and the CAC 200 – astonishing!  Expect some sort of a pull-back soon.  This rally seems unjustified.

DON’T EXPECT TOO MUCH FROM A WATERED-DOWN FAILED HOLLANDE ADMINISTRATION

So the old guard in French politics have been booted in to the long grass – The run-off between Marine Le Pen and Emmanuel Marcon has been interpreted by the markets as a ‘slam-dunk’ for ‘En Marche’, which is really a watered down edition of the failed ‘Hollande’ government. The only really visible difference is that this party is now headed by a ‘matinee idol’ leader with establishment and banking credentials – suave in his presentation, with enormous appeal to the young. Of course he is passionate about expanding France’s role in the EU and is no friend of the UK. He makes no secret of the fact that he intends to persuade the banking community to leave London and set down their stalls in Paris post BREXIT. I suspect that he will have limited success.

 

As for Mme Le Pen; according to those who know about these things, she will be destroyed at the polls. France is an extremely conservative country with a small ‘c’ and its dislike of change knows no bounds. The Front Nationale’s ticket is unabashedly an immigration and anti-EU ticket. I don’t think she will win, but whilst France fails to get a grip on immigration and security issues, Le Pen will grow in popularity and stature. Anyone who thinks that Macron is a serious reformer, desperate for change deludes themselves. He is just very easy on the eye with a modern ‘Clark Gable’ appeal!

 

The Euro has rallied – so has sterling! The FTSE is set to open up +45 points, the DAX 190 points and the CAC +100 points. Enjoy the euphoria. It may be short-lived.

TODAY’S FAYRE

TODAY’S FAYRE – Sunday 23rdApril 2017

 

“I found a ball of grass among the hay
And
 progged it as I passed and went away;
And when I looked I fancied something stirred,
And turned again and hoped to catch the bird—
When out an old mouse bolted in the wheats
With all her young ones hanging at her teats;
She looked so odd and so grotesque to me,
I ran and wondered what the thing could be,
And pushed the
 knapweed bunches where I stood;
Then the mouse hurried from the
 craking brood.
The young ones squeaked, and as I went away
She found her nest again among the hay.
The water o’er the pebbles scarce could run
And broad old cesspools glittered in the sun.

 

John Clare – poet – 1793-1864

 

 

William, Duke of Cambridge, officiated at some of last week’s investitures at Buckingham Palace. He would have enjoyed an eclectic bunch of recipients, which included making Mark Rylance, the celebrated left-wing actor, a knight of the realm as well as honouring Mrs Posh Beckham with an OBE for her contribution to girl bands and fashion! Sir Mark adorned a new ‘titfer’ – rather less tatty and more in keeping with a grandiose occasion! I wonder if Dave is still smarting over ‘no’ knighthood being forthcoming in last year’s New Year’s honours list!

 

Many people over the years have admired the interpretations of Georges Simenon’s French detective ‘Maigret’ by Rupert Davis and Sir Michael Gambon.  However in recent years Rowan Atkinson has left a huge impression with his recent portrayals.  I just love the way his performance is under-cooked and very low ‘key.’ I think he’s a better ‘straight’ actor than he is a satirical comedian.

 

Although Bertolt Brecht’s play ‘THE RESISTIBLE RISE OF ARTURO UI’, adapted by Bruce Norris for the Donmar was tumultuously received by the audience, I did not care for it at all.  I suppose I am just tired of ‘left-wing’ political adaptions of a perfectly good story, based on a parody of ‘Hitler’s story’ in a speak-easy in Chicago. I also got the ‘pop’ at the two Mayor Daley’s of Chicago during the days of prohibition and in the 70’s by father and son, but the ‘Trump’ invective we could have done without!  However odious people find President Trump, it brought nothing to the production at all.  I suppose if it made Sir Lenny Henry feel better, job done. Sir Lenny confirmed that he is a very decent Thespian, but the play was not for me.  Frankly I didn’t have the intellect to gain full enjoyment.

Well against all the odds, PM May, frustrated by subversive activity over BREXIT, finally called a General Election last Tuesday, supposedly against her better judgement. She felt that the Government could not negotiate a satisfactory BREXIT deal with the likes of Tony Blair, Jeremy Corbyn, ‘Little Timmy’, Nick Clegg, Gina Miller, Nicola Sturgeon and others constantly trying to sabotage her efforts.  She was right – even if some polls say her lead in the polls has been slashed due to alleged and spurious tax increases and the fact that she changed her mind!  The suggested cut in Mrs May’s popularity could make this a very messy seven weeks of unpleasant rhetoric.  So for once Trump’s adventures in Syria, Afghanistan and flirtation with North Korea were off the front pages and PM May took pride of place!

 

The markets coped quite well. The FTSE 100 fell by 2.9%, which was a currency ‘trade-off’ as Sterling rose against the Greenback by a similar amount. Conversely the FTSE 250, which is probably a more accurate barometer of UK activity fell by only 0.3% in the same period. The strength of Sterling was down to a strongly held perception that Mrs May should get a decent mandate from which to negotiate her BREXIT, rather than some half-baked plan being hurled back to and from Brussels. On Saturday the Times poured cold water on the idea that the UK was higher in the queue than the EU for a negotiated trade deal with the US. That I doubt, as the US has always taken an inordinate amount of time over any trade deal and apart from TPP, which it has pulled out of in January, no trade deal of any substance or complexity has been pulled off since ‘the Old King Died!’ Trying to deal with 27 countries?  I suspect I will be pushing up daisies before a US deal with the EU is consummated!

 

 

The earnings season was in full flow last week.  In the US most companies did not disappoint, maintaining a decent increase in profits with the exception of Goldman Sachs and Johnson & Johnson.  The S&P 500 added 0.97% in value over the week. Europe’s indices eased by 0.75%.  Japan’s Nikkei added 1.5% thanks in the main to a weaker Yen. Here in London mining, oil, tobacco and some banks felt the wheels of pain across their backs thanks to the strength of Sterling. Though AB Foods pleased their acolytes, the same could not be said for Burberry, which did well at home but saw sales drift in US and Asia and as for Debenhams, there was a little ‘trouble at mill.’  Some outlets are being closed as margins are squeezed due to inflation and the tepid reception to their fashions. Unilever seem to respond well to the threat of Kraft Heinz’s predatory instincts hovering over CEO Paul Polson’s shoulder. Reckitt Benckiser seem on course to buy baby food titan Mead Johnson.  

 

 

This coming week the earnings season sees the floodgates open. In the UK Lloyds Banking Group update the market with a trading statement on Thursday, with Barclays and RBS stepping up to the plate on Friday. RBS is expected to post a small profit of about £70k for the first quarter up from a loss of £963m.  We also expect more meat on the bone in regards to Williams & Glyn – its sale or appropriating £750 million towards SME as well as improved capital requirements.  Barclays is expected to post a profit over the same period of £1.5 billion up from £902 million and Lloyds Banking Group should post a comfortable profit of £1.2 billion.  When CEO Bill Winters presents Standard Chartered Bank’s credentials a modest profit of $290 million.

 

AND SO TO THE FRENCH PRESIDENTIAL ELECTION TONIGHT! – TOO CLOSE TO CALL, but if Melenchon & Le Pen make the final ballot! Look out!  However I suspect it will be Macron & Le Pen, with the natural conservative (small C) culture of the French prevailing. However Mme Le Pen is far from dead in the water post the recent shootings in Avenue des Champs Elysee!

 

UK companies posting numbers this week – Tuesday – Amex Foster Wheeler, Whitbread, BHP Billiton, Carpetright, Virgin Money – Wednesday – LSE, GKN, Croda International, Standard Chartered Bank, Proactis Holdings, Glaxo SmithKline, Boohoo, Metro Bank, Tullow Oil Thursday – Persimmon, Jardine, Lloyd Thompson, Cobham, Aggreko, Harvey Nash, Travis Perkins, C4X Discovery, Lloyds Banking Group (TS), Weir Group, Schroders, Astra Zeneca, WPP, Kaz Minerals, Howden Joinery, Friday – Barclays, RBS, Rotork, Hastings – 2nd May BP, 3rd May Royal Dutch Shell, 4th May HSBC

 

US companies posting numbers – Monday – Alcoa, Kimberley-Clark, Hasbro, Whirlpool, Tuesday – Caterpillar, 3Ms, Lockheed Martin, JetBlue, Valero Energy, Freeport-McMaHon, Coca-Cola, Pulte, Biogen, Texas Instruments, Wednesday – Nasdaq, PepsiCo, Boeing, Twitter, Procter & Gamble, Hershey, General Dynamics, PayPal, Amgen, Thursday – Ford, Raytheon, Zimmer, Bristol Myers Squibb, Mead Johnson, CME! KKR! AbbVie, Intel, Microsoft, Amazon, Starbucks

 

 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​

TODAY’S FAYRE

TODAY’S FAYRE – Thursday 20thApril 2017

 

“There it was I saw what I shall never forget
And never retrieve.
Monstrous and beautiful to human eyes, hard to
believe,
He lay, yet there he lay,
Asleep on the moss, his head on his polished cleft
small ebony hoves,
The child of the doe, the dappled child of the deer.

Surely his mother had never said, “Lie here
Till I return,” so spotty and plain to see
On the green moss lay he.
His eyes had opened; he considered me.

I would have given more than I care to say
To thrifty ears, might I have had him for my friend
One moment only of that forest day:

Might I have had the acceptance, not the love
Of those clear eyes;
Might I have been for him in the bough above
Or the root beneath his forest bed,
A part of the forest, seen without surprise.

Was it alarm, or was it the wind of my fear lest he
depart
That jerked him to his jointy knees,
And sent him crashing off, leaping and stumbling
On his new legs, between the stems of the white
trees?
 

 

Edna St Vincent Millay – poet – 1892 – 1950

 

 

After Tuesday’s surprise election announcement, it was only a matter of minutes before the bottles of vitriol and acrimony started to leak profusely. I have to admire PM May – perfect casting for the job in the current circumstances – irritated by small talk, cold, calculating, focused, resolute and appearing to be immune to serious criticism. She seems very determined to do a very decent job for the people of this country and will not be deterred by the endless barrage of Corbyn platitudes on redistribution of wealth, which is laudable but disastrous as the cost of his plans will bring the UK economy to its knees. Also it’s high time the saboteurs of BREXIT – Blair, Mandelson, Clegg, Farron, Campbell and Miller were put to the sword.  If they don’t like BREXIT and they have every right not to then galvanise the voters to remove Mrs May and the Conservatives from government on 8th June 2017.  Otherwise pipe-down, challenge by all means but respect democracy!

 

This election campaign is dangerously long. Therefore I believe Mrs May is spot on, in thinking that anything positive for her campaign could ever come out of TV debates. These debates tend to be of far more benefit to the underdog. David Cameron gained nothing from them at the last election.  The choice seems clear to her – LEADERSHIP – back me or sack me! Why skid on a few banana skins, when it isn’t necessary?

 

 

Many investors were trying to put geopolitical problems behind them yesterday, but the influence from the UK election call and the cloudy uncertainty that continues to permeate from the French Presidential scene has been too powerful. So the fact that in the US inadequate interim results were posted by Johnnie & Johnnie and Goldman on Tuesday took the wind out of market acolytes’ sails, thus failing to compensate for the other factors. American Express posted adequate numbers which saw its stock price rise by 2.23% after hours and by 15% in the last year. eBay’s efforts were rather good. Though this tech/retail giant certainly beat the Street’s estimates, the second quarter outlook was disappointing.  There is no doubt that this stock has travelled and arrived – down 1.9% yesterday but is has performed in a ‘gangbuster’ fashion in the last year – up 32%.  Perhaps not quite as good as Amazon but wow! – Amazon up 42% in the last year! There is concern about OPEC’S story line.  Their plans on production seem to be falling apart as oil prices have fallen 3.8% in recent days. Exxon Mobil’s share price has hit a 14 month low. That will concern Rex Tillerson or maybe he has sold all his stock options? Gold has also pulled back from $1290 to $1280 an ounce as the markets calms down over North Korea.

 

Yesterday the FTSE opened up just below the Plimsoll line cut its losses but eventually closed the session down 33 points at 7114. As Sterling strengthened, some Dollar related stocks suffered such as Diageo and a few of the miners.  Investors vented the spleens against Burberry down 7.94%.  Sales in the UK were good, BUT obviously suffered in the US and Asia due to the Pound’s weakness. Some domestic diehards without serious BREXIT connotations, rallied to the cause – Sainsbury +5%, EasyJet +4.9% and NEXT +3.2%, though rising inflation must be a concern. Conversely the FTSE 250, the real barometer to the UK economy added 0.62% – nearing a record.

 

At the IMF meeting in Washington, concern was expressed that banking debts, which are heading towards E1 trillion in size, incurred by the likes of Deutsche, Credit Suisse and RBS, was damaging recovery. That is like saying is the Pope a catholic, but point taken.  Having upgraded the UK economy a couple of days ago, the IMF apparently started muttering (unconfirmed) about BREXIT and how the UK did not understand the dangers to its financial markets.  I think we here in the UK have the matter in hand. There was also criticism of the possible dangers from relaxation on regulation in the US. Elliott Advisors amongst other shareholders in Akzo Nobel have rejected £1.3 billion sweetener for shareholders to prevent a takeover by Pittsburgh Glass. A hostile bid is expected for the Dutch mogul which bought ICI and Courtaulds in years gone by. Asian markets made a tepid effort to come to hand with sparse guidance from New York – ASX +0.21%, Shanghai -0.29%, HS +0.30%, Nikkei +0.23%.

 

When you are under the cosh from predators such as Kraft Heinz, it is amazing the size of the rabbit that can be pulled out of the hat.  Paul Polson of Unilever posted excellent results today for the last quarter with a 6.1% increase in sales to E13.3 billion. Dividend is up 12%. Sales growth for the year is expected to be maintained between 3.5-5%.  Emerging markets have done well.  The sale of Flora and Stork is under way. Shares have risen 18.8% in the last year much of that down to the Kraft bid of $115 billion on 27th February. Sky posted revenue of £9.46 billion for the last 9 months.  Revenue in UK only rose 4% but in Germany and Italy it was up 28% and 25% respectively.  100k new customers were added.  Though the churn rate last quarter was alarmingly high at 11.6% Sir Jeremy Darroch the CEO says it has evened out.  We await news on the 21st Century takeover.  Now that Bill O’Reilly the FOX presenter has been hosed maybe Karen Bradley will see her way clear by nodding it through. Debenhams like many retailers is having to cut costs as and may be closing as many as 10 stores and a similar number of warehouses with no doubt jobs to go too!  There are slew of earnings out there.  If I rattle them off I will bore people more than I do already!

 

UK companies posting results this week – Thursday – Hvivo, Debenhams, Unilever, Acacia Mining, Sky, Senior, Go-Ahead, Moneysupermarket, Evraz, Man Group, Essentra, Friday – Reckitt Benckiser

US companies posting results this week – Thursday – Philip Morris, PPG, Bank of New York, Mellon, DR Horton, Travelers, Visa, Mattel, Friday – GE

Economic data out this week – Thursday – Phili-Fed Manufacturing Index, Friday – UK Retail Sales

 

 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​

TODAY’S FAYRE – ALL THE FUN OF THE FAIR POST ELECTION BOMBSHELL!

TODAY’S FAYRE – Wednesday 19thApril 2017

 

“The shining line of motors, 

The swaying motor-bus, 

The prancing dancing horses 

Are passing by for us.

 

The sunlight on the steeple, 

The toys we stop to see, 

The smiling passing people 

Are all for you and me.

 

“I love you and I love you!”– 

“And oh, I love you, too!”– 

“All of the flower girl’s lilies 

Were only grown for you!”

 

Fifth Avenue and April 

And love and lack of care– 

The world is mad with music 

Too beautiful to bear.”

 

Sara Teasdale – poet – 1884 – 1933

 

Considering the parlous sate Leicester City found themselves in two months ago, the recovery of their form under Craig Shakespeare has been nothing short of miraculous.  The Foxes may consider themselves a tad unlucky to lose the replay and the quarter final tie 1-2.

 

 There is little point in mentioning trivial matters such as football and the arts when the only subject on anyone’s mind at present is the snap General Election called by PM May yesterday, in response to subversive tactics adopted by all the opposition parties and some of her own MPS preventing the Government from doing its job properly – that is to say delivering BREXIT unfettered, clean and clearly, without being sabotaged at every nuance and act of legislation.  Those determined to block the government’s programme for leaving the EU have been given their wish.  It is now up to these parties to persuade the voters in the UK of the errors of their ways and have BREXIT turned over in the ballot box. I don’t think they will, as there are no real leaders waiting in the wings ready or respected enough to govern. So if Mrs May wins this election for the Conservatives clearly and by a decent margin, maybe she can get on with the job in hand. My concern is a 7-week campaign is too long – too much time has been accorded to slip up on political banana skins waiting in spurious places.  I fear her majority will not be as great as the polls suggest.

 

Markets on the whole welcomed the news with an opportunity of clearing up doubt, uncertainty and a few anomalies, with slight concern expressed about a seven week campaign. Sterling enjoyed gyrations mainly on the upside with our beloved Pound preening itself like a peacock at $128.20. There is a price to pay for Sterling firming by over 2%. It would inevitably hit the value of FTSE 100 stocks with so many of them related to Dollar income and profits – hence the FTSE fell by 2.45% to 7150, with miners, oil, banks and tobacco suffering the most. Nil-desperandum! This morning at 10.00am the FTSE 100 just eased by 10 points to 7140, but had erased losses by 11.00am. However the FTSE 250 was in a very positive frame of mind – up by 1%, nudging record levels.

 

Not only do US equity markets have to deal with the prospect of Trump failing to get his legislation through Congress, but they also had to deal with a few disappointing results from the 1st quarter earnings season. The fact that Goldman Sachs missed quite badly was a shock considering how well JP Morgan, Citibank and Bank of America have done. Their efforts on fixed interest trading from their high standards, was lamentable – up only 1% in terms of revenue. Goldman shares fell by 4.72%. Traders were almost as unhappy about Johnson & Johnson’s efforts – with shares dropping by 3.1%. Markets in New York closed as follows – DOW -055%, S&P -029% and NASDAQ -0.12%. Asia responded negatively to U.K. Election shock waves, dipping sentiment on the Street of Dreams and a strong ¥en half way through the session – ASX -0.61%, Shanghai -1.06%, Hang Seng -0.71%, Nikkei-0.01%.

 

Len McCluskey, head of Unite – well his timing was priceless threatening industrial action for 7000 BMW workers over pension rights. You have to wonder if this guy is ‘brain-dead!’ – Industrial rights? Of course, but talk don’t threaten at this time? Don’t moan about jobs and then attempt to throw the baby out with the bath water!

 

I’m glad that Chancellor Hammond has agreed to dispose of RBS even at a loss. Hopefully he will do it as a ‘good’ and ‘bad’ bank. The toxic assets always have a price and splitting the bank will help give NatWest, Ulster, Coutts and RBS north of the border the fillip they deserve to crack on with life. RBS share price was up 1.82% at 228p on news of the proposal. However it is still a million miles away from 503p breakeven price – the cost to the taxpayer was £45 billion. This morning AB Foods pleased their acolytes with results – up 3.5%, but Chris Bailey, CEO of Burberry struggled before he hands over to Mario Gobbetti of Celine in July – Burberry shares down 5.75%.

 

UK companies posting results this week – Wednesday – AB Foods, Segro, Burberry, Henderson, Bunzl, Fenner, RELX, Greggs, Rentokil Initial, Rio Tinto, Thursday – Hvivo, Debenhams, Unilever, Acacia Mining, Sky, Senior, Go-Ahead, Moneysupermarket, Evraz, Man Group, Essentra, Friday – Reckitt Benckiser

US companies posting results this week –Tuesday – Bank of America Merrill, Abbotts Labs, Goldman Sachs, Charles Schwab, Harley-Davidson, Yahoo!, Wednesday – Blackrock,  American Express, Abbotts Labs, eBay, Thursday – Philip Morris, PPG, Bank of New York, Mellon, DR Horton, Travelers, Visa, Mattel, Friday – GE

Economic data out this week – Wednesday – Beige Book, Thursday – Phili-Fed Manufacturing Index, Friday – UK Retail Sales

 

 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 ​

POST ELECTION ANNOUNCEMENT MARKET UPDATE

It started off a lovely breezy spring morning on Cheapside.  Punters took their time to shake off the Easter Blues. Wall Street cracked on yesterday – up 0.85%; Asia stuttered over geopolitical problems, though Japan’s Nikkei was closed – down in Shanghai (-0.8%) and Hong Kong (-1.4%).

The FTSE 100 opened at 8.00am down 25 points, based on a rally in Sterling to $1.2575, with mining, oil and bank stocks on the slide.  By 9.00am the FTSE was down by 70 points with these main sectors down between 2-4%. Then came an announcement that Theresa May would make a statement from Downing Street at 11.15am. There was plenty of speculation as to what was the message.  Clearly calling a General election was at the top of the agenda.  And so it transpired at about 11.07am.  It was a very strong, resolute and bold statement.  PM May made it very clear that the decision was reluctant.  She had no alternative but to call one courtesy of subversive activity from the SNP, Lib-Dems, Labour and the House of Lords over BREXIT, making it impossible for the Conservative administration to govern.

 

Though I am a commentator of financial issues, I must say I think a 7 week election campaign is far too long – too many possible banana skins to slip up on. There are millions of disenchanted REMAIN voters out there who could vote tactically against the government over BREXIT. If it was a question of leadership and personality it would be a no-brainer – Mrs May is a ‘slam-dunk!’ However the country has never been so divided and surprises may be there a plenty. There is little comparison to the 1987 election when Margaret Thatcher sent Labour and Neil Kinnock packing. At that time the Conservatives were returned against a rejuvenated Labour party which had suffered under Michael Foot in 1983. This year Labour is in total disarray with Westminster playing all the subversive cards at their disposal. Back in 1987 the overall Conservative government fell to 102 from 144 in 1983.  There were 3 million unemployed against 1.5 million today.

 

Prior to the announcement Sterling started to slide down to $1.2490, but the FTSE was still sliding – down 90 points due mainly to uncertainty. However post the statement Sterling rallied like a grilse back to $1.2660.  However the FTSE surrendered another 30 points – down 125 at 7202 at 1.06pm, thanks to increasing support for Sterling, which damages the value of so many constituent stocks. Also frankly with a P/E ratio of 16.5 times earnings, the FTSE 100 was beginning to look a little rich for many peoples’ blood. So the reaction by investors was predictable.

 

Frankly folks it is a sea of red! – The main losers are BP -3.5% and Shell -3%.  Miners are down between 2-4%.  Others to surrender value include Unilever -1%, Diageo -1.5% and Reed Elsevier -1%.  Banks have had a heavy heart – Barclays -3% and HSBC -1.5%. The DOW futures are down 35 points as I write with decent figures posted by Johnson & Johnson to Bank of America Mellon.