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
Market Commentator – Panmure Gordon & Co
D +44 (0)20 7886 2775
Mobile – 0044 7788 144 877
Panmure Gordon & Co
One New Change | London | EC4M 9AF