TODAY’S FAYRE – Wednesday 5thApril 2017


Tom—garlanded with squat and surly steel
Tom; then Tom’s fallowbootfellow piles pick
By him and rips out rockfire homeforth—sturdy Dick;
Tom Heart-at-ease, Tom Navvy: he is all for his meal
Sure, ’s bed now. Low be it: lustily he his low lot (feel
That ne’er need hunger, Tom; Tom seldom sick,
Seldomer heartsore; that treads through, prickproof, thick
Thousands of thorns, thoughts) swings though. Commonweal
Little I reck ho! lacklevel in, if all had bread:
What! Country is honour enough in all us—lordly head,
With heaven’s lights high hung round, or, mother-ground
That mammocks, mighty foot. But no way sped,
Nor mind nor mainstrength; gold go garlanded
With, perilous, O nó; nor yet plod safe shod sound;
Undenizened, beyond bound
Of earth’s glory, earth’s ease, all; no one, nowhere,
In wide the world’s weal; rare gold, bold steel, bare
In both; care, but share care—
This, by Despair, bred Hangdog dull; by Rage,
Manwolf; worse; and their packs infest the age.”


 Gerard Manley Hopkins – poet – 1844-1889


I care not a jot whether the EU negotiators tried to hoodwink the FCO or the UK Government over the sovereignty of Gibraltar and the welfare and domicile of the 32,000 people, who live there. There is talk of skulduggery, deceit and incompetence.  There is no way, so long as night follows day, that Gibraltar should be either a bone of contention, let alone be even a topic on the agenda.  It must be and remain a non-negotiable issue.  Lord Howard of Lympne was perhaps a little over the top comparing this spat to what happened in the Falklands back in 1981, but there’s nothing like a bit of hysteria for focusing the mind.

 Spain is all but economically broke and could not afford to sustain Gibraltar as a defence centre and the UK would certainly not countenance the EU running the operation. Gibraltar is hugely important strategically. Dear Old ‘Uncle Vlad’ must be salivating at the prospect of the UK and Spain fighting with handbags at 10 paces.  Folks in Spain – grow up and deal with the realities of life! In the grand scheme of life Gibraltar is not an issue. It is part of the UK – full stop!


Apart from the fact that one large IPO and another significant one are on the horizon (Aramaco and Spotify), corporate news has perhaps been not quite as buoyant as in recent times.  There is, however plenty of news to reflect on in the days to come. From a UK perspective, PM May has been in Jordan and Saudi Arabia for trade negotiations whilst Philip Hammond and Mark Carney have been in India for Fintech talks. Global investors eagerly await China’s President Xi to visit President Trump in Florida for sensitive and key negotiations on Trade and the increasingly irrational and jingoistic behaviour of North Korea’s Kim Jong Un, who keeps firing off missiles into the sea with no guaranteed accuracy! For China to pull N Korea back on the bridle I suspect a trade-off will be required. As the old saying goes there’s no such thing as a free lunch! On a more parochial level there are the minutes of last month’s FOMC minutes to be scrutinised for clues about another possible rate hike in the months to come. Finally Friday sees March’s US Non-farm payrolls posted. 175k jobs are expected to have been created against 235k in February. Then finally next week the US 2nd quarter earnings season starts in earnest with an increase of 11% in profits for the S&P 500 constituent stocks expected. Lt us hope we are not disappointed.


 I00 days have now gone by since President Trump took office. Initially the US stock markets responded very positively at the time of the election last November.  An exciting pro-business agenda had been posted with tax cuts and infrastructure spending to the fore – decent remedies for fuller employment.  Companies like Walt Disney, Goldman and JP Morgan blazed the trail adding 15% plus in value.  Since then they have been seen to tread water, leaving tech, utility and healthcare stocks to blaze the trail. Trump’s legislation has yet to hit the buffers but its journey remains uncomfortable as some of his legislation, such as the withdrawal of Obamacare and taxation reforms continue to drive over one pot-hole after another!  The next few weeks will define performance of the US stock markets for much of the year and have significant influence on global stock markets as well, particularly if President Trump fails to deliver infrastructure spending and meaningful tax cuts.


I notice that LSE CEO Xavier Rolet accompanied PM May on her trip to meet all the political and business dignitaries in Saudi Arabia.  With the Aramco IPO under consideration, it would be a terrific fillip for the LSE to be appointed as the main lead exchange for this gargantuan IPO. Saudi may only offer 10% of this huge oil company for sale.  But that 10% could be worth $200 billion – the world’s largest IPO to date. I suspect that since the Saudi government may retain a very large percentage of the company, it will be essential to have a decent shareholder register to guarantee sensible corporate governance. So this IPO is likely to be a global issue with many other bourses involved, probably New York, Hong Kong and maybe Japan, with the LSE as the lead exchange. Rolet has done a decent job as CEO of the LSE in the past 9 years and this deal would be the icing on the cake, making the LSE a very valuable asset. A deal of this nature could not come at a better time for the UK post BREXIT to endorse London’s prowess as the major financial centre.


Spotify is closing in on licensing deals with Universal Music, hoping to streamline the music company’s path towards an IPO after months of negotiations. In exchange, Spotify would restrict the biggest album releases to its paid tier for a period of time — a substantial concession after years of friction with pop stars including Taylor Swift, who pulled her music from the platform in 2014. The long-term licensing deals would boost Spotify’s appeal before an IPO, as it looks to convince investors it can translate its fast customer growth into a solid business. Spotify, valued at $8.5bn in a recent funding round, made a net loss of €173m in 2015, despite revenues surging to €1.95bn, as royalty and distribution fees jumped to €1.63bn. 50m Number of paying customers using Spotify Spotify’s contracts have been up for negotiation with Universal, Sony and Warner, the label owners on whom it depends for most of its 30m songs. Spotify has added 20 million new customers in the last year.


 Yesterday the FTSE added 39 points to 7321. Mining and oils stocks were the standard bearers with Sainsbury’s and Wm Morrison being pulled back by circa 2% thanks to inflationary pressures likely to affect sales and profit margins. There was little activity on the Street of Dreams as investors pondered over President Xi visit and the contents of the FOMC minutes due out tonight. US markets performed as follows with YTD data as well. DOW: 20,689 +0.19% +4.69% , S&P: 2,360 +0.06% +5.42%, NASDAQ: 5,440 +0.15% +11.86%. Stocks eked out slim gains in another sluggish session. The energy sector topped today’s leader board after U.S. crude oil gained 1.5% to finish pit trade at $50.99/bbl, marks the commodity’s highest level in nearly a month. Consumer staples, industrials and tech also outpaced the broader market, while financials and consumer discretionary lagged. Treasury prices finished modestly lower, with the benchmark 10-year yield closing 3 bps higher at 2.35%.



Here also are Asian markets performance today and YTD – NIKKEI: 18,852 +0.24% -1.49%, HANG SENG: 24,221 -0.20% +10.01%, CHINA: 3,494 +1.10% +5.56%, ASX: 5,875 +0.31% +3.70%




 UK companies posting results this week – Wednesday – HSS Hire, McCarthy & Stone, IMI, Thursday – Keystone Petroleum, Homeserve, Mothercare, Friday – AFI Development. 

US companies posting results this week – Wednesday, Walgreen Boots Alliance, Yum China Holdings, Thursday – L-Brands, Fred’s, Constellation Brands, Ruby Tuesday


Economic data out this week – Wednesday – UK PMI Services, US ADP Employment data Thursday – US Initial Jobless Claims, Friday – UK industrial Production, Manufacturing and Construction, UK Trade Balance, US Non-Farm Payrolls and employment data


 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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