TODAY’S FAYRE – Sunday 9thApril 2017


Listen my children and you shall hear
Of the midnight ride of Paul Revere,
On the eighteenth of April, in Seventy-five;
Hardly a man is now alive
Who remembers that famous day and year.

He said to his friend, “If the British march
By land or sea from the town to-night,
Hang a lantern aloft in the belfry arch
Of the North Church tower as a signal light,–
One if by land, and two if by sea;
And I on the opposite shore will be,
Ready to ride and spread the alarm
Through every Middlesex village and farm,
For the country folk to be up and to arm.”

Then he said “Good-night!” and with muffled oar
Silently rowed to the Charlestown shore,
Just as the moon rose over the bay,
Where swinging wide at her moorings lay
The Somerset, British man-of-war;
A phantom ship, with each mast and spar
Across the moon like a prison bar,
And a huge black hulk, that was magnified
By its own reflection in the tide.

Meanwhile, his friend through alley and street
Wanders and watches, with eager ears,
Till in the silence around him he hears
The muster of men at the barrack door,
The sound of arms, and the tramp of feet,
And the measured tread of the grenadiers,
Marching down to their boats on the shore.



 Henry Wadsworth Longfellow – – poet – 1844-1889


It never ceases to amaze me how incredibly robust and resilient markets are in the face of dangerous military jingoism. However I suppose it is fair to say that investors and analysts had the good sense to assess that Friday morning’s strike by US Tomahawks was hopefully a one-off with a view to giving Assad a bloody nose for his barbaric behaviour whilst at the same time squaring up to Russia by make a statement that the US and some of its allies can only be pushed so far without reaction.


There was plenty on the economic, financial and political agenda last week without having to consider the ramifications of a missile attack on a Syrian airbase. The FOMC minutes, US Non-farm payrolls, ECB policy, President Trump’s key meeting with China’s President Xi and the quality of the US earnings, starting this coming week, was always going to prove an exciting cocktail to ruminate over. Let’s all not forget that the forthcoming French Presidential election will also have its challenging moments.


So after a week’s disruptive turmoil it was astonishing that the S&P 500 was down only 0.18%. The FTSE was surprisingly up 0.36%, with European markets closing near enough flat. The NIKKEI eased by 1.29%, much of the loss was down to a stronger Yen. The FOMC minutes gave the first indication that the FED wanted to shrink its gargantuan balance sheet. It currently holds about $4 trillion of assets mainly mortgage backed securities. Some of these may not be renewed later in the year. This would unofficially give a boost to an interest rate rise, not forgetting the possibility of another 25 basis point official rise in June. This indication suggests the US economy is in good shape. However the payroll data posted on Friday was disappointing with only 98k jobs being created in March which accompanied a slight drop in wage inflation from 2.8% to 2.7%



Last week London’s markets were full of news and business nuances. Unilever’s Paul Poland kept us abreast with his plans for keeping predators such as Kraft Heinz at bay. Some foodstuffs such as flora and Stork margarine will be sold for circa £2 billion – maybe to Kraft. Close to £4 billion will be returned to shareholders and the dividend will be raised – all good news for for delivering better shareholder value when many consider they have been short-changed. Shares rose by 0.6% to 3900p and change – above the level the original bid the Kraft bid came in at. Polman also made veiled threats about unnecessary aggressive tactics made by hedge funds on his company.


Akzo Nobel the purchasers of Courtaulds and ICI in years gone by, are fighting a rear-guard battle to stave off a hostile bid by Pittsburgh Plate Glass. Both companies have high profile CEOS – Akzo Ton Buckner and PPG Mike McGarry – Buckner has to make a strong case for remaining independent for keeping the likes of leading shareholders such as Ellliott Advisors satisfied.


Xavier Rolet accompanied PM May to Saudi Arabia last week to make a pitch for the Aramco IPO for the LSE, which followed in the wake of the collapse of its merger/takeover with or by the Deutsche Boerse. Success would be a well-timed endorsement for London as the leading financial centre for Europe. I doubt that investors will have to wait long for the Spotify IPO, valuing the company at $8.5 billion, subject to a satisfactory conclusion to its association with Universal music coming to fruition.


It look as though the game is up for the Coop Bank. The recent loss by the Coop of £132 million suggest this bank will be unable to meet the BOE’S capital requirements, even though the £400 million loan will be repaid in July. This bank is likely to be broken up in to a good and bad bank.  Amongst those flagged up to buy the food bank include Virgin Money, OneSavings Bank and Metro Bank. Cerebus will be keen acquirers for the bad bank assets. The treatment meted out to Imagination by Apple after so many years was reprehensible.  Imagination, the UK chip maker, lost nearly 55% of its value last week as a result of doing 60% of its business with Apple


On Thursday ECB’S Mario Dragi gave a slight hint that any cuts in QE were unlikely to take place until next year. Many folk like me hope that before too long that Mark Carney and the BOE will adopt a similar policy to the FED by slowly dismantling Quantitative Easing by starting the process of not renewing some of the £425 billion of assets they currently own. Again this procedure would help to raise interest rates unofficially. Many are already of the opinion that rates are too low to meet with rising inflation which could reach 2.7% by the autumn. It might have helped if RBS was not such a noose around the government’s neck.  It is good news that the taxpayer only owns less than 2% of Lloyds’ shares. However not such good news that another 100 branches will be closed – part of the carefully laid out 9000 redundancy plan. It was good to hear Mark Carney will instigate a vetting operation for EU-based banks in London, if the passporting system broke down, as a result of impasse or intransigence over BREXIT negotiations. He reiterated that many of these banks would have to come PRA regulatory requirements.



UK companies posting results this week – Highland Gold mining, Tuesday – Vedanta Resources, Wednesday – Dunelm, Tesco, WH Smith, PageGroup, Thursday – Hays, Avocet Mining, PZ Cussons

US companies posting results this week – Monday – Petsmark, Wednesday – Delta Airlines, Thursday – JP Morgan Chase

Economic data out this week – Monday – RICS Housing data, BRC Sales, Tuesday – UK PPI & CPI Data, Wednesday – UK Employment data, Thursday – BOE Credit, Friday – University of Michigan Consumer Confidence, US CPI and 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

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