TODAY’S FAYRE – Hardly known for my sartorial elegance, BUT…

TODAY’S FAYRE – Wednesday 24th May 2017

 

They shut the road through the woods
Seventy years ago.
Weather and rain have undone it again,
And now you would never know
There was once a road through the woods
Before they planted the trees.
It is underneath the coppice and heath,
And the thin anemones.
Only the keeper sees
That, where the ring-dove broods,
And the badgers roll at ease,
There was once a road through the woods.

Yet, if you enter the woods
Of a summer evening late,
When the night-air cools on the trout-ringed pools
Where the otter whistles his mate.
(They fear not men in the woods,
Because they see so few)
You will hear the beat of a horse’s feet,
And the swish of a skirt in the dew,
Steadily cantering through
The misty solitudes,
As though they perfectly knew
The old lost road through the woods. . . . 

But there is no road through the woods.”

 

Rudyard Kipling – author & poet – 1865 –1936

 

One can only admire the fortitude and stoical attitude of the people of Manchester after their ‘loved ones’ suffered the most barbaric attack by some religiously crazed British-born jihadi maniac, detonating his suicide bomb in the foyer of the Manchester Arena. This despicable coward caused carnage and unimaginable grief not only to the grieving families but also to all who live and work in that wonderful city! The whole country salutes you and stands four-square behind Manchester! It is, of course, also alarming to hear that that the security threat level has now been upgraded from severe to CRITICAL.

 

It proved very difficult for market practioners to raise much in the way of enthusiasm, post the fall-out from the heinous Manchester bombing.  I suppose investors should be grateful for small mercies that the level of volatility that prevailed at the time of ‘9/11’ and ‘7/7’ in 2005 had dissipated almost without trace.  In fact, despite the desperate news, the FTSE 100 briefly flirted with another infra-day record at 7515 (record 7522), before closing just below the Plimsoll line at 7485.  However the FTSE 250 did reach record levels at 19920, having at one point reached 19970. This index is a relatively accurate barometer of the UK economy and its rally like the ‘Phoenix from the ashes’ since 27th June 2016 (BREXIT), when it stood at 14967 is truly remarkable – up 33%!    Activity was marginally better than moribund with banks and oils leading the way. Homeserve, the emergency repairs service operator, definitely grabbed the yellow jersey – up 10.8% on a 20% increase in profits. Chancellor Hammond will have been dispirited by the fact that government borrowing rose to £10.4 billion – up £1.2 billion more than in April 2016 and up £1.6 billion above analysts’ expectations. Why? Rising inflation has eaten in to consumers’ appetite to spend money on the high street and on-line – hence lower VAT receipts. VAT raised £11.2 billion – only 0.2% above 2016’s achievements.

 

On the Street of Dreams dealers were in a reflective frame of mind and spent most of the day contemplating over the content of today’s FOMC minutes.  Though the data looks a bit softer, many believe the FED could well raise rates 25 basis points in June.  Tomorrow’s OPEC meeting is also eagerly awaited. OPEC players seem to be offering guidance of a potential extension to the November output cut agreement, which should keep oil prices above $50 a barrel. US MARKETS CLOSED as follows with YTD performances – DOW: 20,937 +0.21% +5.947% S&P: 2,398 +0.18% +7.128% NASDAQ: 5,703 +0.07% +17.265%.  Ford Motor Company fired its CEO Mark Field – well he retired!

 

 

China was downgraded by Moody’s to A! from Aa3.  This is a worry, though the world and his wife has been concerned about the size of local government debt and the humungous exposure of Chinese banks. This downgrade is no more than a realisation. As Asian markets head to the close, the main bourses have performed as follows – NIKKEI: 19,715 +0.52% +3.127% HANG SENG: 25,367 -0.14% +15.354% CHINA: 3,403 -0.61% +1.648% ASX: 5,758 +0.01% +1.648%.

 

So M&S posted their numbers – hugely disappointing. Profits were down from £689m last year to £630m. Gone are the days of £1 billion profit in 1997 and in 2007, when Lord Rose was at the helm. I suspect Sir Philip Green’s bid in 2004. Total merchandising down 5.9% – like for like sales for food -0.8% and clothing -3.4%. I am hardly known for my sartorial elegance – pear shaped.  However I know what a fine looking filly and a good looking bloke look like and these people will not be flocking in their droves into M&S emporiums, unless there is a realisation that M&S fashions are dowdy! Thank goodness Archie Norman will be there as the new chairman to kick backsides in the same manner he did at ASDA and ITV. Also welcome to Jill McDonald who hopefully will be marginally more inspiring about fashion. The share drifted down 1.57%, but the ‘NORMAN FACTOR’ has clearly been positive – shares at 9.00am +1.6% at 393p.

 

Kingfisher posted very mixed results – awful in France with sales down 5.5%, though the UK and Ireland were encouraging – +3.5%. Sales totalled £2.8 billion.  Investors were underwhelmed dragging their shares down by 6.77%. Dixons Carphone pleased their acolytes – shares up 2.3%.

 

Finally it never seems to rain but it pours on Barclays Bank.  Fresh from Jes Staley’s problems, the ‘bald eagle’ is now confronted by a £1.6 billion PPI lawsuit from credit card company, CCUK. 

 

 

 

UK companies posting numbers this week – Wednesday – M&S, Mediclinic, Babcock International, Vedanta Resources, Britvic, Kingfisher, Dixons Carphone, HSS Hire, Thursday – Tate& Lyle, Pets at Home, United Utilities, Halfords, DMGT, Inchcape, Card Factory, L&G, Friday – Intertek, Spectris, Restaurant Group

 

US companies posting numbers – Wednesday Tiffany’s, Thursday – Hormel Foods, Best Buy

 

Economic data this week – Wednesday – FOMC Minutes, Thursday OPEC meeting, BBA Mortgage approvals, UK GDP 2nd Quarter estimate

 

 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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