TODAY’S FAYRE – Thursday, 25th May 2017

 

 

“Turning and turning in the widening gyre

The falcon cannot hear the falconer;

Things fall apart; the centre cannot hold;

Mere anarchy is loosed upon the world,

The blood-dimmed tide is loosed, and everywhere

The ceremony of innocence is drowned;

The best lack all conviction, while the worst

Are full of passionate intensity.

 

Surely some revelation is at hand;

Surely the Second Coming is at hand.

The Second Coming! Hardly are those words out

When a vast image out of Spiritus Mundi

Troubles my sight: somewhere in sands of the desert

A shape with lion body and the head of a man,

A gaze blank and pitiless as the sun,

Is moving its slow thighs, while all about it

Reel shadows of the indignant desert birds.

The darkness drops again; but now I know

That twenty centuries of stony sleep

Were vexed to nightmare by a rocking cradle,

And what rough beast, its hour come round at last,

Slouches towards Bethlehem to be born?”

 

WB Yeats – poet & author – 1865-1939

 

You couldn’t have scripted a more gratifying result to the Europa Cup final in Stockholm, if you had tried to. After the appalling tragedy that swept through the great City of Manchester on Monday night, this was a real tonic of solidarity, which might just alleviate a tiny morsel of unimaginable pain. Well done Manchester United and hats off to the indomitable Joe Mourinho!

 

What on earth is going on with the press in US?  Even if the New York Times was leaked information about the Manchester bomber, has this newspaper no code of conduct?  It must know that sensitive information of this nature can not only cause unnecessary grief but it could also hamper the on-going investigation. Here’s hoping that PM May can provide further ammunition for President Trump’s crusade against the New York Times for perpetrating ‘fake’ or mischievous news.  One does not expect such shabby treatment on security issues from a member of the press of your closest ally.

 

UK stock markets continued to flirt with all-time records – FTSE 100 closing up 40 points at 7514 (7522) and the FTSE 250 up 30 points at 19950 (19970). BAE Systems on the back of Trump’s success in Saudi Arabia saw its shares reach record levels at 650p. easyJet +3.3% and Britvic shone through a rather lack-lustre session. More stuff has been written about M&S than one can imagine.  I suspect the ‘Archie Norman’ syndrome allowed the shares to rally 4% in the last week.  It certainly wasn’t the performance in the last quarter or the year end results which were very disappointing. Despite ambivalent comments by Glencore in regards to acquiring Bunge, the grain titan, the latter’s share price gain at 16.6%. We await developments.

 

US equity markets showed a smidgen of vitality, responding to the content of the FOMC minutes, which took all three indices to new record levels – DOW 21,012 +0.36% +6.324% S&P: 2,404 +0.25%+7.395% NASDAQ: 5,730 +0.47% +17.82%.  It looks as though the FED rate may go to 1.25% in June, though some of the economic data in the last month has looked a little soft. This was reflected in the views of ‘most participants’ (both covering voting and non-voting FOMC members). They think a rate hike will be appropriate ‘soon’. As mentioned in the statement, the FOMC members were not worried about the weak GDP growth in Q1, which they think is transitory and partly reflecting negative residual seasonality. The members also noted that the unemployment rate had dropped further below the Fed’s NAIRU estimate of 4.7% to 4.4% with inflation benign at 1.9%.

 

What was really interesting was the fact that the minutes stated quantitative tightening will be conducted ‘in a gradual and predictable manner’. The staff proposes that the FOMC announces a set of gradually increasing caps/limits on the dollar amounts of bonds that will be allowed to run off each month and only reinvest the amounts that exceeded the caps each month. The FED’S balance sheet is gargantuan and stands at $4.47 trillion.  I would very much like the BOE to adopt a similar policy.  QE is only £425 billion, but the UK still needs weaning from QE.

 

This morning  the FTSE started with a spring in its heal – up 15 points but since then it has surrendered a bit of ground and at 9.30am it was down 15 points at 7499. Halfords (+1.5%) and Card Factory (+1.5%) pleased their acolytes.  DMGT definitely did not and is down 6%.  There was also little joy from Tate & Lyle. The £2 billion merger between Wood Group and AMEC Foster Wheeler seems to have encountered some difficulties over Unoil, an associate of Wood, which is under investigation over fraud. This merger would value the joint operation at around £5 billion, employing 64k in this construction and energy service group. 1280 jobs would be cut at Wood in the event of a successful consummation to the deal.

 

Asian equity markets recovered from China’s downgrade yesterday and performed as follows plus YTD progress – NIKKEI: 19,826 +0.43% + 3.737% HANG SENG 25,623 +0.77% +16.484% CHINA 3,464 +1.19% +4.882% ASX: 5,779 +0.23% +1.982%. OPEC is likely to leave current production levels unchanged when it posts its findings in Vienna today.

 

UK companies posting numbers this week – Thursday – Tate& Lyle, Pets at Home, United Utilities, Halfords, DMGT, Inchcape, Card Factory, L&G, Friday – Intertek, Spectris, Restaurant Group

 

US companies posting numbers –Thursday – Hormel Foods, Best Buy

 

Economic data this week – 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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