TODAY’S FAYRE – Tuesday, 30th May 2017



“The skyline smoke veers – veers and dims

As unpredictable as your whims-

The planning seagull rockets by

With your identical watchful eye;

And everything – within, without –

Shakes to your voice, or the West wind’s shout.

Is there no peace – no kindly thought –

In this damned holiday resort?

At night, when quiet falls serene,

You’ll snore like a foundering submarine;

And I’ll lie still and watch the stars

Steal past the shuddering window bars;

Cold stars, whose rays across the years

Impartial glint, on dew – or tears.”


Arnold Simcock – poet – 1925 –2012


Chancellor Angela Merkel has been in power in Germany for twelve years. She’s a wily old bird and should know better than to not only raise the temperature in terms of her irritation with the US and the UK, but also to attempt to disenfranchise the UK when its knowledge on security and terrorism is invaluable. She has run the EU with the rod of iron for time immemorial and all other 27 constituent countries are but mere surfs to her beck and call.

Chancellor Merkel was being naïve if she ever thought President Trump was going to acquiesce to all of Obama’s policies on trade and climate change first time out! – No chance. Merkel is too used to dominating the EU without being challenged. Seeing her throw her toys out of her pram, because someone stood up to her, was unsightly. Also lumping the US and the UK together as unreliable allies was crude, unfair and unwarranted. Trump was just telling Germany to pay their fair share of NATO. Her feathers were ruffled!  Get over it! Finally many were very perplexed, though maybe not surprised to hear her uncomplimentary remarks about the UK and BREXIT. By adopting a visceral stance to the UK, Germany will be the loser.  Like it or not Germany and the EU need the UK for military and security support until it builds its own military capacity, which could take a decade. As times goes by the world should be left in no doubt that the EU is going Federal and the US and UK are becoming increasingly less than enamoured with globalisation.


Hats off to President Macron for inviting Putin to Versailles! The meeting may not have been an unqualified success but at least he held out an olive branch. Obama and others surrendered the initiative by putting China and Russia in the driving seat over an 8 year period with the President closing down any contact with Russia.  Yes, Putin is a despot but the West needs to be able to communicate with him, regardless of the fact he is a despot who behaved disgracefully towards Ukraine and Syria. So Macron’s move was sensible not only to establish himself as Merkel’s bag carrier, but also with the French people, who are likely to cause him endless grief over Labour laws in the years to come.


After all the furore, anguish and pain suffered in Manchester eight days ago, may I recommend a week of solace and R&A with a visit to the Yorkshire Moors.  They are Heaven reincarnated – virtually no WiFi, broadband or mobile reception. I have rarely experienced such beauty which is hard to replicate anywhere in the world. We stayed in Buckden near Kettlewell. I cannot recommend this area highly enough to recharge the batteries.  


Yesterday London and New York were shut for the Whitsun Bank Holiday and Memorial Day respectively. Just as a reminder New York markets closed as follows with YTD achievements DOW: 21,080 -0.01%% +6.668% S&P: 2,415 +0.03% +7.905% NASDAQ: 5,788 +0.17% +19.013%.  Asia saw little activity though a strong Yen saw the NIKKEI easier to start with but retail sales in Japan rallied by 3% last month, resulting in the NIKKEI heading for positive territory – Towards the close markets were as follows again with YTD achievements – NIKKEI 19,691 +0.03% + 2.989%, HANG SENG 25,701 +0.24% +16.823%, CHINA: 3,480 -0.15% +5.147% ASX: 5,726 +0.33% +1.0.054%.

This morning Ryanair posted results which saw profits up 6% to €1.316 billion with fares -13% in the year ending March 2017 Expect fares to fall further 5-7% current year.  This airline is still adding capacity faster than demand growing, but Michael O’Leary was hardly overflowing with confidence about the future, whining about the fall in the Pound and the potential adverse effect of BREXIT. The shares fell by 3.7% first thing but are now down just 0.6%. They are up 58% in the last 7 months. At 10.45am the FTSE is down just 22 points at 7525.


For the appalling treatment meted out to passengers by BA over the past weekend due to power failure to its computer system, the markets have been unbelievably kind to its share price – down just 2.6% in response to Madrid yesterday taking IAG’s share down 3%. This problem will have damaged the brand.  It may have cost the company £150 billion with 75k customers being adversely affected. Observers say it was just a one-off and IAG will recover quickly!  I wonder.  Where was Willie Walsh – not a ‘Dickey Bird.’  So who cares about Alex Cruz –a budget airline expert! Who wants to speak to the ‘oily rag, when the engine driver about! I must say the PR exercise gets dix points.  I accept a power issue that took the computer system out.  But there should have been a duplicate computer system with a separate power supply in another country or city at least. Talk of re-organising flights elsewhere was fanciful I fear.  IAG/BA has not heard the last of this debacle. I thought the shares would be down 8-10%.  Well done the PR company!


On the subject of France/Paris attracting banks courtesy of comments made by Francois, Villeroy de Galhou of the ECB on the basis of London losing clearing, which employs 80k people, ‘on yer bike, mate!’ The US has already warned the EU in words of one syllable – ‘Mess with clearing, the largest insurance company in the world, where London is the dominant player, just because you have the raving ache with the UK over BREXIT, and we will repatriate huge chunks to New York!’ Yes, I am still aware that HSBC and others want to move a couple of thousand employees to Paris for contingency plans, but that does not mean the capitulation of London as a major banking sector.


Finally to the problem flagged up by the FT today – that of concern over gargantuan car loans. This potential problem is parochial in comparison to sub-prime lending, despite loans for cars reaching $1.17 trillion in the US – up 70% from 2010. This is grown up money. Ex RBS Finance Director Bruce Van Saun, now CEO of Citizens Bank believes that many banks would like to steer away from car loans and head in the direction of student loans.


Here in Old Blighty total consumer loans stand at £1.6 trillion. Of that amount 85% of these loans are in mortgages and the rest are made in credit card loans and car loans.  Car loans are about 7% of the total and the proportions are very similar in the US. It is a worrying situations with sluggish wage inflation and the value of second hand cars dropping, but the outlook is grave rather than catastrophic – no comparison to sub-prime of credit crisis of 2008/9.


UK companies posting numbers this week – Tuesday – Horizon Discovery, Ryanair, Wednesday – London Metric Property, Alpha Bank, IG Group, Thursday – Johnson Matthey, First Group, Friday – KCOM Group


US companies posting numbers – Tuesday – Quanex, Wednesday – Analog Devices


Economic data this week – Tuesday – US personal income & Spending, US Consumer Confidence, Nationwide House prices, Wednesday – Gfk Consumer Confidence, UK Mortgage approvals, US ADP Employment Index, Chicago PMI, Thursday – UK PMI Manufacturing, US PMI Construction, Initial Jobless Claims, Friday US Non-Farm Payrolls (+183k) & employment data (unemployment 4.5%).


 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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