TODAY’S FAYRE – London’s Terrorist attack, politics & markets

TODAY’S FAYRE – Sunday 4thJune 2017



The lads in their hundreds to Ludlow come in for the fair,

There’s men from the barn and the forge and the mill and the fold,

The lads for the girls and the lads for the liquor are there,

And there with the rest are the lads that will never be old.


There’s chaps from the town and the field and the till and the cart,

And many to count are the stalwart, and many the brave,

And many the handsome of face and the handsome of heart,

And few that will carry their looks or their truth to the grave.


I wish one could know them, I wish there were tokens to tell

The fortunate fellows that now you can never discern;

And then one could talk with them friendly and wish them farewell

And watch them depart on the way that they will not return.


But now you may stare as you like and there’s nothing to scan;

And brushing your elbow unguessed-at and not to be told

They carry back bright to the coiner the mintage of man,

The lads that will die in their glory and never be old.”


AE Housman – poet – 1859 –1936


    After last night’s terrorist attack on London Bridge resulting in 6 people being killed and many others being badly maimed or injured with three perpetrators shot dead, to be writing anything on markets seems somewhat trivial trite and embarrassing.  So please forgive me! Again it goes without saying that in quite desperate circumstances, the police, ambulance service, doctor and nurses seem to have acted with incredible speed, kindness and efficiency in response to another brutal and barbaric atrocity. Our hearts go out to the grieving families. London thanks all those brilliant services!

    It has been a wretched week in UK politics and the sooner this truly awful campaign comes to an end, I suspect the majority of voters, regardless of their political persuasion, will be delighted. The most forgettable and regrettable forum was at Cambridge University, which seven leaders or ministers scrapped like alley cats in a ninety minute exchange of irrational trite gibberish, which enhanced no one’s reputation, though Labour’s rent-a-crowd would profoundly disagree with me. PM May was absolutely right, despite the wholesale criticism, to give it a very wide berth. In fairness to Amber Rudd, she was very resolute in tricky conditions and also in the wake of her father passing away. Some sanity returned in the BBC hosted York ‘Question Time’, which allowed Mrs May and Mr Corbyn the chance to answer questions. The PM was, needless to say, heavily criticised for prevarication on some issues and Mr Corbyn was found woefully wanting on matters of defence, security and financial literacy! – No change there!


What has become increasing clear during this election bunfight is the importance of social media and I think Labour are using these visceral and effective tools – Facebook and Twitter – to far greater effect. Rarely have I seen such desperately acrid rhetoric.  The young have been galvanised in to action and if they actually bother to rock up to the polling stations to vote, be prepared for a very close contest. What has surprised me is how little time has been spent on the economy and BREXIT to good effect.  Labour could have been buried without trace on both had the campaign been cleverly handled. If there was a hung parliament it has become clear that the SNP would work with Labour. It is interesting to note that Scotland’s economy is not in great shape. Alex Salmond woefully over-estimated oil revenues and economists tell us that Scotland is spending £127 for every £100 of tax revenue it is receiving.


France’s President Macron has surprised many observers how well his party ‘En Marche’ has done in reaching out for candidates for this month’s legislative election. I understand he is expected to get a working majority. He has also opened the door for Putin, which is more than any other European leader has achieved or wanted to, since Merkel fell out with the Russian President 4 years ago. I was quietly amused that the octogenarian trader/philanthropist George Soros is of the opinion the EU must adopt a more conciliatory attitude rather than a Federal one to political life and that it should not try and punish the UK over BREXIT. However I wonder if anyone is listening or even interested in his pontifications.


World leaders, business industry and commerce were irritated beyond belief that President Trump withdrew from the Paris Climate Change accord. Even US business is forlorn at Trump’s contempt for global consensus.  President Trump’s resistance is not only understandable but also not remotely surprising. So long as night follows day Trump was never going to endorse an Obama initiative straight off the bat. I suppose he was also true to election manifesto.  It was also naïve to think that PM May was going to openly castigate President Trump for his decision. In the current circumstances quiet diplomacy behind closed doors or on the phone is preferable. Also Mrs May needs the support of the US when the level of hostility by the EU towards the UK over Brexit is rising in temperature every day! Ladies and Gentlemen – get real!


Opera Holland Park started its season last Friday with one of Puccini’s lesser known works – La Rondine, with Elizabeth Llewelyn (soprano) and Matteo Lippi (tenor) in the lead roles. I can only use one word – sensational. The conductor Matthew Kofi Waldren brought this lavish and very tuneful production to life with great enthusiasm and gusto. The quality of the singing was off the scale.  For Londoners who enjoy a picnic, a glass of decent white burgundy and a bit of romance – this is a must.


Political considerations on both sides of the pond gave more credence to a ponderous approach towards equity markets than earnings or corporate news last week.  The Beige Book, improved retail activity and employment data provided by Thursday’s ADP Index for the private sector seemed to provide some confidence that the US economy was starting to go on a roll. However Friday’s Non-Farm payrolls were disappointing in some respects. Only 138k jobs were created In May against expectations of 185k.  This the third month that this data has marginally disappointed. However unemployment fell from 4.4% to 4.3%, but wage inflation was somewhat anaemic at 2.5%.  Skilled labour is also in short supply. So the Dollar fell, Treasury yields dipped, maybe putting a rate hike expected this month on hold.  Oil prices also dipped in response to Trump’s decision not to back the Paris climate accord – down the best part of 4% on the week.  Despite this rather negative end to the week, US and UK markets finishes at record levels or still flirting with them. Why? Well TINA was on the premises.  Who or what is TINA, you might say – T.I.N.A – THERE IS NO ALTERNATIVE. Other asset classes remain unappetising. Last week the S&P added 0.87%, the FTSE 100 0.23%, European bourses an average of 0.30% and the NIKKEI was up a measurable 2.49% thanks to improved economic data and buoyant retail sales +3%.


In the US banks made a return to form with many adding the best part of 2% this week, having surrendered some value after the post-election Trump surge based on infrastructure spending, which has been slow to come to hand. Here in Old Blighty the economic news will not have warmed the cockles of PM May’s heart.  Mortgage applications were the lowest last month for seven years, though house building is starting to bloom again. The UK’s GDP fell to 0.2% in the first quarter of the year in concert with Italy.  The US was not that much better (bad weather).  Canada was top +0.0%, with Japan +0.5% and France +0.4%.


Lloyds Banking Group completed the purchase of MBNA from Bank of America for £1.9 billion.  Some RBS shareholders (4500) are looking for another 20p per share on top of the 82p offered to settle their claim. CEO Ross McEwan will be keen to prevent Goodwin, McKillop, Whittaker and Cameron from giving evidence in court, so negotiations will become fraught. The US’S PPG failed to persuade Akzo Nobel to sell their business for E26 billion which is likely to save 3,300 jobs at Dulux. Barclays has all but sold their African operation for £1.6 billion only retaining a 15% interest, which does not have to appear on its balance sheet.


The Sunday Times tells us that Sir Philip Green has called in McKinsey to help improve Arcadia’s wilting operation.  BA, after last weeks’ computer disaster may consider our-sourcing data through Capita. It also tells us that the LSE’ hope of floating Saudi’s ARAMCO IPO will not be plain sailing.  All market rules must be adhered to. The Telegraph informs readers this AM that BT’s pension black hole may have improved by £7 billion thanks to a lower Pound and the resultant stock market rally.


Finally as we haed to the final week of electioneering, there is little doubt that due to a plethora of banana skins which the government keeps skidding on, Corbyn finds himself almost at the doorstep of Downing Street. Tin hats must be at the ready for that eventuality.  The Pound will be trashed and confidence will disappear almost without trace!


UK companies posting numbers this week – Monday – TBC Bank, RedstoneConnect, Tuesday – AO World, IAG, BP Marsh & Partners, Gem Diamonds, Wednesday – RPC Group, Workspace Group, Thursday – Audio Boom, FlyBe, CMC Markets, Boohoo, Friday – Fuller Smith & Turner


Economic data this week – Monday – UK PMI (services), US PMI (Services), Wednesday – BRC Shop Index, NIESR GDP, Thursday – US Initial Jobless Claims, Friday – RICS House Prices, UK industrial Production, UK construction, UK Consumer Inflation.


 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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