TODAY’S FAYRE – Monday, 3rd July 2017


I hear America singing, the varied carols I hear,

Those of mechanics, each one singing his as it should be blithe

and strong,

The carpenter singing his as he measures his plank or beam,

The mason singing his as he makes ready for work, or leaves off


The boatman singing what belongs to him in his boat, the

deckhand singing on the steamboat deck,

The shoemaker singing as he sits on his bench, the hatter singing

as he stands,

The wood-cutter’s song, the ploughboy’s on his way in the

morning, or at noon intermission or at sundown,

The delicious singing of the mother, or of the young wife at

work, or of the girl sewing or washing,

Each singing what belongs to him or her and to none else,

The day what belongs to the day—at night the party of young

fellows, robust, friendly,

Singing with open mouths their strong melodious songs.


Walt Whitman – poet – 1819-1892


To win the final rugby test at Eden Park next Saturday would be an achievement of gargantuan proportions by the British and Irish Lions. For a scratch side to go to New Zealand after a exhausting and long domestic season with only a month’s preparation and compete is fantastic.  However, for the All-Blacks to have lost the game on Saturday in Wellington by 21-24, when missing a player of Sonny Bill William’s stature for all but 22 minutes of the game, just goes to show what an incredibly talented and resilient team the it is! Also the Kiwi kicker, Barrett missed at least three relatively regulation penalties, though conditions under foot were very wet. However the Lion’s defence was immense, with the All-Blacks unable to cross their line, whilst Faletao and Murray scored two excellent tries! All to play for at Eden Park this coming Saturday!


On the whole I am a fan of Michael Gove’s political antennae. I would respect him even more if he were to admit that the £1 billion given to N Ireland to secure the support of the DUP was a necessary political ‘BUNG’ to provide a working majority for this rather weak government.


As Emmanuel Macron awaits the visit of President Trump on Bastille Day, the French President is wasting no time in whispering sweet nothings in to the ears of bankers and French ex-patriots to return to France with the possibility of tax breaks, which he will also be offering to international film companies – He’s a boy!


I am normally very happy to listen to the great Central bankers of the day and respect the content of their remarks, policies and edicts. Last week was probably the rare exception to the rule. There appeared to be a high-degree of miscommunication or misunderstanding. The less than clear prognoses from the BOE and the ECB on interest rates and monetary policies in general set foreign exchanges markets bobbing around with a high degree of uncertainty like corks in a bath! 


Firstly BOE Governor Mark Carney, post last week’s MPC meeting, which voted 5-2 to leave rates unchanged, told markets that the time was not right to hike rates with so much uncertainty prevailing ahead of BREXIT negotiations, regardless of the fact that inflation had reached 2.9%. These minutes had not even been circulated when BOE Chief Economist Andy Haldane controversially suggested that he might vote for a hike in August. Shortly afterwards Mr Carney appeared to his change his mind saying that conditions were changing. Consequently a modest rise in rates could well be justified! What was the market to think? The Pound wobbled for a few days down to $1.265 and then rose sharply to $1.30.21 on Friday evening. Of course Carney has worryingly acute consumer credit to contain – growing roughly by 10% annually in recent years. If a push comes to a shove the MPC will leave rates well alone apart from restoring the 25 basis point cut last summer as a symbolic gesture.


As for the ECB’S Mario Draghi, he also put the cat amongst the pigeons. Markets felt that he was signalling the contraction of stimulus. Draghi, the following day was forced to say that the market had misunderstood his message and that the current rate of stimulus was still required. Again these comments added to an already totally confused market place.  Then of course the threat of higher rates in the US, not discouraged by FED chairman Janet Yellen, rattled the cage of international bond markets. Yields shot up abruptly, which may not augur well for the economies of emerging markets.  However we need to put these moves in perspective – rates are still historically very low.

Last week the S&P 500 yielded 0.48% in value and the NASDAQ looked very volatile and vulnerable shedding 1.8%, with the likes of Alphabet, Netflix, Apple and Facebook being subjected to some rough treatment. The FTSE 100 continued its downward spiral easing by 1.5% – much of it down to the strength of Sterling and the weakness of the May Government who are failing to find unanimity of purpose over BREXIT negotiations. This does not augur well for investment going forward.  According to the FT the SMMT signalled that investment the UK car industry has fallen to just £322m in the first half of 2017, in a sign that companies are delaying or cancelling spending ahead of the UK leaving the EU. Last year £1.66bn was invested in the auto sector, more than 30 per cent down from £2.5bn in 2015, as carmakers and their suppliers delayed non-essential investment following the EU referendum last June. Also if public sector pay is increased above the 1% guideline, inflation pressures could become a real worry. The final nail in the coffin this week for the UK was the fact that GDP fell to 0.2% in the first quarter (+0.7% in last quarter of 2016) – the bottom of the G7 pile.  European bourses were also dragged down on negative sentiment as well as for valuation reasons. They have had a great run on the rails in recent months – down 1.11% on the week. Japan’s Nikkei eased 0.49% on the strength of the yen.


There was quite a compendium of corporate and economic news to digest last week and to consider this week.  Culture Secretary Karen Bradley referred the 21st Century £11.7 billion bid for the remaining 61% of Sky to the CMA for further scrutiny, for competition reasons,  I hope it proves to be no more than delaying tactics. Murdoch may have had some issues with the competition in the UK but he has proved to be a brilliant supporter of the press as well as a great employer. Debenhams reported some very average results and it is becoming equally clear that hedge funds such as Odey and Marshall Wace have massed their troops for an assault on the likes of Morrison, Ocado, Sainsbury, Next, Halfords and Debenhams. Google was the recipient of a $2.4 billion fine for preventing competition through its search engines, which are alleged to have damaged on-line sales.  Too much protectionism in my book – charge what the traffic will bear.  If Google’s appeal is rejected, there could be many civil cases. They could be very damaging for the EU’s relationship with the US. BAE Systems has landed a £4.7 billion contract to build frigates from the MOD. Barclays has chosen Dublin for its EU banking operation, which could take 150 people from London to the Irish Capital – a decent contingency plan. Softbank is rumoured to be taking a £1 billion investment in Dilveroo. J Sainbury posts numbers on Wednesday.  Whereas the acquisition of Argos will continue its progress the supermarket business may have struggled as the market awaits news of the Nisa operation. Inflation and less disposable income from the consumer may see sales fall perhaps even in to negative territory. Savings in the UK have reached dangerously low levels – just 1.7% of earnings. Fears of lower growth, inflation and rising taxes have damaged savers’ appetite to put money away for a rainy day.


UK companies posting numbers this week – Monday – SuperGroup, Tuesday – Imagination Technology, RPS Group, J Sainsbury, Wednesday – Ocado, Booker, Topps Tiles, IAG, SIG, Persimmon, Thursday – AB Foods, Great Portland Estates, Friday – Dunelm


US Companies posting interim results this week – Monday – Ford (sales), Wednesday – Yum China Holdings, Thursday – Cherokee Inc



Economic data posted this week – Monday – US construction, Tuesday – US PMI Construction, Wednesday – BRC Shop price Index, US Factory orders, Thursday – US Balance of Trade, Friday – Halifax House Price Index, UK Trade Balance, UK Industrial Production, US Non-Farm Payrolls & unemployment rate (4.3%)


 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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