TODAY’S FAYRE – Sunday, 16th July 2017


“Behold the apples’ rounded worlds:
juice-green of July rain,
the black polestar of flowers, the rind
mapped with its crimson stain.

The russet, crab and cottage red
burn to the sun’s hot brass,
then drop like sweat from every branch
and bubble in the grass.

They lie as wanton as they fall,
and where they fall and break,
the stallion clamps his crunching jaws,
the starling stabs his beak.

In each plump gourd the cidery bite
of boys’ teeth tears the skin;
the waltzing wasp consumes his share,
the bent worm enters in.

I, with as easy hunger, take
entire my season’s dole;
welcome the ripe, the sweet, the sour,
the hollow and the whole.”


Laurie Lee– poet – 1914-1997


You have to admire President Macron’s judgement in inviting President Trump and his wife to Bastille Day celebrations. Admittedly the invitation coincided with the 100 year anniversary when the US joined WW1. The reception given to President Trump was respectful and the occasion passed without incident and one can have little doubt that it will be to France’s long-term benefit.


Sadly the same cannot be said or guaranteed of UK’s crowds in similar circumstances. Had President Trump paid a state visit to GB, the feisty, liberal-minded anarchists would have massed their troops and unnecessarily embarrassed the monarchy and government. Football hooliganism seems to have infiltrated across aspects of society. No one minds a peaceful demonstration but there seems to be an excess of violence that always accompanies demonstrations on these occasions!


With unemployment at its lowest rate since 1975 (4.5%), interest rates in the lowest cycle in living memory and the stock market within 150 points of its record, who would have believed that the U.K. would be in such a vortex of political uncertainty and despair? However, as was confirmed on Saturday morning living standards, with the exception of the wealthy, are lower than they were fifteen years ago. That of course what is not taken in to account from the Resolution Foundation’s Report is the fact that the top 1% have doubled their share of income. Their share of the income pie is 11% but their tax share is 28%! It is fair to say that the divide between those that have and those that have not is unacceptable. I am more than convinced that if the government threw the kitchen sink at the housing crisis, the gap would be measurably alleviated. Affordable housing in the current economic climate, when BREXIT could temporarily slow down the economy, is a prerequisite.


We have had a galaxy of wonderful of sporting fayre this weekend. The women’s Wimbledon final was a disappointing one-sided affair, with Venus Williams completely out of sorts, though take nothing away from Garbiñe Muguruza – perhaps the first of a few championships for this talented 23-year-old, who also won at Roland Garros in May. The test match at Trent Bridge was riveting. A peach of a cameo innings from Joe Root and some fine bowling by Anderson and the well-balanced South African attack. Many hope that Roger Federer wins his 7th Wimbledon title this afternoon and I am wholly ambivalent about the Grand Prix, though I expect Hamilton to win!


The content of Wednesday’s and Thursday’s Humphrey Hawkins lecture, delivered by FED Chairman Yellen to Congress was sufficiently upbeat about the US economy as well as dovish enough in regard to interest rate policy in the months and years to come, to allow US equities to crack on last week – the DOW was +1.8% on the week (its best week for 2 months), another record and the S&P 500 by 1.29% and the NASDAQ by a spirited 2.5% thanks to the resurgence of Amazon, which had an impressive week for its Prime service (+2.5%) and momentum from Apple (+3.4%) and Alphabet (+3.3%). Not surprisingly the Dollar retreated by 0.5% to a ten month low. Bond yields drifted back from recent sharp rises. M/S Yellen told Congress that any rate rises would be slow and gradual and that the FED would be looking to taper quantitative easing when appropriate.


Friday saw the start of earnings season, with three of the main banks setting down their respective stalls – JP Morgan, Citibank and Wells Fargo. Though JP Morgan recorded its highest quarterly profit of $7 billion, its trading revenues were down 19% due to lack of volatility. CEO Jamie Dimon was not very subtle when criticising the US government for its lack of innovation in terms of education, regulation and taxation reforms. Citibank also beat expectations with a profit of $3.9 billion with decent investment banking results, though revenues for foreign exchange, commodities and fixed income were down 6% and activity in equities was 11% lower for the quarter. Wells Fargo numbers were adequate but concern was expressed about costs. Wells Fargo has been taking measures to cut $4 billion from its annual expenses by 2019 and there was more work to do! Its net income rose 4.5 percent to $5.40 billion, or $1.07 per share, in the quarter, topping the average analyst estimate of $1.01. The respective shares fell as follows on Friday – JP Morgan -0.9%, Citibank -0.3% and Wells Fargo 1.1% – not a bad effort considering the incredible rally of the sector since Presidential Election day – JP Morgan up by 35%, Citibank by 37% and Well Fargo not so spectacularly by 23%. The earning season gathers momentum next week and by Friday we should have a decent idea as to the quality of the results.


The FTSE 100 meandered along adding a rather parsimonious 0.37% on the week, with mining and oil stocks attempting to sit up and take nourishment with BT (+4% on the week) and Vodafone (+2% until Thursday, when its share price gave up the ghost to end flat on the week) promising to improve their respective broadband services. Stephen Rowe, M&S’S CEO whispered sweet nothings in investors’ ears, about the fact that general merchandise sales were not as bad as many thought (-1.2% like for like in the last quarter) and food -0.1% in the same period.  However, even despite reassurances from the arrival of Jill McDonald from Halfords, investors were having none of it – shares down over 5% on the week to 325p, Carillion had a shocker and lost nearly 70% in value last week thanks to an awful profits warning and eye-watering level of debt (£700 million). Access to funds will need to be dealt with, sooner rather than later, to appease the market’s cynics. Carillion employs 50,000 people world-wide.  European stocks enjoyed some ebullient gains last week, with bank, drug and oil sectors all performing with some aplomb – up 1.7%. The Nikkei added a short 1% – it might have been more but for a relatively strong Yen.


After a very successful week for its Prime service, Amazon seems hell bent on challenging the US’S $780 billion grocery market with a plan to deliver meal-kits to peoples’ homes – so the Sunday Times tells us.  There are rumours that some key investors in Barclays want the bank to be broken up in to a retail bank and an investment bank, There is no chance of this happening until the outcome of the Qatar share transaction trial. Unilever is locked in negotiations to buy Reckitt Benckiser’s food division, which includes Coleman’s mustard and spam. If a sale takes place it might be a precursor to RB selling its homecare division as its prepares to buy Mead Johnson for $18 billion.


There is little doubt that the UK has a potential consumer debt crisis. 24% of lenders reported that there was a rise in credit card default payments and 30.3% of lenders say that there has been a marked increase in the default of servicing car loans and personal debt loans. This is a worrying trend, which the Bank of England will be more than aware of and has started implementing ways of controlling lending.  With a view to alleviating the pain of debt some lenders have given as much as 43 months of interest relief.  


UK companies posting numbers this week – Monday – Rio Tinto, Tuesday – NCC Group, IG Group, Ideagen, BHP Billiton, Wednesday – Drax,  Wizz Air, RPC Group, Evraz, TalkTalk, Severn Trent, Thursday – Sports Direct, Moneysupermarket, Unilever, Howden Joinery, Premier Foods, Anglo-American, SSE, EasyJet, Friday – Acacia Mining, Euromoney, Close Brothers, Vodafone.


    US companies posting results this week – Monday – Blackrock, Brown & Brown, Netflix, Tuesday – Johnson & Johnson, Bank of America Merrill Lynch, Harley-Davidson, UnitedHealth, Lockheed Martin, CSX Corpn, Wednesday – Northern Trust, Alcoa, American Express, Thursday – Omnicom, Bank of New York Mellon, Travelers, Abbott Labs, Microsoft, eBay, Snap-on Inc, Philip Morris



Economic data posted this week – Rightmove Housing Index, Tuesday – UK PPI, CPI & Retail Price indices, Thursday – CBI Industrial Order Expectations, US Initial Jobless Claims, Friday – UK PSBR, US PMI Manufacturing


 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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