TODAY’S FAYRE – Wednesday, 8th December 2017


“He would declare and could himself believe
That the birds there in all the garden round
From having heard the daylong voice of Eve
Had added to their own an oversound,
Her tone of meaning but without the words.
Admittedly an eloquence so soft
Could only have had an influence on birds
When call or laughter carried it aloft.
Be that as may be, she was in their song.
Moreover her voice upon their voices crossed

Had now persisted in the woods so long
That probably it never would be lost.
Never again would birds’ song be the same.
And to do that to birds was why she came.” 


Robert Frost – poet – 1874-1963


So at 6.50am this morning we heard from the PM that a basis for agreement on the Divorce Bill, Citizens Rights, the on-going roll of the ECJ and the Ireland/NI border issues, had been cobbled together, allowing trade talks to start. Genuinely well done PM May!  You were dealt a horrible hand of cards. Your partner put you in to 4 spades and you only went down one, which metaphorically speaking was a great achievement.  I like the fact that M Juncker paid tribute to you for your tenacity and gentle handling of tricky negotiations.

Not everyone will be pleased.  The issues that will concern people the single market and customs union issue will remain an imponderable as a result of agreement in principle on the Irish border with NI and the question of the on-going roll of the ECJ particularly on regulation throughout the two year transition period.  It has been the start of the end of the beginning. HOWEVER the trade negotiations are fraught with danger and provide a seriously surmountable challenge.

My colleague, Simon French, Panmure’s chief economist makes the point – “The one thing to remember about this deal is that it still doesn’t tell us what kind of UK-EU relationship occurs post-Brexit. For businesses to know that arrangements on migration/ regulation are far more important than the divorce settlement.”  He also makes the following valid points – “A trade deal may not be agreed until well into Q4 2018/ Q1 2019. The EU will ask the UK what type of Brexit it wants in terms of


1) Regulatory alignment – That would keep NI/RoI happy and soft Brexiteers content; but it would limit the ability of the UK economy to look markedly different from the EU and get 3rd country trade deals.

2) Regulatory divergence – this calls into question the viability of no hard border, imposes trade frictions between EU/UK but does allow negotiating room on 3rd country trade (think chlorinated chicken and the US).


The problem for the government is that the Cabinet and Parliament are divided on this and when the PM has to opt for one it will cause fury amongst the other group. So whichever way you look at it this is a case of difficult conversations kicked down the road.


I always try to attend the Spectator’s Carol Service at St Bride’s Church, off Fleet Street – It is the place of worship for journalists.  For those who don’t know it, it is the most beautiful but simple Wren church tucked off the Eastern end of Fleet Street near Ludgate Hill. By attending this service of all the favourite carols, led by a superbly balanced choir with readings from this brilliant magazine’s contributors such as Andrew Neil, Fraser Nelson and Rod Liddle, I always feel that Christmas Festivities are up and running!


A decade or so ago, if investors had been looking at the equivalent of Trump, without any legitimacy, declaring Jerusalem as the capital of Israel, the UK and the EU indulging in unholy and unpleasant negotiations, thorough badly handled from a diplomatic perspective by both sides and the added dimension of North Korea not far off antagonising and needling the US into war, equity and bond markets would have fallen out of bed with everyone fleeing for the hills.  Not so today – almost total peace and tranquillity prevails. In fact yesterday the Street of Dreams posted a perfectly satisfactory trading session – the three main markets closed as follows – DOW +0.29%, S&P 500 +0.29% and the NASDAQ +0.54%.  The Dollar gained strength during the session and it was the tech sector together with industrials that gave the market a little impetus. Caterpillar +1.8%, Boeing +1.3% and Nike +1.4% captured the imagination. Coca-Cola -1.4% and Procter & Gamble -1.2% were the main laggards.


Asia redressed yesterday’s quite measurable losses with the NIKKEI leading the charge thanks to a weaker Yen and some better than expected Chinese trade data – exports Y/O/Y +12.3% against expectations of 5% and imports +17.7% against expectations of 11.3%. Asian markets finishes as follows – NIKKEI +1.39%, ASX +0.28%, Shanghai +0.55% and Hong Kong +1.19%.  In London yesterday the FTSE 100 eased by 27 points to 7320.  Apart from the CVC/Ladbroke acquisition deal which saw the latter’s shares rattle up by 28% it was DS Smith’s performance, a new entry in to the FTSE 100, which caught the eye.  Thanks to Amazon making a huge contribution to their packaging business, yesterday’s results saw shares up by nearly 3% and 37.2% on the year.


Initially, Bitcoin made headline on the business pages.  Today it was the front pages.  This crypto currency which has attracted 6 million traders since 2009, and whose share price has rallied from $234 19 months ago to $15476 as I speak, has attracted warning notices from Sir Howard Davies, the Chairman of RBS and Robert Shiller the Nobel prize winning economist.  Both think this asset is heading for a big fall. Sir Howard used an analogy from Dante’s Inferno – “Abandon hope, all ye who enter here!”  Maybe a bit strong but a ‘prenez-garde’ notice for this relatively unregulated market.  It will be interesting to see if a futures contract gives the product more liquidity.  Last night’s volatility was humungous. Bitcoin’s price hit $17139 at 1.55am this morning.  By 4.35am this morning it was down to $14749. As I speak at 10.10am it is $15475.  This is not a market for the faint-hearted. Traders need to know exactly how many beans make four!


At 10.10am the FTSE is up 18 points at 7339. The Pound has eased a smidgen from its high to $1.3481 from a high of $1.3512.  UK posted decent industrial production numbers at 9.30am and the sun is shining! Non-farm payrolls will be posted at 1.30pm GMT.


UK Companies posting numbers this week – Friday – Berkeley Group


US companies posting interim results this week – Friday – Johnson Outdoors


Economic data due this coming week – Friday – UK industrial production & Construction output


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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