TODAY’S FAYRE – Monday, 11th December 2017


“The Love a Life can show Below
Is but a filament, I know,
Of that diviner thing
That faints upon the face of Noon—
And smites the Tinder in the Sun—
And hinders Gabriel’s Wing—

‘Tis this—in Music—hints and sways—
And far abroad on Summer days—
Distils uncertain pain—
‘Tis this enamors in the East—
And tints the Transit in the West
With harrowing Iodine—

‘Tis this—invites—appalls—endows & mda sh;
Then—flings in Paradise— 


Emily Dickinson – poet – 1830-1986


Now that last week’s frenetic activity over the EU/UK negotiations has settled down with the greatest political compromise in living memory, I think it is fair to say that there is no more than an agenda to talk about over how the UK leaves the EU, at what cost plus the continuing influential role of the ECJ as well as a basis of retaining the status quo over the Irish border and that of Northern Ireland.  I think a sieve has rather less holes than this rather nebulous agreement.  ‘Hard Brexiteers’ will almost certainly pick up the cudgel and make their feelings very strongly felt.  I cannot see anyway that the Cabinet hardliners and their key back benchers will buy this potential basis for agreement in a month of Sundays, despite Michael Gove’s surprisingly conciliatory tone towards the achievements of PM Theresa May. However I am very much of the opinion that compromise is the only way of achieving a satisfactory outcome to BREXIT in the light of the Government’s wafer-thin majority and the EU’s uncompromising attitude and reluctance to negotiate meaningfully. Of course, it would say why should it? However what I think has become clearer is that ‘NO DEAL’ would not really suit the EU.


When all factions have time to look at the small print and with only just about 14 months to ago to agree a tortuous and unbelievably complicated trade agreement that has over 1400 tricky clauses to be successfully dealt with, it would come as no surprise, if a push came to a shove, a very strong case for ‘NO DEAL” was made by the hardliners.  PM May deserves a great deal of credit for agreeing an accord that prevented the EU from throwing its toys out of its pram and allowing both parties to push on with trade talks, subject to a ratified and tacit agreement from the other 26 members. Ireland will be clearly disappointed for being potentially hoodwinked over its borders and potentially a single market, which has no chance of being accepted. Also a wedge seems to have been driven between David Davis, the BREXIT Secretary and Chancellor Hammond.  Mr Davis tells us there will be no divorce settlement without a trade agreement, though the Chancellor believes there is a moral obligation to pay these dues regardless of any agreement.  Also it appears that Mr Davis has backed down over the border deal with Ireland suggesting it was an expression of intent, and not legally binding. Let’s hope that this is not the first of a slew of cracks appearing in a rather flaky agreement? There was also talk of full-alignment in terms of regulation associated with the ‘Single Market and also a continuation of payments to be made to the EU.  That won’t go down well in many quarters of a deeply divided government and country on this fraught issue.


Last week, despite huge concern expressed over President Trump’s rather undiplomatic behaviour in calling Jerusalem the new capital of Israel, (despite the fact that investors were buoyed by US tax reforms) and the fraught EU/UK negotiations, which went down to the wire, global equities managed to keep their poise and the main indices closed last week as follow – S&P +0.21%, FTSE 100 +1.28%, European bourses an average of +1.62% and the Nikkei -0.03%. Gold eased by $33 to $1247.00 an ounce, with Brent Crude down by 2.15 to $63.53 a barrel. Non-Farm payroll data was on the whole positive with 228k jobs being created in November and the unemployment rate remaining at a 17 year ‘low’ at 4.1%.  However wage inflation remains anaemic at 2.5% but it is expected to rise to 3% next year. Against that background, the FED is still expected to raise rates by 0.25% on Wednesday of this week. With tax reforms very much on investors’ agenda, banks were in demand and there was ‘buying’ interest in the likes of Boeing, Lockheed Martin, Caterpillar, Honeywell and the tech magnates – Apple, Alphabet, Amazon and Microsoft.


Back here in Old Blighty, Sterling bounced around like a cork in a bath between $1.35 down to $1.3390 with punters taking a mixed view on the Brexit negotiations. There was plenty of M&A activity around last week, with GVC bidding £3.9 billion for Ladbrokes which saw the latter’s share price rally by 28% on the day of the announcement.  21st Century may now sell assets including Sky (ex-news) to Disney for a consideration of approximately $60 billion. Hammerson have joined hands controversially as far as fund managers are concerned, with Intu in a retail property enterprise, which may require a change in business plan with more emphasis on entertainment and leisure, rather than shopping units. Investors were not wholly convinced. Later in the week Vodafone bounced on a ‘buy’ recommendation as did Tesco.  There was some interest in house builders, Barratt and Taylor Wimpey. Saga posted a poor profits warning – down 23% on the week. House of Fraser had its credit rating lowered, as did the owner of Poundland, the South African firm, Steinhoff, to junk status. BAE Systems has landed a contract with Qatar value at £5 billion for 24 Typhoon combat jets. Airbnb is threatening to lay out £1 billion to buy UK luxury travel agents – Hoseasons (70 year old camping business), James Villas Holidays, plus brands in Greece, Italy and Croatia. Airbnb carries listings of 3 million properties in 65K cities and towns across 191 countries. Wyndham’s European Villas rentals is also vying for this business. Dixons Carphone posts numbers on Wednesday and investors are expecting to see a 50% drop in profits, thanks to the increasing cost of mobile phones, which has resulted in people retaining their old phones for longer.


Finally the CBOE has opened its futures contract for BITCOIN today. Initially it triggered a 19.8% rise in the price of Bitcoin from $13853 to $16609.  There is a school of thought that suggests it may not be easy to ‘short’ a Bitcoin futures contract, according to the US luminary on the subject Nassim Taleb, who has over 200k followers. This is not an investment product for the faint hearted!  


UK Companies posting numbers this week – Monday – Photo-Me, Capita, Tuesday – Carpetright, Drax, Polar Capital, Balfour Beatty, NCC, Wednesday – Bellway, Dixons Carphone, PurpleBricks, Wood Group, Thursday – PZ Cussons, Capita, Sports Direct, 888 Holdings, Bunzl, Ocado, Petrofac


US companies posting interim results this week – Monday – Casey’s, Thursday – Oracle, Adobe Systems, Jabil Circuits, Costco


Economic data due this coming week – Tuesday – UK Inflation Data, UK House Price Index, US PPI, Wednesday – UK Wage Growth, UK unemployment data, US CPI, US Federal Reserve monetary policy decision, Thursday – UK Retail sales, MPC Decision Meeting, US Retail sales & US PMI Composite, Friday – US industrial Production


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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