TODAY’S FAYRE

 

TODAY’S FAYRE – Friday, 29thDecember 2017

 

 

“I had a dream, which was not all a dream.

The bright sun was extinguish’d, and the stars

Did wander darkling in the eternal space,

Rayless, and pathless, and the icy earth

Swung blind and blackening in the moonless air;

Morn came and went—and came, and brought no day,

And men forgot their passions in the dread

Of this their desolation; and all hearts

Were chill’d into a selfish prayer for light:

And they did live by watchfires—and the thrones,

The palaces of crowned kings—the huts,

The habitations of all things which dwell,

Were burnt for beacons; cities were consum’d,

And men were gather’d round their blazing homes

To look once more into each other’s face;

Happy were those who dwelt within the eye

Of the volcanos, and their mountain-torch:

A fearful hope was all the world contain’d;

Forests were set on fire—but hour by hour

They fell and faded—and the crackling trunks

Extinguish’d with a crash—and all was black.

 

George Gordon, Lord Byron – poet – 1904-1973

 

Rising from my pit at 3.30am in the morning on Wednesday and Thursday to watch Alistair Cook make his double hundred at the MCG was amongst the more worthwhile achievements I have witnessed in recent months. Great to see a real gentleman of the game return to form with the minimum of fuss having taken a tsunami of criticism along the way! Fantastic!

 

There can be few people who are not fed to the back teeth with BREXIT for the way it has deeply divided the country and according to some august economists leaving it dangerously uncertain as to its economic future. However perhaps it is as well to remember how events unfolded leading up to the referendum on 23rd June 2016 and the ensuing months of turmoil that followed. The Sunday Times’s Tim Shipman has written the most marvellous tome – ‘ALL OUT WAR’ – which gives a blow by blow account of the coterie of camps – Vote Leave, Leave EU and ‘Stronger’ In and ‘Remain’ with all the intrigue manifested by the main ‘dramatis personae!’ What I enjoyed so much about it was the fact it was a balanced and objective piece of literature after hours and hours of painstaking research. However, if a push comes to a shove, this book is more about how the ‘Remain’ brigade led by PM Cameron and Chancellor Osborne and its entourage shepherded by Sir Craig Oliver lost the referendum campaign rather than the Brexiteers winning it!

There is no doubt that Nigel Farage’s 20-year crusade to take the UK out of the EU triggered the referendum. The country and the PM’s team, a year before ‘D-Day’, thought ‘Remain’ were ‘nailed-on’, apart from George Osborne, who never wanted the referendum to be called and always nursed grave doubts about winning it. Why were ‘Remain’ put to the sword?

There were many contributing factors. Firstly the EU was never open to reform; or if it was, it had a funny way of showing it. They never considered throwing David Cameron a bone for the voters to chew on. Being out of the Euro and not part of Schengen plus the power of veto was never enough to persuade the majority of a disenchanted public that those factors were sufficient to maintain membership.

The main reasons for Brexiteers’ success were as follows. The dislike of much of the Tory party and the establishment was greatly underestimated. The fact that Farage managed to galvanise much of the North of England to vote Leave was erroneously dismissed by both Tories and Labour alike. ‘Stronger In’ hugely underestimated immigration and that it was a real concern for the blue collar worker, was a major deciding issue. ‘Remain’ never attempted to deal with the problem or placate those concerned until it was too late!

David Cameron refused from day one of the campaign to launch any personal attacks on the likes of Boris Johnson and Michael Gove. In hindsight that was probably a mistake. Craig Oliver never managed to persuade the PM to change his mind.

The timing and ferociousness of George Osborne’s presentation of ‘Project Fear’, despite the support of the Bank of England, the Treasury and the IMF that leaving the EU would precipitate the UK’s economy going to hell and a hand cart was never believed by the public, even when Cable fell from $1.50 to $1.25 in a heart-beat! In fact comments that families could be worse off by £4,300 a year was counter-productive. ‘Remain’ also failed to make sufficient capital out of the Johnson/Gove preposterous idea that the NHS would benefit by £350m a week. The economy should have been the big winner for ‘Stronger IN’ but the message never had sufficient resonance. Immigration was sadly the dominating factor. It shouldn’t have been as good immigration is great for the country. All that was required was the guarantee of improved policing. Brexiteers’ social media influence and particularly that of UKIP was vastly superior to that of ‘Stronger In.’

The most surprising negative factor for ‘Stronger In’ failing to get the result they expected was the wholly inadequate and inept performance of Jeremy Corbyn and his left wing acolytes, who seemed totally ambivalent about what was at stake. Corbyn’s understanding of BREXIT and what it would mean and including the basis of Article 50 was breathtakingly incompetent and frankly ridiculously naive for a leader of the major opposition party. One was left with the impression that Labour felt that ‘BREXIT’ was a Tory crusade and hard-left socialism was damned if it was going to be constructive by rallying to the cause. Jeremy Corbyn’s contribution to the referendum campaign was a disgrace. Had he and his cronies put in the work as supposed supporters of EU membership it might have been another story! This is a fabulous account and a tremendous £8.99’s worth!

At the time of writing the DOW has added 25.6% so far this year and nearly 40% since Donald Trump became President, with the NASDAQ +29%, the Shanghai Composite +21.4% , the Hang Seng +35.7% and the NIKKEI 19.2%. The DAX is 13% to the good and the CAC is up only 9.7%, despite Macron euphoria.  The FTSE 100 sadly has languished way behind and is only 6.7% in credit over the same period. There are reasons for this underwhelming performance.  Firstly the FTSE 100 has been a foreign exchange play.  The Pound fell by 17% in the last 6 months of 2016, which allowed the FTSE 100 to post at 17% gain to the end of 2016, as 60% on the constituent stocks post Dollar earnings.  This year the Pound has gained 7% against the Dollar, so those perennials such as the miners, HSBC, Imperial Brands, Glaxo and BP have posted anaemic performances, as have some banks, utilities and retail stocks. There has also been the uncertainty of BREXIT hanging over equities like the sword of Damocles.  However the FTSE 250 has gained a very respectable 14.5%, but did reach an all-time record of 20472 in early November.

Yesterday in London was a sepulchral session with the FTSE 100 adding 2 points t 7622 – a high closing for the year.  Personally I am not optimistic about the FTSE 100 for 2018. Why.  The Pound may go stronger if BREXIT negotiations fair well.  Retail looks a very doubtful sector with inflation and disposable income not increasing plus the great God Amazon hanging over the high street like the sword of Damocles. Oil and mining stocks may just come to the rescue!  Yesterday the DOW finished at record levels and not a million miles away from 25k. DOW +0.26%, S&P +0.18%, NASDAQ +0.16%.  Asian markets appear to lack ambition on the last day of the year though Chinese’ investors still maintain a little appetite to crack on despite a faltering $ & higher oil prices – ASX -0.21%, Shanghai +0.08%, Hang Seng +0.35%, Nikkei +0.15% at the time of writing.  The FTSE 100 is set to open 8 points higher.

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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