Monthly Archives: December 2017



TODAY’S FAYRE – Sunday, 3rd December 2017


“The darkness crumbles away 
It is the same old druid Time as ever,
Only a live thing leaps my hand,
A queer sardonic rat,
As I pull the parapet’s poppy
To stick behind my ear.
Droll rat, they would shoot you if they knew
Your cosmopolitan sympathies,
Now you have touched this English hand
You will do the same to a German
Soon, no doubt, if it be your pleasure
To cross the sleeping green between.
It seems you inwardly grin as you pass
Strong eyes, fine limbs, haughty athletes,
Less chanced than you for life,
Bonds to the whims of murder,
Sprawled in the bowels of the earth,
The torn fields of France.
What do you see in our eyes
At the shrieking iron and flame
Hurled through still heavens?
What quaver -what heart aghast?
Poppies whose roots are in men’s veins be
Drop, and are ever dropping;
But mine in my ear is safe,
Just a little white with the dust.” 


Isaac Rosenberg – poet & author – 1890-1918


I think it is fair to say that last week global politics were far more intriguing and interesting than global equity or bond markets.  It had been eerily quiet on the shores of North Korea, when unsurprisingly Kim Jong Un probably became exasperated at the tirade of goading abuse from President Trump’s lashing tongue.  I make light of the situation with my marginally trite comments.  However it was no laughing matter when an ICBM was blasted in to the Japan Sea. Me thinks President Un is trying the world’s patience.  Whether further sanctions will stop this despot from behaving in a dangerously erratic manner remains to be seen.  One suspects that the POTUS might just have more pressing domestic issues to attend to, which might just put the N Korean tyrant’s bellicose behaviour on the backburner for a few weeks, though nothing should be ruled out.  Lt Gen Michael Flynn’s guilty plea on lying about engaging with Russia around the time of the Presidential election could well cause acute embarrassment to Jared Kuchner, President Trump’s son-in-law, but also to the Commander-in-Chief himself!


Then of course there were plenty of chuntering emanating from the EU and the UK about the divorce settlement with an irritating, but very possibly a deal-breaking side show, concerning the borders of Ireland and NI, which could derail the process. Needless to say Donald Tusk lost no opportunity to fetch out his wooden spoon and stir the pot of prevailing uncertainty. Also, though he was probably misquoted, Michel Barnier made some ill-considered comments about the UK’s lack of commitment to fight terrorism. Through the gloom, a feeling that a ‘soft’ BREXIT is likely be negotiated manifested itself.  The time to start to add trade talks to the agenda is running out. I think PM May has decided, that in the light of the precarious position, she finds her Government in, it would be better to bend over backwards to placate the EU and force their hand to start negotiate.  I certainly wouldn’t hold my breath that there will be a happy outcome, but the foreign exchange market has taken Cable up to $1.35 – a far cry from $1.20 where it stood in August 2016. The recent strength of Sterling suggests a plausible barometer for agreement. However the hardliners are massing their troops if they perceive the PM is bending over too far.  The EU has adopted an intransigent attitude in response to feeling jilted and left at the altar. These negotiations are excruciatingly complex.  Hence we can only hope that a touch of goodwill and a modicum of good sense will prevail.  The more protracted these negotiations become, the more irascible they will become. I am very confident that though we are likely to feel a little pain initially, in the long term the pain will turn in to gain.  The nation has never been so divided; so it would be very constructive for the rhetoric to be less cantankerous with greater accommodation all the way round from ALL PARTIES – ‘LEAVERS’, ‘REMAINERS’, ‘POLITICIANS’, ‘THE MEDIA’ and ‘BUREAUCRATS!’


Here in Old Blighty Morgan Stanley warned of the dangers of a Corbyn ‘hard-left-leaning’ administration and the damage it could do to the economy.  Jeremy Corbyn concurred that Labour was a danger but he believes his party will lead the country into a ‘Valhalla’ of milk and honey and not into a vortex of economic despair! It is my measured opinion that Lloyd Blankfein of Goldman Sachs should be more worried about the threat of a financially irresponsible Labour administration, rather than carp on about ‘BREXIT’, especially as Goldman has made MILLIONS of Dollars out of this country both in the private sector as well as the government.


Finally there is the Damian Green ‘computer’ issue for the PM to tidy up when she returns from the Middle East.  One cannot help feeling that the police have behaved in a less proprietary manner.  Also is ordinary pornography on a computer a crime? I suppose beauty is in the eye of the beholder!  


There is little doubt that these political machinations took some moderate toll on global equity markets last week. There is also the added factor that many of these indices look flushed, top heavy and over-valued. Early in the week US markets hit records – the DOW breaching 24k – with the others continuing to flirt with them. The GOP’s plans to reduce taxation – both corporation and personal, which could add a further $1 trillion to the US’S borrowing requirements, were coming to fruition even though the margin of success in the Senate was slim. It was the Flynn issue that sent New York’s main indices in to reverse on Friday. Sterling’s strength continued to take the cream off the FTSE. The rest of the European markets were starting to suffer from indigestion and Tokyo’s NIKKEI benefitted from Yen weakness. At the same time a few cumuli nimbus clouds are starting to form quite aggressively over the bond market, especially the junk variety, which has all the hallmarks of a bubble, desperate to be lanced.

So the week and the month ended as follows – the week – S&P +1.25%, FTSE -1.47%, European bourses -0.79%, Nikkei +1.19%. In the month of November the main indices closed as follows – DOW +3.2%, S&P 500+2.6%, NASDAQ +1.6%, Nikkei +0.7%, FTSE -3.1%, DAX -3.5%, CAC -2.6%, Hang Seng +1.8%, Shanghai Composite -1.4%. Gold rallied by $6 to $1281 an ounce. Crude Oil rallied by 1.6% on the week to $63.63 a barrel. The unregulated Bitcoin market kept speculators on their toes with some wild swings of between 18-21% up and down, ranging between $9000 and $11.400.  This is not a market for the faint-hearted.  2 years ago the Bitcoin price stood at circa $400!

In the US last week it was retail and banking stocks that captured the imagination with the likes of Target, L-Brands, Kohl’s, Foot Locker, JC Penney and Macy’s making huge daily gains of between 6-8%. The NASDAQ’s big 5 component stocks which have increased in value by an average of 35% so far this year- Apple, Microsoft, Alphabet, Facebook and Amazon – saw some froth skimmed off the top in the latter part of last week. Another 25 basis point hike in the FED rate is expected at the 12th December meeting, though low inflation continues to prevail, which may restrict any further increases unless the status quo alters.


There were 3 main stories that grabbed headlines in the UK last week. Firstly the unpleasant spat between the LSE and its 5% shareholder Sir Christopher Hohn’s Children’s Trust, with some surprising intervention from Mark Carney, which saw Xavier Rolet leave his position as CEO with immediate effect.  A meeting called by on 19th December by Hohn will decide whether Donald Brydon the chairman remains in situ until 2019.  I hope not.  The LSE needs a new chairman and permanent CEO (Warren or not) before it loses credibility.  I hope someone with an international reputation, such Douglas Flint will be appointed chairman to get the show back on the road. The share price remains firm at about £38, which suggests the market expects that a predator waits in the wings – NYSE, CME? Who know? RBS served notice to close 259 branches making nearly 700 people redundant.  Technology was the convenient excuse.  I think it was cost cutting! Surely bank managers are essential assets for this service industry. Finally Palmer & Harvey went into liquidation, which could put 2500 on the street.  Apparently the main tobacco titans especially Japan Tobacco International were alleged to have offered little or no hope!


UK Companies posting numbers this week – Monday – McColl’s, GW Pharma, Character Group, Lonmin, Tuesday – IG Group, Collagen, McBride,  Wednesday – RWS, Mulberry, Carillion, Stagecoach Numis Securities, Thursday – DS Smith, Capita, HSS Hire, Friday – Berkeley Group


US companies posting interim results this week – Tuesday – Toll Bros, Autozone, Wednesday – Brown-Forman, H&R Block, Fred’s, Korn/Ferry, Thursday – Vail Resorts, Dollar General, Ciena, Friday – Johnson Outdoors


Economic data due this coming week – Monday – UK PMI Construction, US Factory orders, Tuesday – UK car registrations, UK PMI Services, US ISM Non-Manufacturing, Wednesday – US Mortgage applications, Thursday – US Consumer Credit, Friday – UK industrial production & Construction output, UK trade balance, NIESR GDP, US Non-farm payrolls and employment data.


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



Do you remember that wonderful film – “In the Heat of the Night” – with Rod Steiger as Chief Gillespie and Sidney Poitier as Virgil Tibbs? Do you recall Steiger came out with that classic one-liner when picking up the phone and talking purposely shouting down the mouth piece in a pronounced southern drawl – “Yeah talk to me!” Well that’s how I feel about this market today – “Talk to me!” – There’s nothing happening – no companies of great repute reporting – just James Halstead – up 2%. London’s leading index is up a parsimonious 16 points at 7343 at 2.15pm.

After yesterday’s closing of the DOW at record levels above 24k – up 22.8% so far this year – it has rallied by more than the entire value of the DOW in 1995 and it is 47% higher than in 2007, maybe our expectations for London was always going to be a false dawn. London’s senior index is only 2.6% on the year. The performance of the Pound has been the dominant factor after the stellar performance last year – up 16%. Cable is up from $1.22 to $1.3522 – hence the erosion of Dollar based earning stocks.

Banks were weak today after a reasonable run on the rails in recent sessions. Miners were unchanged. Oil was marginally better – BP +1% and Shell +0.5%. Having taken a bit of tap yesterday on downbeat consumer confidence Tesco rallied by 1%. However Morrison was down 0.6% having lost their court case on data protection. M&S was also down 0.6% and Next was 0.5% easier. Imperial Brands has been very disappointing this year and this tobacco titan lost another 0.5%, whereas BATS were 1% to the good. I wish I could raise my game and drive some enthusiasm in to the market, but it is just not there. It’s all about the EU/UK negotiations, Trump and North Korea. Even decent Markit PMI manufacturing data – the best for 4 years failed to stir the market out of its slumber! The DOW, as I scribe, is down 20 points.


TODAY’S FAYRE – Friday, 1st December 2017



“Me happy, night, night full of brightness;
Oh couch made happy by iny long delectations;
How many words talked out with abundant candles;
Struggles when the lights were taken away;
Now with bared breasts she wrestled against me,
Tunic spread in delay;
And she then opening my eyelids fallen in sleep,
Her lips upon them; and it was her mouth saying:

In how many varied embraces, our changing arms,
Her kisses, how many, lingering on my lips.
‘Turn not Venus into a blinded motion,
Eyes are the guides of love,
Paris took Helen naked coming from the bed of Menelaus,
Endymion’s naked body, bright bait for Diana,’
such at least is the story.

While our fates twine together, sate we our eyes with love;
For long night comes upon you
and a day when no day returns.
Let the gods lay chains upon us
so that no day shall unbind them.

Fool who would set a term to love’s madness,
For the sun shall drive with black horses,
earth shall bring wheat from barley,
The flood shall move toward the fountain
Ere love know moderations,
The fish shall swim in dry streams.
No, now while it may be, let not the fruit of life cease.
Dry wreaths drop their petals,
their stalks are woven in baskets,
To-day we take the great breath of lovers,
to-morrow fate shuts us in.

Though you give all your kisses
you give but few.

Nor can I shift my pains to other,
Hers will I be dead,
If she confer such nights upon me,
long is my life, long in years,
If she give me many,
God am I for the time.”


Ezra Pound – poet & author – 1885-1972



Whereas US equity markets reached or flirted with all-time records on November 2017, the same cannot be said for the FTSE 100. It lost 2.1% last month and much of it was down to the increasing value of the Pound, based on the perception that this rather weak and anaemic government is going to have to agree to a very soft BREXIT deal, with the EU receiving more than adequate compensation for the UK’s withdrawal. That, of course, pre-supposes that there is an agreed settlement to the Irish border problem and that is not a ‘nailed-on-certainty!’


Time, of course is running out in terms of any negotiation, let alone any trade agreement which seems a long way off. I think it would be of considerable benefit to everyone if the tone of the rhetoric was lowered significantly in terms of its vituperative content. It would be very helpful if the ‘LEAVERS’ could reach out to those who are forlorn at the prospect of the UK withdrawing from the EU with an olive branch of cooperation and hope, which might just help change the mood of the country. Some appeasement in terms of anger on both sides would be constructive in making this cultural transition a success. We’ve had the ‘weeping and gnashing of teeth’ and the bile and it is time to move on in a positive vein. The press and TV have their role to play too! Perhaps I am naïve, but I see a change in attitude and greater cooperation as the only answer to achieve success most reasonable people finally crave for.


It would also be helpful if both sets of negotiators stopped briefing against each other. Whether Barnier’s comments suggesting the UK had turned its back on the fight against terrorism was taken out of context, it appears to have been uncalled for and injudicious. NO country in the world has contributed more to the security of Europe & the world on a pari-passu basis in terms of size than the UK.



After months of negotiations, House and Senate Republicans have produced separate versions of a sweeping tax package with dozens of provisions that would cut some $1.7 trillion in taxes on businesses and individuals. Yesterday, on the back of this wave of euphoria US indices took a stroll away from reality with the DOW breaching through the 24k barrier for the first time, with the S&P and NASDAQ not a million miles away from recently achieved records. All these indices seem very frothy indeed. However, even though the FED is expected to hike rates by 25 basis points later this month, it seems unlikely many more, if any hikes will follow, unless inflation and wage inflation get under a head of steam. That’s the time to lighten up one’s US portfolio. Markets are still awash with cash. In the past few days retail and healthcare stocks have captured the imagination in beautiful downtown Manhattan – Target and Macy’s both added 8% on Wednesday with Foot Locker chipping in with a 5% gain. Yesterday, L-Brands and Kroger stepped up to the plate both adding 6%, with Costco making its presence felt with a 3.9% rally. Humana and HCA were the pick of the healthcare brigade – both up 6%! New York closed as follows – DOW +1.39%, S&P +0.82%, NASDAQ +0.73%. In Asia the response to New York was very mixed – ASX +0.29%, Shanghai – unchanged, Hang Seng -0.4%, Nikkei +0.40%



Yesterday the FTSE 100 lost 0.9% to 7326 – all of Wednesday’s gains and a bit more – much of it down to a rising Pound – Cable $1.3522. To date the FTSE 100 has only risen 2.5%, which is but a mere bagatelle in comparison to the S&P 500, which is up 18.2% in Dollar terms over the same period. Tesco and Sainsbury were under the cosh due to lack of consumer confidence. However the big faller on the day was DMGT – down 23.8% on the back of a 13% drop in profits. It appears that Cineworld has reached an accord to buy Regal of the US for $3.6 billion. However Cineworld’s share price has lost 20% of its value in two days.


This morning the FTSE was up 10 points at 7336 in sepulchral trading. RBS announced that its ‘bad bank’ had finally run its race and that the Government may well sell £3 billion of shares back to the public in 2019. It also announced the closure of 259 branches – 62 in Scotland and 197 in England. I know technology rules OK and that I remain a Luddite on the subject but the bank manager’s role should be greater than it is. How can bank mangers deal with customers’ requirements and make lending decisions or provide financial services without knowing them or at least having seen the whites of their eyes? The problem is cost of capital. Banks need 10 times the amount of capital to do the same business they did 10 years ago – hence cutting costs, which will drop the level and quality of service.


The Bank of England’s Richard Sharp warned against the level of public debt, which had grown by £1 trillion since 2008. He feels the UK is heading towards Venezuelan Armageddon, unless this debt is reined in. Chancellor Hammond would agree! Despite concerns over BREXIT there has been a hiring spree in the City resulting in salaries increasing 10.3% this year according to the job site Adzuna. I was also quietly amused that the CEO of UniCredit, speaking at an FT symposium felt that BREXIT for the City was ‘much ado about nothing’ and that London would remain a very serious player.


Economic data due this coming week – Friday – UK PMI Manufacturing, 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