TODAY’S FAYRE

TODAY’S FAYRE – Sunday 2nd December 2012

“I heard a fly buzz when I died;
      The stillness round my form
Was like the stillness in the air
      Between the heaves of storm.

The eyes beside had wrung them dry,
      And breaths were gathering sure
For that last onset, when the king
      Be witnessed in his power.

I willed my keepsakes, signed away
      What portion of me I
Could make assignable,-and then
      There interposed a fly,

With blue, uncertain, stumbling buzz,
      Between the light and me;
And then the windows failed, and then
      I could not see to see.”

Emily Dickinson – poet – 1830-1886

Ricky Ponting has been on the top run of the world cricket ladder ever since he made his debut 17 years ago when making 96 against Sri Lanka.  He is quite frankly a legend – the best batter Australia has had since the imperious Sir Donald Bradman back in the late ‘20s ‘30s and ‘40s  Bradman will always be in a league of his own; not because his batting average in test cricket was 99.48 from 6996 runs made in 52 test matches, but because he played most of his cricket against England, South Africa and the West Indies.  There were no soft touches such as Bangladesh, Zimbabwe and Sri Lanka in their infancy. Ricky Ponting played concentrated test cricket – 167 matches.  He accumulated 13,366 runs at an average of 52.21 – an outstanding effort considering the length of his career.  Ponting has just started to perform at a smidgen below his required standards and it is right that he should call it a day and not make his 5^th trip to England next summer! Retire at the top of your game!

Unfortunately Andrew Flintoff won his first fight as a heavyweight on points over 6 rounds.  Ridiculous! He should give up whilst the going is good! Soon he will just get hurt and ridicule himself in the progress!

There was some interesting unemployment data for Europe to disseminate on Friday.  The euro area (EA17) seasonally-adjusted unemployment rate was 11.2% in June 2012. It was 10.0% in June 2011. The EU27 unemployment rate was 10.4% in June 2012. It was 9.5% in June 2011. It is estimates that 25.112 million men and women in the EU27, of whom 17.801 million were in the euro area were unemployed in June 2012. Compared with May 2012, the number of persons unemployed increased by 127 000 in the EU27 and by 123 000 in the euro area. Compared with June 2011, unemployment rose by 2.165 million in the EU27 and by 2.024 million in the euro area. Since 2007 S&P 500 companies have created 300,000 new jobs.  In the same period the STOXX 600 companies have created 1.2 million jobs; many of these people are on reduced working hours in order to say in work.  My good friend and colleague Mike Ingram of BGC Partners makes the following very salient points – “I must confess in comparing these two figures, the odds against the unemployment rate going up in Europe would be very skinny indeed. I have more faith in the US economy.  Europe appears to attach less credence and importance to SMES, which frankly do more to alleviate unemployment than other sectors.”

Last week sentiment bobbed around like a cork in a bath and traders have had to be light on their feet to cope with contrary moves within quite a narrow range. The US Fiscal Cliff is being played out like a poor production of ‘Hamlet’, with Harry Reid and John Boehner putting in dire performances as Rosencrantz & Guildenstern; a conclusion to Greece’s financial woes feels like slap-stick comedy in a Whitehall Farce, with Sir Brian Rix to the fore.  Yes the EU will achieve its goal, but the deal will be in need of a liberal supply of sticking plaster.  France is still getting over losing its AAA credit rating, Spain's bad bank plan has been dropped due to lack of interest. And then there is Cyprus Portugal and soon to be Italy's issues to deal with. However Christmas is only 3 weeks away; so who cares?

Anyway through all this high drama markets, more in hope than expectation, have kept some equilibrium. The DOW added 0.1%, the S&P 500 +0.5%, the NASDAQ +1.5%, with the FTSE 100, European stocks and the NIKKEI all adding 0.8% in fairly thin trading. On the Street of Dreams banks rallied about 4% on the week and the other sector was in play, after Thanksgiving was retail with a fairly mixed bag of reactions. Costco, Dillard’s performed with aplomb, but Whole Foods, Macy’s and Kohl’s certainly suffered the slings and arrows of outrageous fortune , losing 3%, 7% and 14% respectively. Here in Old Blighty the corporate news was thin, though Invensys sale of its railway division to Siemens suggested the company was undervalued – up went the shares by 27% and it also titillated a few predators’ taste buds. Barclays saw some shares that Qatar held sold in to the market, which took a net 3% off its value on the week. Dixon Retail looks as though it will benefit from the demise of Comet – sales in the last half year were up 3%. Time is running out and unless OpCapita can find a buyer for these Comet units 5,000 jobs could be lost.

The market spent much of the early part of the week further digesting the appointment of Mark Carney to succeed Sir Mervyn King as Governor of the Bank of England.  It was generally felt that Mr Carney has excellent credentials for the appointment.  He has been portrayed by the media and those who know him as a cross between Clark Gable, Moses and Einstein. So he is amazingly well-qualified for the position, but one suspects that expectations are far too high.  The UK is not Canada and orchestrating the recovery of the UK’s economy will prove to be a Herculean task.  Mrs Diana Carney, despite her Ladies Cheltenham College background, may well prove to be more comfortable as a product of the ‘blue-stocking Bloomsbury’ era.  One suspects that she probably votes Labour or Lib-Dem, which does not make her a bad person – just unorthodox. One can see her being best mates socially and intellectually with Yvette Cooper, Harriet Harmon and Rachel Reeves.

This week will be all about the Autumn Statement. Chancellor Osborne has very little room to manoeuvre.  He has more or less admitted that the debt reduction targets will not be met, as debt looks unlikely to fall as a total proportion of the economy by 2015/2016. Sir Mervyn King has advised that the £37 billion windfall I profits from QE cannot be used to cut the deficit. We have seen very little austerity, despite all the ballyhoo.  About 800k jobs have been cut in the public sector in the the last 2 years and a similar number have been created in the private sector. Though cuts have been implemented, the revenue from taxation, particularly corporation tax has been below expectations.

It appears that the Chancellor will the help of IDS will be looking to make a further £3 billion in welfare cuts, particularly with the help of PFI.  Some of those getting benefits, with the exception of pensioners, will be forced, where at all possible, to get work. Receiving benefits will no longer be a divine right. I fear acute hostility from many parts of society against these policies.  As a sop, the threshold on tax relief for pension contributions may be lowered from £50k, to between £40 and £30k. This could raise £1.8 billion. The increase of 3p in petrol duty is expected to be postponed. No one is expecting a mansion tax, but some believe there is a case for an increase in stamp duty for houses above £1 million in value or even perhaps a steeper sliding scale. Smoker and drinkers should expect no mercy. We may well hear news on toll motorways going forward.

It will also be interest to hear whether the Chancellor wants to pool resources for Local Enterprise Partners to cover adult skills, work programmes, affordable housing, flood defences and broadband, rather than maintaining a parochial approach, which is what Dr Cable and others want. In total about £58 billion is involved in all the schemes.

The Chancellor has to go for growth.  Politically he is running out of time.  Also in concert with the rest of the world growth has fallen this year and forecasts have been hopelessly optimistic. The OBR forecasted 0.8% at the last budget for 2012 and 2% for 2013.  We will be lucky to achieve 1% next year. So Mr Osborne must throw the kitchen sink at growth and recovery. Having under-spent to the tune of £1.5 billion on its capital spending budget, this should go on roads infrastructure, crossrail, gas power stations etc.  Finally it will be interesting to see whether he calls for a complete overhaul of the tax system, to be able large international corporations to step up to the plate and pay their dues.  Further incentives must also be given to SMES.  

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