Markets live chat transcript for the chat ending at 12:07 on 23 Jan 2008. Participants in this chat were: Paul Murphy (PM) Neil Hume (NH)
PM: Testing testing
PM: Five one, five one
PM: TEST
PM: Five one Five one Five one Five one Five one Five one Five one Five one Five one Five one Five one Five one Five one Five one
PM: That is Five to Spurs and one to the former football club, Arsenel
PM: Arsenal eve
PM: even
PM: Good morning and welcome to Markets Live – FT Alphaville’s daily markets commentary.
PM: Neil should be with me soon
PM: He is just coming to terms with last night’s news
PM: Five one
NH: yeah
PM: that’s 5:1
NH: got the black arm band on this morning
NH: still it was black swan event last night
NH: won’t happen for another 10 years
NH: six standard deviations from the mean
PM: 5:1
NH: anyway, people won’t be laughing when Chaz & Dave are wheeled out to give a reprise of “Spurs are going to Wembley”
NH: you all won’t be laughing then
PM: 
PM: 
PM: that’s enough messing about
PM: We’ve got some very important news for people this morning.
NH: we have
PM: Yep.
PM: Here’s it is. I will say it calmly.
PM: The Credit Crunch is over.
NH: Yep – Crunch over.
NH: NOW WE’VE A CREDIT PANDEMIC!
PM: GET THOSE TIN HATS BACK ON
PM: NOW!
PM: Think we’re making this up?
PM: Think this is just some journalist media thing – sensationalism?
PM: Think we are just trying to panic people?
NH: Well look at this:
NH: The Growing Global Credit Pandemic
NH: Richard Bernstein
PM: Well respected Merrilly Lynch strategist.
PM: Oops.
PM: And I haven’t even had any Merry Lunch yet
NH: Trying again:
NH: Many investors still believe that the credit crisis is purely a
“US subprime problem”. Nothing could be farther from the
truth, in our opinion. There appears to be a growing global
credit pandemic.
Central banks only control the price of credit, and not the
availability of credit. Watching central banks’ base interest rates is, of
course, important. Watching credit availability is more important.
NH: The lock step movement of the widening of Asian CDS
spreads with the decline in the Baltic Dry Index suggests that Asian credit fears
may be economically based, and not simply a technical “contagion” related to the
US credit problems.
We reiterate our preference for developed markets and
higher quality assets in general.
NH: Merry Lynch will go ballistic with me for doing this – but hey, I think conditions dictate
Here’s the link to the full report
http://tinyurl.com/2zmkj2
PM: Actually, they dont mind the strategy stuff going out. It is the individual company research they have a strop over
PM: There’s plenty to read in there – including stuff on one of our favourite indicators
NH: Which is?
PM: The Baltic dry index, of course. It has fallen 41% from its Nov 2007 peak
PM: Shipping rates are collapsing. There is a sense now that that points to a sharp slowdown in Asian economic growth.
NH:
The notion that the Asian economies are immune to the global credit
pandemic is now clearly being challenged
PM: There’s loads more of this bearish stuff from ML today, you know
PM: Gt these snaps from David Rosenberg:
PM: This is on the US economy
PM: The recession in housing has spilled over to the rest of the economy, in our view. We now expect an outright contraction in economic activity in the first three quarters of 2008. This downturn should be led by consumer spending.
PM: GDP is expected to average 0.8% in 2008 (was 1.6% before) and only pick up to 1.0% in 2009, in spite of $175bn in fiscal stimulus and aggressive easing of monetary policy by the Federal Reserve. As we saw in prior post-bubble
de-leveraging episodes, the healing process takes time as the bad debts get extinguished and balance sheets repaired.
PM: * Home prices are expected to decline by 15% in 2008 and by a further 10% in 2009, with more depreciation likely beyond the forecast period. The inventory situation has become intractable and home prices are still far above historical norms when benchmarked against other measures such as rent or GDP. Housing starts will probably slide another 30% from current levels, to 700k by the end of 2008 – a historic low needed to clear inventories amid the worst housing financial crisis in decades.
PM: We expect operating earnings to be $80.0, down 8.4% from 2007, and see a modest recovery to $80.50 in 2009. The annual averages, however, mask a 20% peak-to-trough decline, which is typical of recessionary backdrops. We expect that more write-downs will result in a 15% decline in reported earnings this year. As a result, our forecast takes into account the added hit to the consumer balance sheet and equity cost of capital considerations from a normal 25% cyclical bear market in equities that is part and parcel of most economic downturns.
PM: * We anticipate job losses in the range of 2.5 million, close to what we saw in the last recession. This in turn is expected to push the unemployment rate up, to 5.75% by the end of 2008 and to 6% by early 2009.
PM: Rising unemployment, $6 trillion in lost housing wealth combined with slumping equity valuations, and the lack of participation from the baby boomers for the first time in three decades likely will result in the worst consumer recession since 1980. We see the YoY rate of real PCE dropping to -1.0% by 4Q 2008, led by double-digit declines in consumer durables.
NH: But how do you square this with the noble Teun Draaisma – he’s saying buy today
NH: Buying cautiously – at any rate.
PM: Yes, Helen put a post up a little earlier.
PM: He’s trading the bear market rally.
PM: Quote:
PM: If this is a mild recession then this could well be the low point for markets in this recession. If it is a more severe, global slowdown – which we think is more likely – then we may well go to lower lows after the bear market rally. But the market is oversold enough for us to be wanting to buy a bit today.
NH: Hmm, not sure the bear market rally is quite underway.
NH: But you’ve got to admire the man’s steel – putting out a firm trading buy recommendation in the middle of a squall as fierce as this one.
PM:
PM: Let’s go to the comments below — specifically on this big writedown rumours
NH: we heard the Soc Gen rumour but to be honest we think it is a bit Tottenham Hotspur
NH: ie rubbish
PM:
PM: Actually — the rumour whirling round ABN also
NH: I mean, Soc Gen market cap is what??? less then EUR40bn
PM: Something like that
PM: These are just silly 
stories
NH: Tottenham bear stories
PM: But you never know….
NH: if Spurs can beat Arsenal anything can happen
PM: We will come back to Scottish & Newcastle…
PM:
PM: First….
NH: Richard Crossley, our fav technical analyst at NCB, reckons yesterday’s rally was not to be trusted
PM: So he is not taken the Teun view on this?
NH: no
NH: As commented in an earlier note, one instinctively knew that
2008 would be likely to see the need for some important new
calls, but did not think it likely that they would be needed as
early as the third week of January.
NH: As often commented here, ‘kneejerk’, ‘instinctive’ and ‘obvious’
market behaviour is not rated highly here – e.g. the UK. Bank
sector rose 6% in yesterday’s session, having fallen 6½% in the
previous one.
NH: In this writer’s (not short) experience of life, the truth is rarely
obvious – the investment truth even more rarely obvious.
So, investment moves such as those overnight are instinctively
distrusted here.
And this comment would certainly apply to yesterday’s
American session.
NH: Leadership lay with the really obvious, Housebuilders plus
6½%, the sector shown below:
NH: Unexceptional volume
Below that sector, leadership lay with Real Estate, plus 4%,
General Retailers, plus 3½%, Banks, plus 3%.
NH: In the case of none of these sectors was the strength of any
technical significance. Volume was above the recent averages, but then, in a ‘kneejerk’ – type reaction, it always is.
Yesterday’s American news, and the market reactions to which it gave rise,
changes nothing in regard to the longheld themes pursued here, those of
weakness in prospect in the Financials and Consumer confidence-related’s.
NH: changes nothing. more pain to come and looking at the wider market…..
PM:
PM: As VP notes below — the FTSE 100 is TANKING as we write
PM: Just dipped below 100 points
PM: Current quote is 5648 — down 92
NH: and looking at the biggest risers/fallers table it looks to be the heavyweight oil sector that is doing the damage. Shell and BP taken big hits, which suggests to me the market is worried about the economic outlook
NH: Shell down 79p at £17.15
NH: a drop of 4% and for a company as big as Shell that is a serious fall
NH: Paul is just looking up the brent price
NH: down over a $1
NH: March contract brent contract trading at $87.42
NH: that has had a serious move downwards in the past week or so
NH: $10 fall in three weeks
NH: or since the New Year
PM: Hmmm
NH: but it has been another seriously volatile morning
NH: we are thinking of changing the skyline that shows us with tin hats
NH: to one that shows us on the big dipper
NH: London opened 100 points higher
NH: than collapsed
NH: then rallied
NH: and has now collapsed again
NH: and it is not even noon
PM: We are now off 113 points at 5629
NH: apart from the stuff we have been discussing below
NH: those looking for the BoE to follow the Fed’s aggressive have been left a bit disappointed today
NH: GDP growth was not a disaster
NH: up 0.6 per cent in Q4
NH: and then we got the minutes of the last MPC meeting
NH: that showed an 8-1 vote in favour of keeping rates on hold
NH: all of which suggests that the BOE is not going to follow the Fed and make a series of aggressive rate cuts
NH: the best we will get is 0.25% here and there
NH: and that seems to be the tone of the speech Merve the Swerve gave last night
PM:
PM: Right — let’s go to S&N — we have form on Scottish & Newcastle…
PM: Neil — what do you make of the current situation??
NH: as we wrote in the paper this morning, DD is not going smoothly
NH: now this does not mean the deal will fall apart
NH: just that
PM: due diligence that is
NH: if everyone was expected Carlsberg and Heineken to spend a couple of days looking at the books and then bid 800p in cash
NH: they might be disappointed
NH: this is a complex deal
PM: Shares in S&N are down 8p at 738p — but remember that is in a market that is in general freefall
PM: We’ll keep our ear to the ground
PM:
PM: Sorry we got distracted
PM: Neil has just been sent an online game
NH: this is quite fun
NH: have a go readers
NH: http://www.frbsf.org/education/activities/chairman/
PM:
PM: Let’s due the Pru
NH: been among the biggest risers this morning
NH: stock got up to 693.5p after a serious fat finger
NH: actually we should have an icon for that
PM: 
NH: anyway shares now trading 11.5p higher at 630p
PM: Come well off the top
NH: Now, call me an old cynic if u like, but I was wondering how long this was going to take
PM: wot?
NH: well, earlier this week we ran a story saying
NH: Ping An Insurance, China’s -second-largest insurer, plans to raise almost Dollars 22bn (Pounds 11bn) in China’s biggest share sale to help fund aggressive foreign acquisition plans.
The size of the share issue – three times the amount the company raised in its listing a year ago – indicates that Chinese companies want the financial resources to take over or buy into weakened western rivals, say analysts and bankers.
Many US and European financial services companies have seen their share prices tumble after billions of dollars in subprimerelated losses. Ping An plans to issue 1.2bn new shares to public and institutional investors in a secondary placement in Shanghai, raising more than Dollars 16bn based on Friday’s closing price of Rmb98.21.
The insurer, 16.8 per cent-owned by UK bank HSBC, also plans to sell up to Dollars 5.7bn worth of Shanghai-traded six-year convertible bonds with detachable warrants, further diluting shareholders’ stakes.
HSBC, which saw its stake diluted from 19.9 per cent at the listing, said it could not participate in the A-share issue because it was restricted to domestic investors.
Ping An said proceeds from the fundraising would be used for acquisitions that were “significantly beneficial to the group’s expansion strategies and operation efficiencies” and “compatible” with its insurance, banking and asset management activities.
NH: got that???
PM: yep
NH: now of load brokers said to me
NH: I wonder how long before Ping An is linked with a bid for the Pru
NH: and today we got our answer
NH: thanks to China’s 21st Century Business Herald
NH: they ran a story saying
NH: Ping An Insurance (Group) Co. may spend 100 billion yuan ($13.8 billion) to buy a stake
NH: here’s a take on the story that went up on Bloomie earlier
NH: Prudential Plc, the largest U.K. insurer, rose in London trading following a report that Ping An Insurance (Group) Co. may spend 100 billion yuan ($13.8 billion) to buy a stake.
NH: Prudential gained as much as 12 percent today, before trading up 4.7 percent at 647.5 pence as of 8:17 a.m. in London, valuing the company at 16.1 billion pounds ($31.6 billion).
NH: Shenzhen-based Ping An will make the investment using proceeds from its planned share sale, the Chinese newspaper 21st Century Business Herald cited an unidentified person familiar with the matter as saying.
Sheng Ruisheng, Ping An’s Shenzhen-based spokesman, and Chad Tendler, Prudential’s communications manager in Hong Kong, both declined to comment in phone interviews today.
PM: $14bn stake?
PM: : that would buy a fair chunk of the Pru
NH: it would
NH: company’s market cap in dollar terms is $27bn
NH: so that would imply Ping An buying half the company
NH: and triggering a mandatory bid
PM: So the headline should have ran – Ping An to bid for the Pru
NH: I guess so
PM: So we are not attaching too much credibility to this tale??
PM: After all 21st Century Business Herald were the publication that brought us news of the Baosteel bid for Rio Tinto
PM: and that never emerged
NH: personally don’t think Ping An will bid for the Pru
NH: But I would not rule Ping An or China Life Insurance taking a smaller stake
NH: and the buzz in the market for a few months has been that the Pru is looking to unlock the value of its fast growing Asian operation
NH: here’s what Rob Orr and I wrote a month ago
NH: Prudential was among the gainers yesterday as a leading bank predicted the life assurer would act to raise the profile of its Asian business.
After meeting Prudential’s management, Merrill Lynch said it expected chief executive Mark Tucker would look to address the undervaluation of the Asian franchise within the group’s share price. The bank also noted speculation of a possible spin-off of Prudential’s Asian arm and flagged up the possibility that the group could be a target for a sovereign wealth fund.
“Asia is firmly back in focus now that the UK issues have been addressed and we expect initiatives from the company next year to improve disclosure and further increase the profile of Asia,” Merrill wrote in a “buy” note, setting a price target of 840p. Prudential closed up 1.5 per cent at 666p.
NH: i think that Merrill note followed a meeting with the company
NH: and Mark Tucker has been choosing his words carefully this morning
NH: CNBC got hold of him at Davos
NH: and he said
NH: the Pru always welcomes long term shareholders
PM: Yeah, so what’s he going to say — Pru does not welcome investors?
PM: Bohemia makes an important point below — enlarged capital would be circa 30%
NH: he does, but why what the Pru do with that cash
NH: and of course it would dilute other shareholders
NH: in fact there is such as thing a pre-emptions rights in the UK
NH: they couldn’t issue more than 10% of the current market cap without giving shareholders the chance to join in
NH: so that figure quoted in the Chinese press must be nonsense
PM: Yes, that is all true.
NH: unless they are going to start buying in the market
NH: and we would all see that
NH: anyway, insurers are in focus this morning
NH: most of them around Europe are up
NH: and that follows some REAL stake building news
NH: One Warren Buffett
PM: Yes, the Individual Wealth Fund
PM: Taken a 3 per cent stake through Berkshire Hathaway
PM: Also done a deal to take a fifth of Swiss Re’s casualty and property biz over the next five yars
PM: Looks like WB buying in at or close to the bottom of a well established business which he understands
PM: This is classic Buffettology
PM: Value investing
NH: got a good note on the Buffett move from KBW
NH: wanna see it
PM: Yes please!
NH: Berkshire Hathaway is not a charity and when we see them taking such a significant role in the strategic future of a major competitor, we believe it is wise to be cautious. Buying 3% of Swiss Re in the open market is an obvious vote of confidence, but we believe that the quota share agreement that (effectively) comes attached is not quite so obvious. Without greater knowledge of the ceding commission and profit-sharing arrangements, we judge it prudent to view this transaction as about 10% dilutive to Swiss Re’s EPS. This dilution should be mostly offset by the buy-back, although with the shares being held in treasury, this is a moot point.
NH: We cut our price target slightly from CHF110 to CHF105 to reflect the net dilution that we fear from this new arrangement. We retain our Outperform rating mostly because the silence on the structured investment front is reassuring and because of the increased near term technical support from the buy-back.
NH: Bull (1) – No news is good news. We judge the most reassuring element of today’s announcement to be that there is no update on losses from Swiss Re’s structured credit portfolio. We assume that any significant deterioration in this portfolio would have required comment and so we take its absence as a reassuring sign.
NH: Bull (2) – Berkshire Hathaway buys a 3% stake in the market. This should be taken as a vote of confidence in Swiss Re by one of the world’s most respected investors. We would expect, however, that the stake has been built up recently and so there may have been some technical support for the shares that is now going to cease.
NH: Bear (1) – Quota share questions. Unlike other investors in Swiss Re, Berkshire has also underwritten a 20% quota share retrocession contract for the next five underwriting years from 2008. We show in Figure 2 that we judge this transaction as 9.7% dilutive to 2009E headline EPS if we assume a pro-rata share of premiums, claims and acquisition expense, but nothing to cover administration expenses. Whether the reality is better or worse from Swiss Re’s perspective depends critically on the ceding commission and profit sharing agreements between the two reinsurers. We have been given no information in this regard but judge it prudent to believe that
PM: thanks for that
PM:
NH: Right, a little bit of RAW market info
PM:
PM: Ah, needed something to try and shake the readers out of discussing central banking functions
PM: Wot yer got?
NH: bid rumours flying around in Xstrata again
PM: Zzzz — tht will send the readers back to Mervyn kingland
NH: i know, I know but look don’t shoot the messenger. here’s what I am hearing
NH: £40 a share bid from Vale next week
PM: hang on hang on
PM: I cant see that — after the statement from Vale
NH: what all that stuff about how difficult it is to do a deal in the current market environment
NH: anyway, i can’t see it
NH: and neither can Citigroup
NH: they reckon Xstrata is more likely to bid for someone else
NH: and I seem to remember that after all these Vale rumours surfaced
PM: Well we will take credit for that
NH: Xstrata was careful not to rule out doing deals itself
NH: Anyway, Citi thinks XTA could yet bid for Anglo American
NH: which takes us full circle coz this rumour was also floating round before Xmas
NH: here’s the Citi note
NH: With a mega-cap M&A frenzy hitting the global mining industry, similar to the
one that struck the global oil majors in the late 1990s, we take a look at what
the other likely deals could be. We believe the major focus rests on Vale, Anglo
American and Xstrata. It seems likely that, assuming mega-cap M&A remains a
theme and management mentality continues to lean towards ‘bigger is better’,
these three could become two, or even one, over the coming years. So which
do we see as most probable?
NH: The most likely scenario for us is Xstrata buying
Anglo. Anglo’s quality asset base, commodity diversification and long life
reserves would likely be attractive to Xstrata. So too would its historic cost
underperformance versus the peer group. With big synergies in the copper
operations (c.$250m), coal (c.$400m) and corporate ($150m) we believe the
deal would make both financial and strategic sense. The reverse of this deal
seems less plausible to us.
NH: While the same strategic rationale exists, we believe
Xstrata has the ability to extract more from the combined business due to their
enhanced corporate cost focus and past experience in merger integration.
Meanwhile, if Vale were to acquire Xstrata it would provide the company with
the further diversification it desires (on both the geographical and commodity
front). However, while this also provides an enticing exit strategy for Xstrata
management, a stumbling block exists as regards how Vale would finance a
deal. We believe that M&A activity around these names could provide downside
protection in these weak equity markets. On the European stocks, we retain our
Buy/Medium Risk rating and £40 price target on Xstrata (£32.80) and our
Hold/Medium Risk rating and £32 price target on Anglo American (£24.84).
PM: Im sorry to say — but I just dont buy that
PM: Mick Davis has said quite catagorically that he is a seller at these prices
NOTE: PLEASE SEE THE CLARIFICATION ON THIS IN THE COMMENT SECTION BELOW
PM: yes, mining stocks have come back since he spoke, but to turn on his heel and go for AA would drive some of his investors mad
NH:
NH: hmm seems someone else is following Draaisma line and dipping a toe into the market
PM: Ah yes — the email has landed 
PM: Good morning,
In an exclusive web cast, which can be listened to in its entirety at
www.t1ps.com, small cap tipster and Editor of t1ps.com, Tom Winnifrith
chats with Britain’s Buffet, Nigel Wray who, in extracts, indicates that
perhaps now is the time to buy equities:
“I think that great fortunes will be built from today. By today I mean
if you invest in something I think you can do incredibly well. You might
do worse over the next two or three weeks, or two or three months, but
do I think there could be very substantial movements upwards, over the
next five years? Then yes I do.”
PM: Got that Nigel Wray — Britain’s Warren Buffett
PM: That’s Nigel Wray, with serious form in the realm of penny dreadfuls
NH: careful
PM: You know Wray’s lawyers once wrote a long long letter to me
PM: Saying how everything i had written about the man was grossly defamatory
PM: That he was going to sue the pants off me
PM: And that he wanted an iron undertaking that I would never write about him again
NH: so what did u do???
PM: I told him where to go — in print
NH: ok, very tough of u
PM: Well — it was quite easy actually.
PM: His lawyers had sent the threatening letter to the wrong person
PM: They meant to send it to Times
PM:
PM: Hedgehog — not a peep out of I Rushbrook
PM: Going to issue him with a freefone number
NH: as for First Quantum
NH: was going to post this yesterday
NH: but was too busy
NH: from merger markets
NH: First Quantum Minerals, the listed Canadian mining company, would be open to talks with UK listed India-headquartered Vedanta Resources, said a source familiar with First Quantum.
The source told this news service that the First Quantum board would be happy to meet with its Vedanta counterparts at the negotiation table if Vedanta were to make a good approach. The source was responding to press reports suggesting that Vedanta was considering an offer for First Quantum. The source revealed that Vedanta had not made a formal approach or made contact with First Quantum’s board
NH: The source said “superficially, Vedanta and First Quantum would be a perfect fit. They want copper and we are a pure copper player.” He argued that Vedanta has strong expertise in smelting when asked about potential synergies. He also said First Quantum was happy to retain its independence in the result of no talks.
This echoes comments made last month by First Quantum president, Clive Newall, who told this news service that the company was not for sale and “would very much like to retain our independence as long as possible.” Those comments came as industry sources said the recent large deals in the sector were putting just about every mining company in play.
A spokesperson for Vedanta declined to comment on market rumours relating to a possible bid for First Quantum.
NH: A commodities broker said an acquisition of First Quantum would allow Vedanta to diversify its commodity base in a rising market. The broker also said that from a risk perspective, the deal could appeal to First Quantum, as the majority of their current operations were in the Democratic Republic of Congo, a country which has recently seen mining operations hampered by political and civil instability.
The source familiar with First Quantum said there could be competition issues if a deal was struck between the two parties, as combined, the two companies would own all the copper assets in Zambia. The source claimed that these antitrust issues would be minimal and that “it would be pretty easy to do a deal.” The source noted that Zambia had a similar takeover procedure to that enforced in the UK, and that competition would be an aspect which will be inspected at some level.
The source, when asked about trade unions in Zambia, said “trade unions are fairly efficient and straight forward” to deal with. He added that First Quantum “directly employs 3,000 workers and 16,000 indirectly.”
NH: The source argued that in light of the potential BHP/Rio Tinto deal, there would be pressure for some of the second and third tier mining companies to seriously think about consolidation and M&A, and this was an example of this.
First Quantum’s principal activities include mineral
NH: hope that helps Google
PM: We have no further info ourselves.
PM: And as i stated here yesterday — in these markets we have NO SENSE WHATSOEVER of which deals will have been canned and which have not
PM: In truth I would be surprised if any M&A work at all is being completed at present
NH: and that’s why there are jitters around S&N
PM:
PM: Looking for other features — seen ITV?
NH: It’s in the dog house. Again
PM: Price down 4p at 69.6
NH: looks like another record low to me
PM: Poor viewing
PM: I see this fall is being attributed to a Bear Stearns note
PM: have you seen it?
NH: i have and will paste
NH: Disappointing start indicated for TV ad market in Q108. Our channel checks indicate total TV spend was
slightly negative in January, will be down 3% year on year in February (despite an extra day), and March could be
off by 10% (very early indications). This would be very disappointing given that Easter comes early this year
NH: In
2008, ITV1 is set to underperform the ad market by 2%-3%, although we expect ITV Plc (i.e. including
multichannels) to be in line. Therefore, if the market is down 4% in Q1, ITV1 is likely to be off by 6%. This would
be a concern given that Q1 has an easy comp of -8% (H2 comps are positive) and we are currently forecasting FY08
for ITV1 at -1.1% and Plc at +1%.
NH: Encouraging signs for new ITV1 schedule. In the first two weeks of January, ITV1’s share of viewing among all
adults was flat, although we note that share among the valuable 16-34 year-old demo declined 7.7%. Last week (i.e.
week 3) ITV1 launched its revamped schedule (weeknight hour-long dramas, return of News at 10, soap-free
weekends) with some positive signs, particularly the Sunday evening.
NH: Macro call. The last time the UK entered a recession in 1991 ad spend was a leading indicator and it fell by 7.5%
over five quarters. The downturn was triggered by the Bank of England tightening rates in response to rising
inflation and while rates were cut in December, the Bank today is faced with inflationary constraints. Q2 will be
critical for ITV1 when it is up against a -10% comp.