Markets live chat transcript for the chat ending at 12:07 on 8 Feb 2008. Participants in this chat were: Paul Murphy (PM) Robert Orr (RO)
PM: Hello there
PM: Welcome to Markets Live, FT Alphaville’s daily markets chat
PM: Rob Orr is with me.
RO: hello
PM: Neil has gone off to pre-spend his potential millions.
PM: Millions and millions.
PM: That’s if he stays with us.
PM: Yes. Cat’s out the bag.
PM: Some readers will be aware that a story appeared in cityAM, the alleged newspaper, this morning concerning Neil and suggesting he might be departing the AlphaHQ.
PM: Here’s what has actually happened.
PM: 
PM: A few weeks back Neil was driving back from Tesco.
PM: He was in a traffic jam – and found himself idly reading one of those EARN ££££££ signs attached to a lamp post.
PM: Anyway, bored sitting there in the car he decided to ring the number…
PM: And rather than it being something with prospects, like working in a car wash, or steam cleaning sofas…
PM: It was actually a job minding the coffee machine at a firm called Pali International
PM: Some sort of import/export business with good links to Hong Kong perhaps
PM: Something like that.
PM: Anyway, negotiations are on-going. This is not a done deal.
PM: Neil is not leaving. Yet.
PM: Here, for the record, is the CityAM piece.
PM: ALPHA MALE NEWS
One of the City’s favourite double-acts, Neil Hume and Paul Murphy — who together write the Financial Times’s Alphaville online markets service — could be on the verge of going their separate ways.
A little birdy tells The Capitalist that Hume has been approached to go and work for stockbroker Pali International. Pali is keen on employing journalists, having previously taken on Susan McKenzie from AFX. Perhaps the reason is that only those schooled in the trenches of hackdom can cope with the long hours that that they work at Pali.
Working hours of six till six are apparently not unknown, after which they are then expected to go boozing and schmoozing with clients. “Nothing’s con-firmed,” Hume says when I call.
Still, it’s proof that some financial firms are still hiring — and that they must be offering some pretty phenomenal money if they think they can tempt people away from the goldplated offices of the Pink Paper.
PM: Truth is Neil is doing his column today – as per usual.
PM: And Rob is with me – which is our regular Friday perk up.
RO: Is there a job for me over there? I could do with a few quid
PM: Well, if it takes you half an hour to log on as it just has…..
RO: Don’t like the sounds of 6 till 6 to be honest.
PM: But it has proved a distraction this morning.
PM: I haven’t been able to enjoy this wonderful rally we’ve been having today.
RO: Well, I fear you may have missed it.
RO: Footsie opened sharply higher – ran up above 5800.
RO: But has come back since then – currently up 25 points at 5748.
PM: Hmm
PM: We should congratulate Monkey below on winning the lottery
PM: Tremendous news
PM: Let’s put you thru you paces Rob
PM: Readers are asking about Rank
PM: What you got?
RO: Rank very much in demand at the moment.
RO: up 6.25 to 102p.
RO: As we wrote this morning, Genting has raised its stake in the casinos group to 11 per cent.
RO: Earlier in the week, Guoco, the owner of the Clermont club, raised its stake to 6 per cent.
RO: The Richardson family has also amassed a 9 per cent interest via a derivative position.
RO: All this activity has apparently spooked traders into closing their short positions.
RO: Also . . . .
RO: Times also has a story about Harrah’s approaching Gala Coral Group.
RO: Harrah’s bought London Clubs International and made an approach for Rank that was rebuffed.
RO: Harrah’s Entertainment, the American casino behemoth that owns London Clubs International (LCI), is understood to have made a tentative approach to Gala Coral Group, the betting and gaming operator, about the possibility of merging LCI with Gala Casinos.
RO: The news came as Genting, the Malaysian gaming company that owns Stanley Casinos, announced that it had lifted its stake in Rank Group, the embattled bingo and casino operator, from 10 per cent to 11.03 per cent, sparking fresh bid speculation.
A merger of LCI and Gala Casinos would create a business with 40 casinos in Britain, just one fewer than Stanley and eight more than Rank’s Grosvenor Casinos division. Analysts believe that any competition issues thrown up by such a deal would be limited.
The move comes three months after Harrah’s made a similar approach to Rank over the possibility of swapping its LCI business for a stake of about 28percent in the enlarged Rank. The proposal is said to have been given short shrift by Ian Burke, the Rank chief executive.
Analysts said it remained unclear whether the mooted discussions with Gala Coral, which is controlled by Candover, Cinven and Permira, the private equity firms, involved a similar assets-for-equity swap, or an outright sale of LCI. Neither party would comment last night, although a source close to Gala Coral claimed that the company was approached on a regular basis about possible deals, most of which came to nothing.
RO: Harrah’s acquired LCI in 2006 for about Pounds 300 million as a platform for a wider push into the British gaming market. However, its ambitions have been stymied by the Government’s U-turn on deregulation, last year’s big rise in gaming duty and the smoking ban.
The US group, which owns Caesars Palace in Las Vegas, was recently taken private by Apollo Management and TPG in a $27.8 billion deal, and analysts believe the private equity firms may have decided to rein back the company’s stuttering European expansion plans, particularly as the credit crunch has hampered efforts by its bankers to syndicate the debt funding.
Harrah’s has been pursuing several potential supercasino projects in Europe, including developments in Spain, Slovenia and Hungary. However, progress has been slow and there are question marks over its new owners’ desire to fund schemes that could take years to come to fruition.
PM: Ah, that’s a Dom Walsh story. Must be true
RO: Don’t be so sarcastic
PM: No i’m not!
PM: Used to work with him. He knows the sector backwards
PM: Shrewd hack. Just don’t know why he’s still at the times
PM: Maybe Pali didnt want him
RO: 
PM: We’re going to see much more of this of course.
RO: More M&A you mean
RO: Agreed
RO: Casino is a trophy asset isn’t it. The stock market is no more place for a casino than it is for a football club.
PM: Hmm — Roel Campo — remember him?
RO: Errr, no.
PM: SEC commissioner who compared AIM to a casino – -been very quiet since
PM: 
PM: What on earth has happened to Premier Food this morning?
PM: stock has dropped like a stone
PM: traded as low as 85.25p
PM: currently down 22p at 98p
PM: Fall of 18%
RO: big fall. traders are pinning it on a note from Shore Capital
RO: and this report has reignited fears that Premier could be close to breaking its banking covenants
RO: and might require a deeply discounted rights issue
PM: Goodness
RO: now these rumours first surfaced after recent results from Premier
RO: because the company has moved to securitise some of its debts
RO: Premier said this was not designed to bolster its cash position
RO: but was done in conjunction with one of its major customers and a number of other suppliers
PM: Hmm, okay
PM: so what does this note from Shore Cap say?
RO: Penned by Clive Black
RO: analyst with plenty of experience
RO: he thinks Premier have no choice but to cut their dividend
RO: a payout of 13.8p a share due for 2008-02-08
RO: he also thinks there is no easy or painless way to deleverage its balance sheet
RO: have a look for yourself
RO: Premier Foods (PFD^). Downgrade to Sell at 120p.
Shore Capital has extolled our concerns about Premier Foods for some time and the market has to our minds has been justifiably cautious.
RO: Debt matters
Premier’s debt (£1.75bn) is a permanent feature that impacts the EV/EBITDA multiple, the starting point for our valuation of such stocks; to value Premier on a PER basis alone is a mistake to our minds. The recent sale & leaseback and securitisation of the debtors book suggests to us (and we believe many of its competitors) a company that is not in a comfortable cash position, it causes us to be concerned. On our projections, debt does not fall in future years if our previous dividend expectations are sustained (2010F debt estimate £1.74bn), perhaps the only saving grace for the company is that when £1.75bn is owed, the banks also face a problem. Premier still also has a reasonably large pension deficit (£89m last time on a market capitalisation of £1,013m; interim’s September 2007), which has probably risen since then (note Dairy Crest’s [DCG^, Hold at 542p] recent comments on this matter given bond and equity markets together with longevity issues).
RO: Balance sheet valuation, could impairment ensue?
Additionally, we raise questions about the value of Premier’s balance sheet; the company has net assets of £4bn, but £2.7bn of this is goodwill. With the structural change in RHM’s margins, is the carrying value of those assets accurate – could an impairment charge ensue?
RO: Input woe
We note the record high prices for wheat in the USA this week (Chicago and Minneapolis), reflecting low inventory levels and concern about plantings being switched into corn and soyabean, and our downgrades to earnings from Cranswick (CWK^, Sell at 585p) and McBride (MCB^, Recommendation downgraded this morning from Hold to Sell at 86p) due to commodity and petrochemical orientated cost increases (note also Unilever [ULVR^, Buy at 1620p] announced that input costs as a proportion of sales increased by 330 basis points in Q4, which it expects to continue throughout 2008; we believe that Unilever has productivity initiatives and brand/pricing power to recoup these costs, we do not believe that Premier has such capabilities).
RO: Promotional activity, is Hovis making hay?
If all this is not enough, our recent store visits (Coventry & Hull) show extensive promotional activity in the UK at present, with bread at the fore. Allied Bakeries’ (ABF^, Buy at 832p) is heavily promoting Kingsmill at present with two for 160-180p or 109p individually, which with Warburtons (brand leader) at 116p, own-label between 37-59p and Hovis (Premier) at 112p, leads us not to be filled with confidence that RHM’s trading and margins are moving the right way. Premier is much more than RHM though but with synergies seemingly coming through, the performance of the underlying businesses has been variable and net deteriorating. Note also that Shore Capital believes that 2008 will be a tougher year for the food industry with Tesco (TSCO#, Buy at 389p) and Asda (WMT, NR) seeking to protect their sales base from a revitalised Morrison’s (MRW^, Sell at 293p).
RO: Unbelievable dividend?
Shore Capital was forecasting a 2008F DPS of 13.8p, which we did not believe is out of kilter with the market. Such a pay-out implies a yield of 11.5%. The market clearly does not believe that this is a deliverable prospect, otherwise the stock would be materially higher. To our minds, the market is rarely wrong in this respect, reminding those of us that have been around a long time and can remember the likes of high Booker, Dalgety, Hillsdown Holdings and United Biscuits with their high and ultimately unsustainable yields. Taking this into account, we believe that it is more prudent to reduce our expected pay out to c9p; an implied yield of 7.5% and cover of 2.2 times. To our minds, given the direction of change to our earnings expectations over the last year (six downgrades), the risk to the dividend appears greater than the reward.
RO: Downgrade recommendation to SELL
Finally, with earnings forecasts falling from c28p to 19.9p for 2008, Premier does not have the rating to easily or attractively raise equity to de-leverage its balance sheet while we believe the aforementioned debt and pension deficits are a deterrent to trade or private equity interest. The direction or momentum of earnings does not feel upward. Hence, we are downgrading our stance on Premier stock from Hold to SELL.
Premier Foods is due to release preliminary results on the 4th March. We do not expect negative surprises with respect to 2007 at that time, we wish to point out that our concerns here are structural and strategic in nature. Hence, any potential ‘bounce’ or sense of relief to us is a selling opportunity.
RO: Quite a bit of that
PM: Yes, but its interesting
RO: this is a nervous stock to be honest. we’ve seen these big falls in it before.
PM:
RO: seems quite a few people enjoyed that ashes to ashes last night
RO: i never saw it but plan to watch on bbc i player this weekend
RO: you see it paul>?
PM: Missed it. Kids were watching some stupid cookery programme
RO: jamie @ home?
PM: No some knockout thing
PM: Anyway — someone below asked about Santander and Lex
PM: Who had a bit of pop this morning
PM: Generally on Spanish banks and the threats they face re: overblow spanish property
PM: I completely agree, for what it is worth
PM: I would also repeat the point about Abbey that made a little while back here
PM: They have some sort of problem distributing cash to certain account holders
PM: Always in the personal finance press at the weekend — people complaining
PM: it looks v v suspicious to me
PM:
PM: Anyway — we should share this SocGen news
PM: In case people havent seen it
RO: ROGUE TRADER POLICE ‘QUESTION SECOND MAN’
French police were today questioning a second trader about whether he knew of the deals that led to massive losses at bank Societe Generale, reports said.
Respected French daily newspaper Le Monde said that the trader was being questioned about his relationship with Jerome Kerviel, the man accused by Societe Generale of massive unauthorised bets on European markets.
RO: SOCGEN/INVESTIGATION (URGENT)
Police search SocGen brokerage-source
PARIS, Feb 8 (Reuters) – Police investigating the trading scandal at Societe Generale have searched the offices of one of the French bank’s brokerages, a legal source said on Friday.
Le Monde newspaper reported police were questioning a trader from the brokerage, a SocGen subsidiary formerly known as Fimat but renamed this year as Newedge.
The brokerage executed some of the deals handled by Jerome Kerviel, the trader accused by SocGen of unauthorised trades which led to a record 4.9 billion euros ($7.17 billion) loss at France’s second-largest listed bank.
(Reporting by Marcel Michelson; Writing by David Cowell)
RO: SOCGEN/INQUIRY
French police question second broker over SocGen
PARIS, Feb 8 (Reuters) – French police are questioning a
trader from a brokerage that executed orders on behalf of the
rogue trader at the centre of the Societe Generale scandal, a
legal source familiar with the issue said on Friday.
The brokerage is a SocGen subsidiary formerly known as Fimat
but renamed this year as Newedge after it merged with Calyon
Financial. The brokerage’s offices were raided by police on
Thursday.
The brokerage executed trades on behalf of Jerome Kerviel,
the trader SocGen accuses of unauthorised dealings that led it
to book a record 4.9 billion euros ($7.17 billion) trading loss.
(Reporting by Thierry Leveque)
RO: The plot thickens
PM: Hmm – going to rumble on for a while of course
PM: What strikes me is that senior bankers at other IBs STILL can’t work out how he was able to do this without being noticed
RO: should flag up on big story on this in today’s paper
RO: http://www.ft.com/cms/s/0/927fe998-d5b2-11dc-8b56-0000779fd2ac.html
RO: some of our best writers on the case
PM:
PM: See London Stock Exchange has come off the top now.
RO: It has. Shares touched £17.82 earlier.
PM: Now up 62p at 17.49
PM: Well, there’s a real polemical feel around this stock.
PM: On the one hand you have the Turquoise camp – all those aligned to the plan to produce an alternative trading platform for British equities.
RO: Being set up by the banks – UBS, Goldman etc
PM: On the other hand you have the simple fact that all this volatility is producing exceptionally good trading volumes for the LSE.
RO: All very well saying frenetic market activity is good for business – but the business is frenetic because people are seriously worried about a widespread down turn.
RO: And at the end of the day that has got to point to lower business, even for the LSE.
PM: Well you say that, but most research says there is no correlation between recessions and lower equity trading business – much more reliant on structural changes, development of derivatives, rise of hedge funds.
RO: Bloomberg hosted some conference this week where the heads of Turquoise and Chi-X gave very bullish presentations.
RO: Promising to take market share from the traditional players.
RO: Fox, Pitt Kelton has put a note out on the subject.
RO: Messages from Bloomberg Multilateral Trading Facilities forum > -> London
(DB1 GY – EUR107 – Outperform; LSE LN – 1696p – In Line)
RO: Bloomberg hosted a Multilateral Trading Facilities (MTF) forum today.
Discussing the issues were Turquoise CEO Eli Lederman, Chi-X CEO Peter Randall, NYSE Euronext Head of European cash trading Roland Bellegarde, London Stock Exchange Head of Client Management Nicola Lynch and Cheuvreux Head of execution Jerry Lees.
Conclusion
Naturally this was an occasion for the MTFs to boast their low costs and potential for fee reduction but, even so, there was the strong impression that once Turquoise is up and running and initial operational issues have been addressed there will be a significant impact in the cash trading arena. The established exchanges present acknowledge that they will adjust their fees and the user and MTF indications are that this will need to be substantial. This negative news for the incumbents> ‘> revenue will be balanced to some extent by expected additional volume generated as fresh liquidity is accessed by the MTFs and there is a good chance that they will retain substantial market shares, assuming adjusted fees. For the LSE and Deutsche Börse the meeting underlined the challenge they face in their cash equities activities (around 50% and 20% of revenues respectively) > -> not a fresh point but looking closer to a reality now.
RO: Our take away points were as follows.
* On the part of the broker present the expectation is that exchange fees will fall significantly in Europe with Chi-X cited as 75-85% lower than exchanges >
-> > “> up to 90% lower> “> in their own publicity. Euronext fees are
-> said to
be around 10x higher than those charged by the NYSE. While Chi-X and Turquoise are keen to underline that the attraction of dealing with them will not simply be the price, the discussion kept coming back to this as the primary consideration.
* There was agreement that the post-trade mechanisms and in particular clearing arrangements are an obstacle to pan-European trading, with fees in this area likely to be cruelly exposed once trading fees fall.
* There was also consensus that order routing systems will be effective in linking the puddles of liquidity that are likely to result from increased fragmentation of markets. Against this Chi-X acknowledges that it is still facing operational difficulties in transmitting prices and inputting orders on some systems. This is being addressed and should be in place in time for the launch of Turquoise.
* The trend to slicing and dicing of orders through algorithmic trading has helped drive the dramatic growth in volumes but this may not be the solution to the underlying problem, which is for institutions to trade large blocks of shares. Indeed, the LSE does not want the trend to smaller and smaller orders to go too far and has considered tariff changes to act as a limit on this process.
Turquoise and others are looking to offer systems that will include the ability to trade large blocks efficiently and at low cost.
* This in turn should bring on market (or to new block trading systems) the large completely hidden volumes that currently trade OTC. This could form a significant part of the fresh volume that Turquoise may generate – in other words it believes it is accessing fresh liquidity.
* Turquoise is of the view that some exchanges have not invested adequately in new technology and that they may have trouble keeping pace with increased velocity once new platforms start trading.
* Chi-X note that in the stocks it trades in common with Deutsche Börse that it does not appear to have been a zero sum game and overall volumes have increased strongly.
* On fees LSE and Euronext are clearly on difficult ground compared with the MTFs but both say they have plans to reduce fees progressively and LSE said it would not simply slice fees on the eve of the Turquoise launch.>
* For the MTFs their long-term view is that returns in the exchange world should be much more utility like, with price data being provided free of charge and low costs possible thanks to their simple business model and low staff numbers > -> Turquoise says it can operate with 35 staff and 24 consultants.
* On the Rainbow derivatives consortium that is planned to challenge Liffe,
Euronext> ‘> s view is that it is open to competition, does not control
Euronext> its
clearer and is confident of its ability to compete (no surprise here). The only reservation to this open approach is that there should be a suitable reward for innovation in the derivatives arena.
PM: Hmm — that’s quite negative actually
PM: There was that Sanford Benstein note a few weeks ago wasn’t there.
RO: There was. That was pretty gloomy too
RO: Here’s what we wrote in the paper the following day.
RO: London Stock Exchange was also under pressure, falling 5.7 per cent to Pounds 16.14 after Sanford Bernstein warned the company was facing considerable competition and could miss earnings forecasts this year and next.
“Changes in technology allow meaningful competition between equity trading platforms in Europe for the first time,” Bernstein said, as it started coverage of the LSE with an “underperform” rating and a £16 target price. Unlike many of its rivals, LSE has little exposure to the fast-growing derivatives market
PM: ok
PM:
RO: OK – serious point.
PM: What’s that?
RO: We need to issue a correction.
PM: Er, what for?
RO: Gross error.
PM: Wot?
PM: Error on Alphaville?? Surely not.
PM: When ?
RO: Nah, in market report.
PM: Go on
RO: Tate & Lyle
PM: Yeah, and whats the mistake?
RO: We mistakenly referred to them as a sugars group in Thursday’s paper.
RO: But apparently this is mistaken.
PM: it is?
RO: Apparently.
RO: They’d like to be known as an ingredients group
PM: The company that made its name in Tate & Lyle syrup wants to distance itself from sugar?
RO: Seems so.
RO: Less than half the profits come from sugar apparently.
RO: Just on the website now.
RO: The home page features a sticky bun, some ice cream and what we think might be a brandy snap.
RO: And an advertisement for the Pancake Appreciation Society.
RO: “Celebrate Pancake Day with Lyle’s golden syrup” it says.
RO: Anyway, T&L is an ingredients group.
RO: Not a sugar group. Got that?
PM: Sure
PM: Sweet movement in the shares this morning, tho — up 4.75 at 490
PM: Tate & Lyle the sugars and sweeteners group and ingredients
PM: Tate & Lyle the sugars and sweeteners group and ingredients
PM: Tate & Lyle the sugars and sweeteners group and ingredients
PM: Tate & Lyle the sugars and sweeteners group and ingredients
PM: Tate & Lyle the sugars and sweeteners group and ingredients
RO:
RO: paul’s on the phone
RO: give us a second
PM: Im off
PM: Was just talking to Sarah Connor, one the CDS front
PM: And Sam is on the case
PM: Lots of mentions below
PM: All the credit indicators have widen out suddenly
PM: Apparently 80 CDos are in default , worth, wait for it….
PM: 97bn dollars
PM: And 18 are opting to liquidate — so far
PM: This is being dictated to me by Sam
PM: Where are you getting your infor Sam
PM: He says — S&P press release
PM: he’s going to do a post
PM: Rumour is that a number of these are synthetic cdos — which are the things having a direct impact on the CDS market
RO: LONDON (Dow Jones)–The Markit iTraxx Europe credit derivatives index has
traded at 94.5 basis points Friday, marking a new record high in the cost of
insuring European investment grade corporate debt against default.
The index traded at 92.25 basis points Thursday, and had previously traded at
92 basis points Jan. 22 this year.
PM:
RO: Right, onto Kingfisher.
PM: Seen that — price off 2.7 at 133.3
PM: Any reason?
RO: UBS sell note doing the damage there.
RO: Lots of talk about Kingfisher at the moment.
RO: We flagged up that Deutsche upgrade earlier in the week.
RO: Deutsche reckon Ian Cheshire will be able to turn the company around.
PM: New ceo — formerly of B&Q
RO: UBS think profit will come under pressure as the housing market weakness bites.
RO: E.stablishing Short-Term Sell Cutting PBT forecasts
Although all non-food retailers are likely to be affected by any dramatic slowdown in HEW and
rise in the savings ratio, Kingfisher forecasts beyond 2007-08 (which remains unchanged at
£390m) may be most at risk. We cut our 2008/09E PBT forecast from £415m to £370m and
2009/10e from £475m to £375m. See our Q-Series report dated today, “How important is HEW to UK retailers?” for addition information. Weaker LFL forecasts at B&Q
We reduce our LFL sales forecasts for B&Q for 2008-09 and 2009-10 from -1.5% and 2.5% to -
4% and flat respectively. We already expect a 40bp gain in 2008-09 as underlying sourcing
gains and the remainder of the weak dollar effect should be enough to offset promotional activity
i.n showroom. Little solace in France
We now move out France LFL assumptions from +2% to -1% for 2008-09, with not much
difference between Casto and Brico. Overall, we now assume 2008-09 EBIT in France is flat at
£235m, down from £255m. We reduce our 2008-09 EBIT forecast by £10m for markets outside
t.he UK and France. Valuation: Short-Term Sell, Price Target to 145p (from 160p)
We also establish a short-term Sell rating on the basis that medium-term forecasts could be
vulnerable over the next two reporting dates, Q4 sales (due 21 February) and prelims (due 27
March). We base our new price target on SOP methodology, and apply a 10% discount (was
zero).
PM: Thanks for that – what’s HEW by the way?
RO: Home equity withdrawal
PM: Ah of course. Becomes difficult if the price of your house falls
RO: This is the Q-series note the refer to above.
RO: How i mportant is HEW to UK retailers?
ÀÛ„Ü 2005 revisited?
A collapse in home equity withdrawal (HEW) seems to have been a major factor
behind weak sector LFLs in calendar 2005. Changes in households’ views of HEW
and a decline in the supply of funding threaten durables sales once again in 2008,
and possibly 2009. These come on top of existing pressures on disposable income.
ÀÛ„Ü HEW outlook and UBS survey
The Bank of England issues quarterly HEW data. We commissioned a proprietary
UBS/GfK survey of UK homeowners to provide more detail on the data and the
outlook. This showed that 14% of homeowners released equity over the last five
years, and 5% in 2007. While the same number plan to do so in 2008, more will be
saved and not spent. More mortgagees also plan to reduce the size of their loan.
ÀÛ„Ü UBS growth forecasts: consumption weak into 2009
There are strong links between HEW and the savings ratio, as both are driven by
consumer confidence. The UBS Economics Team expects only a muted recovery
in consumer spending in 2009 despite 125bp of rate cuts, as the savings ratio and
unemployment are both expected to rise.
PM: Ties in nicely with the story on the FT.com home page
PM: House price weakness spreads to London
By Norma Cohen, Economics Correspondent
Published: February 8 2008 09:32 | Last updated: February 8 2008 09:32
UK house prices are now lower than they were three months ago and the weakness shows signs of spreading to London which has appeared resilient up until now, according to the latest FT House Price Index.
RO: http://www.ft.com/cms/s/0/136607dc-d5b7-11dc-8b56-0000779fd2ac.html
PM: Very nice
PM: That’s not all – was reading this in the Times.
PM: Home repossessions to hit eight-year high
Angela Jameson
The number of homes that were repossessed by lenders jumped by a third in 2007 as an increasing number of people fell behind with their mortgage repayments, figures out later this morning are expected to show.
The Council of Mortgage Lenders is expected to say that around 30,000 homes were taken over by lenders after heavily indebted borrowers defaulted on their mortgages. That figure is expected to soar to 45,000 during 2008 – a level not seen since 1995 – as the cost of home ownership pushes an increasing number of families to breaking point.
Repossessions in 2007 were at levels not seen since 1999 and are 32 per cent higher than the total number of repossessions that occurred in 2006. However, the repossessions represent just a quarter of one per cent of all mortgages.
RO: How very gloomy.
PM: I did a post yesterday on the British property crash –Live!
PM: you could watch a Barnard Marcus auction on screen while posters at housepricecrash.co.cuk were busy looking up past sale prices and comparing them with the auction sales
PM: it was very entertaining — there seemed to be literally thousands of onliners cheering falling prices
PM:
PM: We should mention Biffa — even if neil not here
PM: Neil has been predicting a takeover of Biffa since my birthday the year before last
RO: offer had come in at 350p
RO: Montagu Funds, Global Infrastructure Partners and UCIL.
RO: BUT
RO: shares are up 41p to 369p on hopes of higher bid
PM: So the market is saying Montagu et al are not going to be buying this busienss for 350p
RO: biffa has actually said themselves that there have had other expressions of interest
RO: host of names being thrown about
PM: Ah, Reuters have an EXCLUSIVE on this one
PM: BIFFA-TERRA (URGENT)
EXCLUSIVE-Terra Firma among Biffa suitors-sources
LONDON, Feb 8 (Reuters) – British financier Guy Hands’s Terra Firma is among companies in talks with British waste collection company Biffa Plc
Biffa said on Friday that third parties had approached it, were looking at its books and might improve on the 350 pence per share it had accepted from Montagu Funds, Global Infrastructure Partners
Terra Firma, which has a history of deals in the waste management sector, is one of those parties, said the sources.
Biffa declined to comment, a spokesman for Terra Firma could not be reached.
PM: Can obviously see the synergies between EMI and Biffa
RO: Both in business of waste management
RO: Suez is another name being linked
RO: This is all boosting Shanks shares too – up 14.5p to 237.5p
PM: great — thanks for that
PM: Anyway one to continue watching. I guess
PM:
PM: Should mention Glaxo briefly
RO: Stock down 39p to £10.39.
PM: host of downgrades this morning after yesterday’s figs
RO: we’re calling it a profit warning
RO: does not look good for them – or indeed for the sector
RO: Astra down 55p to £19.24.
PM:
RO: Three little pigs commenting on home people have given up on B&Q
RO: I bought a pair of wellies from there on the way to glastonbury
RO: but can’t say i’m a regular
PM: Lemmy — sorry cant immediately answer that
PM: Most of the research we ahve seen this morning has been mildly positive
PM: We have got to go
PM: Sam is threatening to put up his post on S&P any moment
RO: all this credit market stuff is hitting the FTSE
RO: currently flat at 5726
PM: In fact helen is just correcting his spelling etc — and his use of apostrophes
PM: Thank you for joining us today — and thanks for the comments
PM: We will be back at 11am on Monday
PM: But in the meantime, come to the Alphaville home page
PM: Aside from Sam’s S&P post, there will also soon be an interesting number from Helen…
PM: On the Americans suggesting that SWFs will be dealing inside and generally abusing the market
PM: I’m not kidding here. No evidence or anything — but because they are foreigners various people — like the SEC – are worried about them being crooks
PM: But we are off!
RO: see you