Markets live chat transcript for the chat ending at 11:54 on 20 Aug 2009. Participants in this chat were: Paul Murphy (PM) Bryce Elder (BE) Masa Serdarevic, FT (MS)
PM:
Good morning.
PM:
Welcome
PM:
This is ML
PM:
AV’s daily markets chat.
PM:
Bryce is here with me – cheering stocks on.
BE:
Hello
PM:
Know why prices are up?
BE:
No.
PM:
Much news around?
BE:
No.
PM:
Okay, sorry Indiana Jones
PM:
that’s it for today.
PM:
Thanks for joining us
PM:
Thanks for all the comments.
PM:
We’ll be back tomorrow at 11am.
BE:
Bye.
PM:
Just kidding
PM:
We know we cant switch ML off, not its created.
BE:
Monster
PM:
Actually, I doubt there are many people with us today.
PM:
Or only half with us – watching the cricket instead
PM:
So we are a place to discuss that i guess
PM:
which is fair enough
11:06AM
PM:
What’s the Footsie doing Bryce??
BE:
Up
BE:
64 points at 4753
PM:
BE:
Because China came out of its bear market
BE:
Where it had been for about 20 minutes
BE:
Actually, while we’re on China
BE:
Enskilda has sent something …
BE:
What is China telling us?
Sustainability of recovery remains the key issue
Sustainability of recovery remains the key issue
BE:
Chinese equities are down nearly 20% in
two short weeks.
two short weeks.
BE:
The powerful combination of frontloaded fiscal stimuli and an explosion of liquidity have worked wonders for Chinese equities since last October (upper chart). The recent sharp drop, however, suggests a quick reversal of risk appetite and has occurred as marginal changes in policymaking have been quietly suggested by officials.
BE:
China’s policy decisions were instrumental as relief for global investors and Chinese manufacturing sentiment did indeed lead the way for similar improvements globally. China cannot, however, go alone and the striking divergence between companies’ perception reflected in the PMI survey and consumer’s continued caution suggests that a broad-based recovery independent of stimuli and demand abroad has not unfolded (lower chart).
BE:
China is a high beta play on global recovery and the equity sell-off may still turn out to be nothing more than violent profit taking. China’s need for a much broader pick-up in activity is, however, shared by most other regions, leaving a warning of the risks still present for a global recovery lacking a solid footing.
PM:
cheers for that
BE:
But, really, the only big bit of news this morning is UBS
PM:
Swiss government selling out of UBS
BE:
They’ve made turn in the region of 20 per cent on this – I think
BE:
Got the upfront coupon payment – 1.8bn swiss francs
BE:
and then just under 5.5 billion from the the converted stock.
BE:
Swiss government put up 6 bilin francs originally
PM:
here’s some stuff from Matthew Clark at KBW
PM:
Hang on — having pasting issues
PM:
JohnDoe settlement/gov’t exit: Both welcome, neither surprising
Yesterday’s pre-trial settlement of the UBS ‘John Doe’ summons yielded few
surprises vs. recent press reports (no fines, c.5k accounts referenced). Swiss
authorities will broaden interpretation of the existing tax co-operation agreement
and accelerate processing of a request for information exchange on 4,450
suspicious accounts. While the US authorities do not know the names of the
accountholders, they must have grounds for suspicion and individuals will have
the right to appeal. We are sceptical that this development will materially impact
the listed Swiss PBs, for whom US cross-border activities represent a fraction of
their business. However, the John Doe saga has succeeded in providing enormous
publicity for the US IRS’s voluntary disclosure programme.
Yesterday’s pre-trial settlement of the UBS ‘John Doe’ summons yielded few
surprises vs. recent press reports (no fines, c.5k accounts referenced). Swiss
authorities will broaden interpretation of the existing tax co-operation agreement
and accelerate processing of a request for information exchange on 4,450
suspicious accounts. While the US authorities do not know the names of the
accountholders, they must have grounds for suspicion and individuals will have
the right to appeal. We are sceptical that this development will materially impact
the listed Swiss PBs, for whom US cross-border activities represent a fraction of
their business. However, the John Doe saga has succeeded in providing enormous
publicity for the US IRS’s voluntary disclosure programme.
PM:
Fraud definition seems unchanged. Under the 1998 bilateral tax treaty, tax fraud
was defined as “fraudulent conduct that causes or is intended to cause an illegal and
substantial reduction in the amount of the tax paid”. As such, this would already
appear to capture large scale tax evasion.
Grounds for suspicion not yet clear. Swiss authorities indicate “account information
may also be released – through treaty request channels – even if the IRS does not yet
know the name of the bank client concerned …” It is not yet clear, however, how this
reconciles with previous assertions that information would only be exchanged in the
event of “individual cases upon specific and justified request”. Criteria for requesting
exchange of information on the 4,450 accounts will be revealed in 90 days time. It is
conceivable to us that the Bradley Birkenfeld testimony and earlier criminal
investigation of UBS’s cross-border business (resolved via February’s Deferred
Prosecution Agreement) is deemed to provide a sufficient basis for the request and
allow Swiss authorities to repeat their mantra that ‘fishing expeditions’ are ruled out.
was defined as “fraudulent conduct that causes or is intended to cause an illegal and
substantial reduction in the amount of the tax paid”. As such, this would already
appear to capture large scale tax evasion.
Grounds for suspicion not yet clear. Swiss authorities indicate “account information
may also be released – through treaty request channels – even if the IRS does not yet
know the name of the bank client concerned …” It is not yet clear, however, how this
reconciles with previous assertions that information would only be exchanged in the
event of “individual cases upon specific and justified request”. Criteria for requesting
exchange of information on the 4,450 accounts will be revealed in 90 days time. It is
conceivable to us that the Bradley Birkenfeld testimony and earlier criminal
investigation of UBS’s cross-border business (resolved via February’s Deferred
Prosecution Agreement) is deemed to provide a sufficient basis for the request and
allow Swiss authorities to repeat their mantra that ‘fishing expeditions’ are ruled out.
PM:
Faster processing of requests. Switzerland has indicated it received only 89
applications from foreign countries requesting tax-related mutual assistance last year
and, anecdotally, the process for assessing the claim can take several years. Hence, it
is significant that Switzerland commits to processing the full 4,450 account requests
within 360 days (and 500 within 90 days).
UBS consequences. This disclosure requirement does not appear more onerous than
anticipated and while adverse headlines are likely to persist (e.g., ‘US criminally
investigating 150 UBS clients, Bloomberg 18 August), one could suspect they will be
less frequent once the IRS’s voluntary disclosure programme closes in September.
Additionally, some comfort might be gained that UBS saw Asian inflows in 2Q09,
despite the adverse backdrop. Overall, this settlement appears to be a necessary, but
well-anticipated step to recovery, along with the pending exit of the government
(MCN conversion indicated for 25 August with placing of shares to follow). However,
at 10.2x KBW 2010E Op. EPS (20% RoNAV), the valuation still seems uncompelling
and we retain our Market Perform recommendation.
applications from foreign countries requesting tax-related mutual assistance last year
and, anecdotally, the process for assessing the claim can take several years. Hence, it
is significant that Switzerland commits to processing the full 4,450 account requests
within 360 days (and 500 within 90 days).
UBS consequences. This disclosure requirement does not appear more onerous than
anticipated and while adverse headlines are likely to persist (e.g., ‘US criminally
investigating 150 UBS clients, Bloomberg 18 August), one could suspect they will be
less frequent once the IRS’s voluntary disclosure programme closes in September.
Additionally, some comfort might be gained that UBS saw Asian inflows in 2Q09,
despite the adverse backdrop. Overall, this settlement appears to be a necessary, but
well-anticipated step to recovery, along with the pending exit of the government
(MCN conversion indicated for 25 August with placing of shares to follow). However,
at 10.2x KBW 2010E Op. EPS (20% RoNAV), the valuation still seems uncompelling
and we retain our Market Perform recommendation.
BE:
Cheers
PM:
So everyone is reading this bullishly – as tho others might do it
PM:
Here’s some stuff from Panmure on Swiss Re, for example
PM:
Sorry, not Panmure
PM:
Collins Stewart
PM:
idea that Swiss Re could by Buffett convertible
PM:
BUY | Target: SFr48.00 | Price: SFr45.88 | Europe | Insurance | 20 August 2009
Swiss government sale of UBS stake the precedent
¦ Could Swiss Re look to the example of UBS?
We believe the likely ease of the Swiss government’s disposal of its CHF6bn stake in UBS this morning could encourage Swiss Re’s board to raise equity to repay the CHF3bn Buffett convertible.
¦ Organic repayment schedule is achievable
The stated aim of the company is to repay Buffett from self-generated capital within the repayment window before conversion between March 2011 and 2012. With the economic surplus to AA rating having increased from CHF1.8bn to CHF4.5bn in Q2, we think the company is on-track to achieve this goal through further de-risking and earnings retention.
Swiss government sale of UBS stake the precedent
¦ Could Swiss Re look to the example of UBS?
We believe the likely ease of the Swiss government’s disposal of its CHF6bn stake in UBS this morning could encourage Swiss Re’s board to raise equity to repay the CHF3bn Buffett convertible.
¦ Organic repayment schedule is achievable
The stated aim of the company is to repay Buffett from self-generated capital within the repayment window before conversion between March 2011 and 2012. With the economic surplus to AA rating having increased from CHF1.8bn to CHF4.5bn in Q2, we think the company is on-track to achieve this goal through further de-risking and earnings retention.
PM:
¦ Capital raise could reduce uncertainty for investors and clients
We think an early resolution of the convertible overhang would reduce uncertainty surrounding the group’s capital position, increase client confidence, and help earnings generation (albeit possibly at the cost of upfront dilution). We would assume that the terms of the convertible could be re-negotiated to allow early repayment prior to 2011, presumably with the present value of coupons. Total cost would likely be in the region of CHF4bn, including the 20% premium for repayment in the current agreement.
¦ We would not expect a comment at this stage
There is an analyst meeting with the CFO in London tomorrow, and we would not expect any comment on a change to the stated strategy. We would look instead for any update on the de-risking and asset disposal programme, as well as any greater clarity on earnings sensitivities to market movements.
¦ 15-25% discount to reinsurance peers on book metric
We think an early resolution of the convertible overhang would reduce uncertainty surrounding the group’s capital position, increase client confidence, and help earnings generation (albeit possibly at the cost of upfront dilution). We would assume that the terms of the convertible could be re-negotiated to allow early repayment prior to 2011, presumably with the present value of coupons. Total cost would likely be in the region of CHF4bn, including the 20% premium for repayment in the current agreement.
¦ We would not expect a comment at this stage
There is an analyst meeting with the CFO in London tomorrow, and we would not expect any comment on a change to the stated strategy. We would look instead for any update on the de-risking and asset disposal programme, as well as any greater clarity on earnings sensitivities to market movements.
¦ 15-25% discount to reinsurance peers on book metric
PM:
We see upside as Swiss Re de-risks, with the core businesses performing reasonably well. Swiss Re trades at 0.75x 09E adj. NAV against its reinsurance peers on 0.9-1.0x, an undeserved discount even given the various levels of uncertainty and capital raise possibility.
11:13AM
PM:
Of course the UK gov is still underwater in the likes of RBS
BE:
Briefly broke even on Lloyds I think
BE:
I’m sure someone to the right can scroll back and get us the average prices.
PM:
How are the UK banks doing this morning
BE:
Up
BE:
Barclays ahead 8p at 353p
PM:
Hmm
BE:
Lloyds up 3 at 102 – so still short of the govt’s 115p average price (thanks Cityunslicker)
BE:
RBS up 1.5p at 47.4p (state in at 58p).
PM:
On Barc
PM:
Jonathan Pierce has a note out
PM:
Credit Suisse are no longer restricted, research wise
PM:
He’s still a buyer – but there’s a real note of caution in this stuff.
PM:
TP of 395
BE:
Actually, Pierce had a neutral rating before – now saying outperform.
PM:
Investment case: This is a largely relative valuation call given the shares trade
at 1.2 times 2009E TNAV versus European banks at 1.5 times and investment
banks at 1.4 times. Fundamentally though, we temper enthusiasm on the
potential near-term upside in this research. Indeed, our 2011E EPS is 32p – well
below some of the more optimistic estimates in the market.
Our main concerns are margin pressure in GRCB, where we believe liability
shares are unlikely to recover for 18-24 months, where mortgage yields are
proving relatively inflexible given the large number of customers rolling onto
non-SVR product, and where Barclaycard yield improvement seems to be
levelling out courtesy of more stable funding costs. Impairment in GRCB is also
likely to remain at high levels until 2011, in our view.
We also worry about the potential for substantially inflating costs in Barclays
Capital, and think stabilisation in credit markets might lead to a sharp
acceleration in cost accruals – meaning we might never see the “underlying”
profits that many pointed to at the first half stage.
Investment case: This is a largely relative valuation call given the shares trade
at 1.2 times 2009E TNAV versus European banks at 1.5 times and investment
banks at 1.4 times. Fundamentally though, we temper enthusiasm on the
potential near-term upside in this research. Indeed, our 2011E EPS is 32p – well
below some of the more optimistic estimates in the market.
Our main concerns are margin pressure in GRCB, where we believe liability
shares are unlikely to recover for 18-24 months, where mortgage yields are
proving relatively inflexible given the large number of customers rolling onto
non-SVR product, and where Barclaycard yield improvement seems to be
levelling out courtesy of more stable funding costs. Impairment in GRCB is also
likely to remain at high levels until 2011, in our view.
We also worry about the potential for substantially inflating costs in Barclays
Capital, and think stabilisation in credit markets might lead to a sharp
acceleration in cost accruals – meaning we might never see the “underlying”
profits that many pointed to at the first half stage.
PM:
Catalyst: Continued robust performance from Barclays into Q3 2009 (IMS
statement due 10th November) should bring the rating closer to the peer group,
but will also demonstrate some of the concerns highlighted above, in our view.
statement due 10th November) should bring the rating closer to the peer group,
but will also demonstrate some of the concerns highlighted above, in our view.
Valuation: We appreciate that our thesis does not present a particularly strong
case for buying Barclays’ shares, but it highlights that our Outperform rating is a
relative call in a UK sector where we have even bigger concerns. Indeed, we
believe a prolonged low rate environment (which seems increasingly likely)
would hurt others more than Barclays. Our one-year target price is 395p, which
represents around 1.4 times 2009E TNAV and provides 15% potential upside vs
an average 20% downside across the UK banks sector and 0% across Europe.
BE:
Ok – thanks for that.
11:17AM
PM:
Now we had a little zapping controversy here yesterday
PM:
Involving Tactless
PM:
Reason was that I hadn’t discussed with Masa – our “pre-grad”
PM:
About what she wanted to say publicly about herself.
PM:
So, since Taxloss does not seem to be around
PM:
And because it is his birthday
PM:
Masa is coming on here to introduce herself
PM:
Masa – you there?
PM:
Masa?
MS:
Hello everyone
PM:
hi there
PM:
So who are you and why are you here?
MS:
Ex-Lehman and now just about to start on the FT grad scheme
PM:
for your sins
MS:
haha
PM:
So you are on AV until the beginning of September, yeah?
MS:
yes
PM:
Hope it is not too painful
MS:
Much less painful than M&A!
PM:
The grad trainee scheme here is rather nice
PM:
You get to travel round various desks
PM:
and then get sent to Paris or washington or something
BE:
Far better than being staff, one could argue.
PM:
Indeed
PM:
Get paid bugger all tho
PM:
Which, if you are ex-Lehman might be a bit of an issue
BE:
Hm.
MS:
Getting used to it…
BE:
Ok – should we move on to some stocks stuff now?
PM:
Okay — seeya masa
PM:
Bryce says we must press on
11:23AM
PM:
Where we gonig?
BE:
Requests, among the few punters to have turned up today, for some comment on Wellstream
BE:
Oil services thingmy
BE:
Makes flexible pipes
BE:
Floated back in 2007
BE:
By Candover – price of about 350p if memory serves
BE:
And today we’re down 55p at 481p.
BE:
After what most people are taking as a profit warning.
BE:
Hang on – will just dig out a bit of comment
PM:
oh do
BE:
This is from Merrill
BE:
Slow order intake to put pressure on 2H; 2010 recovery
WSM’s weaker than expected 1H results – see below – and tough 2H outlook
point to the challenging environment faced by the company in 09. The outlook is
markedly more cautious near term than at the last update (May-09) as the slow
order intake puts pressure on plant utilisation. Management now points to (1)
2H09 earnings slightly ahead of a depressed 1H09 and (2) order intake
accelerating in 2010, as opposed to previous indications of late-09. That said, to
us the LT story remains compelling even if it takes longer to materialise. The
opportunity set in Brazil remains massive and recent strategic steps from WSM
(new Brazil plant with the option to expand further; entry into installation market)
position the company well to capture LT growth, in our view. We keep our BUY
rating (reducing PO from 700p to 630p).
WSM’s weaker than expected 1H results – see below – and tough 2H outlook
point to the challenging environment faced by the company in 09. The outlook is
markedly more cautious near term than at the last update (May-09) as the slow
order intake puts pressure on plant utilisation. Management now points to (1)
2H09 earnings slightly ahead of a depressed 1H09 and (2) order intake
accelerating in 2010, as opposed to previous indications of late-09. That said, to
us the LT story remains compelling even if it takes longer to materialise. The
opportunity set in Brazil remains massive and recent strategic steps from WSM
(new Brazil plant with the option to expand further; entry into installation market)
position the company well to capture LT growth, in our view. We keep our BUY
rating (reducing PO from 700p to 630p).
BE:
Weaker product mix weighs on 1H09 margins
1H09 EBITDA came in at £30m (c10% below our estimates) as low plant
utilisation (c80%) and a weaker product mix put pressure on margins. The c20%
YoY increase in throughput (215km(n) vs 188km(n) in 1H08) was partially offset
by a c15% YoY drop in implied pricing (£807/metre vs £926/metre in 1H08). All in,
group EBITDA margins came in at 15% (1H08 22.8%). We note that the earnings
contribution from the SeaStream (intallation) JV was negligible in 1H as the
Pyrenees project only started its offshore phase in April 09.
1H09 EBITDA came in at £30m (c10% below our estimates) as low plant
utilisation (c80%) and a weaker product mix put pressure on margins. The c20%
YoY increase in throughput (215km(n) vs 188km(n) in 1H08) was partially offset
by a c15% YoY drop in implied pricing (£807/metre vs £926/metre in 1H08). All in,
group EBITDA margins came in at 15% (1H08 22.8%). We note that the earnings
contribution from the SeaStream (intallation) JV was negligible in 1H as the
Pyrenees project only started its offshore phase in April 09.
BE:
Lowering 09-10E EPS by 18%
Factoring into our model the new guidance and assuming lower margins going
forward, we lower our 2009-10E EPS by an average 18%. Our new estimates put
WellStream on 13.3x 2010 earnings, in-line with the sector average.
Factoring into our model the new guidance and assuming lower margins going
forward, we lower our 2009-10E EPS by an average 18%. Our new estimates put
WellStream on 13.3x 2010 earnings, in-line with the sector average.
BE:
And Cazenove has downgraded this morning
PM:
Do you have the note??
BE:
Well, yes.
BE:
But Caz have started protecting their PDFs
BE:
The spoilsports
BE:
However, if you’re really desperate for a look …
BE:
You could always go here: http://tinyurl.com/lewzxu
BE:
Then here: http://tinyurl.com/nmdn5t
BE:
And I look forward to hearing from the Cazenove press office later this afternoon.
11:30AM
BE:
Ok
BE:
Paul’s busy zapping
PM:
Sorry, back now
BE:
Smells like brimstone in here
PM:
BE:
Briefly, on Rio
BE:
Results seemed a bit dull to me
BE:
underlying earnings of US$2,565mn, 4% below consensus.
PM:
(Impersonating AV editorial people gets an immediate ban — obviously. Letter to parents if it is repeated,e tc)
BE:
Iron Ore was where it missed.
BE:
The interim dividend has been passed, as expected, but guidance that a final dividend may be paid.
PM:
(Rain — yes, they should, but doesnt seem to have happened on this occasion)
BE:
Outlook sensibly cautious
PM:
(Harry — news to us)
PM:
(They couldnt afford him)
BE:
Brief comment from Merrill for any followers
BE:
H1 2009 results light vs. our forecasts and consensus
Rio has reported H109 interim numbers slightly light against our forecasts. Net
profit of $2.6bn was -54% YoY, -5% vs. our forecast and -4% vs. consensus,
including the effect of the one-off gain from the sale of Potash assets. Net debt at
the end of the half was $39.1bn, but this has since been reduced by $14.8bn.
Maintain Buy: valuation compelling
We maintain our Buy recommendation on Rio Tinto as we believe the stock
presents compelling value vs. its peers at 10x 2010E EPS and 0.7x P/NPV. The
company’s iron ore, copper and energy divisions offer good exposure to our
bullish view on commodity prices and an economic recovery in 2010.
Outlook: cautious short term, confident longer term
In terms of outlook statement: “We remain cautious about the recent rally in
prices. However, the expectation that development in emerging markets will
generate underlying strength in metals and minerals demand over the long term
remains broadly unchanged.”
Rio has reported H109 interim numbers slightly light against our forecasts. Net
profit of $2.6bn was -54% YoY, -5% vs. our forecast and -4% vs. consensus,
including the effect of the one-off gain from the sale of Potash assets. Net debt at
the end of the half was $39.1bn, but this has since been reduced by $14.8bn.
Maintain Buy: valuation compelling
We maintain our Buy recommendation on Rio Tinto as we believe the stock
presents compelling value vs. its peers at 10x 2010E EPS and 0.7x P/NPV. The
company’s iron ore, copper and energy divisions offer good exposure to our
bullish view on commodity prices and an economic recovery in 2010.
Outlook: cautious short term, confident longer term
In terms of outlook statement: “We remain cautious about the recent rally in
prices. However, the expectation that development in emerging markets will
generate underlying strength in metals and minerals demand over the long term
remains broadly unchanged.”
BE:
What a year it has been!
We think it is important to take these results in the context of what has been a
pretty tumultuous 12 months for Rio including BHP walking from its bid, the global
credit crisis and ensuing collapse in metal demand, a rights issue, asset sales, a
bounce in Chinese metal demand and so on. In this context are we particularly
concerned about a 5% miss on interim earnings? Not really.
“Underlying” number includes one-off gain
The “underlying” numbers that Rio report are slightly misleading in that they
include a one-off gain of around $800mn related to the sale of its undeveloped
Potash assets earlier this year. Stripping this gain out, net profit was $1.77bn.
Divisions: Iron ore inline, Cu and Al ahead, others light
In terms of the divisions, iron ore EBITDA was exactly inline with our forecasts.
Meanwhile Aluminium EBITDA loss was smaller than forecast, and copper was
ahead of our estimates on provisional pricing. Energy, Minerals and Diamonds
were all light vs. our forecast.
We think it is important to take these results in the context of what has been a
pretty tumultuous 12 months for Rio including BHP walking from its bid, the global
credit crisis and ensuing collapse in metal demand, a rights issue, asset sales, a
bounce in Chinese metal demand and so on. In this context are we particularly
concerned about a 5% miss on interim earnings? Not really.
“Underlying” number includes one-off gain
The “underlying” numbers that Rio report are slightly misleading in that they
include a one-off gain of around $800mn related to the sale of its undeveloped
Potash assets earlier this year. Stripping this gain out, net profit was $1.77bn.
Divisions: Iron ore inline, Cu and Al ahead, others light
In terms of the divisions, iron ore EBITDA was exactly inline with our forecasts.
Meanwhile Aluminium EBITDA loss was smaller than forecast, and copper was
ahead of our estimates on provisional pricing. Energy, Minerals and Diamonds
were all light vs. our forecast.
PM:
Okay
PM:
cheers
PM:
for that
BE:
(Times – not a particularly happy place to work.)
BE:
(Allegedly.)
PM:
In your experience Bryce
BE:
Well, yes. The walk to Wapping every morning was horrendous.
PM:
(monkey — please)
BE:
Rats the size of dinosaurs would chase you through St Katherine’s Dock.
PM:
PM:
It’s also The Times
BE:
Hm.
11:36AM
PM:
Here’s some horses stuff from the Shrewdette
PM:
York day 3 today, but I’m getting more feeble by the day!
Here’s the list I sent Taxloss to help him celebrate his birthday at York races today, so I am counting on him brining us some Leo luck!
1:45 MIDNIGHT MARTINI (lovely name!) 20/1 but can’t think why so long when she won both last starts albeit shorter distance. Throwing up all ML’s yellow triangles here, approach with extreme caution, but if you want to live on the edge….
2:50 ACROSTIC 6/1 must be in with a fair chance after good win last month this distance Sandown. Last run disappointing but quite possible here to make amends.
3:25 On paper nothing is going to beat SARISKA but at 4/11 not worth the walk to the bookie, unless you are laundering…. So I might just plug on with my last-but-one outing winner BARSHIBA 14/1. Honest sort and despite her tendency to hang because of eyesight problem she could well contest. Good moderate EW flutter.
4:05 FALLEN IN LOVE 7/2 Only one win in seven starts but very good second to fast improving winner over same distance. In form and from and yard has won this twice. Must be in contention here.
Here’s the list I sent Taxloss to help him celebrate his birthday at York races today, so I am counting on him brining us some Leo luck!
1:45 MIDNIGHT MARTINI (lovely name!) 20/1 but can’t think why so long when she won both last starts albeit shorter distance. Throwing up all ML’s yellow triangles here, approach with extreme caution, but if you want to live on the edge….
2:50 ACROSTIC 6/1 must be in with a fair chance after good win last month this distance Sandown. Last run disappointing but quite possible here to make amends.
3:25 On paper nothing is going to beat SARISKA but at 4/11 not worth the walk to the bookie, unless you are laundering…. So I might just plug on with my last-but-one outing winner BARSHIBA 14/1. Honest sort and despite her tendency to hang because of eyesight problem she could well contest. Good moderate EW flutter.
4:05 FALLEN IN LOVE 7/2 Only one win in seven starts but very good second to fast improving winner over same distance. In form and from and yard has won this twice. Must be in contention here.
11:37AM
PM:
What else before our early departure Bryce??
BE:
We should probably mention UK retail sales
BE:
Up 0.4% in July
BE:
In line
BE:
Although below the surface it’s a bit more interesting.
BE:
Here’s Karen Ward from HSBC
BE:
Looking at the breakdown by type of spending, the upturn in housing market activity appears to be filtering into spending
as the rise was driven by a strong gain in household goods. This had been the main area of weakness over the past eighteen
months with spending on other areas holding up remarkably well (Chart 1). As we have mentioned on numerous occasions,
this is most likely because low interest rates are a huge stimulus to UK households as most mortgages are on short-term rates
(see Chart 2). This seems to be offsetting the rise in unemployment in total spending.
as the rise was driven by a strong gain in household goods. This had been the main area of weakness over the past eighteen
months with spending on other areas holding up remarkably well (Chart 1). As we have mentioned on numerous occasions,
this is most likely because low interest rates are a huge stimulus to UK households as most mortgages are on short-term rates
(see Chart 2). This seems to be offsetting the rise in unemployment in total spending.
BE:
The retail sales deflator fell -0.7 as food price inflation moderated. Discounting can’t explain the strength of spending on
household goods because the rate of deflation was much less than it has been in the past year.
household goods because the rate of deflation was much less than it has been in the past year.
BE:
The public sector borrowing numbers were less positive, with borrowing of £8bn in July. July is historically a month where
revenues exceed spending so whilst most UK economic indicators are surprising to the upside this is not yet feeding into better
outturns for the public finances. The fiscal deficit remains the black cloud over the outlook. Our view is that whilst fiscal
policy will undoubtedly serve as less of a stimulus to growth over the coming years, monetary policy will compensate so that
the peak in the interest rate cycle will be lower than past cycles.
revenues exceed spending so whilst most UK economic indicators are surprising to the upside this is not yet feeding into better
outturns for the public finances. The fiscal deficit remains the black cloud over the outlook. Our view is that whilst fiscal
policy will undoubtedly serve as less of a stimulus to growth over the coming years, monetary policy will compensate so that
the peak in the interest rate cycle will be lower than past cycles.
BE:
And, for an added bonus, this is from Nick Bate at Merrill
BE:
it is notable that while YoY growth in retail sales volumes has strengthened a
little over the last few months, with inflation falling back, sales growth in nominal
terms has actually remained broadly flat
little over the last few months, with inflation falling back, sales growth in nominal
terms has actually remained broadly flat
BE:
More generally, retail sales growth has held up relatively well in this recession, at
least according to official data (survey evidence showed much weaker growth
through 2008 and 09H1, but is now broadly in line with the official data). But retail
sales are only around 35% of total household consumption, and pronounced
weakness in overall consumer spending in recent quarters has been driven by
lower vehicle sales, and falls in spending on consumer services.
least according to official data (survey evidence showed much weaker growth
through 2008 and 09H1, but is now broadly in line with the official data). But retail
sales are only around 35% of total household consumption, and pronounced
weakness in overall consumer spending in recent quarters has been driven by
lower vehicle sales, and falls in spending on consumer services.
BE:
However, new vehicle registrations have risen strongly over the last couple of
months, not least as a result of the government’s car scrappage scheme (Chart
2). That could boost consumer spending somewhat in the short-term, though in a
more medium-term perspective it may just bring expenditure forwards from future
periods. Indeed, over a medium-term horizon, we expect tight credit conditions,
the weak labour market, the falls in asset prices since mid-07 and a period of
rebalancing by the household sector to continue to weigh down on their spending.
months, not least as a result of the government’s car scrappage scheme (Chart
2). That could boost consumer spending somewhat in the short-term, though in a
more medium-term perspective it may just bring expenditure forwards from future
periods. Indeed, over a medium-term horizon, we expect tight credit conditions,
the weak labour market, the falls in asset prices since mid-07 and a period of
rebalancing by the household sector to continue to weigh down on their spending.
PM:
okay
PM:
ta
PM:
right
PM:
we are kinda done here
PM:
Bit of a chaotic session
PM:
apols
BE:
Lorcan – scroll up
BE:
Just before we close
BE:
Capital & Regional mentioned to the right
BE:
Fundraising was heavily rumoured yesterday
BE:
And, keen viewers may note, was in the paper this morning
BE:
Not going well though
Capital and Regional (CAL:LSE): Last: 49.50, down 48.5 (-49.49%), High: 82.00, Low: 45.00, Volume: 3.16m
PM:
Well done on that
BE:
Well – mini hit I guess.
PM:
75 per cent discount
BE:
Yup – there was a bit of a rush to get on the shareholder list yesterday, hence the rise
BE:
And while we’re on the vague subject of raw
RAW is market chatter – information that has not been formally tested through traditional journalistic channels (PRs etc). The story might be complete rubbish, but if we believe there is some substance to it we will say so. Either way, Reader Beware.
BE:
There’s apparently a story in one of the Swiss papers that Shire could bid for Acteleon
BE:
Theory being they could use it as a defence if Teva wanted to bid for Shire
BE:
Which was an idea put about by Citigroup last week
BE:
Although there’s a lot of people who think this combination doesn’t make all that much sense.
BE:
Cityslicker – on African Minerals ….
BE:
We continue to stand by what we wrote earlier this week
BE:
Which is that they’re in talks with ENRC
BE:
Wouldn’t even class that as raw.
BE:
But – since there’s been no statement – I guess you have to be a bit cautious about what those talks may entail.
BE:
No idea about Harbinger getting on board, or otherwise
BE:
Not sure it would be game changing either way
BE:
And, just in case anyone’s forgotten, this is a Frank Timis company
BE:
So …. well …. it might be prudent to be a bit prudent.
PM:
right
PM:
we are off
11:53AM
PM:
thanks for joining us today
PM:
thanks for all the comments
PM:
Back at 11 am tomorrow
PM:
Seeya
BE:
Bye