Markets live chat transcript for the chat ending at 12:14 on 6 Oct 2009. Participants in this chat were: Neil Hume, FT (NH) Bryce Elder (BE)
NH:
Howdy
NH:
Good morning and welcome to Markets Live
NH:
FT Alphaville’s daily market’s discussion
NH:
Bryce is here
NH:
and
NH:
it’s deja vu all over again
BE:
eh?
NH:
October
NH:
its’s started just like September
BE:
A groundhog month
NH:
possibly
NH:
have a look at this
NH:
sent by a broker earlier
NH:
The S&P sold off on the last two days of Aug & continued to
fall into the first two days of Sep, on the 3rd trading day of
the month the market took off.
Who said historic performance can’t predict the future!
fall into the first two days of Sep, on the 3rd trading day of
the month the market took off.
Who said historic performance can’t predict the future!
11:05AM
BE:
well, the market is certainly motoring this morning
BE:
on the back of Wall Street’s decent overnight performance
BE:
the FTSE has vaulted 72 points higher to 5,097
NH:
hmmm
NH:
I wonder if this has something to do with it
NH:
hearing reason for the pop is a big buyer of Estoxx futures…approx $2.4bn worth. UNCONFIRMED
BE:
Dunno
BE:
Only five stocks down on the day
NH:
before we look at those
NH:
gold
NH:
RTRS-SPOT GOLD HITS 18-MONTH HIGH OF $1,025.10/OZ ON WEAK DOLLAR-REUTERS DATA
NH:
which I am guessing
NH:
is on the back of the weak dollar
NH:
which in turn was caused by the front page splash in the Indy
NH:
BE:
Indie ROCKS the financial markets
NH:
Yes
11:08AM
BE:
The weak dollar seems to have pushed up the oil price and commods
Kazakhmys (KAZ:LSE): Last: 1,062, up 60 (+5.99%), High: 1,070, Low: 1,015, Volume: 860.05k
Randgold Resources (RRS:LSE): Last: 4,401, up 207 (+4.94%), High: 4,412, Low: 4,256, Volume: 123.99k
Antofagasta (ANTO:LSE): Last: 778.50, up 32 (+4.29%), High: 779.50, Low: 749.00, Volume: 1.19m
Vedanta Resources (VED:LSE): Last: 1,995, up 83 (+4.34%), High: 2,005, Low: 1,928, Volume: 1.19m
NH:
thanks
NH:
actually on gold
NH:
just spotted this
NH:
from Anglo Gold
NH:
* CEO mark cutifani says gold to trade at between $950 to $1,100 in next 12
Months
Months
NH:
* Cutifani – gold to rise beyond $1,100/oz if U.S. economy continues to dip and
investment demand for gold rises * Cutifani says AngloGold to produce up to 6 million ounces/yr within five to seven yrs versus 4.9 million oz a year currently
investment demand for gold rises * Cutifani says AngloGold to produce up to 6 million ounces/yr within five to seven yrs versus 4.9 million oz a year currently
NH:
* Cutifani says strong safrica rand eroding gains on rising dollar price of
gold; expects rand to weaken by late 2010
gold; expects rand to weaken by late 2010
NH:
* Cutifani says AngloGold to continue scaling back on hedge book; company to
trim 800,000 ounces per year over next five yrs * Cutifani says rising electricity, labour costs to impact earnings, but plans
trim 800,000 ounces per year over next five yrs * Cutifani says rising electricity, labour costs to impact earnings, but plans
BE:
hm
BE:
another hedge book to go
NH:
possibily
11:10AM
NH:
and if there is anyone out there
NH:
who has missed the Indy exclusive
NH:
here it is
NH:
n the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
BE:
Robert Fisk on the byline
BE:
Not someone you usually associate with the financial exclusive
BE:
Tends to stick to warzone news
BE:
Although, of course, in this case his tale’s been denied quite comprehensively
NH:
hmmm
NH:
quite a story to splash with
NH:
considering
NH:
that this idea has been around a while
NH:
and is not particuarly new
NH:
anyway, we live in interesting times
11:13AM
NH:
Right
NH:
where too now?
NH:
what about some of these laggards?
NH:
Vodafone
NH:
been down for most of the morning
NH:
just nosed into positive territory
Vodafone Group (VOD:LSE): Last: 140.35, up 0.3 (+0.21%), High: 140.80, Low: 138.15, Volume: 42.26m
BE:
yeah, why not – what do you reckon the story is here?
NH:
some interesting developments in the Indian mobile phone market
NH:
where Vodafone is getting most of its growth
BE:
that’s true
BE:
what’s been happening
NH:
er, this
NH:
**** INDIAN TELECOMS STOCKS DECLINE BY 6-8% OVERNIGHT ON THE BREAKOUT OF A
PRICE WAR – Indian two biggest mobile operators fell overnight (Bharti stock
dropped by 8.0% and reliance Com by 5.6%) on news that a price war has been
initiated by Reliance Communications.
PRICE WAR – Indian two biggest mobile operators fell overnight (Bharti stock
dropped by 8.0% and reliance Com by 5.6%) on news that a price war has been
initiated by Reliance Communications.
NH:
**** THE PRICE CUTS ARE DEFENSIVE IN NATURE AND TRIGGERED AS A BY-PRODUCT OF
INCREASING COMPETITION following the entrance of well capitalised global
telcos. Local press reports today that DoCoMo has just launched per second
billing at a price of 1 Paisa per second (ie around €0.008628 per minute) with
competitors rushing to offer similar cut-throat tariffs. Another new entrant
(Sistema Shyam Teleservices) is planned to offer aggressive pricing when it
enters the Delhi circle this week. According to press articles Sistema needs to
acquire around 30 million users in the next three years to breakeven and the
per-second billing will be an important plan of the strategy to meet that
target. Clearly, new players are leveraging on empty network as a key
subscriber acquisition tool.
INCREASING COMPETITION following the entrance of well capitalised global
telcos. Local press reports today that DoCoMo has just launched per second
billing at a price of 1 Paisa per second (ie around €0.008628 per minute) with
competitors rushing to offer similar cut-throat tariffs. Another new entrant
(Sistema Shyam Teleservices) is planned to offer aggressive pricing when it
enters the Delhi circle this week. According to press articles Sistema needs to
acquire around 30 million users in the next three years to breakeven and the
per-second billing will be an important plan of the strategy to meet that
target. Clearly, new players are leveraging on empty network as a key
subscriber acquisition tool.
BE:
I see
BE:
that’s not terribly good news for Vod
NH:
and here’s what SG make of it
NH:
although it is worth noting they are big Voda bears
NH:
Indian telecom stocks Bharti and Reliance now down 12% and sinking faster than “a spaceship approaching a blackhole”. Bear in mind that 60% of Vodafone’s cash- flow growth is generated in India. The risks are increasing on a stock which
has benefitted from a current un-biased market re-bound but once the visibility
to the underlying weakness increases in the November results it is set to
continue to underp[erform. SELL.
has benefitted from a current un-biased market re-bound but once the visibility
to the underlying weakness increases in the November results it is set to
continue to underp[erform. SELL.
NH:
**** INDIA REPRESENTS 60% OF VODAFPNE'S EBITDA GROWH? Due to ongoing pressure
on European operations, the Indian market represents Vodafone’s key driver for
EBITDA growth. We estimate that more than 60% of March ‘ 09-12 EBITDA growth is underpinned by growth in India. Potential rise in revenue pressure (combined
with high leveles of capital intensity) has the potential to impact Vodafone’s
financials further.
on European operations, the Indian market represents Vodafone’s key driver for
EBITDA growth. We estimate that more than 60% of March ‘ 09-12 EBITDA growth is underpinned by growth in India. Potential rise in revenue pressure (combined
with high leveles of capital intensity) has the potential to impact Vodafone’s
financials further.
BE:
Ok - thanks for that
11:16AM
BE:
While on the laggards, I guess we should mention Shire
BE:
Which is leading the fallers at the moment
NH:
and missing out on this Bright New Bull Market Era
NH:
UBS downgrade, right?
BE:
Yup
BE:
Saying the velaglucerase trade is over.
NH:
velaglucerase?
BE:
Its Gaucher disease treatment
BE:
You might remember in June that Genzyme had to stop production of Cerezyme, its Gaucher drug, after finding a virus in the factory
BE:
So Shire rushed its own drug to market to try and pick up the slack
BE:
Although Gaucher's not exactly the common cold, so the slack is still pretty tight
BE:
UBS had reckoned Shire would "capture" 700 patients, worth $80-130m.
BE:
And now they're saying forecasts have moved up by 6%, which is about $80-130m, so you may as well take profits.
NH:
Right. Anything else to the note?
BE:
Not really.
BE:
Here's the rest of what Martin Wales (PhD) says.
BE:
Fabrazyme delays offers limited upside.
Whilst Fabrazyme (Fabry disease) is in short supply, we see limited upside given Replagal’s wide availability in Europe. The US situation is challenging given Fabrazyme’s Orphan Drug Status until 2010 & lack of US approval for Replagal, although SHP is in discussion with US authorities re possible approval.
Whilst Fabrazyme (Fabry disease) is in short supply, we see limited upside given Replagal’s wide availability in Europe. The US situation is challenging given Fabrazyme’s Orphan Drug Status until 2010 & lack of US approval for Replagal, although SHP is in discussion with US authorities re possible approval.
BE:
Next catalyst, Q309 results (29-Oct-2009), may offer limited excitment
Despite the fact that Adderall XR is holding market shares in the US better than anticipated, we understand that average pricing may have deteriorated since Q209 results and we understand that stocking effect might come a bit ahead of what management suggested (around US$30 million per quarter).
Despite the fact that Adderall XR is holding market shares in the US better than anticipated, we understand that average pricing may have deteriorated since Q209 results and we understand that stocking effect might come a bit ahead of what management suggested (around US$30 million per quarter).
BE:
Valuation – Maintaining 1,160 PT, downgrading to Neutral
We value Shire using a DCF based model that yields our unchanged 1,160p PT. As our price target suggests only limited upside to the current share price, we downgrade Shire to Neutral (from Buy).
We value Shire using a DCF based model that yields our unchanged 1,160p PT. As our price target suggests only limited upside to the current share price, we downgrade Shire to Neutral (from Buy).
BE:
Although, while we're on tne subject of Shire ....
BE:
I've just been forwarded a "biggest concerns" list from RiskMetrics
NH:
The what? Now that sounds very interesting. I would like to see that.
BE:
Here's their mission statement
BE:
CFRA’s Biggest Concerns List includes companies in which we see an underappreciated risk regarding the quality of the reported financial results. For each company on the Biggest Concerns List, our accounting lens provides an edge that materially changes the general perception of the company. The Biggest Concerns List is managed by our internal Sounding Board and is a subset of our list of companies with a Significant or Highest concern level.
BE:
CFRA being the Center for Financial Research & Analysis
BE:
And here's what they say about Shire
BE:
We are concerned that SHP’s Q2 2009 revenues and earnings, particularly related to non-ADDERALL XR sales, may have benefited from lower sales related provisions in Q2 2009 versus prior periods. If SHP is not able to sustain these lower provision levels or if provisions have to increase beyond past levels to replenish the related reserves, future revenues and earnings will suffer. However, despite the apparently low sales related provisions in the quarter related to non-ADDERALL XR sales, the sales related reserves are in line with historic norms as a percent of sales.
NH:
Who else is on that list?
BE:
Burberry's the number 1 concern, it seems.
BE:
While margins were significantly impacted in 2H08-09 from discounting and lower production/procurement, margin pressures are likely to continue in upcoming periods as inventory continues to remain elevated relative to expected future sales and trends in underlying demand remain weak. In addition, the grant of share awards to executive directors in June 2009 and changes to the calculation of Spanish goodwill in FY08-09 represent potential corporate governance concerns.
NH:
right thanks for all that.
NH:
some share prices
Shire (SHP:LSE): Last: 1,049, down 22 (-2.05%), High: 1,060, Low: 1,042, Volume: 1.80m
Burberry Group (BRBY:LSE): Last: 501.50, down 1.5 (-0.30%), High: 509.00, Low: 501.00, Volume: 808.61k
11:21AM
NH:
right let’s just wrap up the other fallers
NH:
L&G down 1.35p to 84.3p as the punters become impatient waiting for a bid to materialise
NH:
and you know that South African company that was supposed to be interested in them
BE:
Resolution something or other
NH:
yep
NH:
well, I have talked to them today
NH:
and guess what
BE:
they're not interested
NH:
nope
NH:
they have never heard of L&G
NH:
and only have 12 employees
BE:
BE:
what did I say about South African bid rumours?
NH:
I know
NH:
you were right
NH:
but on Legals
NH:
it has been named as one of HSBC’s Super Ten convictions buys in Europe
BE:
What?
BE:
Super 10
BE:
Sounds like a rugby tournament. Or a tramp beer.
NH:
very probably
BE:
and what else is on the list?
NH:
hang on
NH:
: In cooperation with HSBC’s equity research analysts we are
launching a Europe Super Ten series – our highest
conviction equity ideas in the region.
We include one-page summaries on each of the selected
companies – the core investment idea and HSBC’s value
add, as well as a summary of valuation and risks. More
detail can be found in our published company reports.
launching a Europe Super Ten series – our highest
conviction equity ideas in the region.
We include one-page summaries on each of the selected
companies – the core investment idea and HSBC’s value
add, as well as a summary of valuation and risks. More
detail can be found in our published company reports.
NH:
here we go
NH:
Deutsche Boerse – financial that has lagged, cheap in a global
context; our strategy view is positive on equities and financials
Legal & General – improving solvency and operating cash
generation; strategy view is overweight on financials
Lloyds Banking Group – normalised impairments suggest
16-17p EPS (irrespective of APS), still cheap at 6x earnings
Lufthansa – strong finances and credible consolidation
strategy, shares have lagged other cyclicals
Pernod Ricard – strong de-rating offers good entry price,
strong cash flow, good visibility on earnings
Sandvik – stronger than expected earnings recovery
should drive a continued re-rating; our strategy view is
overweight industrials
Santander – solid capital position along with strong
recurring earnings power, diversified with EM exposure
Telefonica – strategically sound, 2009 OpCF guidance
should be met, upside potential to come from Latam
Vestas Wind – climate change beneficiary with big earnings
recovery on the way, recovery in wind and project finance
Volvo – cost efforts and strong cash flow performance
protect near-term downsides; we are overweight industrials
context; our strategy view is positive on equities and financials
Legal & General – improving solvency and operating cash
generation; strategy view is overweight on financials
Lloyds Banking Group – normalised impairments suggest
16-17p EPS (irrespective of APS), still cheap at 6x earnings
Lufthansa – strong finances and credible consolidation
strategy, shares have lagged other cyclicals
Pernod Ricard – strong de-rating offers good entry price,
strong cash flow, good visibility on earnings
Sandvik – stronger than expected earnings recovery
should drive a continued re-rating; our strategy view is
overweight industrials
Santander – solid capital position along with strong
recurring earnings power, diversified with EM exposure
Telefonica – strategically sound, 2009 OpCF guidance
should be met, upside potential to come from Latam
Vestas Wind – climate change beneficiary with big earnings
recovery on the way, recovery in wind and project finance
Volvo – cost efforts and strong cash flow performance
protect near-term downsides; we are overweight industrials
11:24AM
NH:
Right
NH:
a few things to follow up on
NH:
from the right
NH:
Debbie Downer
NH:
very funny comment on Gulf Keystone
NH:
NH:
stock went up 25% yesterday
NH:
in heavy volume
NH:
we all thought it was down to bid rumours
NH:
but no
NH:
they have found light oil
NH:
not the heavy stuff from before
NH:
but light stuff
Gulf Keystone Petroleum (GKP:LSE): Last: 100.00, down 5.5 (-5.21%), High: 110.00, Low: 98.25, Volume: 10.75m
BE:
And what do you make of the statement?
NH:
well, as Debbie said
NH:
they market wanted light oil
NH:
and volia
NH:
they have it
NH:
here's a bit of comment
NH:
Unequivocally good news from GKP today. Say what you like about the 18 API oil in the Jurassic being difficult to recover (even at up to 5 Darcies permeability), but 40+ API oil in a high energy reservoir in the first hit in the Triassic is unequivocally good news. Now, we don’t know the size of this discovery yet, and flow rates of 2kbbl/d aren't astonishingly exciting, but it does mean that there's potential for more of this, which makes the overall proposition of GKP more exciting compared to a heavy oil play in Kurdistan, which is really what it was before this news
BE:
Unequivocally?
NH:
Even so, I think the stock has gotten ahead of itself again, and whilst it may have a very good day today, the unequivocal need to raise funds should mean that there will be an opportunity to BUY at a discount soon. If you’re feeling brave, go short if today is a really good day for the stock, otherwise wait. Great operational delivery from Todd Kozel and co. though.
NH:
now
NH:
the point on fund raising is interesting
NH:
I reckon the need to raise $80m
NH:
and if they get
NH:
I reckon they will rise
NH:
but anyway
11:27AM
BE:
While we're on oil
BE:
We should take a look at Heritage
BE:
Which has had a good move this morning
Heritage Oil (HOIL:LSE): Last: 510.00, up 23.6 (+4.85%), High: 517.00, Low: 500.00, Volume: 965.31k
NH:
and not bid rumours this time
BE:
Nope, not this time
BE:
Seems to be on the back of the move in DNO
BE:
shares are flying this morning after it made up with the Kurdish government
BE:
which means it can resume its role as an operator
BE:
here’s a quick wire snap
BE:
OSLO, Oct 6 (Reuters) - Norwegian oil company DNO International said on Tuesday it was restarting operations in northern Iraq after settling a row with Kurdish authorities.
BE:
DNO said the Kurdish Regional Government (KRG) had reinstated DNO's rights to production sharing agreements with immediate effect after lifting a suspension that had been in place since Sept. 21.
BE:
The semi-autonomous KRG originally suspended DNO's operations for up to six weeks and said it might kick DNO out for good after details of Kurdish transactions in DNO's shares were released by the Oslo Stock Exchange (OSE).
BE:
DNO said it strongly rejected OSE's decision to publicize information related to the sale of treasury shares by the company in October.
BE:
and a bit of broker comment from Oriel
BE:
DNO announced this morning that it has received a letter from the KRG reinstating all of
DNO's rights with immediate effect and DNO can now resume the role as Operator
without any restrictions.
DNO's rights with immediate effect and DNO can now resume the role as Operator
without any restrictions.
BE:
The letter also notes that the KRG is working on mechanisms for guaranteed payments,
but agrees with DNO's request to focus on increasing supplies for local consumption.
but agrees with DNO's request to focus on increasing supplies for local consumption.
BE:
We expect this to be seen as positive news for Heritage as this announcement should
help alleviate some of the political risk concerns that have been weighing on the stock.
We expect this to be seen as positive news for Heritage as this announcement should
help alleviate some of the political risk concerns that have been weighing on the stock.
BE:
We retain our BUY recommendation with a risked NAV of 531p/sh and risked EMV
168p/sh. In our numbers we are carrying Miran West risked at 50% until the results of
Miran West 2 are known (due late Nov/early Dec, worth 407p/sh unrisked). In the interim
we are expecting news from Kewa Chermila shortly (75mmbbls pre-drill est, worth
11p/sh).
168p/sh. In our numbers we are carrying Miran West risked at 50% until the results of
Miran West 2 are known (due late Nov/early Dec, worth 407p/sh unrisked). In the interim
we are expecting news from Kewa Chermila shortly (75mmbbls pre-drill est, worth
11p/sh).
NH:
thanks for that
NH:
but do not
NH:
that DNO is only selling into the domestic market
NH:
still no payment for exports
NH:
nonetheless
NH:
shares up 32.15% to just over NOK
NH:
and by the looks of things
NH:
the Gulf Keystone fund raising is done
11:31AM
NH:
Right
NH:
just need to clear something up
NH:
ALPHAVILLE SAYS RESOLUTION HAVE NO INTEREST IN LEGAL AND GENERAL
NH:
that email is just going round the City
NH:
no for avoidance of doubt
NH:
that is Resolution in South Africa
NH:
not the UK
BE:
******* Resolution SA - nothing to do with Cowdery ***********
BE:
Crazy story, now shot down.
NH:
yep
11:33AM
NH:
Right
NH:
a hectic start to this morning's session
NH:
so let's break things up
NH:
here's my UBSOTD
NH:
Lakeland, Fla. (AP) -- Animal control officers hope to trap
a pack of raccoons that mauled a 74-year-old Florida woman who
tried to chase them from her yard.
The sheriff in Polk County, east of Tampa, says Gretchen
Whitted fell when five raccoons surrounded and attacked her
Sunday. She was taken to a hospital with extensive cuts from
her neck to her legs.
"We're not talking about a lot of little bites here,"
Sheriff Grady Judd said. "She was filleted."
A neighbor called for help after hearing the woman's cries
and seeing her covered in blood.
Whitted was treated for rabies, though officials doubt the
animals were infected.
Fire crews flooded nearby drains to drive the animals out,
but none appeared. Animal control officers hope to catch them
using cat food and sardines as bait.
a pack of raccoons that mauled a 74-year-old Florida woman who
tried to chase them from her yard.
The sheriff in Polk County, east of Tampa, says Gretchen
Whitted fell when five raccoons surrounded and attacked her
Sunday. She was taken to a hospital with extensive cuts from
her neck to her legs.
"We're not talking about a lot of little bites here,"
Sheriff Grady Judd said. "She was filleted."
A neighbor called for help after hearing the woman's cries
and seeing her covered in blood.
Whitted was treated for rabies, though officials doubt the
animals were infected.
Fire crews flooded nearby drains to drive the animals out,
but none appeared. Animal control officers hope to catch them
using cat food and sardines as bait.
BE:
Bloody hell.
BE:
Racoons, eh?
NH:
yep
NH:
vicious
11:35AM
BE:
Where now?
NH:
well, lots of comments on the Indy splash
NH:
let's have a look at some of that
NH:
then a treat
NH:
the latest missive from Albert Edwards
11:35AM
NH:
this is from BNP
NH:
The USD faces selling pressure on the back of an article
released in the UK’s Independent suggesting that
various countries are negotiating to use a basket of
currencies to replace the USD pricing of oil and other
commodities. The article concluded that the USD would
lose about 50% of its value within 10-years if
commodities were traded in non-USD currencies.
released in the UK’s Independent suggesting that
various countries are negotiating to use a basket of
currencies to replace the USD pricing of oil and other
commodities. The article concluded that the USD would
lose about 50% of its value within 10-years if
commodities were traded in non-USD currencies.
NH:
While a
50% depreciation looks frightening it represents a yoy
depreciation rate averaging 5%, which would be less
than the recent USD depreciation rate. The discussion
regarding the USD losing its commodity pricing function
is not new having first come to the surface in 2003 when
Russia moved its RUB peg from the USD towards a
basket of currencies. Russia energy clients are EUR
based and hence Russia is paying for most of its imports
in Euros and it does not make sense for Russia and its
energy clients to pay energy imports and exports in
USD’s
50% depreciation looks frightening it represents a yoy
depreciation rate averaging 5%, which would be less
than the recent USD depreciation rate. The discussion
regarding the USD losing its commodity pricing function
is not new having first come to the surface in 2003 when
Russia moved its RUB peg from the USD towards a
basket of currencies. Russia energy clients are EUR
based and hence Russia is paying for most of its imports
in Euros and it does not make sense for Russia and its
energy clients to pay energy imports and exports in
USD’s
NH:
Nonetheless, despite this huge commercial
interest, using the EUR for its energy exports, Russia still
receives USD’s. What investors should not forget is
that Saudi Arabia, which is the world biggest oil
country in respect of production of reserves, has an
interest to keep the US strong and involved in the
region. Switching the USD for a basket of currencies for
commodity factoring would weaken the US additionally,
which would be against the interest of Saudi Arabia, but
Saudi Arabia will be the key country when discussing
which currencies oil should be factored in.
interest, using the EUR for its energy exports, Russia still
receives USD’s. What investors should not forget is
that Saudi Arabia, which is the world biggest oil
country in respect of production of reserves, has an
interest to keep the US strong and involved in the
region. Switching the USD for a basket of currencies for
commodity factoring would weaken the US additionally,
which would be against the interest of Saudi Arabia, but
Saudi Arabia will be the key country when discussing
which currencies oil should be factored in.
NH:
Hence, we
regard the ‘Independent’ article as offering little
substance. Nonetheless, the article will add to USD
weakness, which is already under pressure due to other
reasons.
regard the ‘Independent’ article as offering little
substance. Nonetheless, the article will add to USD
weakness, which is already under pressure due to other
reasons.
NH:
this is from BNY Global Markets
NH:
the greenback hardly got off to a good start
today in view of an article in the Independent newspaper (see Headlines)
– an article of huge, potential significance given that Gulf States
share the dilemma of fellow USD-hoarder China (whose ‘protestations’
over the greenback’s stability have grown all the louder in 2009). Yet
in view of the likely implications for OPEC’s immediate interests, the
subsequent denials (see Headlines) were hardly that surprising; and in
fact, what was most notable about the morning’s episode was that despite
this clear, official denunciation, the New York session approached with
the USD trading only a hair’s breadth above its morning’s lows.
today in view of an article in the Independent newspaper (see Headlines)
– an article of huge, potential significance given that Gulf States
share the dilemma of fellow USD-hoarder China (whose ‘protestations’
over the greenback’s stability have grown all the louder in 2009). Yet
in view of the likely implications for OPEC’s immediate interests, the
subsequent denials (see Headlines) were hardly that surprising; and in
fact, what was most notable about the morning’s episode was that despite
this clear, official denunciation, the New York session approached with
the USD trading only a hair’s breadth above its morning’s lows.
NH:
In short, nothing has arisen this past fortnight that appears likely to
divert the USD’s prior course. If investors believed in mid-September
that the world was on the road to recovery, then there seems little
reason to believe that they will have had a change of heart in the
interim and will therefore continue to happily swap their USDs for
higher yielding currencies accordingly. Moreover, despite the stated
intent of many heading into G20 about a concerted need to establish firm
exit strategies from the unprecedented levels of fiscal stimulus
introduced post-crisis, nothing of the sort was decided.
divert the USD’s prior course. If investors believed in mid-September
that the world was on the road to recovery, then there seems little
reason to believe that they will have had a change of heart in the
interim and will therefore continue to happily swap their USDs for
higher yielding currencies accordingly. Moreover, despite the stated
intent of many heading into G20 about a concerted need to establish firm
exit strategies from the unprecedented levels of fiscal stimulus
introduced post-crisis, nothing of the sort was decided.
NH:
oh
NH:
and there's a little bit on RBA rate rise
NH:
Even for the RBA, which surprised markets today by raising rates, there
is no question of anything but a slow withdrawal of emergency measures
(particularly as growth will suffer from an inevitable withdrawal of
fiscal stimulus). However, as far as the USD is concerned, over and
above the FOMC’s belief that ‘exceptionally low levels of the federal
funds rate [will be needed] for an extended period’, there is the
unyielding question of Chinese and US currency policy. A week ago,
French Finance minister Christine Lagarde complained that “it is out of
the question that the EUR pays the bill for an adjustment between the
USD and the CNY.” However, on the basis of the ‘G’ meetings just past,
there appears little prospect that plaintiffs like Ms Lagarde will be
assuaged.
is no question of anything but a slow withdrawal of emergency measures
(particularly as growth will suffer from an inevitable withdrawal of
fiscal stimulus). However, as far as the USD is concerned, over and
above the FOMC’s belief that ‘exceptionally low levels of the federal
funds rate [will be needed] for an extended period’, there is the
unyielding question of Chinese and US currency policy. A week ago,
French Finance minister Christine Lagarde complained that “it is out of
the question that the EUR pays the bill for an adjustment between the
USD and the CNY.” However, on the basis of the ‘G’ meetings just past,
there appears little prospect that plaintiffs like Ms Lagarde will be
assuaged.
11:38AM
BE:
Ok – thanks for that.
BE:
So what’s Albert saying?
NH:
well
NH:
it is bearish
NH:
BE:
Well obviously.
NH:
he thinks we are all going Japanese
NH:
and that Bernanke has allowed a gargantuan credit and property bubble to develop
NH:
anyway
NH:
the basic message
NH:
is that QE etc will all play out like Japan did
NH:
Ice Age here we come
BE:
Can you paste?
NH:
yep, just the summary
NH:
For years investors laughed at any attempt on my part to draw comparisons between the
inflating bubble in the US and the Japanese experience. For most in the West, Japan might as
well have been on another planet, its post-bubble experience held so little relevance. They’re
not laughing so much now. Yet we hear an increasing chorus that the extreme policy response
will safeguard the West against a repeat of Japan’s lost decade. I remain sceptical.
inflating bubble in the US and the Japanese experience. For most in the West, Japan might as
well have been on another planet, its post-bubble experience held so little relevance. They’re
not laughing so much now. Yet we hear an increasing chorus that the extreme policy response
will safeguard the West against a repeat of Japan’s lost decade. I remain sceptical.
NH:
Ben Bernankes claim to have learnt the lessons from Japan has long reassured
investors. Yet to my mind, perhaps the biggest lesson from Japan would have been not to
allow a gargantuan credit and property bubble in the first place, for the ultimate burst would
be ugly indeed. And now we know from the last payroll report that, including benchmark
revisions, the US economy has to date lost some 8 million jobs in this recession. This sorry
state of affairs was wholly avoidable.
investors. Yet to my mind, perhaps the biggest lesson from Japan would have been not to
allow a gargantuan credit and property bubble in the first place, for the ultimate burst would
be ugly indeed. And now we know from the last payroll report that, including benchmark
revisions, the US economy has to date lost some 8 million jobs in this recession. This sorry
state of affairs was wholly avoidable.
NH:
I have long believed that a post-bubble world would play out in a very similar fashion to
Japans lost decade of the 1990s. To be sure there are huge differences, but the similarities
are also surprisingly close. Bubbles have a habit of playing out in a certain way.
Japans lost decade of the 1990s. To be sure there are huge differences, but the similarities
are also surprisingly close. Bubbles have a habit of playing out in a certain way.
NH:
I remind readers of a few simple key facts that continue to nudge me towards the view
that the Western authorities are set for dismal failure in their attempts to atone for being
asleep at the wheel.
that the Western authorities are set for dismal failure in their attempts to atone for being
asleep at the wheel.
NH:
They say a picture is worth a thousand words. Thanks then to John Trever of The
Albuquerque Journal, who really sums up exactly where we are in the current, post bubble
maelstrom (see cartoon below). Try, as many will, to see the bright clear skies overhead, I
remain convinced we are still very much in the eye of the storm.
Albuquerque Journal, who really sums up exactly where we are in the current, post bubble
maelstrom (see cartoon below). Try, as many will, to see the bright clear skies overhead, I
remain convinced we are still very much in the eye of the storm.
BE:
Is there a link to that?
11:41AM
NH:
of course
NH:
Albert’s tone
NH:
is very different to that of Tim Bond
NH:
the thinking man’s bull
BE:
Oh yeah – what’s his take then?
NH:
well, he has been looking into the Great Wall of Cash
NH:
which is a bit like god
NH:
lots of people believe in it
NH:
but no one can prove its existence
NH:
but that has not stopped Bond from having a go
NH:
The first of these forces is obvious enough: namely the pressure that a near-zero shortrate
structure exerts on holders of cash to hunt for higher returns. This process is more
than a little visible in the volumes of funds currently leaving money market mutual funds
in the US. Since early March, $423bn has left money market funds, presumably in search
of higher returns in alternative assets. A good portion of this cash appears to have found
its way into longer-term mutual funds, primarily bond and credit funds. Since March, net
inflows to such mutual funds have been in the region of $234bn, with monthly inflows
running at record highs. It is important to note that the outflows from money market
funds are accelerating
structure exerts on holders of cash to hunt for higher returns. This process is more
than a little visible in the volumes of funds currently leaving money market mutual funds
in the US. Since early March, $423bn has left money market funds, presumably in search
of higher returns in alternative assets. A good portion of this cash appears to have found
its way into longer-term mutual funds, primarily bond and credit funds. Since March, net
inflows to such mutual funds have been in the region of $234bn, with monthly inflows
running at record highs. It is important to note that the outflows from money market
funds are accelerating
NH:
The rolling 12-week annualised pace of outflow has rise from an
average of $200-300bn in March-April to an average of $780bn in September (see Figure
2). It is reasonable to presume that these flows are making their way out along the risk
curve in search of higher yields, the bond markets being the initial destination. It is equally
reasonable to suppose that so long as short-term rates remain near zero, the flow will
average of $200-300bn in March-April to an average of $780bn in September (see Figure
2). It is reasonable to presume that these flows are making their way out along the risk
curve in search of higher yields, the bond markets being the initial destination. It is equally
reasonable to suppose that so long as short-term rates remain near zero, the flow will
NH:
continue or accelerate. In this respect, the current environment is characterised by a pickup
in the demand for bonds out of cash investments.
It is crucial to understand that this move out of cash into other assets is a clear signal that
the financial system is healing. The collapse of the secondary or shadow banking system
resulted primarily from money market investors refusing to buy asset-backed commercial
paper. These flows, having retreated down the yield curve and up the credit curve, are now
beginning to flow back into the capital markets. The infrastructure of the shadow banking
system may very well have disappeared, but the liquidity that financed the system is starting
to return. Same money, different intermediary, one might say.
in the demand for bonds out of cash investments.
It is crucial to understand that this move out of cash into other assets is a clear signal that
the financial system is healing. The collapse of the secondary or shadow banking system
resulted primarily from money market investors refusing to buy asset-backed commercial
paper. These flows, having retreated down the yield curve and up the credit curve, are now
beginning to flow back into the capital markets. The infrastructure of the shadow banking
system may very well have disappeared, but the liquidity that financed the system is starting
to return. Same money, different intermediary, one might say.
BE:
So – typically bullish.
BE:
Versus Edwards’ typically bearish take.
BE:
With both as convincing as each other.
BE:
That should keep everyone happy.
NH:
yes
NH:
something for bulls and bears
11:44AM
NH:
where next
BE:
The Unpronouncable One, I think
NH:
oh no
BE:
The company that’ll eternally be known as “the company formerly called Peter Hambro Mining”
NH:
which is now called
NH:
go on try and spell it
NH:
imagine the damage Murph would have done to this one
BE:
Right ….. Petro-pav-lovsk
BE:
Petropavlovsk
BE:
Think that’s it.
NH:
well done
NH:
now
NH:
this is the old Peter Hambro Mining
NH:
is obviously benefiting from the gold price move to do
NH:
but that’s not all
Petropavlovsk (POG:LSE): Last: 938.00, up 51 (+5.75%), High: 959.50, Low: 892.50, Volume: 1.00m
BE:
Yeah – there were bid rumours getting some airtime yesterday
NH:
but that’s not the reason for the move today
NH:
no
NH:
that’s down to a tie up with Gazprom
NH:
that has got a lot of people excited
NH:
talking about a FTSE 100 stock in the making
NH:
they are creating a fund with the Gazprom pension fund to invest in Russian gold plays
BE:
Yep
BE:
LONDON, Oct 6 (Reuters) – Russian gold producer Petropavlovsk and asset manager Leader have agreed to create a joint investment fund to buy and develop Russian gold mines, Petropavlovsk said on Tuesday.
BE:
Petropavlovsk, Russia’s third biggest gold producer, which recently changed its name from Peter Hambro Mining, would provide mining expertise and some capital, while Leader, the largest asset manager in Russia, would invest clients’ funds, a statement said.
BE:
The initial joint investment is expected to be around $100 million and a number of targets have already been identified, it added.
BE:
A spokesman said further details were not available since a memorandum of understanding had been signed but a final agreement was still being discussed.
Leader’s main client is the pension fund of Gazprom , the world’s largest gas producer, the statement said.
NH:
and here’s why the market thinks it is good news
NH:
This is a big positive for the politivcal positioning of POG and its prospects for new projects. One of the key reasons POG trades at a dicsount to other gold miners is the Russian Risk discoutn …This deal is with a Russian State company . !!! FTSE 100 bound we think . Our no1 pick
NH:
that was from a broker
NH:
and here’s a bit of analyst comment
BE:
Hm
NH:
from Canaccord
NH:
Focus on Kimkan (first of the magnetite ores likely to be developed) – 132Mt of magnetite grading 35.5%Fe, and likely to be mined at 10Mtpa and up-graded to 3.2Mtpa of concentrate grading 65%Fe.
NH:
The big surprise to all was the amount of work already undertaken in addition to that planned for next six months. Half of the approved 440 hectares of forest has been cleared so far, a team of 60 mostly new hires is on site or dedicated to the project. Pre-stripping is well underway but not yet exposing ore – there are some million cubic meters to be removed before mining. The final plan is for 1,000 workforce with full accommodation, at the moment the foundations have been laid for the workshop and some accommodation already in place.
NH:
Petropavlovsk plan to be ready to start plant construction mid 2010, should finance and agreements be in place.
· Kimkan is the only mining project in Jewish Autonomous Region so is getting full support from local authorities.
· Kimkan is the only mining project in Jewish Autonomous Region so is getting full support from local authorities.
NH:
Our view is that the product should sell for US$55-60/t of concentrate at the border with opex of US$40-45/t including freight to the border. With a capital cost at Kimkan of US$374 million the concentrate only project should show 15-18% per annum ROC. It comes down to whether the Chinese want to do this project or not. And that is what the current US$20 million work programme is about. A US$20 million commitment and show of confidence by Petropavlovsk I believe, just might work to entice the Chinese into a JV.
· I think the market has to catch up on this; most in the market seem to be ignoring the iron ore and attributing no value or at least one case, negative value.
· A word of caution ‑ all the work being done may convince some of an early start to commercial production. We forecasts first ore late 2013 and we doubt it can be done sooner.
· I think the market has to catch up on this; most in the market seem to be ignoring the iron ore and attributing no value or at least one case, negative value.
· A word of caution ‑ all the work being done may convince some of an early start to commercial production. We forecasts first ore late 2013 and we doubt it can be done sooner.
BE:
Not the first time we’ve heard people shout “FTSE 100 bound” in the wake of some big promises from Peter Hambro
BE:
There’s sometimes a bit of a gap between performance and delivery though.
NH:
too true
NH:
and a volatile stock
NH:
what’s the free float?
BE:
Can’t remember off the top of my head. Wasn’t great in the past.
BE:
The Aricom buy-in may have helped there.
NH:
yes
NH:
we did
NH:
a bit of fantasy M&A that came off
NH:
those were the days
11:52AM
NH:
Right
NH:
we are just debating whether it is worth looking at Tesco
NH:
I thought the figs were dull
BE:
Agree
BE:
Think Numis has seen enough in the release to downgrade though
BE:
This is from Nick Coulter
BE:
Having revised our recommendation from Buy to Add in mid-June, we now move to
a HOLD code, seeing only c.5% upside to our revised target of 420p (previously
400p). Tesco remains peerless, with superior domestic operating metrics and a
consistent double-digit group growth profile. However, while the long-term story
remains compelling, and 1H results were in-line, we see little to catalyse a re-rating
in the near term. Targeting 420p, or 13x Feb-10 ex-property EPS. HOLD.
a HOLD code, seeing only c.5% upside to our revised target of 420p (previously
400p). Tesco remains peerless, with superior domestic operating metrics and a
consistent double-digit group growth profile. However, while the long-term story
remains compelling, and 1H results were in-line, we see little to catalyse a re-rating
in the near term. Targeting 420p, or 13x Feb-10 ex-property EPS. HOLD.
BE:
The gist being that results were fine in sum but the shares are up with events.
BE:
Meanwhile, JPMorgan – a Tesco permabear – takes the negative view
BE:
weaknesses surfacing
BE:
Which is based around international being a wee bit weak in the mix
BE:
International: weaker than expected: we estimate LFLs fell 6.5%
(JPMe -6%). RoE LFL –8.9%. Asia LFL –3.5%. Trading profit in RoE
£175m (JPMe £173m), Asia £191m (JPMe £198m), US £-85m (JPMe
£-75m). Tesco has made an impairment charge of £82m in Japan. In
Korea Tesco achieved a good performance with 40% sales uplifts in the
converted ex-Homever stores and the stores are now profitable. In
Thailand Tesco claims ‘excellent’ performance with -5% LFL. In
Malaysia Tesco claims a ‘very good’ start to the year with solid growth
in sales and profits (LFL -8%). In Ireland (LFL -18%), Tesco cut prices
on 12,500 products by an average of 22%. There was an exceptional
restructuring charge of £15m in the first half. Poland was the ‘bright
spot’ in Eastern Europe with flat LFLs. US. F&E has opened 11 stores
in 1H and plans to open one per week going forward. LFL sales growth
has softened. Tesco expects a loss to be similar to last year (-$259mln
in FY08/09).
• Tesco Bank: Customer deposits appear to have declined, from £4.5bn
to £4.4bn. Customer loans are higher than expected, this means the
loan to deposit ratio has increased from 75% to 86% in the half. This is
still a good ratio compared to the UK domestic banks, but we would
like to see deposit growth. NAV is in line with our expectations.
(JPMe -6%). RoE LFL –8.9%. Asia LFL –3.5%. Trading profit in RoE
£175m (JPMe £173m), Asia £191m (JPMe £198m), US £-85m (JPMe
£-75m). Tesco has made an impairment charge of £82m in Japan. In
Korea Tesco achieved a good performance with 40% sales uplifts in the
converted ex-Homever stores and the stores are now profitable. In
Thailand Tesco claims ‘excellent’ performance with -5% LFL. In
Malaysia Tesco claims a ‘very good’ start to the year with solid growth
in sales and profits (LFL -8%). In Ireland (LFL -18%), Tesco cut prices
on 12,500 products by an average of 22%. There was an exceptional
restructuring charge of £15m in the first half. Poland was the ‘bright
spot’ in Eastern Europe with flat LFLs. US. F&E has opened 11 stores
in 1H and plans to open one per week going forward. LFL sales growth
has softened. Tesco expects a loss to be similar to last year (-$259mln
in FY08/09).
• Tesco Bank: Customer deposits appear to have declined, from £4.5bn
to £4.4bn. Customer loans are higher than expected, this means the
loan to deposit ratio has increased from 75% to 86% in the half. This is
still a good ratio compared to the UK domestic banks, but we would
like to see deposit growth. NAV is in line with our expectations.
BE:
So, in summary: meh.
Tesco (TSCO:LSE): Last: 395.20, up 3.8 (+0.97%), High: 396.90, Low: 384.40, Volume: 29.87m
NH:
thanks, but I think that’s enough Tesco for now.
11:57AM
NH:
Right ITV are up this morning
ITV (ITV:LSE): Last: 45.39, up 2.19 (+5.07%), High: 45.50, Low: 43.04, Volume: 7.15m
NH:
i was wondering why
NH:
and now this story has been put to the move
NH:
Hearing rumour of Philip Green and Simon Cowell to bid for ITV!
BE:
BE:
Cowell’s birthday tomorrow, I think
BE:
Had his party at the weekend
NH:
perhaps PG will buy ITV for him
BE:
Perhaps.
NH:
and the party
NH:
I am guessing
NH:
it was in specutacularly poor taste?
BE:
Warning – the following contains elements of Daily Mail
BE:
AMANDA PLATELL: My verdict on Cowell birthday party… Vulgar, crass and so tacky
BE:
Despite the fact that guests of honour included the host’s 84-year-old mother and a local vicar, the party’s entertainment included exotic topless dancers, naked women gyrating behind a big screen, and a guest enjoying a good whipping on stage from a dominatrix.
But the highlight of the show was the appearance on stage of a giant replica of female genitalia, joined by two giant sex toys. What a jolly jape to humiliate every woman in the audience.
BE:
Sounds like someone’s trying to over-compensate ….
NH:
OMG
NH:
that’s much worse that Caring’s
NH:
which was just about money
NH:
have a look at this
NH:
The theme for the no-expense-spared evening at the Caring family home in Hampstead was Swan Lake. The ornamental lake in the grounds was covered with a floating temporary ballroom that housed tables for 400 guests plus the full Royal Philharmonic Orchestra and, flown in specially from Russia, the entire Bolshoi Ballet. Under glittering chandeliers and frescos from Swan Lake the dancers performed scenes from Act II of the classic ballet
NH:
Among guests from fashion, the arts and showbusiness were Kate Moss, Elizabeth Hurley, David Walliams, Claudia Winkleman, Tracey Emin, Kevin Spacey, Kirsty Young and Sir Michael Parkinson. Business figures included Sir Philip Green, Michael Spencer, Sol Kerzner and Sir David Tang. In all, I counted eight billionaires in the room.
BE:
right
BE:
That’ll make interesting reading for all the Caprice Group suppliers
BE:
Who’ve been worrying about whether they’re going to get paid month to month
BE:
Very reassuring, one hopes.
12:02PM
NH:
Okay
NH:
we must bring things to a close
NH:
before we do
NH:
some more bad news for bears of Rolls Royce
NH:
who are already nursing seriously burned digits
BE:
Go on
NH:
Citi have upgraded this morning
NH:
in a big note on the aerospace sector, which they are also bullish on
NH:
they think there will be a recovery of sorts next year
NH:
and because Rolls is so plugged into the after market
NH:
Consensus forecasts are too low and need to rise
NH:
So, here’s the note on Rolls
NH:
well more of a snippet
NH:
More Positive on Civil Aerospace — particularly the aftermarket exposed aero
engine companies. We believe that deliveries will not fall as significantly in this
downturn as in previous cycles (we expect a 15%-20% fall between peak and
trough vs. c40% falls in previous cycles). Aftermarket revenues are likely to recover
with airline traffic from 2010.
engine companies. We believe that deliveries will not fall as significantly in this
downturn as in previous cycles (we expect a 15%-20% fall between peak and
trough vs. c40% falls in previous cycles). Aftermarket revenues are likely to recover
with airline traffic from 2010.
NH:
Civil Aerospace Division: EBIT Growth from 2010 — expected despite OE weakness as a result of resumed aftermarket growth (with airline traffic) and a significant FX tailwind. RR is a major long-term beneficiary of £ sterling weakness. We forecast £510m Civil Aero EBIT in 2009E rising to £543m in 2010E. We believe consensus is for flat Civil Aero earnings.
NH:
Non-Civil Aero Businesses Expected to be Flat Overall in 2010 — Marine EBIT is likely to fall in 2010 (we expect by 5%) following a period of extremely strong
growth due to late cycle weakness in offshore and merchant end markets. Defence EBIT is expected to grow, albeit at a slower pace (+3% EBIT expected).
growth due to late cycle weakness in offshore and merchant end markets. Defence EBIT is expected to grow, albeit at a slower pace (+3% EBIT expected).
NH:
Upside Risk to Forecasts — We believe that upside risk exists to our forecasts
should OE deliveries not fall as much as expected in 2010 and 2011 or if the
recovery in airline traffic is faster than expected. Additionally our forecasts are 8%
above consensus in 2010E.
should OE deliveries not fall as much as expected in 2010 and 2011 or if the
recovery in airline traffic is faster than expected. Additionally our forecasts are 8%
above consensus in 2010E.
NH:
Raising to Buy, 550p Target — Our 550p TP represents c14x FY10E EPS, which
looks undemanding in the context of other capital good stocks and the general
market. We believe that RR deserves to trade at a higher P/E than its historical
average of 12x on account of it being a much improved business.
looks undemanding in the context of other capital good stocks and the general
market. We believe that RR deserves to trade at a higher P/E than its historical
average of 12x on account of it being a much improved business.
NH:
and here’s the aerospace bit
NH:
More positive on civil aerospace —The rate of decline of airline traffic is slowing with growth expected in 2010. However airline profitability remains distant. Credit conditions are still constrained, but have eased, and customer financing has been less than anticipated to date. The airframers have avoided significant production cuts so far through managing the large backlog, but cuts look inevitable in 2010 and 2011; however, we do not believe that they will be as severe or will last for as long as in previous cycles. As airline traffic recovers, the aftermarket exposed aero engine companies’ earnings should recover quicker than the original equipment
exposed airframers.
exposed airframers.
NH:
Long-term concerns – A350XWB development risks remain high for EADS. A380 profitability has been worse than anticipated because of a slow delivery ramp up. We are sceptical about the airframers’ expectations of 5% pa long term traffic growth and believe that the duopoly for aircraft >100 seats will become fragmented in the long term.
NH:
Top civil aero pick: Rolls Royce — On account of its attractive aftermarket focused business model, long term growth prospects and reasonable valuation.
Defence: Value without catalyst – Cheap valuations reflect genuine concerns over long term defence budgets and a preference for cyclicals over defensives generally. Sector earnings are likely to underperform the general market, so a discount is warranted. Additionally an increased likelihood of acquisitions raises the sector’s risk profile. Our new Target Prices imply c10x 2010E EPS vs. 12x historical average to reflect this. We have also updated our risk ratings on BAE and Finmeccanica.
NH:
Top defence pick: Cobham — On account of its niche exposure to growth areas of
the defence market, enviable financial track record and strong cash flows.
the defence market, enviable financial track record and strong cash flows.
Rolls-Royce Group (RR:LSE): Last: 473.30, up 17.8 (+3.91%), High: 475.70, Low: 463.30, Volume: 3.20m
BE:
All done on that?
NH:
we are and that’s it for today
12:06PM
NH:
Fitz
NH:
there is no full note
NH:
just a two pager
NH:
Tracy filleted the most important bits
NH:
in her post
NH:
and someone was asking about Monitise
NH:
here’s a little bit of comment from Canaccord
NH:
on today’s deal
NH:
Amazon has introduced a mobile payment service for smartphone users to pay for mobile content. Web site operators can link with the service to use payment information already stored on Amazon’s site. Mobile shoppers can click a “Pay with Amazon” button and be redirected to a page hosted by Amazon Payments to choose a payment method and then be redirected back to the original website.
NH:
Our view
· Amazon’s entry into the mobile payments market indicates that the market is becoming a mass market. But the market is likely to be fragmented into multiple payment alternatives.
· In our view, Monitise is well positioned to benefit through its banking networks to participate and mobile payments should be a long-term driver of ARPU in its business model.
· Amazon’s entry into the mobile payments market indicates that the market is becoming a mass market. But the market is likely to be fragmented into multiple payment alternatives.
· In our view, Monitise is well positioned to benefit through its banking networks to participate and mobile payments should be a long-term driver of ARPU in its business model.
BE:
Final FTSE reading up 83 at 5107
NH:
right we are done
BE:
Yup
NH:
lunch becjons
BE:
Gaucher disease, Russian gold and inflatable female parts. A comprehensive session, by all accounts.
NH:
yep
NH:
covered a lot of ground again
NH:
and you forgot to mention the demise of the dollar
NH:
a new world order
NH:
and one more thing
BE:
Of course – a rare and welcome mention of Robert Fisk.
NH:
those waiting for an Emerson bid for Chloride
NH:
might have to wait a bit longer
BE:
Why?
NH:
*DJ Emerson Elec To Buy Avocent For $25/Shr — $1.2bn
BE:
Aha!
BE:
Chroride’s down 2.1p at 171.5p,
NH:
(Vikram. Watch it. Chuckle Bros = yellow card. One more and you are off)
12:11PM
NH:
and one more thing
NH:
that Goldman note on HMV
NH:
a broker I know
NH:
had a look
NH:
and here are his thoughts
NH:
Gentlemen – I return from 2 weeks away to find that Goldmans upped HMV to conviction buy on Friday of last week. A stock which I was pushing before I went away.
NH:
My reasons for buying are simple –
NH:
Market leading position of sales for DVD and Games in the UK
This Christmas will be the first since the demise of Woolies and Zavvi where HMV will dominate the all important “impulse buy” on high street sales. I estimate an increase of over 10% mkt share from Woolies and Zavvi demise
NET CASH – not debt – Consensus estimates are £18m cash next year.
A stream of top new games/media coming out for 2H – we saw the first with the new Beatles collections that were released to global anticipation. Halo 3 and FIFA 2010 have both been launched in the last few days and more will come in the run up to Christmas = good news flow.
Price cuts for consoles. In the last couple of weeks we have seen the Xbox 360, the PS3 all have their prices cut. I am still to see an official announcement of the Wii cut in the UK, although Nick assures me this has taken place. Remember 80% of PS2 sales took place AFTER its price cut.
This Christmas will be the first since the demise of Woolies and Zavvi where HMV will dominate the all important “impulse buy” on high street sales. I estimate an increase of over 10% mkt share from Woolies and Zavvi demise
NET CASH – not debt – Consensus estimates are £18m cash next year.
A stream of top new games/media coming out for 2H – we saw the first with the new Beatles collections that were released to global anticipation. Halo 3 and FIFA 2010 have both been launched in the last few days and more will come in the run up to Christmas = good news flow.
Price cuts for consoles. In the last couple of weeks we have seen the Xbox 360, the PS3 all have their prices cut. I am still to see an official announcement of the Wii cut in the UK, although Nick assures me this has taken place. Remember 80% of PS2 sales took place AFTER its price cut.
NH:
on valuation –
EV/EBITDA under 4x, PE under 8.5x all point to an undervalued stock , LFLs in UK are fine (Positive 1.5% odd at last count for the mainstream UK), Waterstones new distribution centre should help to stem LFL losses there – even though HMV are no worse than the wider market.
12:12PM
HMV Group (HMV:LSE): Last: 112.40, up 4.3 (+3.98%), High: 112.50, Low: 108.10, Volume: 7.04m
12:12PM
NH:
Right
NH:
that really is it
NH:
thanks for all the comments
NH:
very enjoyable session
NH:
one of the best in a while
BE:
Plenty around, which helps.
BE:
Plenty to talk about, at least. Another bloody melt-up in the market though.
NH:
right
NH:
cya tomorrow
BE:
Bye.