Markets live chat transcript for the chat ending at 12:12 on 21 Oct 2009. Participants in this chat were: Neil Hume, FT (NH) Miles Johnson, FT (MJ)
NH:
it’s 11.03am
NH:
or thereabouts
NH:
so
NH:
it’s time for Markets Live
NH:
60 minutes of lively markets discussion
MJ:
it’s certainly going to be lively this morning
MJ:
you just couldn’t resist posting on GKP could you?
MJ:
had to put your finger back in the hornet nests
NH:
that’s not fair, Miles
NH:
look, this report was moving the price
NH:
it was on the Fidesa trading system that most City professionals use
NH:
and given the interest in this company
NH:
I thought it should go up
NH:
along with the stuff from Bloomberg
NH:
who have a different slant on the comments from MOL
NH:
they believe the find is significant
NH:
and as the interview from the Hungarian newspaper has been translated
NH:
there’s a risk something has been misinterpreted
MJ:
suppose you are right
NH:
Now it could be, that none of this is new
NH:
but it certainly spooked brokers this morning
NH:
I have been bombarded with emails and calls
MJ:
Yep
NH:
anyway
NH:
there are other things going on this morning
MJ:
Indeed
MJ:
We should move on lest things get ugly
NH:
yes
NH:
good idea
11:06AM
NH:
and a quick HatTip
NH:
to Daddy
NH:
and Red Hat
NH:
and Lorcan
NH:
for their excellent work on Sound Oil
NH:
and unearthing Frank’s african plaything
MJ:
Very good stuff
NH:
we will be out of a job soon
MJ:
Citizen journalism
MJ:
makes “proper” hacks look bad
NH:
indeed
NH:
although we can’t be expected to know everything
NH:
such as
NH:
such as the last Liberian licensing round
NH:
what’s the market doing Miles???
11:09AM
MJ:
Down
MJ:
Off 34 points at 5208 – FTSE 100 that is
NH:
So Gulf Keystone is taking the FTSE 100 with it?
Gulf Keystone Petroleum (GKP:LSE): Last: 111.00, down 13 (-10.48%), High: 124.00, Low: 96.00, Volume: 10.00m
MJ:
hadn’t thought of that
MJ:
Best explanation I have heard though
NH:
MJ:
We all had so much pinned on this stock
NH:
right, what shall we look at
NH:
big day for Cadbury
NH:
how has the presentation gone
MJ:
Well, the trading statement was out this morning, and unsurprisingly was strong
NH:
(Taxloss GKP down = FTSE down)
NH:
So Stitzer has been polishing things up ahead of the Kraft put up or shut up?
MJ:
It would appear so
MJ:
Though rather annoyingly they were not allowing press onto the conference call, so I missed an hour of inspring managment school guff
NH:
really
NH:
they banned the press
MJ:
They did
MJ:
But numbers were very good nontheless
MJ:
Sales forecasts were beaten comfortably, full year guidance was hiked for both revenue and operating margins
NH:
And the share price?
MJ:
Well, normally we could have expected a bump
MJ:
even if this was pretty well flagged
MJ:
But Cadbury flat this morning
Cadbury (CBRY:LSE): Last: 800.50, up 2 (+0.25%), High: 808.00, Low: 799.00, Volume: 1.39m
MJ:
Predictably there have been reports about how this “puts pressure” on Kraft ahead of the deadline
NH:
Of course Cadbury aren’t really meant to talk about Kraft until there is a formal offer.
MJ:
Yeah. It’s the elephant in the room
MJ:
Hence this from Roger Carr, the chairman
MJ:
Roger Carr, Chairman of Cadbury, added: “The strength of our operating performance
continues to underpin the Board’s confidence in both our growth prospects and the potential for creating further, material shareholder value as a pure play standalone confectionery business”.
Roger Carr, Chairman of Cadbury, added: “The strength of our operating performance
continues to underpin the Board’s confidence in both our growth prospects and the potential for creating further, material shareholder value as a pure play standalone confectionery business”.
MJ:
Carr is of course meant to be coordinating the defence
NH:
Right, we must have some decent comment on all of this
MJ:
But judgement will have to be reserved until after the deadline passes over whether he has used the put up or shut up shrewdly
MJ:
We do, quite alot actually
NH:
OK
NH:
fire away
MJ:
Andrew Wood of Bernstein, following on from his curtain raiser the other day
MJ:
welcomes Cadbury being “more aggressive” in its guidance
MJ:
In overview, Q3 organic growth was strong at +7%…ahead of our estimate (+6%), which was well ahead
of consensus (+4.7%), highlighting the continued momentum of the business and the attractive prospects
into the medium-term. As we anticipated, Q3 organic growth performance has allowed Cadbury to
increase FY organic growth guidance…from “the bottom end of the 4-6% target” to “the middle of the 4-
6% target” (in-line with our +5.1%). Additionally, based on very strong YTD margin growth of +180bps,
Cadbury also increased FY margin guidance…from +80-100bps to “at least +135bps”, which is even
ahead of our +130bps and well ahead of consensus in the +80bps range.
of consensus (+4.7%), highlighting the continued momentum of the business and the attractive prospects
into the medium-term. As we anticipated, Q3 organic growth performance has allowed Cadbury to
increase FY organic growth guidance…from “the bottom end of the 4-6% target” to “the middle of the 4-
6% target” (in-line with our +5.1%). Additionally, based on very strong YTD margin growth of +180bps,
Cadbury also increased FY margin guidance…from +80-100bps to “at least +135bps”, which is even
ahead of our +130bps and well ahead of consensus in the +80bps range.
MJ:
Given that there must have been
well-founded evidence for Cadbury to be allowed by its auditors (under the Takeover Panel rules) to
increase guidance, we see little risk to this new guidance being achieved. Overall, Cadbury management
has successfully “laid out its hand” in the Q3 Interim Statement, showing how attractive Cadbury is…and
this trading update should put further pressure on Kraft to increase its bid.
well-founded evidence for Cadbury to be allowed by its auditors (under the Takeover Panel rules) to
increase guidance, we see little risk to this new guidance being achieved. Overall, Cadbury management
has successfully “laid out its hand” in the Q3 Interim Statement, showing how attractive Cadbury is…and
this trading update should put further pressure on Kraft to increase its bid.
MJ:
More generally, we were also pleased to see Cadbury become more aggressive, and less prudent, in its
guidance…as we had suggested it should. There is a clear advantage to Cadbury laying its genuine
expectations out on the table…which it did with increased top-line and margin guidance for FY 2009.
Guidance for “the middle of the 4-6% organic growth target” and “at least +135bps of margin growth” is
broadly in-line with our estimates of +5.1% organic growth and +130bps of operating margin growth in
constant FX…but is well ahead of consensus, which we estimate might need to increase 2009 net
income/EPS expectations by +6-7%. This increased guidance should make Cadbury look even more
attractive…both to its own shareholders (who should not give in to Kraft’s very low bid) and to Kraft
(who we believe will need to significantly increase its bid to get a deal done).
guidance…as we had suggested it should. There is a clear advantage to Cadbury laying its genuine
expectations out on the table…which it did with increased top-line and margin guidance for FY 2009.
Guidance for “the middle of the 4-6% organic growth target” and “at least +135bps of margin growth” is
broadly in-line with our estimates of +5.1% organic growth and +130bps of operating margin growth in
constant FX…but is well ahead of consensus, which we estimate might need to increase 2009 net
income/EPS expectations by +6-7%. This increased guidance should make Cadbury look even more
attractive…both to its own shareholders (who should not give in to Kraft’s very low bid) and to Kraft
(who we believe will need to significantly increase its bid to get a deal done).
MJ:
Additionally, while we understand that specific medium-term guidance needs to be limited given
Takeover Panel Rules, Cadbury management was quoted in the press as saying that organic growth in
2010 and 2011 should be “good” and “at least +5%”. Additionally, management reiterated “good midteens”
margins by 2011 (with a subsequent comment mentioning “at least in the middle of mid-teens
margins” by 2011)…which we believe should be interpreted as at least 15%.Clearly progress in 2009
(and 2008) puts them well on the way to achieving this goal.
Takeover Panel Rules, Cadbury management was quoted in the press as saying that organic growth in
2010 and 2011 should be “good” and “at least +5%”. Additionally, management reiterated “good midteens”
margins by 2011 (with a subsequent comment mentioning “at least in the middle of mid-teens
margins” by 2011)…which we believe should be interpreted as at least 15%.Clearly progress in 2009
(and 2008) puts them well on the way to achieving this goal.
MJ:
And Caz were also pleased
MJ:
As expected, Cadbury is using this positive trading statement as part of its defence against the Kraft bid. It reports “excellent” Q3 trading and upgrades its FY guidance on organic sales growth to “around the middle” of its 4-6% range (previously at the lower-end) and also upgrades FY guidance on EBIT margin improvement to “at least 135 basis points” (previously 80-100 basis points). Ahead of this morning’s conference call, we expect to see low single-digit upgrades to our estimates in 2009E.
Q3 trading is ahead of our expectations with organic sales growth of 7% (Caz 4%). This is better than the more cautious commentators’ expectations. Further, it has improved its disclosure to include the year-to-date EBIT margin (up 180 bp at constant FX), which implies it is well on-track to deliver an (upgraded) EBIT margin progression of 135 basis points at constant FX in 2009E. It also comments on quarterly marketing spend.
Q3 trading is ahead of our expectations with organic sales growth of 7% (Caz 4%). This is better than the more cautious commentators’ expectations. Further, it has improved its disclosure to include the year-to-date EBIT margin (up 180 bp at constant FX), which implies it is well on-track to deliver an (upgraded) EBIT margin progression of 135 basis points at constant FX in 2009E. It also comments on quarterly marketing spend.
MJ:
We are not surprised that Kraft has waited to see Cadbury’s Q3 trading announcement before it puts forward a firm offer. Further, we believe Kraft could use its own Q3 results announcement (3 November) to reiterate its investment case in Kraft and the strategic rationale behind its proposal to acquire Cadbury: firstly, recapping that Kraft has delivered its three-year plan of organisational change, portfolio rationalisation, improved execution in the marketplace, and cost reduction; and secondly, highlighting the rationale behind the proposal to acquire Cadbury including its exposure to emerging markets, access to instant consumption channels, and the potential for revenue and cost synergies
MJ:
On the more bearish side were Execution
MJ:
Strong, though we believe unsustainable, performance in Q3
was predictable but has nonetheless promoted us to raise
EPS numbers for the full year by 7%. We expect Kraft to
enter a formal bid ahead of the current putative £7.30 level
ahead of 9 November.
Excellent sales growth – check; reduced A&P – check; substantial margin
accretion – check; increased guidance for 2009 – check; confidence about
2011 targets – check. In the circumstances Cadbury was always going to
report as strong a Q3 performance as it could, and raise its guidance
accordingly. It looks unsustainable, but right now we would class that as
the least of Cadbury’s worries. In our view there is enough here to tempt
Kraft back with a higher bid than the current putative £7.30.
The 7% underlying revenue growth reported by Cadbury for Q3 was
broadly based in terms of both categories and geographies. That said,
volume fell 3% in the quarter with price/mix up 10%. This is an
exacerbation of the trends seen in 1H when volume was down 2% and
price/mix up 6% – a function of higher input prices, notably cocoa, as well
as opportunistic pricing. While such growth cannot be sustained in the
medium/long term it has certainly paid for itself in Q3.
was predictable but has nonetheless promoted us to raise
EPS numbers for the full year by 7%. We expect Kraft to
enter a formal bid ahead of the current putative £7.30 level
ahead of 9 November.
Excellent sales growth – check; reduced A&P – check; substantial margin
accretion – check; increased guidance for 2009 – check; confidence about
2011 targets – check. In the circumstances Cadbury was always going to
report as strong a Q3 performance as it could, and raise its guidance
accordingly. It looks unsustainable, but right now we would class that as
the least of Cadbury’s worries. In our view there is enough here to tempt
Kraft back with a higher bid than the current putative £7.30.
The 7% underlying revenue growth reported by Cadbury for Q3 was
broadly based in terms of both categories and geographies. That said,
volume fell 3% in the quarter with price/mix up 10%. This is an
exacerbation of the trends seen in 1H when volume was down 2% and
price/mix up 6% – a function of higher input prices, notably cocoa, as well
as opportunistic pricing. While such growth cannot be sustained in the
medium/long term it has certainly paid for itself in Q3.
NH:
thanks for all that
NH:
but the question is
NH:
does any of this mean Kraft will increase their price
NH:
and are Cadbury really committed to independence
NH:
or just getting 850p+ out of the yanks
MJ:
That is the question
MJ:
If this is aimed at Cadbury shareholders or Kraft managment
11:18AM
NH:
Some comments on the right about Deutsche Bank
NH:
post the results
NH:
and it has to be said a pretty poor performance from IB arm
NH:
everyone making hay
NH:
except for them
NH:
well, that’s bit of an exaggeration
NH:
but
NH:
what are the shares doing?
MJ:
Shares are down 4 per cent
MJ:
At EUR53.27
MJ:
Hasn’t been well recieved lets say
NH:
hang on
NH:
there’s some more news from the banking sector
NH:
just breaking
NH:
on Lloyds
NH:
LLOYDS: UK regulators are seen moving closer to plan allowing firm to avoid APS – sources
11:16 21Oct09 RTRS-UK REGULATORS MOVE CLOSER TO APPROVING LLOYDS PLAN
TO STAY OUT OF ASSET PROTECTION SCHEME – SOURCES
11:16 21Oct09 RTRS-UK REGULATORS MOVE CLOSER TO APPROVING LLOYDS
TO STAY OUT OF ASSET PROTECTION SCHEME – SOURCES
MJ:
Hmmm
MJ:
Without wanting to overly speculate
MJ:
I would say that is an even firmer sign that this cash call is being primed
NH:
I agree
NH:
this is coming soon
Lloyds Banking Group (LLOY:LSE): Last: 90.23, down 1.12 (-1.23%), High: 91.81, Low: 89.34, Volume: 23.64m
11:22AM
NH:
back to Deutsche
NH:
this is a really opaque statement
NH:
and was not scheduled
NH:
which probably explains these cash rumours that were doing the rounds earlier today
MJ:
Deutsche are, of course, one of the last remaining big European banks to not have raised any capital
NH:
hmmm
NH:
actually
NH:
got a good take on the numbers from Citigroup
NH:
which makes some good points
NH:
like no idea how the profit figure has been arrived at
NH:
anyway
NH:
here it is
NH:
Unexpected 3Q09 Trading Update – Deutsche has published an unexpected
trading update ahead of the 3Q09 results, due 29 October 2009. Details are
scarce and the reasons behind this pre-release remain unclear, with the company
claiming the release is to manage expectations on the tax credits.
trading update ahead of the 3Q09 results, due 29 October 2009. Details are
scarce and the reasons behind this pre-release remain unclear, with the company
claiming the release is to manage expectations on the tax credits.
NH:
PBT c€1.3bn – PBT is said to be “in the range of €1.3bn”, broadly in-line with
both 2Q09 and company consensus. There are no details on how this PBT figure
has been derived, other than “all business segments will report positive results”.
This implies that asset management will report positive earnings for the first time
since 2Q08, likely driven by a reduction in impairments on RREEF.
Net Income c€1.4bn — Net income is estimated to be “approximately €1.4bn”,
significantly ahead of the €1.1bn reported in 2Q09 and 3Q09 consensus €0.8bn,
but driven by tax credits and the “impact of tax exempt income”. This raises
questions over the quality of the c€1.3bn PBT, and how much is derived from
recurring income.
both 2Q09 and company consensus. There are no details on how this PBT figure
has been derived, other than “all business segments will report positive results”.
This implies that asset management will report positive earnings for the first time
since 2Q08, likely driven by a reduction in impairments on RREEF.
Net Income c€1.4bn — Net income is estimated to be “approximately €1.4bn”,
significantly ahead of the €1.1bn reported in 2Q09 and 3Q09 consensus €0.8bn,
but driven by tax credits and the “impact of tax exempt income”. This raises
questions over the quality of the c€1.3bn PBT, and how much is derived from
recurring income.
NH:
Capital Better — 3Q09 Tier 1 ratio is indicated at 11.7%, from 11.0% at the prior
quarter-end. After dividend accrual, we estimate that the improvement was split
between retained earnings (+50bps) and further RWA reduction (+20bps). We
estimate this corresponds to a core tier 1 ratio of 8.4% (7.8% at 2Q09).
quarter-end. After dividend accrual, we estimate that the improvement was split
between retained earnings (+50bps) and further RWA reduction (+20bps). We
estimate this corresponds to a core tier 1 ratio of 8.4% (7.8% at 2Q09).
NH:
Hold Rating — Deutsche has made solid progress on de-risking & deleveraging,
but the 3Q09 pre-release suggests only a small beat on consensus, versus much
larger beats from some of the US investments banks during the past week. With
lower gearing to asset gathering and equities trading and outstanding questions
on asset quality we retain a Hold rating. We prefer UBS (UBSN.VX; SFr19.19; 1H)
and CS (CSGN.VX; SFr59.75; 2H).
but the 3Q09 pre-release suggests only a small beat on consensus, versus much
larger beats from some of the US investments banks during the past week. With
lower gearing to asset gathering and equities trading and outstanding questions
on asset quality we retain a Hold rating. We prefer UBS (UBSN.VX; SFr19.19; 1H)
and CS (CSGN.VX; SFr59.75; 2H).
MJ:
DB management however have kept a very steady line to investors on the capital raising front – in as much as they don’t need to do anything hasty
MJ:
The market would probably take any contrary indication pretty poorly
MJ:
Have you got more comment Neil?
NH:
I don’t at the moment
NH:
but
NH:
worth remembering
NH:
Morgan Stanley is set to schedule results today
NH:
and Wells Fargo
NH:
in fact MOST might come out while we are on air
NH:
if it is
NH:
we will hang around
11:27AM
NH:
Okay
NH:
some of the ROTR
NH:
asking about Nick Levene
NH:
and the latest seems to be connected to this
NH:
and that’s about all I want to say on that
MJ:
God, that all seems very ugly
MJ:
Moving on
NH:
yes
NH:
let’s have something lighter
NH:
what about
NH:
currencies
NH:
the GBK having a good run
NH:
a very good run
MJ:
Cable at 1.654
MJ:
And a euro buys you 90p
NH:
presumably this on the back of the MPC minutes
MJ:
That would appear to be it
NH:
so, for today at least, it looks like QE
NH:
won’t be extended
MJ:
Well, that is how traders are reading the minutes
NH:
but
NH:
we have had some many mixed messages from the MPC
NH:
over the past couple of weeks
NH:
I just don’t know where we stand
NH:
anyway
NH:
City economists have been trying to make some sense of it all
NH:
here’s JP Morgan
NH:
The minutes of the MPC’s October meeting show the expected 9-0 vote on the scale of asset purchases, with more substantive consideration of change delayed until November, and no discussion of possible change to arrangements for remuneration of reserves ( we expect this will be decided one way or another in November). The MPC’s reading of the recent dataflow is mildly upbeat: the likelihood that global growth would be stronger in 2H09 than thought previously is acknowledged, while the weakness of the August IP data is contrasted with survey evidence pointing to modest growth in the UK over the second half of this year. The lingering drags on growth over the medium term from balance sheet adjustment and the need to rebalance global demand are still present in the discussion, as is a sense that those problems remain large relative to the recent improvement in financial markets. But the reading of the new information is positive, and the effect of the QE programme on asset prices is described as “substantial”.
NH:
Paragraph 30 of the minutes reports differences of views among members about the balance of risks to the inflation outlook and how it had evolved in recent months. Up until now, those differences appear to have been about whether there was enough downside risks to extend QE further. While all MPC members agreed to defer a decision until the November meeting, the tone of the minutes up to paragraph 30 hints that some members may be beginning to perceive upside risks. It should be said that the drafting here is not very clear. The paragraph also mentions no need to change the level of asset purchases or the level of the Bank rate. The latter had not been mentioned in the September or July minutes, and some market participants have interpreted the fact that a change to Bank Rate has even been mentioned as a hawkish signal. We do not see it that way: to us this just looks like a quirk of the drafting.
NH:
We continue to anticipate a “modest” £25bn extension of QE at the November meeting as the outcome of a three way split in the vote (some wanting to hold at £175bn, some wanting a £50bn increase to £225bn), and changes that will sees a small portion of the reserve stock (around 10%) not paid the Bank rate at 0.5%. Though the minutes are, at the margin, mildly unfriendly to that view, they effectively push all the substantive questions to November. We recognise that exactly how the MPC’s views will evolve as the outcome of the Inflation Report has been difficult to call. Our sense is that the majority on the MPC will continue to see enough constraints on a recovery in output to want to continue to manage downside risks for now, even as some (Sentance and Dale, for example) become a little more uncomfortable with a further extension of QE.
NH:
and here’s a bit of bonus
NH:
JPM
NH:
have been going over Merv’s anti bank rant last night
MJ:
(@FJP73 – its quicker to write, but I can change if it deeply offends you)
NH:
Aside from the minutes, Mervyn King’s speech last night on the future shape of the banking industry has been widely covered in the media. On the monetary policy front the speech makes only limited remarks, but the statement that QE is about boosting growth in broad money is made once again by King without significant qualification. Other members of the MPC, and the text of the Inflation Report and the minutes, have emphasised the need to view a broad set of processes on the impact of QE. But King’s remarks continue to suggest that, for him at least, broad money growth moving back into the 6-9% range is the litmus test of whether QE has done its job. On that basis, we continue to see King as prepared to vote for more QE in November (and probably in the £50bn group), with the high frequency growth rate of the key M4 measure still running in the neighborhood of 4%.
NH:
Mervyn King also has an opinion piece in the Herald Newspaper (link below) which echoes the themes of last night’s speech. He states “I do not know for how long interest rates will remain so low. But at some point they will return to more normal levels and it would be wise to take this into account in your financial planning.” Some may regard that as a hint that the tide on monetary policy is turning – we would not do so. Rather, this is the sort of statement the Governor often makes when addressing (or writing for) the public at large rather than a more specialist audience, and should be interpreted under the heading of “fatherly advice” rather than a signal on the near term evolution of policy.
NH:
and if you want to have a look at that report
NH:
go here
MJ:
And Neil – what about the Brazilian real?
NH:
hang on
NH:
looks to be at 1.752 against the dollar
NH:
that was an amazing move yesterday
NH:
we all know about attempts to prevent capital flight in emerging markets
NH:
but not
NH:
the opposite
NH:
and the main Brazilian index is at something like 65,000 points
MJ:
Very important story IMO
NH:
yes
NH:
not sure how bullish you can be
NH:
when so many countries are worried about the dollar falling
NH:
did you see the comments from the Canadian central bank overnight
MJ:
I missed that actually
MJ:
Care to share?
NH:
hang on
NH:
this from the WSJ
NH:
The Bank of Canada’s latest interest rate statement should put to rest any notion that the Canadian central bank might be one of the next to follow the Reserve Bank of Australia’s lead in beginning to tighten rates.
Not with the Canadian dollar’s latest thrust back toward U.S. dollar parity, a development that the central bank cited as threatening to eventually “more than fully offset” favorable developments seen in the economy since July
11:38AM
MJ:
Thanks for that
NH:
So what else is moving this morning?
MJ:
The LSE has taken a bit of whack in the wake of a Goldman downgrade
NH:
yes
NH:
stock off 22p at 912p
NH:
and the LSE
NH:
is another company where there is a big middle eastern shareholdinig
MJ:
Probably only a matter of time before that angle will start getting excited again
NH:
yes
NH:
but that has nothing to do with today’s comments from Goldman
MJ:
Im sure the ROTR would like to see a bit of that
NH:
what the note
MJ:
Of course
NH:
well
NH:
it looks at the fact the LSE is losing market share
NH:
to rivals like BATS
NH:
actually
NH:
there is a very good BATs website
NH:
that provides an excellent breakdown of which trading platforms
NH:
have traded what across Europe each day
MJ:
have you got the URL?
NH:
yep
NH:
this is a good page for the LSE
NH:
nice and colorful too
MJ:
So out of 437m shares traded this morning the LSE has done 258m
MJ:
Chi X has done 110m
MJ:
BATS 29m and Turquoise has done 28m
NH:
thanks for that, gives an idea of the fragmention
MJ:
And might reveal why the LSE would want to buy Turquoise
NH:
it might
NH:
anyway
NH:
here’s the GS note
NH:
basically says the new CEO is doing the right things
NH:
but competition is intense
NH:
Current view
In the few months since becoming CEO, Xavier Rolet has shown a clear
understanding of challenges – and opportunities – faced by LSE. In
particular, the acquisition of MillenniumIT gives the exchange a clearlydefined
technology strategy, albeit with an unhelpful (but probably
necessary) lag in implementation. Despite this progress, investors
continue to focus on market share attrition in UK equities. However, we
believe that the impact of this has been more than offset by index gains
ytd. We also expect re-equitisation will continue to grow the total size of
the pie. Ytd, we believe that the loss of UK equity market share has
impaired LSE’s value by only 1.6%-2.9%.
In the few months since becoming CEO, Xavier Rolet has shown a clear
understanding of challenges – and opportunities – faced by LSE. In
particular, the acquisition of MillenniumIT gives the exchange a clearlydefined
technology strategy, albeit with an unhelpful (but probably
necessary) lag in implementation. Despite this progress, investors
continue to focus on market share attrition in UK equities. However, we
believe that the impact of this has been more than offset by index gains
ytd. We also expect re-equitisation will continue to grow the total size of
the pie. Ytd, we believe that the loss of UK equity market share has
impaired LSE’s value by only 1.6%-2.9%.
NH:
LSE has announced it is in exclusive talks to acquire the trading platform
Turquoise. We estimate that this would open up European markets that are
1.7x-2.3x the size of UK and Italian equities alone, though the current ‘land
grab’ in this space limits the near-term revenue opportunity. With brokerowned
dark pools criticised for an alleged lack of transparency, any deal
that suggests a realignment of LSE’s relationship with the broker
community could have positive implications for LSE’s aim to establish an
independent dark pool with broker-support based on Baikal’s technology.
We maintain our 12-month SOTP-derived price target of 1,000p. Higher or
lower volumes and market shares are key risks to our view.
Turquoise. We estimate that this would open up European markets that are
1.7x-2.3x the size of UK and Italian equities alone, though the current ‘land
grab’ in this space limits the near-term revenue opportunity. With brokerowned
dark pools criticised for an alleged lack of transparency, any deal
that suggests a realignment of LSE’s relationship with the broker
community could have positive implications for LSE’s aim to establish an
independent dark pool with broker-support based on Baikal’s technology.
We maintain our 12-month SOTP-derived price target of 1,000p. Higher or
lower volumes and market shares are key risks to our view.
London Stock Exchange Group (LSE:LSE): Last: 914.50, down 20 (-2.14%), High: 920.00, Low: 898.00, Volume: 692.73k
11:45AM
MJ:
Right – anymore on that Autonomy post you did the morning?
NH:
about yesterday’s carefully managed results meeting?
MJ:
Thats the one
NH:
Well, I have a bit more colour
MJ:
Appears to have ruffled some feathers
NH:
obviously people are afraid to talk because they fear being banned by Mike Lynch from further meetings
NH:
apparently the guy at Cazenove who is really bearish on the company and has raised questions about its accounting practices
MJ:
Daud Khan
NH:
that’s the guy
NH:
apparently the last meeting he was able to attend was back in the first quarter of last year
MJ:
NH:
so yesterday’s meeting
NH:
according to my spy
NH:
has two sets of seats
NH:
on the right and left
NH:
in the front row of the left
NH:
are GS and Citi
NH:
both of who have buy ratings on Autonomy
NH:
they are allowed to ask questions
NH:
analysts who have hold recommendations are passed over
NH:
and the mike
NH:
passed to UBS
NH:
who are house broker
NH:
now
NH:
it seems that one the analyst asked the question
NH:
the mike was whisked away
NH:
and they could not say anymore
MJ:
Ha – this sounds rather Soviet
NH:
it does
NH:
and
NH:
there was no informal chat
NH:
with company executives at the end
NH:
apparently they had to shoot off and talk to some paper called the FT
MJ:
I see
MJ:
I would be very intersted to see what Mr Daud and his fellow exiles had to say about yesterday’s figures
NH:
before we do that
NH:
have a look at this
NH:
from the Daily Telegraph
NH:
AUTONOMY, the FTSE 100 software company, has been accused of avoiding questions from “bearish” analysts.
The row threathens to overshadow record third-quarter revenues of $191m ( pounds 117m), compared with $127m a year earlier.
The Daily Telegraph understands that no analysts with a “sell” rating on the stock were apparently able to ask a public question after the company presented its third-quarter results yesterday. Several analysts claimed they are often prevented from asking Mike Lynch, Autonomy’s chief executive, and Sushovan Hussain, finance director, difficult questions.
NH:
“They didn’t let any of the people they knew were bearish ask any questions. If you’re a bear, there was no way that mic was coming in your direction,” one analyst said of the meeting yesterday.
Another analyst said: “Autonomy must have been practising for a week . . . everything was read from a piece of paper. It was all done so no one could ask any questions.”
Autonomy denied allegations that it prevented bearish analysts from asking questions.
NH:
“We gave 30 minutes for questions, but we simply ran out of time. There was ample opportunity to ask individual questions,” a company spokesman said.
NH:
anyway
NH:
you could argue that 30mins was not enough
NH:
as yesterday’s statement really surprised the City
MJ:
Some comment?
NH:
this is from Daud
NH:
who is on the banned list
NH:
Meat for the bulls and the Bears
Autonomy presented a most unusual quarter of results. Following a positive pre-announcement in early October, the market was talking of small upgrades for the full year with the prospect of material upgrades for FY 10. In itself, a discussion about 2010 at the end of Q3 is unusual as the management has preferred to wait until Q4 before pining its expectations for the following year.
Following the pre-announcement the expectations for the quarter were clear, revenues of $191-193m and EPS of 20-23c. Deferred revenues stable and good cash conversion. We expected few additional surprises in the full release, however, we were wrong
Autonomy presented a most unusual quarter of results. Following a positive pre-announcement in early October, the market was talking of small upgrades for the full year with the prospect of material upgrades for FY 10. In itself, a discussion about 2010 at the end of Q3 is unusual as the management has preferred to wait until Q4 before pining its expectations for the following year.
Following the pre-announcement the expectations for the quarter were clear, revenues of $191-193m and EPS of 20-23c. Deferred revenues stable and good cash conversion. We expected few additional surprises in the full release, however, we were wrong
NH:
EPS – a low quality beat
Consensus before the pre-announcement was 19.8c (source: Bloomberg), Autonomy achieved 20.0c at the low end of its guidance. That was not the end of the story, the EPS was boosted by net R&D capitalisation of $9.5m vs. $1.6m in Q3 08. This was a boost of 2.5c vs. last year. In addition, a lower tax charge of 24% vs. 30% last year boosted EPS by 1.3c. Both these effects were unexpected by the market. Hence a normalised EPS figure would have been 16.2c a decline of 6% y/y. In our view this was a low quality earnings beat. Further commentary on the call suggested that unexpected revenues fell on the last day of the quarter which skewed DSO’s higher. In other words without the additional unexpected revenue EPS would have missed consensus.
Cash conversion
Cash conversion for the quarter was good. However, with a rise in creditors of $44m (the highest in the history of the company) this will likely reverse in Q4. As yet we have not had a suitable explanation for why creditors jumped up so significantly.
Consensus before the pre-announcement was 19.8c (source: Bloomberg), Autonomy achieved 20.0c at the low end of its guidance. That was not the end of the story, the EPS was boosted by net R&D capitalisation of $9.5m vs. $1.6m in Q3 08. This was a boost of 2.5c vs. last year. In addition, a lower tax charge of 24% vs. 30% last year boosted EPS by 1.3c. Both these effects were unexpected by the market. Hence a normalised EPS figure would have been 16.2c a decline of 6% y/y. In our view this was a low quality earnings beat. Further commentary on the call suggested that unexpected revenues fell on the last day of the quarter which skewed DSO’s higher. In other words without the additional unexpected revenue EPS would have missed consensus.
Cash conversion
Cash conversion for the quarter was good. However, with a rise in creditors of $44m (the highest in the history of the company) this will likely reverse in Q4. As yet we have not had a suitable explanation for why creditors jumped up so significantly.
NH:
Tax
The tax rate was lower than expected at 24%. This was explained by the utilisation of tax losses and reaching an agreement with the tax authorities around certain tax effects. Normally we would not expect utilisation of tax losses to reduce P&L tax, only cash tax. This quarter cash tax actually exceeded P&L tax for the first time that we can remember. On negotiations with tax authorities, we would expect the change to have a multi quarter impact but Autonomy says the full year tax rate should be 28%.
Capitalised R&D
Net benefit from the capitalisation of R&D was $9.5m vs. $2m in Q2. IAS38 has a number of criteria for the capitalisation of R&D. This one particularly stands out:
The tax rate was lower than expected at 24%. This was explained by the utilisation of tax losses and reaching an agreement with the tax authorities around certain tax effects. Normally we would not expect utilisation of tax losses to reduce P&L tax, only cash tax. This quarter cash tax actually exceeded P&L tax for the first time that we can remember. On negotiations with tax authorities, we would expect the change to have a multi quarter impact but Autonomy says the full year tax rate should be 28%.
Capitalised R&D
Net benefit from the capitalisation of R&D was $9.5m vs. $2m in Q2. IAS38 has a number of criteria for the capitalisation of R&D. This one particularly stands out:
NH:
Development costs are capitalised only after technical and commercial feasibility of the asset for sale or use have been established. This means that the entity must intend and be able to complete the intangible asset and either use it or sell it and be able to demonstrate how the asset will generate future economic benefits.
Generally software companies capitalise very little R&D as the criteria is difficult to pass and in general software companies prefer to expense R&D as they did under UK GAAP. In our view it is harder to justify capitalisation with new products where customer participation is uncertain and value is difficult to quantify. Hence we were surprised by the one off nature of this capitalisation. If the criteria is passed, any further development should also be capitalised.
Generally software companies capitalise very little R&D as the criteria is difficult to pass and in general software companies prefer to expense R&D as they did under UK GAAP. In our view it is harder to justify capitalisation with new products where customer participation is uncertain and value is difficult to quantify. Hence we were surprised by the one off nature of this capitalisation. If the criteria is passed, any further development should also be capitalised.
NH:
Guidance
As expected the company referred to 2010 and talked of two scenarios. The “winter” scenario or in other words a continuing of current market conditions and the “thawing” scenario. Earnings growth will be 22% in the winter scenario and 33% in the thawing scenario. Oddly the company believes the scenarios are black and white i.e. one or the other not a blend of the two which assumes recovery is binary.
For 2009 there appears to be an implicit downgrade. In the winter scenario “guidance” has moved from 105c (given at Q2) to 100-105c. In the thawing scenario where additional expenses will occur this will move to 95-100c. Add to this a tax rate now expected to be 28% for the year vs. commentary after Q1 that 32-33% was reasonable. In our view the downgrade for the year is likely to be c. 15% for the full year (105c to 88c-normalised tax). In our view this doesn’t reflect a company that should trade on 7.5x sales.
As expected the company referred to 2010 and talked of two scenarios. The “winter” scenario or in other words a continuing of current market conditions and the “thawing” scenario. Earnings growth will be 22% in the winter scenario and 33% in the thawing scenario. Oddly the company believes the scenarios are black and white i.e. one or the other not a blend of the two which assumes recovery is binary.
For 2009 there appears to be an implicit downgrade. In the winter scenario “guidance” has moved from 105c (given at Q2) to 100-105c. In the thawing scenario where additional expenses will occur this will move to 95-100c. Add to this a tax rate now expected to be 28% for the year vs. commentary after Q1 that 32-33% was reasonable. In our view the downgrade for the year is likely to be c. 15% for the full year (105c to 88c-normalised tax). In our view this doesn’t reflect a company that should trade on 7.5x sales.
NH:
The positives
Autonomy’s new non executive chairman Robert Webb announced that the company expects to hire two more non executive directors in the near future. We believe corporate governance has been an issue for a number of years and this should help to alleviate some of those concerns.
Demand for IDOL SPE (Autonomy’s new product) has been better than expected according to the company and that revenues are likely to be pulled forward from 2011 to 2010.
Acquisitions
We continue to believe an acquisition in the next 3-6 months is likely and now consider both structured data and web analytics as targets.
Autonomy’s new non executive chairman Robert Webb announced that the company expects to hire two more non executive directors in the near future. We believe corporate governance has been an issue for a number of years and this should help to alleviate some of those concerns.
Demand for IDOL SPE (Autonomy’s new product) has been better than expected according to the company and that revenues are likely to be pulled forward from 2011 to 2010.
Acquisitions
We continue to believe an acquisition in the next 3-6 months is likely and now consider both structured data and web analytics as targets.
MJ:
the stuff on capitalised R&D won’t please Mike
NH:
no
MJ:
Not one bit
NH:
another three years in the wilderness for that
MJ:
Sent to the back of the class
NH:
suspended from the school more like
NH:
and here’s the ever reliable David Toms at Numis
NH:
Autonomy’s results were characterised by weaker-than-(we)-expected underlying
numbers, coupled with a stronger-than-expected story for 2010. Next year’s bull
case is a combination of the new SPE product gaining traction earlier than
previously indicated, and a general improvement in tech spend driving an
acceleration in sales, particularly on the ‘Meaning Based Marketing’ side. However,
we are materially downgrading our FY09 forecasts to reflect the Q3 miss and an
expectation that Autonomy ramps up investment in Q4 in anticipation of a strong
FY10. The key issue for the shares is whether the market perceives this as ‘sensible
investment’ or ‘downgrade and jam tomorrow’. We are inclined to the former camp -
traditionally Autonomy’s move into new areas, whether organically or by
acquisition have been successful. However, given the scale of downgrades, we
retain our Hold stance and 1580p TP.
numbers, coupled with a stronger-than-expected story for 2010. Next year’s bull
case is a combination of the new SPE product gaining traction earlier than
previously indicated, and a general improvement in tech spend driving an
acceleration in sales, particularly on the ‘Meaning Based Marketing’ side. However,
we are materially downgrading our FY09 forecasts to reflect the Q3 miss and an
expectation that Autonomy ramps up investment in Q4 in anticipation of a strong
FY10. The key issue for the shares is whether the market perceives this as ‘sensible
investment’ or ‘downgrade and jam tomorrow’. We are inclined to the former camp -
traditionally Autonomy’s move into new areas, whether organically or by
acquisition have been successful. However, given the scale of downgrades, we
retain our Hold stance and 1580p TP.
11:53AM
NH:
Okay
NH:
someone the right
NH:
asking about Tesco
NH:
and today’s upgrade from Nomura
NH:
which I think we can dig out
MJ:
Tesco is one of the biggest risers in the FTSE this morning
Tesco (TSCO:LSE): Last: 390.65, up 7.15 (+1.86%), High: 395.00, Low: 388.80, Volume: 12.45m
NH:
actually
NH:
this note is a reprise of something the analyst
NH:
Matt Truman has been saying for a while
NH:
that its international business
NH:
will effectively create a new company over the nexyt couple of years
NH:
and check out the target price
NH:
526p
MJ:
MJ:
Pretty big jump needed for that no?
NH:
In the next five years of disciplined growth, we estimate that Tesco will effectively
create “a new company” with sales of £27.3bn, EBITDA of £2.65bn, an underlying
EBIT margin of 7.3% and CROI of 25.9%, far superior to the existing one. The
changing nature of its mix, both in the UK and in the rapidly maturing international
business, is likely to step change margins and returns to 6.2% and 16.1%,
respectively, on our calculations. We estimate this “new company” alone is worth
£16.4bn, or 209p per share. We raise our target price from 405p to 526p, offering
39% upside potential to current levels, and reiterate our Buy rating.
create “a new company” with sales of £27.3bn, EBITDA of £2.65bn, an underlying
EBIT margin of 7.3% and CROI of 25.9%, far superior to the existing one. The
changing nature of its mix, both in the UK and in the rapidly maturing international
business, is likely to step change margins and returns to 6.2% and 16.1%,
respectively, on our calculations. We estimate this “new company” alone is worth
£16.4bn, or 209p per share. We raise our target price from 405p to 526p, offering
39% upside potential to current levels, and reiterate our Buy rating.
NH:
So what exactly will Tesco have ‘created’ in terms of value in these five years? We
estimate a business where the “new growth” has a return on invested capital of c.26%,
EBIT profit contribution at a margin of 10.7% in the UK and, given the lack of capital
required for the new business segments, an estimated UK CROI of 49.8%. On a sector
average multiple (despite our projection of far higher growth, margins and returns), this
“creation” would be worth c.£8bn-9bn in the UK despite the current depressed sector
multiples and no additional change in the capital structure. In value terms, this is larger than
both Sainsbury and Morrison. For the international business, we estimate the creation of
revenues totalling £16.1bn and EBIT of £1.28bn, therefore, despite the push into services,
we believe Tesco International is likely to contribute 48% of profit growth in the next five
years. We estimate that the international business could be prudently worth at least a
further £8bn, meaning total group value creation of £16.4bn, or £2.09 per share. While
this is a snapshot, we regard Tesco as being on the cusp of creating material profits at a
step-changed level of returns. None of its European peers can say that, in our opinion
estimate a business where the “new growth” has a return on invested capital of c.26%,
EBIT profit contribution at a margin of 10.7% in the UK and, given the lack of capital
required for the new business segments, an estimated UK CROI of 49.8%. On a sector
average multiple (despite our projection of far higher growth, margins and returns), this
“creation” would be worth c.£8bn-9bn in the UK despite the current depressed sector
multiples and no additional change in the capital structure. In value terms, this is larger than
both Sainsbury and Morrison. For the international business, we estimate the creation of
revenues totalling £16.1bn and EBIT of £1.28bn, therefore, despite the push into services,
we believe Tesco International is likely to contribute 48% of profit growth in the next five
years. We estimate that the international business could be prudently worth at least a
further £8bn, meaning total group value creation of £16.4bn, or £2.09 per share. While
this is a snapshot, we regard Tesco as being on the cusp of creating material profits at a
step-changed level of returns. None of its European peers can say that, in our opinion
NH:
if folk are interested
NH:
that could appear in the usual place
NH:
let me know
11:56AM
NH:
Miles
NH:
it is almost midday
NH:
anything else we should cover?
NH:
have we any 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.
NH:
(Lorcan will add to your table)
MJ:
Well – I came across this story yesterday, which dates from Oct 13
MJ:
So not really RAW – but I was suprised no one had appeared to pick up one it
NH:
go on
MJ:
probably as a result of the paper it was published in
NH:
a red top?
NH:
(welcome back Greenback)
MJ:
Exactly
MJ:
This is from the Sun
MJ:
THE American consumer goods-to-healthcare giant behind LISTERINE is in talks to buy up the bulk of a UK rival – it was claimed today.
Sources said JOHNSON & JOHNSON was poised to make a “friendly bid” for the most profitable parts of UK replacement hip and knee specialist SMITH & NEPHEW.
Rumours of a deal for Smith & Nephew’s endoscopy and advanced wound management divisions have been circulating for days.
But a source told Sun City that Johnson & Johnson had now emerged as the clear front-runner give the premium it is willing to offer.
Other US giants STRYKER CORP and BIOMET have previously been linked with the UK business.
Johnson & Johnson has been mooted as a potential bidder for over a decade given the synergies between the two groups.
Read more: http://www.thesun.co.uk/sol/homepage/news/2680118/US-giants-takeover-plan.html#ixzz0UZDONNMo
NH:
hmmmm
NH:
that’s not as odd as it might first appear
NH:
and the hack
NH:
Steve Hawkes knows what he is doing
NH:
I could we believe
NH:
that S&N might sell there woundcare and endoscopy businesss
NH:
they aren’t the highest margin
NH:
as above claims
NH:
but if they were sold
NH:
S&N would be a pure play on hip replacements and knees
NH:
and that’s their biggest business
MJ:
Exactly – what would they do with the rest of the company?
NH:
what’s the share doing
NH:
i reckon there could be something in this
NH:
advisers have be running around a bit recently
NH:
or so I am told
MJ:
Doing well – up 5p at 535p
NH:
Miles is going to do so more work on this because we believe there was or is something in it. We will of course report back
MJ:
Of course
NH:
right
NH:
doesn’t look like MOST is coming out now
NH:
so we will sign off
NH:
before we do
NH:
here’s the big Merrill note on property
NH:
they have upgraded
NH:
Hammerson, St Modwen and Derwent London to Buy
NH:
Land Securities and Great Portland to Neutral
NH:
argumemt seems to be
NH:
punt the sector while rates remain low
NH:
and QE remains
NH:
could say the same about the market
NH:
anyway
NH:
here is the note
NH:
The emperor has bought an entirely new wardrobe from all the stimulus money. In
our view the question still remains how much of it will have to be returned if and
when the stimulus is eventually withdrawn. We believe the momentum trade is
likely to continue as long as the stimulus stays in place, as for investors the
alternative of not playing along has proven to be and still is too painful.
our view the question still remains how much of it will have to be returned if and
when the stimulus is eventually withdrawn. We believe the momentum trade is
likely to continue as long as the stimulus stays in place, as for investors the
alternative of not playing along has proven to be and still is too painful.
NH:
For the UK we can not envisage stability driven by a weak currency and low rates,
but for now the money is on interest rates to stay low for some time. This in turn
should support property values. With UK capital values bouncing back up, we are
now pencilling in c.6% rise in capital values in 09Q4 and a further 7% increase in
FY10E. As a result we have upgraded our NAV forecasts. On average we have
increased ungeared values in our forecasts for FY09/10, FY10/11 and FY11/12 by
3%, 8% and 9% respectively
but for now the money is on interest rates to stay low for some time. This in turn
should support property values. With UK capital values bouncing back up, we are
now pencilling in c.6% rise in capital values in 09Q4 and a further 7% increase in
FY10E. As a result we have upgraded our NAV forecasts. On average we have
increased ungeared values in our forecasts for FY09/10, FY10/11 and FY11/12 by
3%, 8% and 9% respectively
NH:
We are turning increasingly positive on London offices, as a geared play on capital
markets staying strong, envisaging supply shortages and a return to development
in 2010. Unfortunately UK retail is much more exposed to the economy/consumer.
We upgrade Hammerson, St Modwen and Derwent London to Buy (from Neutral)
and upgrade Land Securities and Great Portland to Neutral (from Underperform).
We have increased many price objectives in the process (see side table right).
markets staying strong, envisaging supply shortages and a return to development
in 2010. Unfortunately UK retail is much more exposed to the economy/consumer.
We upgrade Hammerson, St Modwen and Derwent London to Buy (from Neutral)
and upgrade Land Securities and Great Portland to Neutral (from Underperform).
We have increased many price objectives in the process (see side table right).
NH:
From Current Premiums back to Future Discounts
As part of the move to upgrade NAV we move our reference point from a premium
to trough NAVs now to a discount to our new increased FY11/12E NAVs. The
sector trades at a premium when it is in upgrade mode, but the risk is that the
recovery we have now priced in for 09H2/2010E will finally bring out product and
will keep a lid on price appreciation. We expect assets to move out of the
overleveraged hands into the more equity financed hands.
A potential increase in available product could well dampen the outlook for capital
values, bringing the focus back on the poor income generated. We believe at that
point investors may require discounts to entice them back in. Hence our new POs
are struck at a premium to the trough NAVs; roughly in line with our new 10/11E
NAVs and at a discount to our new 11/12E NAVs.
As part of the move to upgrade NAV we move our reference point from a premium
to trough NAVs now to a discount to our new increased FY11/12E NAVs. The
sector trades at a premium when it is in upgrade mode, but the risk is that the
recovery we have now priced in for 09H2/2010E will finally bring out product and
will keep a lid on price appreciation. We expect assets to move out of the
overleveraged hands into the more equity financed hands.
A potential increase in available product could well dampen the outlook for capital
values, bringing the focus back on the poor income generated. We believe at that
point investors may require discounts to entice them back in. Hence our new POs
are struck at a premium to the trough NAVs; roughly in line with our new 10/11E
NAVs and at a discount to our new 11/12E NAVs.
NH:
so
NH:
there you have it
NH:
ignore fundamentals
NH:
and play the momentum trade
NH:
shut your eyes and buy
MJ:
Seems to be the order of the day for many people out there
MJ:
or order of the year
NH:
and just don’t take that from me – which I am sure no one would
NH:
but no less a figure than Anthony Bolton
NH:
Oct. 21 (Bloomberg) — Fidelity International’s Anthony Bolton said investors can still benefit from the rally in stocks as global markets may advance for a “considerable” time.
Low interest rates will spur investment in riskier assets including equities, and valuations are still “attractive,” according to documents handed to reporters before a speech by Bolton, president of investments at Fidelity, in Seoul today. Investor sentiment has moved to “optimistic” from “pessimistic,” according to the documents.
NH:
“I expect the Asian region including China to continue serving the role of growth engine for the world economy,” Bolton was quoted as saying in a Korean-language press release. “For China’s market, there’s a possibility of a correction, but the long-term outlook is still bright.”
Stocks have surged in the past six months as evidence mounts that the global economy is emerging from its deepest recession since the 1930s. Governments have poured in about $2 trillion of stimulus while central banks have cut interest rates to close to zero in efforts to revive growth.
NH:
“Despite the fact that markets have risen well off their lows, I think we’re in a bull market I expect to go on,” Bolton said in his speech, advising investors to be “overweight” in technology and financial stocks in the “medium” term. “It’s a multiyear bull market. I don’t think it’s over yet.”
NH:
“The relative growth being seen in some emerging markets is going to look particularly attractive against the low growth in the West,” Bolton said today. “I particularly like emerging markets that can be driven very much by domestic demand, by the internal dynamics of their economy.”
NH:
On China, “although certain parts of the economy are very exposed to exports, I think the domestic story in China is a good one,” Bolton said. “That will be one of the markets that I would be favoring at the moment.”
NH:
NH:
that’s a link to the Bolton comments
NH:
I should have done a post
NH:
because I know how much Tuna
NH:
and others love him
NH:
the UK’s answer to Warren Buffett
MJ:
Uber shrewdie
NH:
yes
NH:
and before we go
NH:
a price update
NH:
on the momentum stock of the moment
Gulf Keystone Petroleum (GKP:LSE): Last: 113.50, down 10.5 (-8.47%), High: 124.00, Low: 96.00, Volume: 10.69m
MJ:
Its rallying!
NH:
the trend is your friend
MJ:
On that note – lunch time beckons
NH:
it does
NH:
and the FTSE 100
NH:
is down 56 points at 5,187
NH:
thanks for logging on today
NH:
and for all the comments
NH:
join us tomorrow
NH:
for another 60 minutes of stimulating stock market debate
MJ:
Bye everyone
NH:
and Taxloss is correct
NH:
about the White Feather
NH:
Fabrizio Ravanelli (born December 11, 1968) is a former Italian football player.
NH:
we are done
NH:
see you all tomorrow
MJ:
See you tomorrow
12:12PM