FT Alphaville » Markets Live transcript 19 Mar 2010

Share Print

Markets Live transcript 19 Mar 2010

Posted by Neil Hume on Mar 19 11:03.

Markets Live chat transcript for the chat ending at 12:14 on 19 Mar 2010. Participants in this chat were: Neil Hume, FT Bryce Elder

good morning

we have opened for business

it Markets Live

FT Alphaville’s daily markets chit chat

11.03am every weekday

sharp

Bryce is here

Hello. TGIF.

Right

let’s get straight down to business

lots going on

wider market?

11:04AM

Currently at 5684, up 42 points.

pretty much all down to the banks

hmm

post the Lloyds statement

Lloyds Banking Group PLC (LLOY:LSE): Last: 60.73, up 5.18 (+9.32%), High: 61.09, Low: 58.60, Volume: 401.44m

not surprising really

And ….

Royal Bank of Scotland Group PLC (RBS:LSE): Last: 44.61, up 2.61 (+6.21%), High: 44.79, Low: 43.50, Volume: 157.46m

Barclays PLC (BARC:LSE): Last: 361.30, up 8.4 (+2.38%), High: 363.35, Low: 356.15, Volume: 46.99m

also

the market was squeezed higher during the expiry

apparently it was caused by large open interest at the ’55 level.

Okay

I expected the market to come off post expiry

it hasn’t

and that’s down to the banks

and Lloyds

11:06AM

Any idea why they put the statement out?

yep

They have a series of management presentations scheduled for the next week or so

Of course There’s also a Morgan Stanley thing next week I think.

Although hang on

It’s only three weeks since we had results

and previous guidance

How could things have improved that much in three weeks?

pass

reporting systems

I really don’t know

but it is suspicious

anyway I can’t see the stock going much further

even after today’s upgrades

Why?

well

tangible book value is around 60p

and why should Lloyds trade at a premium to that?

given that the fact that it will be pretty weakly capitalised once the Basel III proposals come in

and brokers are already talking about the govt selling its stake

BEFORE THE ELECTION

have a look at this

it’s from Execution

Joe Dickerson, Execution Noble analyst, said: “Today’s trading statement points to a good level of income growth. Costs are well controlled and lower than the equivalent period in 2009. Most importantly the group now expects to deliver a better impairment performance than previously guided in both retail and corporate in 2010. The group now believes that it will be profitable in 2010. This was the key focus of our post results note attached (2010: The New Black). We continue to expect Lloyds to report net profit of at least £529m for 2010, against a consensus loss of £973m. Stock should be strong today and we anticipate follow through. We flag the prospect of a pre election placing in the stock.”

Hm. That’s a line being pushed by several commentators this morning.

I’m not sure

it’s as positive as everyone on the right thinks it is

However, I guess the shares can overshoot 60p

after all: small free float

The Jim Henson-inspired investor base love it.

and RBS for that matter

indeed

muppets love

RBS and Lloyds

and Barclays

right

looks like the govt’s average in price

is 74p

Because they’re all a lot cheaper than they were. That’s the logic. Apparently.

as such I really can’t see them selling

the Tories would love it if they did

would make hay with it

Yup – crystalise a loss.

Echoes of selling the gold at the bottom.

as for the short position in Lloyds

it is around 9%

because that’s 9% of the shares in issue

not the free float

which is only 60%

so the short is quite big

(Cityunslicker Emoticon

)

(Praxis22: That is a very leading question. I note only for full disclosure that their offices are in a brewery on Brick Lane.)

Anyway, do we have any comment on the black horse?

oh yes

Back in black at the Black Horse

Here’s our sector watcher in the banking sector

released trading statement this morning in advance of MS conference next week. The bank expects to be profitable in 2010. The bank had been ambigious during its results last month as to whether it would or wouldn’t be profitable and it is removing that uncertainty this morning.

The driver of this is the expectation for bad debts. Impairments are trending better than expected which means that the £15bn guidance given last month was too conservative. The improvement is being seen all across the book, so both retail and corporate. We expect bad debts may have moved to £13bn or a £2bn improvement for the full year. Running this through our numbers, it would add 2p to our TCE, bringing it to 59p for 2010 (conservative TCE is 48p so it would rise to 50p).

). Reported net income rises to c.£1bn of profit for FY2010 (currently a loss of £834m on our numbers). This £1bn figure assumes that Lloyds can utilise some of its deferred tax assets. The important thing for us is that on an underlying basis (ex-FVA adjustments and one-off restructuring costs), we expect the bank to be profitable at an operating level. We reiterate our Buy recommendation at 100p TP.

100p! Punchy stuff. No glass ceilings there.

here’s Nomura

The most significant aspect of the trading statement, in our view, is the message around impairments, which are indicated to be trending lower than anticipated by the management. At the full-year results, the group had indicated that it expected impairments to improve at a similar rate as that seen in the second half of 2009, where they were down 21% half on half. This implied impairment in 2010 is around the level of c£15bn. The group now expects to deliver a better impairment performance, in both retail and corporate businesses in 2010.

As a result, the group now expects to be profitable on a combined business basis in 2010, which implies upgrades to our 2010 loss before tax estimate of £900m. Consensus expectations for 2010 according to the company are for loss before tax of c£300m (with a wide range), which are also likely to move up. However, this is not likely to change our 2012 normalised earnings estimate of 10p per share including margin gains over the period (and 9p excluding the full extent of margin improvement).

The statement is likely to be a positive driver for the domestic UK banks, especially in the near term as it supports the view that impairments could decline significantly after their peak in 2009. Over the longer term, a key judgment for the UK banks in our view is whether there is a risk for an extended tail of impairments as supportive fiscal conditions could be reversed in the second half of 2010 following the election. In the near term, with Lloyds shares trading at 1.1x P/TBVPS and 6.7x 2012E earnings, there is likely to be further positive momentum. RBS shares which trade at 0.9x P/TBVPS earnings are also likely to be geared to this, however we see greater uncertainties over future earnings at RBS and hence would prefer Lloyds between the two. Barclays which trades at 1.1x 2010 P/TBVPS, remains our preferred domestic UK bank recommendation.

Right – cheers for all that.

Neil’s nipped off to argue with the news desk about the Champions League draw.

So here’s some more comment to fill the time.

Citigroup

Unexpected positive trading update – should drive consensus upgrades. — The
company is now guiding that the group will be profitable in FY10 at the underlying
Combined Businesses level. (Company-supplied current consensus is for a loss of
GBP300m.)
Impairment trends on UK retail and corporate books better than expected YTD and at
the group level the company expects it will do better than the previously guided FY10
impairment charge of GBP14.5-15.0bn.
Margin expansion on track to hit 2% previously guided driving “good” revenue growth.
The company is attempting to allay market concerns that revenues may not be
increasing in line with margin expansion. According to Bloomberg, consensus revenue
growth for FY10e is only 2-3%. We believe this needs to move up to at least 5-6%.

We expect upgrades to the market’s FY10e profit forecasts of around GBP1bn from a
combination of lower impairments and higher revenues than are contained in the
current consensus. This should add around 1p to consensus FY10e EPS, with similar
uplifts for FY11e forecasts.

The key new news is that, as a result of
“strong” trading performance YTD, the company is now prepared to guide that it
expects to be profitable on the Combined Businesses basis in FY10. The
company’s assumptions regarding the UK economy and regulatory impacts are
unchanged since the FY09 Results presentation on 26 February. At that stage the
company – always conservative in its guidance, in our view – was unwilling to give
such clear overall profit guidance (despite positive profits for FY10 being the
logical outcome of the elements of guidance that the company did provide in
terms of our own forecasts). This suggests to us that YTD trading performance
trends are gaining positive momentum, giving the company increased confidence.

Right – he’s back.

sorry

But still arguing.

very distracting

Champions League draw in the middle of ML

some people have no respect

glamor tie I guess

and at least we get the pain over and done with early

although the downside

is Barca will be able to tap up Fabregas

Barcelona are no challenge.

Dundee United have a 100% record against them in all competitions.

Played 4 won 4.

talking about Spain

did you see the Execution note

on BBVA

and Santander

came out yesterday

very, very agressive

Didn’t read it. What was the gist?

sell

and keep selling

Santander & BBVA will have to recognize greater loss through their P&L as the Spanish economic backdrop deteriorates and forbearance proves only to have delayed loss as opposed to prevent it. Our stress tests suggest that each bank needs a further €8bn of capital and we expect that this need will be met through a combination of dividend cuts, capital raises and possibly business divestitures. We move our rating on each from Under Review to SELL. We value SAN at €8.10; BBVA at €8.60.

and they both need more capital

Spanish system-level credit is estimated to contract 5% pa over the course of 2010-2013. Japanese-style forbearance is extensive in the
Spanish system, with an estimated 20% of mortgage stock on modified terms (and not showing up in NPL data); debt service capacity is set to become impaired with the roll-off of unemployment benefits and likely wage deflation which will ensue as austerity measures are adopted. Against this backdrop, we do not expect NPLs to peak until 2011.

The once unique generic loan loss reserves have been depleted starting in Q4 08 and we expect that a greater proportion of Spanish credit loss will have to be taken through the P&L of each bank. It is this incremental P&L hit, mostly, which generates 2011 earnings estimates 19% and 22% below the consensus expectation for Santander and BBVA respectively. The Iberian operations generated 37% and >45% of Santander and BBVA’s net earnings in 2009. Thus, scope to circumvent macro deterioration in Spain is limited.

Hm. Emails to the usual address please.

apparently

in the note

there is some discussion of what constitues a house in Spain

and that has something to do with provisions

We also note that there
seems to be a broad definition of what constitutes a house (see Fig).

What?

Bedouin tents? Caravans? What on earth does that mean?

Additionally, the undisclosed coverage “floor” for the generic (generic
allowances are formulaic and relate to volume growth and category
specific risk such as mortgage, credit card, etc) loan loss allowance is
moving downward – this is to be expected in a recessionary environment –
we believe to 10% of the “alpha” component of the generic loan loss
allowance.

Both the methodology change and downward movement in the coverage
floor for the generic loan loss allowance suggest that reserving
methodology in Spain is becoming more pro-cyclical, irrespective of the
fact that the Bank of Spain has reportedly increased reserving

requirements on bank-owned real estate portfolios to 30% (we view this as
window-dressing because real estate owned is only a small component of
the Spanish portfolios at Santander and BBVA).

anyway

it is an interesting note

available in the usual place

In the meantime …..

Shrewdette update?

oh yes

Another tough day for our tipster

but apparently

like Lloyds

she is back in black

after some death or glory punt yesterday

Well thanks to my Big Bucks/Time For Rupert forecast my head is back above water again! Hope you had it too.
Here are my picks for the last day – lots of long odds – so you know what that means … caution!

lots of long odds!

you have been warned

1:30 CARLITO BRIGANTE 4/1 looks the form horse here but as Paddy Power are paying 5 place in this race I’ve got a really daft EW flutter going on BLAZING BUCK 100/1 !! (was a winner for me last time out but form bit below this field).

2:05 STRADBROOK 25/1 2nd here last year but recent form been a bit disappointing – maybe Chelters will bring out the best. Paddy Power paying 5 here too so worth EW punt. NOBLE PRINCE 12/1 also interesting.

2:40 ENTERPRISE PARK unbeaten so far and think there is more to come. 7/1

and here’s is the big one

the Gold Cup tip

drum roll

3:20 Well KAUTO STAR 8/11 looks to have this in the bag (& maybe rightly so), but I’m a sentimental fool so am going for the single-minded DENMAN 9/2. Oh, and I ante-posted COOLDINE @ 18/1 but that was 6 months ago, so …!!

4:00 Struggled with this one but settled for KILTY STORM 14/1 a confirmed staying hurdler.

4:40 PAUSE AND CLAUSE – yes one of my old favourites – was 3rd in Coral last year but hasn’t produced that lately , still EW flutter 16/1

5:15 FRENCH OPERA 9/1 3rd in this last year and winner of 3 over fences this year.

Meanwhile, I haven’t had time to give the rally monkey a pin and a copy of the Racing Post this morning.

(Taxloss – hello)

So I’m going to bet on number 3 in all races.

Quid multiplier.

good luck with that

And I note so far that me and Shrewdette are neck & neck.

On zero.

Right.

Back to the market I guess.

11:27AM

Where now?

right

what about oil

Gulfsands Petroleum

for some reason a bidder has overlooked

the Gulf company

and gone for this one

which does most of its business in Syria

Hm.

And the bidder, it seems, is not Sinopec.

and just so we get this straight

that’s right

THE BIDDER IS NOT

I REPEAT NOT

SINOCHEM

the bidder

is India

we think we know who it is

and it that isn’t ONCG

for the avoidance of doubt

That narrows it down.

well

a sector specialist might be able to guess

anyway

the bidder sounded out a few shareholders

apparently they were suggesting something around 315p

which was laughed out of the Gulfsands boardroom

and the reason

I think is because

Gulfsands have results due

and in that we are likely to see a reserve upgrade

Now

at 315p

last night’s closing price

Gulfsands was rated at exactly the same multiple of 2p reserves

that Emerald Energy went out at

now if we assume a reserve upgrade come through

they are clearly worth more

and I reckon the board

would want something with a 400p

whether shareholders would settle for less

I don’t know

Andy Brough

the kingmaker here

with a holding of 23%

There’s a good note from Collins Stewart taking this all apart

let’s have a look

Gulfsands confirmed today that it had rejected an unsolicited approach for the company. The FT reported that it believes the approach was pitched at around the 350p/share level and comes from an Indian company. An approach for Gulfsands is in line with our view of the company as being one of the most attractive M&A candidates in our coverage given the quality of its assets in Syria and the fact that its 50% partner in Syria’s Block 26 – Emerald Energy – was itself subject to a takeover in 2009.

Our previous NAV was conservative
Our last published NAV estimate for Gulfsands showed a full NAV of 333p/share. In February, Gulfsands announced disappointing results from its Zaman-1 exploration well, which encountered water. At the time, we did not lower our NAV estimate to adjust for this well since we expected (and still expect) an upgrade to the company’s reserves estimates for year-end ‘09 to more than compensate for this impact on our NAV. Gulfsands is set to report its YE09 reserves on or before its FY09 results on 30 March – given that it has now received an approach, we may well see the reserves detail sooner rather than later.

What is Gulfsands worth? Raising our tgt price to 350p/share
In our view the perceived value of Gulfsands will depend closely on its latest assessment of its reserves in Syria’s block 26. The last published reserves estimates (given at 1H09) were 2P reserves of 40mboe and 3P reserves of 64mboe, with c.90% of the totals in Syria. If we exclude the value of the Zaman well from our NAV this would take the total to 286p/share, 9% below the current share price. However, our NAV estimate has been based solely on 2P

reserves, with no credit for Gulfsands’ significant 3P upside. If we include a risked assessment of the 3P upside in Block 26, using only a 25% chance of success (CoS) on the 1H09 3P reserves figure, this would take our full NAV up to just over 400p/share – as shown in figure 1. We think this is a reasonable preliminary figure to use ahead of more detailed YE09 reserves disclosure. On this basis, we think a target price of 350p/share (previously 300p/share) is appropriate, which equates to a near-15% discount to this provisional NAV.

And here’s a few lines from Matrix Corporate Capital

Gulfsands reported on 18/3 that it had received a preliminary approach for the company. Gulfsands advised shareholders to take no action. Today, the company announced that it has rejected a preliminary approach.
We expect that there will be comparisons made between Gulfsands (whose primary asset is 50% operated interest in Block 26, Syria, which includes the Khurbet East field) and Emerald (which also had 50% of Block 26, though non operated, and extensive production development and exploration in Colombia). Emerald was acquired in late 2009 by Sinochem for 750p cash. This was an 11% premium to the price just before the announcement of detailed terms, a 34% premium to the price immediately before the announcement of the approach, and a 47% premium to Emerald’s 3-month average price before the initial approach announcement. Applying similar, rather simplistic metrics, would suggest a takeover price of 350-370p/share for Gulfsands. This compares with our previous TP of 292p.

The press speculation is that an Indian company has made the approach. We think this is plausible, but Chinese or Middle Eastern companies could also fit the profile of most likely potential suitors. All these companies could have significantly different views on strategy, risk, and oil price assumptions than traditional large western oil companies. We believe that could add significantly to the price such a potential suitor would be willing to pay. On an initial view, we think this could certainly support a valuation in the range indicated above.

We think that shareholders could reasonably expect a potential takeover of Gulfsands for cash at no less than 350p/share, and possibly 5–10% above that.
Still, with such a volatile situation, and no certainty of a takeover, there remains, in our view, about 50p downside and about 50p upside to the stock, which given the risks looks about right for now

thanks for that

here’s a share price

Gulfsands Petroleum plc (GPX:LSE): Last: 308.00, down 4.5 (-1.44%), High: 313.00, Low: 301.75, Volume: 1.50m

one to watch

I think

especially that reserve upgrade

that’s the key here

A little surprised they’re off a bit today.

me too

Although if people were betting on a quick return from the Chinese story yesterday, this certainly does look a little more complicated.

indeed

11:35AM

sticking with things that are dug out of the ground

African Barrick Gold

started trading this morning

after being placed at 575p

And

well not a great debut

it has to be said

opened at 550p

now at 568p

so not great

this might be a good play

but it is no Randgold

and most traders reckon

TCWNWCP

is a much better punt

in the short term at least

You mean …..

Petropavlovsk PLC (POG:LSE): Last: 1,137, up 19 (+1.70%), High: 1,150, Low: 1,108, Volume: 672.65k

indeed

and here s a little bit of comment

on Barrick

ABG starts trading today at 575p. 101,082,317 new shares are issued, approx 25% of the company’s issued share capital, resulting in a £2.325bn market cap. The deal was priced at the lower end of the 550-650p valuation range, and well within our estimated valuation range (£2.2bn-£2.47bn). At this level there ABG is likely on the cusp of FTSE 100 inclusion but will definitely qualify for the FTSE 250. It’s now up to the company to prove it can deliver in order to attract a premium multiple.

Right.

Can’t get worked up about gold miners today.

Would much prefer some Friday 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.

11:38AM

OK then

you won’t like this

not at all

but…

apparently there is going to be a story in one of the Sunday papers

detailing the BHP Billiton move

You’re right. I don’t like it

BHP’s going to pay, what, £60bn for BG?

Howe’s that going to go down with shareholders?

I know

don’t shoot the messenger

Most of whom already own BHP and BG ….

It just seems fanciful.

Absurd, even.

I agree

However, I made grumbly noises about the Gulfsands rumour yesterday and look where that ended up.

yes

it was flushed out

the other bid of Friday rumourtrage

concerns Collins Stewart

rumours of a bid approach

That sounds a bit more credible.

well

until you consider the fact that Tullett

which shares a chairman has had a bid approach

but look

there’s need to be further consolidation in the broking sector

although CS is such a tightly run ship

I’m not sure how much you could strip out

although for an overseas rival looking to bulk up

it could be a good play

Collins Stewart Plc (CLST:LSE): Last: 77.50, up 2 (+2.65%), High: 79.00, Low: 75.50, Volume: 612.02k

Interesting. And Terry Smith steps down in two weeks, I think.

yes

and they had results yesterday

Actually, there’s a backgrounder in today’s paper.

http://www.ft.com/cms/s/0/bdf6aa6a-32f5-11df-bf5f-00144feabdc0.html

thanks

11:44AM

Let’s take a quick look at sterling.

Does the rebound continue?

nope

that’s been nipped in the bud

cable is £1.5152

although

OK against a euro thingy

0.8948

and that follows someone at the BoE warning about a double dip recession

trying to find who that is

but the internet has just crashed in the office

Andrew Sentance, I think it was.

March 19 (Bloomberg) — Bank of England policy maker Andrew Sentance said there is a chance that Britain may return to recession if there were new shocks from the world economy.
There is “some risk of a double-dip recession” from “big” international shocks, he said in an interview with CNBC television in London yesterday that was broadcast today. While there “can be bumps along the road” to recovery, a second slump is “not the central forecast,” he said.
The economy expanded 0.3 percent in the last three months of 2009, capping Britain’s longest recession on record at six quarters. Policy makers unanimously decided to hold their bond purchase plan at 200 billion pounds ($304 billion) this month while they assess the recovery, with some saying inflation risks have increased, minutes published this week showed.
Sentance didn’t tell CNBC which risks from the world economy posed the biggest threat, saying new shocks could not be ruled out. He said in a speech last night in London that banks rebuilding balance sheets damaged by the financial crisis and the end of monetary and fiscal stimulus may jeopardize growth.
The pound fell as much as 0.8 percent against the dollar today and traded at $1.5140 at 9:59 a.m. in London.

actually

that’s statement of the bleedin obvious

And Sentance is a hawk.

yep the UK would lurch back into recession

if there was another Lehman

you don’t have to be Mystic Meg

to call that one

Yup. Wallpaper stuff.

anyway

this brings us nicely on

to a piece of work from the strategy team at Credit Suisse

on all things english

the GBK

gilts

equities

the lot

and they are bullish

Ok. Give us a look then.

We think that £/$ could weaken to 1.35 as we believe seven factors are worse than the US: UK consumer leverage, UK banks leverage, UK fiscal position, the rise in inflation swaps, the overvaluation of housing, the reliance on QE to fund the budget deficit and, although UK economic momentum has improved recently, it’s still worse than the US. Sterling trades in line with PPP against the dollar and we believe that sterling should fall to 10% to 15% below PPP. Sterling is already 18% cheap against the Euro but it might become cheaper (the post 1979 low is 26%). Current opinion polls are consistent with a minority government which adds to the policy uncertainty. We therefore want to buy the international earners (Mondi, Xstrata, Meggitt, Millenium&Copthorne).

bullish on what it means for equities

that is

The gilt/bund spread could easily rise to 150bp from 90bp currently: this makes us underweight domestic UK stocks where there is high financial leverage: Liberty, Kesa, Sainsbury.

We upgrade the UK to benchmark for hedged portfolios (after all, only 18% of UK market cap is domestic cyclical) but for un-hedged portfolios we stay underweight the UK. The UK is no longer a cheap market (DY relative is close to a 25-year low), its high weighting in defensives (35% of market cap versus a norm of 29%) gives it a strong inverse correlation with lead indicators and between 2002-05 a rise in gilt/bund spreads saw the UK underperform Europe.

Of the domestic sectors, we take UK commercial property to underweight (from benchmark): it’s the most sensitive sector to the rise in the cost of debt; on our projected gilt yield, we believe that property should trade on a 12% discount to NAV (versus a 9% premium currently). We stay underweight retailing (weaker sterling, end of tax cuts, recent rise in oil)- this sector is more sensitive to interest rates than retail sales. We think investors should be benchmark domestic banks: P/TB is the same as domestic Spain and Greece, yet UK fundamentals are better and write-off assumptions are now realistic- we prefer Barclays. We overweight regulated utilities as they are cheap indexed-linked bond proxies. UK homebuilders are better value than UK REITs, in our opinion.

Elsewhere in the UK, we add to the overweight on the NJA plays (STAN and HSBC), the cheaper indirect GEM consumer plays (SAB, WPP, M&C). We add to the corporate spend related areas (corporate FCF is well above previous peak with CBI investment intentions at an all-time high): the cheap corporate spend related plays are Autonomy, UBM, M&C. We take UK capital goods to overweight from benchmark (Tomkins, Cookson).

We reduce the overweight of mining from 15% to 10% overweight (owing to concerns over rising inventories, less excess liquidity, a sharp capex response), but continue to prefer mining to IOCs (where we are underweight albeit smaller).

We would still buy quality growth in the UK, which on our screens is Compass, Morrison, Capita.

Familiar themes, but nicely argued. Thanks for that.

11:50AM

It’s gone 11am

So surely we’ve had another FSA press release through

Another “look – we’re doing things! please don’t take our jobs away” statement.

not this morning

but there is something

and it is even better

it looks like the FSA are turning the idea

of innocent until proven guilty on its head

everyone is basically a crook

until they can prove otherwise

have a look# at this

March 18 (Bloomberg) — Traders’ mobile-telephone calls may be taped in an effort to stamp out insider trading, according to proposals from the U.K. financial regulator.
Cell phones used for business shouldn’t be exempt from rules requiring banks and brokerages to record employees’ calls, that the Financial Services Authority can listen to later, under proposals the agency said may take effect as soon as next year. Around 22,000 phones would be covered, the FSA said.

“Some would say that it is about time that mobile-phone technology should catch up with the procedures for other communication types,” said Tony Woodcock, a lawyer at London- based Stephenson Harwood. “But it does mean that determined miscreants will find other means such as private mobiles, or others’ mobiles, to effect the trading more clandestinely.”

Companies should make sure employees don’t use private phones or e-mail for business to circumvent the recording, the FSA said. Banks would have the option of banning employees from using mobiles for business use, the regulator said.
“Removing the exemption will provide an additional source of contemporaneous voice conversations and electronic communication evidence,” the FSA said today. “This can also help us to counter market abuse, one of our key priorities

so basically

it is more survillence

in our suvillence society

Paul did a post about this last night

Very amusing stuff.

http://ftalphaville.ft.com/blog/2010/03/18/179706/wasteful-useless-uk-regulation-part-93/

It’s almost as if Hector Sants got a box set of The Wire for his birthday

very good

but look

the FSA isn’t the only one

trying to cover up its failings by launching a war against someone

Ze Germans are doing something even more sinsister

check this out

March 18 (Bloomberg) — Germany’s suggestion that it may order spies to track speculators targeting currencies is “sinister and silly,” according to analysts, who said hedge funds in London and New York would be the targets.

Germany’s Finance Minister Wolfgang Schaeuble told the Bundestag on March 16 that the country may have to consider ordering “intelligence agencies to set up surveillance of who is getting together with whom for which kinds of speculative processes, and where” to protect the euro.

I find it sinister and silly, it is a complete overreaction,” said Philip Whyte of the Centre for European Reform, a pro-European Union research institute in London. “There is a certain school of thought in continental Europe that everything is always the fault of hedge funds.” Schaeuble’s comments reflected “a longstanding paranoia about the Anglo-Saxon model of capitalism.”

Right

this sort of madness has got to stop

hedge funds being followed around by spooks

FFS

There’s clearly an international shortage of scapegoats.

hedge funds tick

insider tick

and let’s forget all about northern rock

The bank brought down by City Spivs

yep

Not its paper thin balance sheet.

and what about those CDOs

and the rating agencies

would any of this stop that

Absurd. It’s all absurd.

complete and utter waste of resources

the FSA costs almost half a billion a year to run

Incredible, that.

And they still don’t seem to have an internet connection in the office.

Have to wait for the paperboy to arrive each morning before reacting to “rumours”

OKay

rant over

I’ve got lots more in reserve, but yes, it’s probably best if we spare the readers that.

Let’s move on.

11:58AM

Bryce

anything you want to look at?

Well, just quickly

The Fatboy Finance bid for Blacks Leisure has been detailed

so he has

And Ashley’s offering 62p a share.

a …. wait for it ….. 3% premium on the pre-bid price.

Blacks Leisure Group PLC (BSLA:LSE): Last: 61.00, no change, High: 61.50, Low: 61.00, Volume: 176.65k

So the pitch is – “wouldn’t you like to be owned by Mike Ashley?”

this isn’t a real bid is it

No.

(Anonymous could you send link pls)

But we’d always assumed this wouldn’t be a real bid.

It’s Ashley after all.

Just like it’s never a real “closing down sale”.

indeed

this is just some sort of stalling tactic

to upset a rival

Yup

Aside from that.

I think one of the rabble was taking a passing interest in the Rangers FC takeover story.

(Anon – thanks)

Now, there’s an interesting story about this in the Herald today.

Basically suggesting that this odd property character, Andrew Ellis, was in for a shopping centre development

Which, it transpires, Rangers don’t actually have rights to build.

http://www.heraldscotland.com/news/home-news/33m-rangers-takeover-bid-on-the-brink-of-collapse-1.1014488

Anyway, that’s two mentions of Scottish football so far this session, which you can argue is two too many.

12:03PM

Neil, what’s this Daily Mail article on your screen?

sorry just a line about the Germans buying Arriva

and that it all comes down to price

Moreover, one would not want to probe too deeply into the archives of Deutsche Bahn given the role the railways played in ‘transports’ from one end of Europe to another during the Second World War.

In the end, as with all takeover approaches, it is a matter of price which settles the issue.

Read more: http://www.dailymail.co.uk/money/article-1258723/ALEX-BRUMMER-Germans-seek-freedom-pass.html#ixzz0ichfAoYV

as it happens

price is exactly what the board of Arriva

and Deutsche Bank

are going to be doing this weekend

and if the price is right

the books are opened

and from what we are hearing

Arriva

are not opposed to a sale

but the price must be right

but with DB’s balance sheet groaning under the weight of loads of debt

how much can they afford?

Arriva PLC (ARI:LSE): Last: 709.50, up 1.5 (+0.21%), High: 726.50, Low: 705.00, Volume: 1.43m

As we keep pointing out, we can’t answer how much they can afford.

Normal rules don’t apply.

true

By the way, what’s the current thinking re. someone else emerging?

yes

ComfortDelGro

and no

that name has not been made up

but what I am trying to figure out

is if bankers are putting this name around

to create an auction

or if there is something in it

But they’re only wee.

They’d need a partner of some kind.

Such as ……….. um …………… Temasek?

That might make things interesting.

yep

another state owned company getting involved

right

I think we are done now

it’s past midday

and there is still a lot to do

12:10PM

Such as?

just things here

for the paper

nothing more for ML

Ah.

Oh, I meant to mention Man Group.

Bit of a rally this morning, and I know it has a following.

(Oil&Gas – see snap news)

JPMorgan Caz is saying the chances of a surprise next week is already in the market given the downgrades

And the dividend cut worries are little more than a distraction

Here’s the upshot of their argument.

The potential for a disappointing preclose statement from Man on 24
March has, we believe, been rather lessened by a series of earnings
and/or ratings downgrades over the last week. Once again consensus
earnings estimates are under pressure, but there is still no reason to
believe that estimates are being set at a level at which the company can
necessarily outperform expectations, in our view.
• While estimates remain under pressure, we continue to believe that the
share price will struggle to perform. That said, the share price has
responded with remarkable equanimity to the latest round of
downgrades.

We have also refreshed our estimates, but as we already had lower
than average estimates for 2011E, our downgrades are relatively
modest. As discussed in our last note on the company – The hurdle of
consensus (20 January 2010) – the issue remains that our estimates,
and consensus, assume that AHL “works”. Although performance is
back to flat for the calendar year to date, that is below our “run rate”
assumption.
• Debate will continue about the dividend, but in our view this remains a
distraction. The yield is, in our view, the last reason for holders not to
sell, but is not a compelling reason for new investors to buy. Cutting
the dividend makes little difference to the finances of the company –
this is no engineering company facing cashflow problems – but a cut
could easily be interpreted as meaning that management does not
expect to be able to grow earnings to a level commensurate with
establishing reasonable cover. Given the upbeat assessment of the
business’ prospects normally given by management this is arguably a
message that management does not want to give.

There’s also a buy note from Evo, cutting forecasts but saying the divi (12% yield, remember) looks okay.

The February fund flow data from Eurekahedge highlights that recovery
continues to be slow for the hedge fund industry. As a result of AHL’s
continued weakness we see Man as more exposed to the industry
dynamic than has historically been the case. With flows returning more
slowly than anticipated we reduce our end March 2010 FUM forecast to
US$39.5bn and reduce our FY2010 and FY2011 EPS estimates in advance
of the pre-close statement on 24 March. We reduce our target price to
330p but retain our Buy recommendation given the attractive yield.

Hope that’s useful to someone.

And, on that, I’m done.

we are done

the FTSE 100 up 40 points at 5,682

Lloyds up 10%

have a good weekend everyone

and see you all next week

and look out for that BG story in the Sunday press

cya

This entry was posted by Neil Hume on Friday, March 19th, 2010 at 11:03 and is filed under Uncategorized. Edit this entry.

Share Print

Markets Live transcript 19 Mar 2010

Popular posts

Most commented

Tags

Blogroll

Site Navigation

Categories

The Cut by date

Jump to day