| | Tuesday 26 June 2012 THOUGHT FOR THE DAY  Hello Share Mates
I've been trying to think of a few more reasons why we should continue to invest in shares. A lot of sceptical folk would say that it is just not worth the risk - what with the Euro crisis and all.
Well, I am hanging onto my shares. And I might even buy some more if I could get my hands on a bit more cash. I still have a cash reserve, which only makes sense in these dark day. But if I had some more dough on top of that, I would still go bargain-hunting in the share market.
And there are plenty of bargains out there. Many a share is now undervalued, compared to the tasty profits some firms are still making. But maybe the timing is not quite right - at least until there are stronger signs of a more sustained stock market rally.
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TIP OF THE DAY  An extract from the diaries of infamous bear raider Evil Knievil
June 20th 2012 Yesterday's Times ran a lead story on taxation avoidance. I reckon that the scheme insofar as it was described accurately seems to me to be defective in that it is clearly artificial. I imagine that some bright spark at HMRC has noted this long ago. So I suspect that quite a lot of taxpayers are going to have their files reopened. For those on the paying out side, this will not be fun.
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Paper Round EU, Brent, Xstrata
David Cameron has been warned by one of the country's leading bankers that the biggest threat to the City is the possibility of Britain leaving the European Union. Peter Sands, the chief executive of Standard Chartered, had a breakfast meeting with the Prime Minister on Monday during which he is understood to have raised concerns over a British breakaway. The warning was sounded amid growing calls from Conservative MPs for Britain to have an "in-out" referendum on the country's ongoing membership of the European Union. George Osborne, the Chancellor and Mr Cameron's key election strategist, is understood to be considering offering the pledge of a referendum as the centrepiece of the next Conservative manifesto. Labour is also considering a similar pledge, The Telegraph says.
The price of oil dropped below $90-a-barrel level today as analysts predicted its huge slide in recent weeks was set to continue. Brent crude was trading at $89.84 by mid-afternoon, down more than $1 on the day. The price has crashed from $128 - a fall of 30% - in just three months, with the falls blamed on slowing economic growth in Europe, the U.S. and even China. Analysts suggest it is also the result of increased production and the global stockpiling of oil, with Saudi Arabia now pumping crude at a 30-year peak. The world is now producing 91.1 million barrels per day. The falls will be welcomed by consumers, who have had their spending power squeezed by stagnant wages and rising prices. The consumer prices index, a measure of inflation, fell to 2.8% in May, from 3% in April, largely due to lower crude prices. Further falls in June will help drag CPI down closer to the Bank of England's target of 2%, The Daily Mail says.
Official forecasts for growth in Britain are based on unrealistic expectations that the private sector, consumer demand and foreign trade will drive a recovery, according to leading ratings agency Standard & Poor's. S&P said the Office for Budget Responsibility's expectation that the economy will grow by 0.8% this year and 2% in 2013 may well prove "overly optimistic" given the weak outlook for the British economy. The economy shrank by 0.3% in the first quarter, plunging Britain into its first double-dip recession since 1975. "Given the UK's fiscal restraint, weak private-sector demand, and softening trade and business conditions, it is unclear what will quickly bring the country out of the doldrums," said S&P in a research paper, according to The Telegraph.
One of the City's most powerful fund managers has effectively called on Mick Davis to step down as chief executive of Xstrata as the price of a successful merger with Glencore. David Cumming, the head of UK equities at Standard Life Investments, said that shareholder hostility to retention payments for senior Xstrata managers, including a GBP29m handout to Mr Davis, meant that the merger was now "in jeopardy". He said that investors would not be able to support a series of retention deals worth GBP217m, with no performance conditions attached. As a result, the credibility of Mr Davis is "probably irretrievably shot", he said, The Times reports.
Microsoft is buying the social network site Yammer for $1.2bn in a deal that will allow the software giant to offer Facebook-like services to corporate customers. Yammer, which was created in 2008 and has five million corporate users at more than 200,000 companies, enables businesses to create private social networks in which employees can chat, share files and collaborate on projects. Microsoft intends to incorporate Yammer into its software products, such as Office, to increase their appeal. The service counts some of the world's largest companies, including Deloitte, Shell and Ford, among its customers and is reporting strong growth of 250,000 new users per month, The Telegraph explains.
Japanese technology giants Sony and Panasonic are joining forces in a bid to steal a march on their Korean rivals Samsung and LG in the race to develop the next generation of television sets. The two companies are to co-operate on developing screens based on OLED (organic light emitting diode) technology with the aim of establishing mass-production in 2013. Panasonic plans to invest some $373m (GBP240m) in its Himeji plant in western Japan for a test production line of panels using the technology. Industry observers believe establishing a lead in the market for the sets, widely touted as the successor to liquid-crystal displays (LCD), will depend on being able to produce the screens at a low enough price, The Scotsman reports.
BT Vision will lose GBP240m on its gamble to buy into Premier League football coverage, analysts have claimed. The telecoms giant made a surprise foray into the market for Premier League rights earlier this month, paying GBP738m for 114 matches. However, it is forecast to recoup only two thirds of that investment. It originally bid for the rights to all the Premier League matches, worth more than GBP3bn, and eventually secured 38 matches a season for the three years from 2013. BSkyB, paid GBP2.28bn for the remaining 116 matches. BT said the games would serve as a "calling card" to help it sell other services, such as its super-fast fibre broadband, and also stem the flow of customers moving their internet and telephone services to BSkyB and Virgin Media, writes The Telegraph.
THE LATEST ON THE CRAZY BOARD The top 5 hot company threads on the Bulletin Board: Harvest Natural Resources Maxima Holdings Great Eastern Energy Mediawatch Running trading thread
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BOOK OF THE WEEK  By Detlev Schlichter
A book review by James Faulkner of WatsHot.com "The US government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many US dollars as it wishes at essentially no cost," observed Ben Bernanke during his time as an academic before he became chairman of the Federal Reserve. Although Bernanke was speaking with reference to the response of policymakers in the face of a deflationary environment, there was essentially nothing radical about his prescription; the Fed had already been steadily increasing the money supply for some time.
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