| | Wednesday 11 July 2012 THOUGHT FOR THE DAY  Hello Share Gang.
The numbers from America aren't so good these days. We were relying on the US markets to bolster share prices in Britain. Well, I was anyway.
First their latest employment figures were a set back - down a fifth on the anticipated. Now their futures market is slower than expected. This is something to do with the fact that their earnings season is almost here. And some weak news is possible there.
But it will always be a mystery to me why American goings-on mean so much to share prices here. Does a bad week in Wall Street mean that we will all spend less at Marks and Sparks? Does rising unemployment across the Big Pond, mean fewer jobs here.
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Paper Round Labour, Annuity rates, Market prices
Advances in technology are eroding workers' share of their country's income, according to a leading think-tank. Automation and computerisation are responsible for as much as 80 per cent of the decline in the so-called "labour share", which measures wages as a proportion of the total income generated in an economy, the Organisation for Economic Co-operation and Development said. Corporate investors have been the big winners, as businesses save on salaries and their profits increase. The research in the OECD's Employment Outlook 2012 shows that the average labour share dropped from 66.1 per cent of national income in the early 1990s to less than 62 per cent in the late 2000s. In all but four of the 26 OECD nations analysed, workers' slice of their country's income declined between 1990 and 2009, The Times explains.
Annuity rates fell 2.13% between March and June, piling further pressure on cash-strapped retirees. Aston Goodey, distribution and marketing director of MGM Advantage, said that rates could fall further still because of triple blow of new solvency rules requiring insurers to hold more capital, the impact of the Bank of England's quantitative easing policy on gilt yields and the European Union's gender ruling, which requires insurers to offer equal rates to both genders from December, writes The Times.
Private equity group Permira has shelved plans to both refinance and sell Iglo Group, the frozen food business which owns Birds Eye. Permira had been expected to announce a EURO500m (GBP395m) refinancing of Iglo this week after sale talks with two rival private equity houses broke down. Sources said on Tuesday that the terms of the proposed bond issue were "not attractive enough" to warrant raising the cash - a large chunk of which would have been returned to investors. The refinancing would have increased Iglo's debt from EURO1.4bn, or 4.2 times earnings before interest, tax, depreciation and amortisation , to almost EURO2bn. Talk of a recapitalisation emerged earlier this week after Permira reached stalemate in talks with BC Partners and Blackstone, which made a joint offer of EURO2.45bn for Iglo, but this fell short of Permira's EURO2.8bn asking price, The Telegraph reports.
The German Constitutional Court may take up to three months to rule on an injunction by private citizens and Left-wing lawmakers aimed at blocking the Eurozone bailout machinery, leaving markets hanging in suspense as the Eurozone debt crisis eats at confidence. Chief justice Andreas Vosskuhle said the court in Karlsruhe must be allowed a "constitutionally reasonable" period to weigh matters of great public significance, brushing aside warnings that any further delay by the Eurozone's key creditor power would set off a disastrous chain of events. Finance minister Wolfgang Schauble told the eight judges that there would be "serious consequences far beyond Germany" if the case dragged on for long, risking a funding crisis for EMU states in trouble and throwing the whole euro project into doubt. The urgency was thrown into relief by warnings from Italian premier Mario Monti that his country might need "temporary support" from the eurozone bail-out funds to bring down bond spreads -but not to pay public employees "as in Greece," The Telegraph says.
The Financial Services Authority's head of financial conduct Martin Wheatley is expected to examine many other "self-certified" market prices in his upcoming review investigating Libor. Prices which, like Libor, are based on quotes or estimates from market players rather than actual trading, include foreign exchange rates, as well as prices for precious metals and - in part - benchmark prices for other commodities. The Wheatley review was announced by the Chancellor last week, but its full remit has yet to be formally unveiled. Mr Wheatley is designated to become chief executive when part of the FSA is split into the Financial Conduct Authority.
Under the deal to bailout Spain's stricken banks, the Government must come up with a roadmap of structural reforms by the end of July. Spain has pledged to clean up the Spanish financial system and put its economy on the road to recovery after Eurozone finance ministers agreed a rescue deal for its banks. Early on Tuesday, Eurozone finance ministers agreed a package of up to EURO100bn for Spanish banks devastated by the burst housing bubble.They agreed that EURO30bn of urgent funding can be ready for Spain's troubled banks by the end of the month. Ministers also agreed to grant Spain an extra year until 2014 to reach its deficit reduction targets in exchange for further budget saving, according to The Telegraph.
Government plans to reform the House of Lords were in disarray on Tuesday night, after the coalition was forced into a climbdown by the threat of rebellion from up to 100 Conservative MPs. The MPs had been expected to defy the government and oppose its plan to limit the time available for debating proposals for a mainly elected second chamber of parliament. The government wanted to limit debating time so the controversial bill was not "talked out" by opponents, where debate takes so long it does not go to a vote and therefore cannot be passed. The decision to abandon the bid to limit debate saved David Cameron from the coalition's first defeat in the Commons, but it is expected to place unprecedented strain on the relationship between the Tories and the Liberal Democrats, The Scotsman reports.
THE LATEST ON THE CRAZY BOARD The top 5 hot company threads on the Bulletin Board: Rivington Street Holdings Ascent Resources BTG Avanti Communications Running trading thread
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BOOK OF THE WEEK  By Benjamin Graham and David Dodd
A book review by Ross Jones The majority of us will have heard of Warren Buffett, George Soros, Michael Bloomberg and Peter Lynch, but less of us will be familiar with Benjamin Graham or David Dodd. Peter Train in The Money Masters (1980) described Graham as the 'century's (and perhaps history's) most important thinker on applied portfolio investment, taking it from an art, based on impressions, inside information, flair, to a proto-science, an orderly discipline'. But who were Graham and Dodd?
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