| | Friday 21 September 2012 THOUGHT FOR THE DAY  Hello Share Fans,
This week has been a let down. The Footsie has meandered down, instead of making improvements on the week before, which was excellent. This is a typical hang-over after a good party. We have to accept that it nearly always happens.
Profit-takers are mostly to blame. And yet how can we blame people who take a profit? They are usually the sensible ones.
Will shares book up now? Well, there is the old worry of Euros. But this seems to be in a lull now and more and more of us are coming round to the view that no-one - not even the Germans - want to see the currency die altogether. The chaos would be immense - and the whole financial world dreads the uncertainty of uncharted waters.
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FREE SHARE TIP OF THE DAY  A report by Growth Equities & Company Research
- Reflecting the growing momentum in its clinical development programme, e-Therapeutics has started a second phase I clinical trial of its anti-cancer drug ETS2101.
- This comes less than 3 months after the AIM-listed biotechnology company commenced the first clinical trial - which is enrolling patients with both primary (glioma) and secondary brain cancer.
- We have taken this opportunity to update our financial model.
- With four drug candidates now in preclinical (ETX1153c) and clinical development (ETS2101, ETS6103 and ETX1153a), our stance remains buy.
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Paper round BoE, Spain rescue, BAE
Sir Mervyn King has prepared the ground for George Osborne to abandon a key debt reduction target by saying that it would be "acceptable" to fall short if a global slowdown was responsible. In his first live television interview the Governor of the Bank of England yesterday denied finding the job stressful, said that he had never thought of resigning and rejected suggestions that he had "fired" Bob Diamond as Barclays chief executive. He conceded that there was a "black cloud of uncertainty" hanging over business because of the Eurozone crisis. And admitting that the economy had grown more slowly than predicted, he implied that the Government may miss its target to reduce public debt as a proportion of GDP by 2015. "I am more relaxed about missing targets if it is because the world economy is growing slowly. If it's because the world economy has grown slowly, so we have in turn grown slowly, then that would be acceptable," he said, according to The Times.
EU authorities are working behind the scenes to pave the way for a new Spanish rescue programme and unlimited bond buying by the European Central Bank, by helping Madrid craft an economic reform programme that will be unveiled next week. According to officials involved in the discussions, talks between the Spanish government and the European Commission are focusing on measures that would be demanded by international lenders as part of a new rescue programme, ensuring they are in place before a bailout is formally requested. One senior European official said negotiations have been conducted directly with Luis de Guindos, the Spanish finance minister. The plan, due to be unveiled next Thursday, will focus on structural reforms to the Spanish economy long requested by Brussels, rather than new taxes and spending cuts, The Financial Times reports.
The management of the defence giant BAE Systems has so far met with 600 UK staff face-to-face to persuade them of the merits of its proposed GBP30bn merger with Airbus-owner EADS.Ian King, chief executive, is holding a series of town hall meetings to reassure employees that the tie-up, which would create a European champion capable of taking on the US's Boeing, would create more work in the UK in the future. Critics of the deal have argued that British staff could be most vulnerable in any future jobs culls because of the more stringent labour laws in France and Germany, where so many of Airbus's workers are based. However, BAE has struggled on its own, having been forced to cut 20,000 jobs, many of which were in Britain, over the past five years, The Independent reports.
People watching the GBP48bn merger expect miner Xstrata to back the revised offer from commodity trader Glencore, in an announcement that could come as soon as Friday morning. The boards of the two FTSE 100 companies were on Thursday said to be locked in separate talks, as they readied for Xstrata to reveal its decision on Glencore's latest offer. Under the new terms, Glencore is offering 3.05 of its shares for each Xstrata share, handing the Qataris and other Xstrata shareholders more of the combined company. Xstrata's board have until 7am on Monday under takeover rules to announce their decision, but are expected to make their announcement to shareholders imminently, The Telegraph says.
IG Metall, which represents most of EADS's 49,000 members in Germany, said that only by pressing ahead with agreed contracts would jobs be preserved. "We want credible pledges from the companies about job security, but we also need credible statements from the governments about military contracts," said Jürgen Kerner, the union's defence and aerospace representative. "That will be the only way of keeping plants in use and people in work - in Germany, in the UK and in France," he said. Both companies have emphasised there is little overlap between defence giant BAE and Airbus owner EADS, suggesting the merger would not result in mass job losses. However, neither company has given definitive assurances on jobs. A combined company would potentially employ 220,000 people worldwide, The Telegraph reports.
Italy's economy will contract by twice as much as previously forecast this year, hobbling its plans to pare back public borrowing and dealing a blow to the Prime Minister, Mario Monti. Rome yesterday was forced to issue revised predictions showing that gross domestic product will drop by 2.4% in 2012, compared with the 1.2% forecast in April, after the economy performed weakly in the first half of the year. Italian GDP is no longer expected to rebound in 2013, with a further 0.2% slide now pencilled in by official forecasters. Waning growth will eat away at tax revenues and dislodge efforts to cut the budget deficit. Public borrowing will come in at 2.6% this year, up from the 1.7% previously forecast. However, the Economy Minister, Vittorio Grilli, insisted that the country had no plans to ask for European help to pare back its borrowing costs, writes The Times.
The managing director of Carphone Warehouse's British business has walked out before a restructuring that could result in hundreds of job losses. The Times has learnt that Matt Stringer, a former Marks & Spencer high-flier who took the post last year, has resigned from the company and not lined up a new role. It is the second major departure at the British business within three months. Anthony Hemmerdinger, the retail director, quit to rejoin Sainsbury's in July after only a year with the mobile phone retailer. The latest departure coincides with a possible restructuring plan, due to be announced early next month, that is expected to result in job cuts at the company's headquarters in Acton, West London. The offices contain a number of business units such as the fledgling Talk Mobile unit.
Britain's shale gas reserves could create up to 35,000 jobs and meet 10% of the country's gas requirements for a century, according to a new report from the Institute of Directors. The publication comes only weeks before ministers are expected to give the go-ahead to more "fracking", despite growing environmental concerns about the controversial technology. Ed Davey, the energy secretary, gave warning on Thursday that the industry was no "silver bullet" for Britain's energy needs until more was known about the "scale and costs of shale gas production". Mr Davey was responding to an article in the Financial Times by Lord Browne, former head of BP, who said fracking offered a "substantial prize" to the UK and could play a "critical role" in terms of energy security, The Financial Times says.
THE LATEST ON THE CRAZY BOARD The top 5 hot company threads on the Bulletin Board: Imagination Technology Black Mountain Conroy Gold Norseman Gold The Running Trading Thread
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BOOK OF THE WEEK  By John Cassidy
A book review by Ross Jones I am very interested in behavioural economics and have therefore read quite a few books covering similar subjects to what John Cassidy, a writer for the New Yorker, looks to address in his book How Markets Fail: The Logic of Economic Calamities. However, none of the other books I have read come close to the excellent way in which Cassidy analyses the roots, the progression and the ultimate outcome of the US credit bubble. Unlike other books, Cassidy does not just focus on the events which unfolded immediately before the collapse, but traces the origins of economic thought and ideas right back to Adam Smith's 18th century invisible hand teachings, and analyses exactly why and more importantly, how, the credit bubble occurred and subsequently popped.
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