| | Tuesday 11 September 2012 THOUGHT FOR THE DAY  Hello Share Owners,
Well, that was a boring start to the week. The Footsie stayed in so tight a channel all day that it put me to sleep. The it ended about flat on the end of last week.
This is a sure sign of uncertainty. Nobody buying, nobody selling and those that do either cancel each other out.
But we must never forget, gang, that even on the flattest of days, some shares are soaring. Or at least moving a bit. We need to be aware of that – especially those shares that are moving down.
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FREE SHARE TIP OF THE DAY  A report from Growth Equities & Company Research
- Summit Corporation has announced interim results which are in-line with our expectations, as it continues to ramp up research and development for Phase I testing.
- The UK drug discovery company also revealed that it will place greater emphasis on clinical development - focusing on the development of its drug programmes targeting Duchenne Muscular Dystrophy (SMT C1100) and C. difficile infection (SMT 19969) - and curtail internal discovery-stage research.
- Taking this opportunity to move from a relative (market-based) valuation model to an absolute (Discounted Cash Flow) model, our stance remains speculative buy.
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Paper round ESM, Barclays, BHP
A delay to the highly anticipated German court decision on bail-out funding and a rebellion in the Greek government over austerity doused hopes that the European Central Bank will be able to stem the crisis after all. Germany's federal constitutional court said it might be forced to delay its ruling on the legality of the European Stability Mechanism (ESM) because of an eleventh hour objection by an MP. Peter Gauweiler, a member of Angela Merkel's ruling coalition, argued that the court ruling, due on Wednesday, should take time to assess the impact of the ECB's "outright monetary transactions", announced last week. The German Chancellor's spokesman insisted that the ECB's plan to buy unlimited sovereign bonds from countries being supported by the bail-out funds - dubbed the Draghi Plan - should not impact the court ruling. However, the court said it would consider the request and announce its decision on Tuesday, The Telegraph reports.
Barclays will take the axe to its controversial tax structuring unit, as the UK lender seeks to clean up its image in the wake of a succession of scandals. The business, which at its peak may have generated as much as three-quarters of profits at Barclays' investment banking operation, will be shrunk dramatically as part of the bank's Project Transform under new chief executive, Antony Jenkins. Barclays' actions comes as global banks from Goldman Sachs to Deutsche Bank are reviewing their business models in response to new regulations and government enforcement efforts. "We have to take a fresh look to see if there are products and services in which ... we no longer deem it appropriate to do business, regardless of financial return," Rich Ricci, Barclays investment banking chief, said in an address to investors on Monday night, The Financial Times says.
BHP Billiton and rival Xstrata have added to concerns that Australia's resources boom has peaked after announcing plans to cut 900 coal mining jobs in Queensland and New South Wales. In the latest sign that falling prices and high costs are taking a heavy toll on the industry, BHP said on Monday that it would close the 33-year-old Gregory coking coal mine in Queensland next month, with the loss of 300 positions, because it was no longer profitable. The announcement came as Xstrata Coal, the world's biggest exporter of seaborne thermal coal, said it would axe 600 jobs and scale back high-cost production at its mines in Queensland and New South Wales because of "low coal prices, high input costs and a strong Australian dollar," The Financial Times explains.
One of the coalition's key policies to help business has been denounced as scandalous for failing to get money into the economy to boost growth. A report by MPs found that business has received less than 5% of the £1.4bn allocated to the Regional Growth Fund since its creation in June 2010. By May the scheme had generated only 5,200 of the 36,800 jobs it was supposed to deliver by 2014. The report, which raises questions about Whitehall's ability to revive the private sector, comes as Vince Cable today sets out the Government's vision for an industrial strategy. The Business Secretary's plans are part of a week of coalition announcements about deregulation, innovation and investment designed to revitalise the flagging economy, says The Times.
The Brazilian chief financial officer of BG Group who has been tipped for the company's top job has been granted a medical leave of absence until the end of the year. Fabio Barbosa will travel to Brazil to undergo treatment for a recently diagnosed condition. A spokesman for the company would not discuss the problem, saying only that it was a "private matter for Fabio and his family". Mr Barbosa is one of three internal candidates being groomed to replace Sir Frank Chapman, the longstanding chief executive who is retiring next June. BG's spokesman insisted that Mr Barbosa would remain involved in the selection process, which also involves external candidates, The Times reports.
Eastern Europe needs to curb its "shadow economy" to weather Europe's current financial crisis and promote growth, the World Bank has said in a new report. "Too many of Eastern Europe's workers and firms are engaged in the 'shadow economy' - doing business and work in untaxed and unregulated markets for goods and services," according to the report "In From the Shadow: Integrating Europe's Informal Labor". "As the impacts of the euro crisis, population ageing, and labor force shrinkage spread to emerging economies of Eastern Europe, bringing workers and firms in from the shadow economy is critical for long-term economic growth in Eastern Europe," the Washington-based development lender said, according to The Telegraph.
THE LATEST ON THE CRAZY BOARD The top 5 hot company threads on the Bulletin Board: Pasternoster Resources Fenner Lavendon Falkland Oil & Gas Running trading thread
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BOOK OF THE WEEK  By Nicolas Sarkis
A book review by James Faulkner of watshot.com "While less sophisticated players may well prefer to kneel and pray that the poor returns on stocks since 2000 will soon somehow be miraculously transformed into a new bull market, serious investors should instead delve into the history books." These are the words of warning Nicolas Sarkis conveys to his readers as he heralds a "lost era" for equities in the opening chapter of his refreshing appraisal of the investment landscape, Fear and Greed. Sarkis, the founder of investment firm AlphaOne Partners and notable for being the youngest ever Goldman Sachs Associate, sets out to equip readers with the insight necessary to avoid the pitfalls of investing in a "lost era"; indeed, he is well placed to do so, having preserved and increased his clients' wealth throughout the turbulent years of the financial crisis.
The book can broadly be divided into two parts; the first six chapters deal with specific investments and market themes - equities, deleveraging, gold, emerging markets, government defaults, and the euro - while the last four address some of the broad sweeping issues that will colour the investment environment for years to come - fearfulness among investors, regulation, fraudsters, and central bankers (perhaps he should have put the last two in the same chapter?). Sarkis is particularly bullish on gold due to the fact that it has a low correlation to equities, making it "a great asset for balancing out risks on equity investments and vice versa". However, for those looking to diversify into emerging markets he cautions that a renewed downturn would probably see them among the worst performing asset classes, particularly in Asia, where China shows many symptoms of a bubble.
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