Tuesday 11 September 2012
QUOTE OF THE DAY
Don't worry about people stealing your ideas. If your ideas are any good, you'll have to ram them down people's throats
- Howard Aiken
ON THE SHARECRAZY BLOG
At the TUC Congress this week (no I did not know or care that it was happening either) you can buy T-Shirts celebrating the death of Margaret Thatcher. Cased in environmentally unfriendly plastic you can buy now and use on the day Thatch dies and again on the day of her funeral. Tasteless and unkind are words that spring to mind. A few others string to mind but they would not pass the censor's pen on this website.
In the days BT (Before Thatch) the TUC Congress was a mammoth and important event. Because despite not having won a mandate at the polls the TUC barons (funded in part by the Soviet Union) dictated industrial policy and crippled British industry. By 1976 thanks, in good part, to the efforts of the comrades, Britain was bankrupt. Thatcher stood up to the Unions and won. And Britain enjoyed an economic renaissance. Today, outside the public sector, Unions are almost irrelevant.
We can almost laugh when the General Secretary of Unite (elected with 8% of his members voting for him, so little do they care) calls for a General Strike to oppose the policies of a democratically elected Government. Who gives a toss if most public sector workers go on strike? Will the world collapse as the 72 folk employed by Islington Council to combat climate change walk out?
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THIS MORNING IN LONDON
FTSE 100
5,765.78
-27.42 -0.47%
FTSE 250
11,734.60
-106.90 -0.90%
FTSE 350
3,073.63
-16.40 -0.53%
FTSE All Share
3,008.53
-15.95 -0.53%
AIM 100
3,157.68
-30.12 -0.94%
AIM All Share
696.25
-3.68 -0.53%
11:40 am
Footsie sinks to intraday low
- Markets await German ruling on ESM, FOMC meeting
- Burberry sinks after full-year guidance
- Miners provide a drag
London's FTSE 100 index was at its lowest levels of the day by Tuesday lunchtime as Burberry and the miners suffered from a steep sell-off; meanwhile, investors continued to show caution ahead of two key 'risk events' this week.
The German Constitutional Court said this morning that it will definitely provide its ruling on the European Stability Mechanism (ESM) and Fiscal Compact tomorrow. This follows fears that the decision could have been delayed due to German protests about the European Central Bank's Outright Market Transactions announced last week.
"There are fears in Germany that too many powers are being passed over to Brussels, thereby reducing the authority of parliament. However, given the fact that the same court approved the EFSF lay within German law, it seems very unlikely the ESM will be rejected. As for the Fiscal Compact, this was originally drawn up in Germany, so again it would be very surprising if there were any issues here," said analyst Craig Erlam from Alpari.
Meanwhile, the two-day monetary policy meeting in the US begins tomorrow at which many are expecting the Federal Open Market Committee to announce some sort of easing measures on the back of the disappointing payrolls data on Friday.
Market strategist Ishaq Siddiqi from ETX Capital said: "Although market expectations are for a ruling in favour of the ESM by the German court and more stimulus by the Fed, investors are still uncertain of both outcomes given the mixed messages from Germany and its Bundesbank and worries that the Fed may again delay a response at Thursday's meeting given that we have the US elections in November."
In other news, the UK trade deficit was GBP1.5bn in July, much lower than the GBP4.3bn the month before. There was a deficit of GBP7.1bn on goods, partly offset by an estimated surplus of GBP5.6bn on services.
Spanish Prime Minister Mariano Rajoy has yet to decide if he will request assistance from the European Central Bank (ECB) in what would effectively be considered a 'bailout' of the southern European country. "I haven't decided yet if I'm going to request the ECB's help. I have to think about it," he said.
FTSE 100: Burberry sinks after warning about full-year profits
British fashion house Burberry plummeted in the opening hour after warning that trading conditions were becoming more challenging with like-for-like sales flat in the second quarter. The firm said that ahead of the key retail trading period in the second half, it expected pre-tax profits for the year to March 31st 2013 to be at the lower end of market expectations.
Nomura and Seymour Pierce both downgraded their ratings on the stock this morning. "This news will obviously hit sentiment towards Burberry and the luxury sector and the shares are likely to underperform until there is better news on demand," said Seymour analyst Kate Calvert.
Meanwhile, miners were firmly out of favour as risk appetite waned: Vedanta, Anglo American, Fresnillo, Antofagasta and Kazakhmys all fell sharply this morning.
Vedanta was the worst performer after saying that subsidiary Sesa Goa has suspended all mining operations today after Indian state Goa temporarily stopped all iron ore mining activities after a scam was uncovered.
Fund manager Ashmore fell after full-year pre-tax profits and assets under management took a small dip in the year to June 30th.
FTSE 250: IG Group gains after first-quarter update
Spread betting firm IG Group rose strongly after first-quarter revenues came in line with expectations, though they were still 18% down year-on-year due to a tough comparative. Internet gambling group
Betfair was in the red in spite of revenues gaining 13% in the three months to the end of July, helped by betting on Euro 2012 and Wimbledon.
FTSE 100 - Risers
British American Tobacco (BATS) 3,164.00p +1.26%
GlaxoSmithKline (GSK) 1,429.00p +0.95%
Royal Bank of Scotland Group (RBS) 254.90p +0.75%
ARM Holdings (ARM) 553.00p +0.73%
International Consolidated Airlines Group SA (CDI) (IAG) 150.90p +0.67%
Unilever (ULVR) 2,257.00p +0.53%
Hargreaves Lansdown (HL.) 656.50p +0.46%
Imperial Tobacco Group (IMT) 2,260.00p +0.44%
InterContinental Hotels Group (IHG) 1,616.00p +0.44%
RSA Insurance Group (RSA) 116.20p +0.43%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,116.00p -18.84%
Anglo American (AAL) 1,915.00p -4.32%
Vedanta Resources (VED) 962.00p -4.09%
Antofagasta (ANTO) 1,210.00p -3.12%
ITV (ITV) 86.10p -2.93%
Kazakhmys (KAZ) 668.00p -2.69%
Kingfisher (KGF) 274.90p -2.41%
Fresnillo (FRES) 1,715.00p -2.33%
Eurasian Natural Resources Corp. (ENRC) 334.70p -2.25%
Randgold Resources Ltd. (RRS) 6,875.00p -2.14%
FTSE 250 - Risers
IG Group Holdings (IGG) 452.90p +4.50%
Dechra Pharmaceuticals (DPH) 572.00p +2.42%
Diploma (DPLM) 455.40p +1.56%
Stobart Group Ltd. (STOB) 116.70p +1.48%
Hiscox Ltd. (HSX) 484.90p +1.19%
BH Macro Ltd. USD Shares (BHMU) 18.82 +1.07%
Dialight (DIA) 1,199.00p +0.93%
Daejan Holdings (DJAN) 2,910.00p +0.87%
Bankers Inv Trust (BNKR) 420.60p +0.86%
Electra Private Equity (ELTA) 1,685.00p +0.84%
FTSE 250 - Fallers
Ruspetro (RPO) 104.00p -9.33%
Oxford Instruments (OXIG) 1,270.00p -6.96%
Hays (HAS) 76.95p -5.29%
Taylor Wimpey (TW.) 55.40p -4.48%
Ferrexpo (FXPO) 188.00p -4.33%
Chemring Group (CHG) 316.90p -4.14%
Lonmin (LMI) 596.00p -3.72%
Petropavlovsk (POG) 380.70p -3.38%
Premier Oil (PMO) 364.60p -3.26%
Homeserve (HSV) 230.60p -3.11%
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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WHAT THE BROKERS SAY
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
Click here to discuss shares with other ShareCrazy members
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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