| | Monday 29 October 2012 THOUGHT FOR THE DAY  Hello Share Shufflers.
Dunno about you, but as I get older, I find it harder and harder to make decisions. This is because with age comes experience, and we all learn that there is usually a very fine line between getting it right and doing it wrong.
So we are more scared about choosing the wrong option. This makes it hard for share shifters like us to know when to buy and when to get rid. I also find that self-recrimination gets stronger as the year roll by.
It's nice to know that we old ones are getting stronger in something. But self-chastisement is a horrible thing to live with. It's for this reason that I never look back at a share's progress, once I have sold it.
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Paper round Greece, ARM Holdings, Chinese banks
A draft version of the Troika report obtained by Spiegel magazine said EMU governments and the European Central Bank must accept their share of losses in order to bring Greece's public debt back to 120 per cent of GDP by 2020, deemed the sustainable level. Greece must carry out a further 150 reforms, some involving a drastic loss of sovereignty. Troika payments will be held frozen in a special account under creditor control. The Troika will have power to raise taxes automatically. There must be new laws to make it easier to fire workers and adjust the minimum wage. In exchange, Greece should be given two extra years until 2016 to meet budget targets, costing up to 38bn euros. German finance minister Wolfgang Schauble said over the weekend that taxpayer "haircuts" were unthinkable. "The question has very little to do with the reality in Eurozone member states," he said, The Telegraph reports.
Third quarter results by Lloyds Banking Group, the Royal Bank of Scotland and Barclays are expected to show that despite advances of the past three months, the banks have been pushed in to the red by the mounting PPI scandal. Lloyds may have to set aside as much as £2bn against PPI claims pushing its total losses to more than £6bn. Barclays has raised it provisions by £700m. RBS, which is reporting its first results since exiting the Government's asset protection scheme, is forecast by some analysts to break even this quarter. However the bank is expected to set an extra £500m against PPI and as much as £200m for mis-selling interest rate swaps to small businesses, which will cause it to report an overall loss. The cost of the PPI scandal to the British banking industry is pushing above £10bn, The Telegraph says.
Struggling chipmaker AMD will try to step out of the long shadow cast by arch-rival Intel on Monday as it announces plans for its first server chips made with the low-power designs of UK-based Arm Holdings. The announcement also signals a broader push by Arm to invade the internet-connected data-centres that have proliferated with the spread of "cloud" computing. In the process, it will widen a battle with Intel that already takes in tablets and, with the arrival last week of Microsoft's Windows 8, some types of PCs. According to people familiar with its plans, AMD will make the announcement at an event in San Francisco on Monday. The company declined to comment, according to The Financial Times.
China's largest state-owned banks are moving big chunks of their European business to Luxembourg as they seek to escape tougher regulation in the City of London. In a recent letter to the UK Treasury, the Chinese banks bitterly complained that uneven regulation and "rigorously demanding" liquidity rules had prompted them to transfer business and even the management of their European operations out of London. "They are finding it increasingly difficult to operate in the UK under the current regulatory environment," read the letter sent by the Association of Foreign Banks on behalf of the banks, which are among the world's biggest by market value, The Financial Times says.
Cash-starved companies face a £21bn loans squeeze this year as business lending falls to its lowest level since 2006, according to alarming new forecasts today. Smaller businesses will bear the brunt of a 4.6 per cent fall in corporate loans to £429bn this year, Ernst & Young's latest forecasts for the financial sector warn. Business lending should return to growth next year but will not recapture 2008 heights for another four years, it adds. The accountant blames a poor economic backdrop and tougher capital requirement for the shortfall as Britain's banks shrink their balance sheets by an estimated £300bn this year. Carl Astorri, senior economic adviser to the Ernst & Young ITEM Club, said: "The good news is that 2012 is likely to be the last year of such marked deleveraging in the UK - the bad news is that, once again, SMEs will bear the brunt of it, The Independent writes.
Indian tycoon Vijay Mallya has insisted that he does not have to do a deal with drinks giant Diageo or sell off the "family silver" to prop up his troubled airline. Mallya's United Spirits empire, owner of distiller Whyte & Mackay, has been locked in talks with Diageo to sell a key stake in the business to the maker of Bell's and Johnnie Walker. However, in an interview published yesterday, India's answer to Sir Richard Branson poured scorn on reports that he was being forced to sell stakes in profitable businesses to fund his Kingfisher airline venture. "I am not so sure that I lack commercial acumen to the extent that I would sell a hugely thriving, successful business to take the cash and put it into an airline in an environment such as India," said Mallya, in his office at Force India, the Formula One team he co-owns, The Scotsman reports.
Britain will get an economic reality check this week, just days after figures seemed to show a powerful return to growth. Key October numbers for manufacturing, construction and retail will give the first indication of how the economy is performing during the fourth quarter amid fears that it could slide backwards again. 'There is a real risk that a return to contraction might be seen in the fourth quarter,' said Chris Williamson, chief economist with financial information company Markit. Graeme Leach, chief economist at the Institute of Directors, said: 'There is a risk of a negative fourth quarter.Although our view is that there will be growth, the problem is there is no real momentum.' John Hawksworth, chief economist at accountant PricewaterhouseCoopers, said: 'I would expect growth of between 0.3 per cent and 0.4 per cent in the fourth quarter. 'That would mean 2012 as a whole would come out flat, with no growth,' The Daily Mail writes.
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BOOK OF THE WEEK  By Michael McGrath
A book review by Luka Lukic of t1ps.com M&A is one of the powerful tools for a company that wants to change its business or rapidly expand. However, even the biggest companies can get it wrong, as we have seen in the past with General Motors and Chrysler, or Microsoft and Yahoo. It is fundamental for businesses to have a firm set of guidelines, both when looking for a target and throughout the amalgamation process. Holding a doctorate in banking M&A risk management and with over 15 years of experience working for some of the world's leading banks, there are arguably few men better qualified to give advice on the subject than Michael McGrath.
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