| | Thursday 11 October 2012 THOUGHT FOR THE DAY  Hello Share Hipsters,
The banks have all gone up. Their share prices, I mean. This is fairly unusual these days. What with all the financial uncertainty in Europe and the USA and all.
But it is even more unusual that bank prices should rise, when most of the Footsie members fall. The reason is that the FSA has relaxed capital and liquidity rules. And any trend towards relaxing rules on banks and not imposing any more regulations on them is to be welcomed.
This is also interesting, gang. What I humbly suggest is that the future profitability of banks lies in their so-called casino activity. In other words, the banks speculating on the world markets with the money they gather in from customers.
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FREE SHARE TIP OF THE DAY  A report by GECR - Quindell Portfolio, the leading supplier of software, consulting and outsourcing services within the insurance and telecoms sectors, has acquired Metaskil.
- Metaskil develops a range of technology components that are highly advanced and utilise Software as a Service (SaaS) cloud-based technology.
- This acquisition is expected to be significantly earnings enhancing from 2013 onwards.
- Quindell also announced that it has completed a record quarter in Q3 2012, for revenue, profit and cash generation.
- Our stance remains buy at 12p with a 25p target price.
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Paper round Direct Line, Spain, BAE
Retail shareholders are to invest a greater sum in Direct Line's initial public offering than any other UK flotation in at least the past five years after about 25,000 individual investors applied to take part. Private investors are set to account for about 15 per cent of shares offered in Royal Bank of Scotland's insurance arm, which is scheduled to begin trading on the London Stock Exchange this morning. Bankers were still finalising the details Wednesday night but the part-nationalised lender was expected to raise about 115m pounds from the public. The retail allocation is set to be the biggest for a London IPO since that of Hargreaves Lansdown in 2007, people with knowledge of the flotation said, The Financial Times reports.
Setting the stage for another volatile market session on Thursday, Standard & Poor's cut Spain's credit rating by two notches citing the country's deepening economic recession and inability to handle mounting borrowing costs. S&P cut the country's debt to triple B minus from triple B plus, just one notch above junk level and said the country's outlook is negative. The rating agency's move came after markets had closed in New York, but the euro still fell slightly on the news to trade 0.1% lower at $1.2870, The Financial Times says.
Christine Lagarde has called for decisive action from world leaders to end uncertainties in the global economy that are prolonging "terrifying and unacceptable" levels of unemployment. Rounding on Europe and the US in particular, the managing director of the International Monetary Fund said this week's annual meetings in Tokyo needed to be marked by "courageous action on behalf of our members". Speaking just days after the IMF slashed its global growth forecasts for both this year and next, Ms Lagarde said the economic weakness was not just a result of "tail risks" such as a eurozone break-up but "the degree of uncertainty in many corners of the world - whether it is Europe or America". "It is deterring investors from investing and creating jobs," she said. "We need action to lift the veil of uncertainty." She also reiterated the softening of the IMF's position on austerity, saying that governments should no longer pursue specific debt reduction targets but focus on implementing reforms, The Telegraph says.
The future of Britain's biggest manufacturer has been thrown into doubt after German Chancellor Angela Merkel personally blocked a proposed £30bn merger between BAE Systems and Franco-German EADS. BAE's management were forced to defend the company's prospects and their own positions as chairman Dick Olver admitted he did not think the deal had a "hugely high probability of succeeding" from the outset, adding: "It was never something that I thought was more than 50/50." Mr Olver said that he did not expect to resign over the collapsed talks, while chief executive Ian King insisted "we haven't damaged the business by pressing ahead [with talks]". However, some investors and analysts said failure of the talks left the company far more vulnerable to a break up or takeover approach, The Telegraph says.
Powerful Indonesian backers behind the troubled coal group Bumi have stoked tensions prior to a board meeting on Thursday by alleging their phones and emails have been hacked. Indonesia's Bakrie family and its companies were infiltrated, according to Bakrie Group spokesman Christopher Fong, who said the group had "strong suspicions" as to who was behind the attacks. "Our email servers and telephones have been compromised or 'hacked' and we have reported this to the Indonesian National Police, Cyber Crime Unit," he told Reuters. The complaint came as Bumi's board prepared to meet in Singapore, where they will be updated on its investigation into "potential financial irregularities" at its major Indonesian subsidiary, The Telegraph explains.
Turkish fighter jets forced a Syrian passenger aircraft to land after it entered Turkey's airspace last night, further heightening tensions between the two countries. The airliner, with 35 passengers on board, was intercepted en route from Moscow to Damascus. Ahmet Davutoglu, the Turkish Foreign Minister, said that it was forced down because it was carrying "illegal cargo" which Turkey believed was "objectionable" and destined for the Assad regime, The Times reports.
THE LATEST ON THE CRAZY BOARD The top 5 hot company threads on the Bulletin Board: St Ives Hiwave Scotgold Range Resources The Running Trading Thread
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BOOK OF THE WEEK  By Robert Dubil
A book review by Emanuil Halicioglu The whole is worth the sum of its parts. Even the most complex structured bond, credit arbitrage strategy or hedge trade can be broken down into its component parts, and if we understand the elemental components, we can then value the whole. We can quantify the risk that is hedged and the risk that is left as the residual exposure. If we learn to view all financial trades and securities as engineered packages of building blocks, then we can analyse in which structures some parts may be cheap and some may be rich. It is this relative value arbitrage principle that drives all modern trading and investment.
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