TODAY’S FAYRE – Wednesday 2nd April 2014
“Love is like the wild rose-briar,
Friendship like the holly-tree —
The holly is dark when the rose-briar blooms
But which will bloom most constantly?
The wild-rose briar is sweet in the spring,
Its summer blossoms scent the air;
Yet wait till winter comes again
And who wil call the wild-briar fair?
Then scorn the silly rose-wreath now
And deck thee with the holly’s sheen,
That when December blights thy brow
He may still leave thy garland green”
Emily Bronte – author & poet –1818-1848
I am now gearing myself up culturally for at least one season in the Championship for Fulham next year. I have enjoyed over a decade of roller-coaster life in the Premiership (2001) and it is increasingly looking as if the party may be temporarily over. Theoretically if Fulham were to beat Hull, Norwich and Crystal Palace at home in the run in and Sunderland, Cardiff and Palace were to fall apart the Cottagers could pull off a ‘Houdini’ act. However I suspect ‘hell has a better chance of freezing over.’
The Championship is the hardest division to get out of – at least 20 clubs at the start of the season are in with a shout. Also I suspect Felix Magath, Fulham’s hard-nosed Teutonic manager may not be able to attract the kind of players Fulham will need to make a quick return to the Premiership. He is no ‘charismatic’ Harry Redknapp! When you think about it Sir Alex Ferguson, thanks to his charisma and gravitas, could attract most players to Man Utd. David Moyes, an excellent manager in his own right, does not have that flair yet. I suspect Magath may be the wrong manager for Fulham in the Championship for the same reason, once the decks have been cleared of old, redundant and expensive non-performers.
I was pleased to see Chancellor George Osborne’s open letter to Martin Wheatley at the FCA, written in response to intemperate language probably used by the authority’s press office in regards to the policing of 30 million policy holders from the insurance sector. The comments and exclusive access given to the Telegraph caused stock market prices to plunge, rubbing £3 billion in value off the sector. The Chancellor’s visceral tone was surprising and very welcome to city observers.
In the wake of the woeful treatment meted out by the banks over PPI, LIBOR and swaps, it is very understandable that the FCA should adopt a robust approach in attempting to protect the consumer. However this means setting very high standards of behaviour. There is no way the FCA can come down like a ton of bricks on the financial sector, ‘kicking seven bails out of it’, if its own behaviour and market sensitivity is not exemplary. At least the Chancellor made himself very clear on the subject and is looking for a scapegoat. I don’t think Mr Wheatley will be that scapegoat; nor should he be. He is a good man with an excellent track record.
I must confess to still being a bit of a Luddite when it comes to change and the domination of technology. I love people and conversation and I believe that to be key to humanity. I really am very unhappy at the way banking has been consumed by the internet. Around 1,800 transactions are now conducted each minute on Apple iPhone, Samsung Galaxy and other smartphones.
The British Bankers’ Association (BBA), whose research is the most comprehensive study of customer habits undertaken to date, said daily usage had doubled in 12 months. In total, 12.4m people have downloaded banking apps, which allow customers to check their balance and make payments at the touch of a button. They used their devices to conduct 18.6m transactions a week last year, up from 9.1m in 2012. I fear that the dominance of the net will trigger the closing of branches, which I am profoundly against. How can bank managers assess loan propositions from individuals and SMES without seeing the whites of their eyes? If true, this is such a bad move, particularly as the banking sector has an uphill struggle in attempting to build its trust up with the public and its customers.
I much enjoyed the conjecture in Evening Standard’s Jim Armitage’s article on the revamping of BHP’s mining assets. A $19 billion IPO of non-core mines sounds very ambitious to me. The shedding of more assets on top of the $6.5 billion already sold by new CEO Andrew McKenzie strikes me as an easier option. The trouble with the mining sector is valuation. Base metal prices go up and down like the whore’s drawers. There are political inferences, supply and demand and trading vagaries to consider. One of BHP’s prodigal sons, Mick Davis, whose has a humped back carrying it all the way to the bank from his stake and payoff from Xstrata, when it was acquired by Glencore, could well use most of his $2.5 billion supposed wealth to buy a few mining assets as well. It just goes to show how profligate Marius Kloppers, McKenzie’s predecessor was and for that matter the same character defect could be leveled at Frank Albanese, the former CEO of Rio Tinto.
It looks as though the major shareholders in Finland’s Metso will reject Weir Group’s overtures to merge. Weir, the Scottish valve and turbine manufacturer is valued at about £5 billion and Metso would appear to have a £3 billion price tag. BT’s John Petter seems to have rejected the idea that acquiring Channel 5 would be good for BT’s aspiring sports channel – not enough synergy and one would suspect that Richard Desmond is not giving the Channel away at £750 million. An IPO is unlikely at that price and a sale to Discovery, Viacom or UKTV may need to see an adjustment in valuation. Delta Airlines’ CEO Perry Cantarutti did not mince his words in saying that unless Heathrow built another runway its importance as a leading international airport would be eroded. Dubai is already snapping at the heels of the competition to become the largest ‘entrepot’ in the world.
Decent PMI manufacturing data in the US yesterday buoyed the Street of Dreams to hit new records. The S&P 500 hit an all-time high at 1885.52 and the DOW reached its highest point for the year. ADP Index employment data today (Est+193k) and Non-Farm Payrolls (est+ 205k) on Friday will be eagerly awaited. 2nd quarter earnings start to be published in the US at the end of next week. They will need to be stellar for equities to crack on with gusto. The P/E ratio for the S&P is 15+ change times earnings – quite rich. Few are suggesting that the market will fall out of bed, if targets are not exceeded, as bonds are so unattractive. Let’s, however, not forget the smaller companies coming to the market, particularly in the UK. They offer real scope, probably more than fully valued large caps.
This morning ASOS posted a 34% increase in sales. Asia enjoyed an upbeat session with the NIKKEI adding 1% thanks to a weaker Yen. Greece will be given a further €8 billion loan from the EU and IMF in 3 tranches. I am told that Greece will come out of recession next year! Really? Finally the ECB meets tomorrow against a background of deflation. There may be rumblings about negative interest rates and buying in commercial bonds rather than just sovereign debt to kick start a more robust recovery, though I doubt immediate action.
These are David Buik personal views
Twitter – @truemagic68
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