Ted Butler: What really happened to Bear Stearns?
Gold Anti-Trust Action Committee Inc.
Ted Butler: What really happened to Bear Stearns?
Embry kicks the Bundesbank and Christian says 'Ouch!'
|London Market Report|
|UK stocks end on a high after quiet session|
- FTSE closes up 72 points at 6,736
- Hammerson and RSA lead risers
- UK inflation due out tomorrow
- House prices up 3.3 per cent in February
techMARK 2,857.31 +0.90%
FTSE 100 6,736.00 +1.09%
FTSE 250 16,244.71 +0.83%
Stocks ended the day with strong gains, driven by both Hammerson and RSA Insurance on what has been a quiet day for markets.
The FTSE 100 settled 72.38 higher at 6,736, marking a gains of 1.09%.
The gains come ahead of tomorrow's release of monthly UK inflation figures, which are expected to show that January consumer prices held steady at 2%.
Helping drive today's rally was data out overnight from China, which revealed borrowing for January was above expectations. Loans for the four-week period leapt to 1.32trn yuan from 482.5bn yuan in December and 1.07bn in the same period a year earlier, indicating that borrowing hasn't been affected by fears over credit expansion.
Traders have also welcomed the departure of Italian Prime Minister Enrico Letta last week. Letta fell on his sword after his party backed calls for a new administration, with Matteo Renzi, who has this morning been asked to form a new government, saying a change was needed to end the "uncertainty" and lack of action over the country's economic situation.
Meanwhile, and back in the UK, three former employees of Barclays have been charged by the Serious Fraud Office (SFO) in connection with its investigation into the manipulation of Libor, the inter-bank lending rate. The charges, all of which are for conspiracy to defraud, relate to events between June 1st 2005 and August 31st 2007. The FTSE is up 70 points at 6,734.
In other news, a survey of professional managers showed that fewer UK firms are planning on hiring new staff and instead opting to get the most out of existing employees. The Chartered Institute for Personnel and Development revealed that 54% of firms surveyed between December 12th and December 24th said they were looking to recruit staff, the lowest proportion since the survey began in 2010.
UK house prices accelerate further in February
UK house prices rose in February as demand continued to outpace supply, according to estate agencyRightmove today. The average asking prices of homes was £251.964 this month, up 3.3% on January and the strongest monthly increase since October 2012. On the year prices were up 6.9% from February, the sharpest gain since November 2007. In January prices rose 1% on the month and by 6.3% year-on-year.
Hammerson leads the risers on strong results
Hammerson is in the top spot today, after it reported a rise in annual profits, driven by strong demand for retail property. The property group posted pre-tax profit for the year ended December 31st 2013 of £341.2m, up from £142.2m the previous year, as like-for-like net rental income climbed 2.1% to £282.8m. During the period the group secured £24m of new rents, compared to £19m in 2012.
Both Imperial Tobacco Group and British American Tobacco were performing strongly after the latter today began a TV advertising campaign for its new e-cigarette. Imperial is due to launch its own version later this year.
RSA Insurance was also charging higher following a report out over the weekend from the Financial Timesthat said the company is set to raise up to £350m in an emergency share sale that would avoid a rights issue. The group's shares have suffered since it was revealed accounting problems in Ireland had resulted in a huge hole in its balance sheet.
IMI shares climbed following the company's confirmation of a share capital consolidation taking place today.
Vodafone Group was given a lift by broker Jefferies, which upped its target from 216p to 238p.
Meanwhile, Aberdeen Asset Management shares declined following Goldman Sachs's decision to reduce its target from 600p to 540p.
On the second tier index, DCC rose strongly after analysts said the the impact of the weather wasn't as bad as had been feared. The group said both its operating profit and adjusted earnings per share for the year ending March 31st will be between 7-10% above the previous year, compared to the approximate 15% and 13% previously forecast. Despite this, Investec analysts reiterated their 'add' rating on the stock, while brokerJefferies restated a 'buy'.
|FTSE 100 - Risers|
Hammerson (HMSO) 560.50p +3.13%
Royal Bank of Scotland Group (RBS) 351.80p +2.69%
Imperial Tobacco Group (IMT) 2,357.00p +2.48%
RSA Insurance Group (RSA) 98.20p +2.45%
IMI (IMI) 1,530.00p +2.43%
British Land Co (BLND) 680.00p +2.33%
InterContinental Hotels Group (IHG) 2,047.00p +2.20%
Persimmon (PSN) 1,415.00p +2.17%
Anglo American (AAL) 1,552.00p +2.14%
British American Tobacco (BATS) 3,108.50p +2.02%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 1,006.00p -1.85%
Aberdeen Asset Management (ADN) 394.00p -1.84%
International Consolidated Airlines Group SA (CDI) (IAG) 444.20p -0.49%
Mondi (MNDI) 1,023.00p -0.49%
SSE (SSE) 1,383.00p -0.43%
Pearson (PSON) 1,117.00p -0.18%
Tate & Lyle (TATE) 656.50p -0.15%
Meggitt (MGGT) 518.00p -0.10%
Johnson Matthey (JMAT) 3,300.00p -0.09%
William Hill (WMH) 346.90p -0.06%
FTSE 250 - Risers
DCC (DCC) 2,918.00p +4.78%
Bank of Georgia Holdings (BGEO) 2,268.00p +4.71%
Rank Group (RNK) 151.00p +4.28%
Polymetal International (POLY) 684.00p +4.03%
Computacenter (CCC) 683.00p +3.96%
Telecom Plus (TEP) 1,879.00p +3.75%
Wetherspoon (J.D.) (JDW) 849.00p +3.54%
Essar Energy (ESSR) 68.15p +3.26%
Micro Focus International (MCRO) 782.50p +3.23%
AL Noor Hospitals Group (ANH) 867.00p +3.21%
FTSE 250 - Fallers
Daejan Holdings (DJAN) 4,876.00p -3.45%
Rotork (ROR) 2,590.00p -3.14%
JD Sports Fashion (JD.) 1,379.00p -1.99%
KCOM Group (KCOM) 98.70p -1.79%
Xaar (XAR) 1,055.00p -1.68%
BH Global Ltd. USD Shares (BHGU) 11.31 -1.31%
Kenmare Resources (KMR) 16.70p -1.18%
IP Group (IPO) 196.00p -1.11%
UK Commercial Property Trust (UKCM) 78.15p -1.08%
F&C Commercial Property Trust Ltd. (FCPT) 120.30p -1.07%
FTSE TechMARK - Risers
RM (RM.) 147.25p +9.28%
Dialight (DIA) 774.00p +4.74%
Vectura Group (VEC) 163.00p +4.15%
Sarossa Capital (SRC) 1.48p +3.50%
Oxford Biomedica (OXB) 3.17p +2.42%
Skyepharma (SKP) 181.50p +1.68%
Promethean World (PRW) 33.00p +1.54%
CML Microsystems (CML) 615.00p +1.23%
Consort Medical (CSRT) 1,031.00p +0.59%
SDL (SDL) 385.00p +0.52%
FTSE TechMARK - Fallers
Kofax Limited (DI) (KFX) 473.75p -2.32%
Phoenix IT Group (PNX) 117.00p -2.30%
Torotrak (TRK) 21.50p -2.27%
DRS Data & Research Services (DRS) 23.50p -2.08%
Wolfson Microelectronics (WLF) 128.50p -1.91%
Ricardo (RCDO) 721.00p -1.90%
Optos (OPTS) 199.75p -1.60%
Innovation Group (TIG) 33.25p -1.48%
XP Power Ltd. (DI) (XPP) 1,750.00p -1.41%
NCC Group (NCC) 202.75p -1.22%
|Europe Market Report|
|European stocks little changed as Italy's Renzi begins coalition talks|
- Italy's Renzi to start coalition talks
- Moody's lifts Italy's debt rating
- Japanese GDP rises
- UK house prices accelerate further
FTSE 100: 0.99%
CAC 40: -0.06%
FTSE MIB: -0.06%
IBEX 35: 0.04%
Stoxx 600: 0.43%
European stocks were little changed as Italy’s President Giorgio Napolitano asked centre-left leader Matteo Renzi to form a new government.
Napolitano’s request today follows the resignation of former Prime Minister Enrico Letta last week.
Renzi said he will begin official consultations to form a new government in the next 24 hours.
He expects to lay out full reforms to Italy's electoral law and political institutions by the end of February, to be followed by labour reforms in March, an overhaul of the public administration in April and a tax reform in May.
Separately, Moody's lifted its outlook on Italy's credit rating late last Friday, citing the government's resilient financial strength and reduced risk from contingent liabilities.
The agency affirmed Italy's 'Baa2' rating, which is two notches above junk bond status and raised the outlook to stable from negative.
Moody's also noted that it expects Italy's debt-to-gross domestic product (GDP) ratio to peak this year “at below 135% in its central scenario in which modest economic growth resumes”.
However, the credit rating agency mentioned that the resignation of Letta and the likely takeover by Renzi does not alter its expectations.
Eurozone finance ministers to meet in Brussels
Eurozone finance ministers will meet up in Brussels on Monday to continue discussions on the banking union and the economic situation in the region.
The Eurogroup is scheduled to begin its meeting on Monday at 13:00 London time with a press conference to be held at the end of the meeting at approximately 15:30.
In other Eurozone news, economists are split on their forecasts over whether the European Central Bank will change its policy next month.
ECB President Mario Draghi has signalled that he may act to counter low inflation as soon as March when he gets his hands on the release of more clear economic data.
Nineteen out of 38 responses in the Bloomberg Monthly Survey of economists predicted Draghi will ease monetary policy when officials hold their monthly rate-setting meeting in March.
SGL Carbon, Morpho
SGL Carbon edged higher after Bayerische Motoren Werke said it is building a second production hall at a factory jointly run with the maker of carbon materials to prepare for rising demand for carbon fibre.
MorphoSys AG gained as the German biotechnology company said it received a milestone payment from Novartis in connection with a clinical trial application and projected initiation of a Phase 1 clinical trial.
Polymetal International and Randgold Resources advanced as the price of gold, silver and copper rose.
Neste Oil Oyj dropped after Nordea Bank AB reduced its rating on the stock to ‘hold’ from ‘buy’.
Bouygues slumped after the French construction and telecommunications company said it will take a writedown in the fourth quarter of €1.4bn.
The euro increased 0.10% to $1.3707.
Brent crude futures fell $0.211 to $108.850 per barrel, according to the ICE.
|US Market Report|
|Due to the Markets being closed for Presidence Day. There is no US Market Report.|
|RSA, Randgold Resources, Anglo American|
Gold miner Randgold Resources’ latest full year results showed a decrease in earnings per share when compared to the year ago period. Management, however, was nevertheless able to compensate for the falling gold price via increased output, those same figires showed.
That trend looked set to continue over the coming 12 months, with a step change in production expected by broker Numis.
The firm saw production coming in at between 1.13-1.2m ounces at a cash cost of between $650 to $700/oz Numis: 1.19Moz at $683/oz.
Exploration targets looked “very good” and the likelihood of improvements in mine plans looked high. In that regard, the broker referenced “spectacular hits” at the company’s Gounkoto mine and the growing number of prospects at Kibali.
Capital expenditure was expected to peak in the first half of 2014, which might place some strain on the balance sheet. Yet given current buoyant gold prices and some release of working capital a dip into the debt facility no longer seemed likely.
In fact, “substantive cash generation” was seen, as well as the chance of dividend upgrades in 2015.
Numis retained Randgold Resources as its ‘top pick’ in the sector while hiking its target on the shares to £55 from £50 previously.
Hot on the heels of market reports regarding RSA’s recapitalisation plans, Canaccord Genuity pointed out to clients the advantages of a share placement versus a rights issue. Namely, while a placing does not give existing shareholders any rights it can be done much more quickly and typically at a much smaller discount to the existing price.
That meant a smaller dilution for existing shareholders.
A share placement usually implies a discount of between 5-10%, instead of the 35% typically seen in a rights issue.
Furthermore, RSA might opt to raise only £350m via that channel, those same reports had indicated, considerably less than the £500m to £1bn which Canaccord had envisioned. That amount could be supplemented by asset sales, a dividend cut although that was not certain and more extensive reinsurance.
In line with the above, Canaccord raised its view on the stock to ‘hold’ and lifted its target to 95p from 85p.
“A 10% placing at a 5% discount would be approximately 9% dilutive before the impact of disposals and/or increased reinsurance costs, but we think would be well received by shareholders, who will also likely look to back the new Chief Executive Officer Stephen Hester,” the broker concluded.
New management’s efforts to restructure Anglo American are starting to bear fruit.
Thus, there are indications of improved operational performance at the company and a major restructuring of management is underway throughout the organisation, analysts at Credit Suisse wrote on Monday.
As a result, the above analysts now had greater confidence in the company’s targets for returns. They also saw an increased possibility for major divestments.
Following its latest full-year results and more specifically the second half figures, they believed that the company’s 15% target for 2016’s return on capital employed, while ambitious, was achievable.
In fact, over the three years to the end of 2016 they estimated that earnings before interest and taxes would expand by 36%, with an ‘upside’ case of 58% if management delivered just half of the targeted $2.5bn in efficiencies.
Platinum and De Beers remained the most obvious candidates for divestment, albeit most likely towards 2015 rather than next year.
For all of the above reasons the Swiss broker raised its recommendation on the shares to ‘outperform’ from ‘neutral’ and their price target to 1,900p from 1,650p.
The latter was the average of their forecast for the company’s 2016 price-to-earnings multiple, of 20, and their sum-of-the-parts valuation of £20 per share.