Friday 28 September 2012

The French twist on fairness

Can tax rates at 75% work?

They have been announced after being long trailed as France tries to get it budget deficit in order. Interesting that France is of course running a deficit only half of the UK's; however, starting with a high debt level means that in many ways our positions are fairly similar at a macro level.

75% tax on earnings over a million euro's is not going to lose you many votes, I guess that is the calculation. As in the UK, if it was applied to salaries of over £750,000 then hardly anyone would be hit. Very few work for PAYE wages at this level - oddly, mainly professionals I would imagine like top doctors and lawyers. Most owners at this level would pay themselves dividends in any event in the UK and so avoid that tax in any event. Private Equity earners and Hedge Funds who mind have all legged it to Switzerland already.

Which leads me to wondering why 75%, its such an arbitrary number, why not 100%? If you are going to go down a socialist road like this the 100% income tax level makes a lot more sense, especially at the incredible sum of 1 million euro's a year income and above. Certainly key socialist goals such as levelling societal incomes would be greatly enhanced if you enforced a single, 100% tax on all income over such a level. After all, 75% leaves you with not much anyway given there are sundry taxes to pay as well as this. 100% would be in many ways fairer to society.

And if you were really a serious socialist, you would also impose 100% death duties on all but the family home. That way you could ensure that there was no inter-generational advantages generated, people would spend all their money and so boost the current economy. This would boost fairness measurebaly in society.

Mr Milliband has said how much he admires Francois Hollande - I hope to see some of these ideas in his conference speech.

Thursday 27 September 2012

Question Time returns

The return of Question Time has caught me somewhat unawares. I saw the panel posted on another blog and assumed it was a joke line up... Harpy, Geeky, Moggy, Soppy and Angry. does seem to be true. The venerable show is back with its assorted low fliers,self publicists, lime lighters, aged politicos,hacks and strike makers.

David Dimbleby chairs Question Time from Brighton. On the panel: Labour's deputy leader Harriet Harman MP, chief secretary to the Treasury Danny Alexander MP, Conservative MP Jacob Rees-Mogg, TV presenter Kirstie Allsopp and comedian Steve Coogan

They May Not Mean To, But They Do

Yes, Osborne and his Conservative party strategists f*** it up.

Forgive me if all this is common knowledge but I'm away rather a lot these days.  So, I read that the LibDems are going to block the boundary changes and reduction in number of MPs; but hang on, wasn't that in the Coalition agreement ?  Oh yes, but the LibDems have decided that, having lost Lords Reform (and AV etc etc), they are free to shoot down the boundary changes.  It's all a bit theological.

So I ask Someone Who Knows about these things, and the story goes as follows:  
  • The LibDems (not Labour) have the most to lose from boundary changes and were never, ever going to support them
  • Nor will the Nats; nor (obviously) Labour
  • So they fall
  • What's more, they won't even be put to a vote to show the world what complete 4-letter men the LibDems are, because - haha! - the Nats will support it for England but defeat it in Scotland and Wales (it would be separate votes), making their over-representation even greater !
  • If the Tories takes this treachery as a pretext to scrap the coalition, under the new '5-year Parliament' rules Lab and LibDem have 14 days to come up with a new coalition, which they surely will do
In short, Boy 'Genius' Osborne and Hague and Letwin and the whole team of Tory 'negotiators' have utterly, utterly, f****d this up.

Now, to basics: back in 2010, was there a more critical issue for the Tories to nail ?  I can't think of anything: this was a once-in-a-lifetime opportunity to fix our outrageous boundary system (forget the reduction in number of MPs), a previous batch of Tories having culpably failed to do it throughout the whole of the 1979-97 period (due to outstanding Labour tactics on the Boundary Commission).

So, knowing (as they must have - mustn't they ..?) the content of bullet #1 above, didn't they realise this had to be structured into the Coalition in such a way as to be proof against LibDem backsliding ?

No ?  Then away with them.  I feel ill.


Tuesday 25 September 2012

LIb Dem Conference - is this the start?

Is this the start of a descent into pure madness. I have been excessively busy in the day job this week, which on balance is a good thing; but I note with dismay the ludicrous proposals coming out of the Lib Dem conference.

Clearly they need to win back their left of centre vote, however distant this maybe as a prospect they have to try. So they are trying with an all-out attack on the 'Wealthy' really using the language of the Occupy movement to appeal to their ex-student voters.

Sadly, all the ideas are dismally flawed, wealth taxes are a no, no economically and a certain way to enforce economic decline a la the 1960's and 1970's. Offering pensioners the right to give away money which they can do already under the law is also a little, well, ill-thought out?

But the attack must go on because it is crucial that the wealthy pay for the lack of real cuts to Government spending.

My main worry is that this is the start, the Tories are not happy at being labelled the party of the rich and labour in opposition have the freedom to suggest silly new taxes at will, confident that in 3 years time no one will remember what they were saying. So perhaps the Tories will play ball.

Attacking the rich does not really strike me as a sensible economic strategy, it smacks of desperation to avoid the hard truths about our economic prospects and entitlement culture, again just as in the 1970's when it was wage-bargaining union power and the competitive failings of the state owned industrial base.

One important lesson of the Internet age is the fast transmission of information, people, money - all is movable very easily and efforts to extract more from those who can move will work at the margins but be poisonous in the long-term. if it were a necessary cover for serious reform that would be one thing, but it does appear that it is this scenario in UK politics currently.

Monday 24 September 2012

You've used all your lifelines...

So, JJB tips into administration.
As an ex-employee of their much more successful rival, I should say Ha-ha?

But not really. From a pure image view JJB always looked sharp whilst Sports Direct makes Lidl look well presented. In market sports casual , or 'sofa clothes' share market Britain price and brand was all important. Mike Ashley at SD buys labels and brings the price way down, volume selling. JD just has better products, even if expensive. JJB never moved on price, preferring to keep its brands exclusive.The poor squeezed middle.
 The model that had made them the largest sports retail company in 2006, was followed long after others were showing how to tread a different path.

JJB is set to close its remaining 180 stores and lose many of its 4,000 staff when KPMG are expected to be appointed to split up the company and sell what they can.  Its long been reported here that they couldn't survive with the Gordon Brown style debts they'd built up in the good times, purchasing other companies and interests that were largely loss making. 

As one wag has written 
"They've had more lifelines than Chris Tarrant." 

So..who's next? Can't see another old C@W  favourite making it beyond the January rent bills. 
HMV , for all the very innovative and solid business plans they have put into place still continues to slide. The Guardian reported that Sales down 14.8% – but retailer hopeful pre-Christmas music, DVD and games releases will boost performance.

yeah...hopefully. But if they are relying on the eighth year of the 'X' factor and Halo 4 and FIFA 2013 .. not that likely.

Sunday 23 September 2012

Currency Wars

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It is rather worrying how little coverage there is in the Western media about the increasingly nasty escalation of the China-Japan stand-off over a few small islands. The Arab Spring which was galvanized through the enormous power of social media may have parallels in China given the strangle hold the authorities have there over main stream media - social media is rather more difficult to keep the reins on…
In  the markets this week ,the big factor continuing to reverberate around the globe is the de-facto potentially unlimited US Quantitative Easing. This huge round of monetary easing is unparalleled in the US and the world to date including Japan.
Back when QE started in 2009 I forecast that it was a ‘Pringles’ event – once started you just can’t stop. And so Ben Bernanke is proving. Many Countries around the world are not unsurprisingly, no particularly enamoured by this new course of money printing. US dollar devaluation only makes it more difficult for developing economies to grow as their products become more expensive on global markets.
The US, by printing money, is trying to generate inflation to help it wipe outs its debt. This inflation though is also being felt in other countries. Their response is to also to try and reduce the value of the currencies through their own forms of QE.
With the dollar falling, there are some potential lucrative investment gains to be made. As the dollar falls, risk assets gain. Also as the dollar falls, the other side of the equation is that the “pair” currencies strengthen, particularly of havens like the Swiss Franc and the Norwegian Krone. Similarly, commodities also generally rise. It is quite hard to see how more money printing in the US and elsewhere does not underpin commodity prices – given the value destruction in the mining sector this year that itself provides a good long-term position for finding value - a stance that is opined in the current edition of spreadbet magazine -

Finally, in terms of opportunities presented through a falling dollar, this also pushes up food prices. There is of course quite rightly a stigma attached to betting on food prices but spreads and ETF’s are offered.

Below is the HSBC graph of the effects of QE on the dollar – it does work in lowering the dollar and this in turn sets off a competitive devaluation in other currencies around the world. It provides the only solution governments can think of to the current sovereign debt crisis and this is to devalue their debt instead of paying it off as the burden is too large.

The currency wars are here to stay and traders should look to this as a theme to underpin their trading strategies in 2012/13.

Friday 21 September 2012

BP In Russia - Again

Now obviously I'm supposed to know about this stuff (or else shut up), and I don't have a good record on BP-in-Russia.  In 2003, BP got involved in the TNK-BP joint venture.  Around 6 years ago they were considering an even bigger play in Russia at a time when others were piling in and others still (Shell and yes, even the mighty Exxon) who had already got in were getting a kicking in the usual Russian manner.  On this occasion BP (wisely, in my view at the time) held back.  In due course, 2008, and TNK-BP gets a kicking of its own, with Bob Dudley being sent packing in the boot of a car or some such skullduggery.

But of course those endless reserves of oil and gas are forever beckoning, and Russia's need for inward investment (and technology-transfer) is likewise never-ending.  In due course (early 2011) BP made another bold play, this time linked to Rosneft (a company now more in favour than Gazprom).  At the time I gathered, wink wink nudge nudge, that however implausible, they knew what they were doing.  It rapidly seemed I was wrong however (CU always said this) and the kicking recommenced with even greater ferocity.  How many beatings can a company, already on the back foot after Deepwater Horizon, take ?

But no, they are hanging on in there with another round of Big Plans.  What prize is so tantalisingly close that they can justify the effort ?

Perhaps it's as simple as this: the unchanging fundamentals of Russia's vast natural resources and its extensive needs - $1 trillion, we are told, and who's to doubt it ?  If BP are wrong about this they are in very good company: the Big Oil herd stampedes resolutely eastwards, irrespective of massive periodic setbacks. Putin spent time in London with Cameron during the Olympics, and now more Russians are coming to town to display their wares.

On the other hand, I can't quite shake off the idea that BP is being badly advised ...  this one will run and run.


Thursday 20 September 2012

M&A pick-up a good sign

So now we have Sporting Bet, to add to Glencore/Xstrate and BAE/EADS - OK it is not really on that scale is it? But nonetheless a sign that the long-dormant M&A market maybe starting to awake from its slumber.

Now I am getting a little ahead of myself as I have nto met an investment banker in a happy mood for many moons and they all appear to be just as depressed as ever in September.

The global QE and efforts to revive the economy may though help in the short-term. Even though for sharehodlers M&A is normally a bad idea, for the markets and economy its is a greathing, generating much needed change and getting money spent rather than stored away doing not much.

Also when bad companies go under this is also a good sign - as is the case with Hibu this morning, long a victim of change, Yellow Pages may soon be gone to the cheers of forests worldwide.

Now, let's just hope that after Xcite Energy's proving up of its North Sea field announced today, this minnow can attract some attention.

Wednesday 19 September 2012

More banking madness courtesy of Mad Vince

Regular readers will know that we hold no candle for VInce Cable here. Either in person, as an MP or in Government Mr Cable has shown little aptitude for anything except misguided thinking and politicking.

The latest idea being bandied about is a state backed business bank. Already there are plenty of calls for this to be scrapped as an idea. The IPPR reckon it will add too much to the deficit (funny they are less worried when its Labour's plans but anyway...).

The big issue for me is that the UK already owned more than 20% of the Banking sector, Northern Rock bits in run off, 85% of RBS, 43% of Lloyds (which itself absorbed HBOS). With all this in state hands why on earth is there a need for a new channel to market.

Moreover, the reasoning sounds very strange to me. Banks will only lend to good credits and these do not include some businesses that the Government wants to encouraged - that would be because the market thinks they are bad credits then? It'sis that thing called capitalism where a market tells you the real state of affairs and you can't buck them. The best case will therefore include this business bank running up big losses on its loans in all likelihood.

With all the QE in the economy I struggle to believe there is a lack of credit - certainly the bankers I speak to do not see this. they just see a big deleveraging of their own and their customers balance sheets. Which is what we want, private sector borrowing which is unsustainable high to come down.

Then we have the small issue of UK Corporate balance sheets being awash with cash - yet this is not invested? There are lots of ways to encourage this, but it is not through setting up a business bank. If you want investment, increase capital allowances reliefs and taper taxes for new business start-ups.

As ever, a Government is obsessed by debt, so much so that it sees not other solution than more debt. This idea is without merit and understandably therefore is a key policy idea of Vince Cable.

Tuesday 18 September 2012

Oil Price Quandry

As much as with my long, high risk, equity positions I am keen for global markets to continue their advances, there is the odd risk factor at play. Economically, the only game in town is oil price. The price of oil has accurately predicted every recession of the post war, even in 2008 there was the massive spike up to $147 preceeding the Great Crash.

The driver of oil price rises (and falls after a sharp fall yesterday remains unexplained) is more of a mystery. In a time fo falling demand across the world, in US, China and Europe, one would not expect a run up in prices. Of course, this is driven by political and macro factors too. Israel faces a choice of striking Iran soon or learning to live with a nuclear armed terror state. A strike on Iran and the price of oil will shoot north of $200 a barrell for sure on a gigantic spike.

Plus there is huge volumes of speculative trading, the more monetary stimulus is pumped into the world, the higher the price of commodities will go. No doubt oil is being affected by this. However the lasting condundrum of this point is that more QE is really becoming self-defeating. As prices rise and inflation is created by the devaulation of fiat currencies, then the consumers of the world have less money to spend, feel poorer and so reduce their demand further - financial repression sets in, even with liquidity at high levels.

Many people suggest watching the gold price to see the true effects of QE; I demur, the price of oil, the driver of all human activity on a global scale, is the key price to monitor.

Monday 17 September 2012

Ganging up on Gazprom

Here's an amusing turn of events.  At the end of last month, Russia - after 18 years of trying - was admitted to the WTO.

Welcome to the world of free trade !  Within days, the EC announced proceedings against Gazprom under Competition law, on three counts, focusing on Gazprom's activities in Eastern Europe:
  • hindering the free flow of gas by use of 'no-resale' clauses in contracts;
  • preventing diversification of supply by frustrating third-party access to, and development of, gas infrastructure;
  • insisting on pricing gas using oil-indexed pricing formulae.
One hopes the EC doesn't waste too much of our money on their investigation and I can assist them in this regard.  On count 1, a cursory examination of the relevant contracts will do the trick: guilty as charged.  (And while you are at it, check the big gas sales contracts made by Algerian state company Sonatrach to France, Spain and Italy - you'll find the same there, too.)

On the second you may have a bit more trouble because there will be less of a paper-trail, and some of the European companies who could spill the beans are strongly inclined not to.  Nil desperandum, because to establish charge no.3 you need only read the collected public works of Gazprom speakers at energy conferences over the past 5 years.

Putin seems to be sweating a little over this (wonder why ?) and has rushed to hinder the process.  As well he might because there is no telling where this could eventually lead.  (Hint to EC: broaden your scope to Italy ...)

What has triggered this action ?  You may recall that, of the two big German energy companies that have been bleeding white from importing oil-indexed Russian gas, E.on - always much closer to Gazprom - settled earlier this year but RWE was hanging in for much bigger concessions, and they gave fair warning.  This is RWE's ace: they have made several large acquisitions in the Eastern European energy sector, thorough which they obtained all the paperwork necessary to prove the case.


Sunday 16 September 2012

Time to put the foot on the pedal with risk assets

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We posted back in July that the correlation between UK QE and the UK stock markets was likely to be broken as four rounds of QE have now been completed and yet the primary increase in asset prices had been completed after the second round, last year. Indeed in July and August  of this year there was a modest uplift in the UK markets, but nothing overly dramatic, a 100 points on the FTSE here or there.  The real QE impact in the UK has not strangely been from our own domestic monetary activities but from Marc Faber’s favourite person (not!) - Mr Bernanke in the US..
Expectations had been building right through August that the Federal Reserve would have to authorize more QE to help the stalling US economy and the button would be pressed in September to avoid accusations of interfering with the US election cycle. And so it has come to pass with a very big effect on markets with the FTSE poised to break the 6000 barrier. Earlier in the month we wrote that the charts for the FTSE were looking more and more bullish with a move above 6000 very likely.
With ”the can” not just kicked down the road but sent into orbit by Mr Bernanke through the introduction of a new element to the monthly $40bn asset purchases and that is the effective unlimited timescale, we can expect the FTSE to establish itself above 6000 in the weeks ahead.
Throw into the mix the German Court decision which will extend the Euro udge for a few more weeks (let’s not forget the law of diminishing returns applies to Euro bailout announcements and Greece is already asking for a 3rd bailout) then  September looks to be set fair (a bit like the weather - finally!).
Risk assets are the  ones to take positions in and within those key commodities – gold as a store of wealth against devaluing currencies and copper, which is one of the few commodities to have seen significant de-stocking this year, together with silver we can expect more upside this year. It’s time to be brave. In 2009/10 risk assets moved up 500% from their lows in many cases. The lows are much higher this time, but triple digit profits could be made by Christmas in certain sectors of the markets and if oil goes higher, then our old favourite - the oil explorers sector is likely to a big beneficiary.

Thursday 13 September 2012

Rockstar ate my Curlywurly

As a small boy, spending Christmas at the Selsdon park hotel,  the one of Ted Heath fame, I played table tennis with Alvin Stardust. He also bought my Curlywurly off me as he was peckish. {And paid a substantial amount, which was generous of him. } 
I have always considered this to be the most Z-list of non celebrity stories. Easily topping my backstage pass and access all areas card for Haircut 100. Or the time Lionel Blair needed to borrow a pound in Roehampton Asda.

But Mrs Q told me that Robson Green once asked to borrow a tissue.  She said it with much pride. Now that really is weak.
But her sister topped it!

"Our patio furniture used to belong to Valerie Singelton."
"So you went round her house to buy them?"
"No..They were already here."
" did you know they were Val's?"
"Well..the bloke we bought the house from said he bought them from her from a news-agent's advert.."
"But you have no actual proof?"
" it is a good story."
"Hmmm....No. Not really."

But it is the current Z-list, non celeb non-event champion anecdote.

If you have a worse, more pointless, less famous, utterly banal sleb story, then the crown might be yours.
Into the comments please.

In third place - GSD with Gary Linekar saw my fence.
In Second place- floppy flops with Tommy Ball's a voyeur. first place..the winner of the most uninspiring celebrity anecdote is 

Paul : Mungo Jerry should have gone to specsavers.

Ego unbounded and unbent- Peter Cummings

It is very lucky today that I am going to work early enough to avoid breakfast; otherwise on reading the paper I may have choked this from the Telegraph:

"In a statement Mr Cummings said he rejected the FSA's findings but would not be appealing the fine.
He said: "Many people must bear collective responsibility for what happened, including governments and regulators as well as the boards of the banks themselves. But the fact that I am the only individual from HBOS to face investigation defies comprehension.
"The decision to single me out for investigation is even more grotesque given that even the FSA has to admit in its notice that other senior people were involved in the critical decisions for which I am taken to task. This is tokenism at its most sinister, and has made it feel throughout like institutional oppression."

Poor Mr Cummings, responsible in the main for signing off dodgy loans with markers like 'approved for business development purposes' when the Credit teams at HBOS had come back saying not to make the loans as they were too risky. Mr Cummings, who indulged in the ultimate 'pig and pork' banking whereby you lend equity and debt (senior and mezzanine) to a client who if they go belly up you will be guaranteed to be over-exposed and take a massive loss. Real banking 101 stuff. Lo and behold, HBOS lost so much money in 2008 a Government rescue via Lloyds was the only way out. Lloyds has not recovered, still writing off billions in losses on real estate loans, of which almost the whole book came from HBOS Corporate Banking wherein Mr Cummings was the boss.   Of course, he wants to blame regulators (who could have sacked him) or Politicians (who could have given backbone to the regulator) - but no one made him sign-off on these loans.   By my guesstimation he has ended up costing taxpayers a bailout of around £20 billion. A ban from working in the City and a fine is getting of lightly - in the US he would be looking at a long stretch, in China possibly the death penalty.   I generally am happy with the Government proposed reforms to the banking system, they will make it safer - but Mr Cummings did not do anything criminal under current or proposed laws. This should change, if it were me he would be done for treason.

Wednesday 12 September 2012

Should We Let Johnny Foreigner Buy Our Assets?

Here's one for Budgie: a long and thought-provoking piece in the LRB entitled How We Happened to Sell Off Our Electricity by James Meek, on what he reckons is the disaster of our energy policy which, inter alia, allows the frogs et al to buy up our assets. 

"In overseas chanceries the Thatcher doctrine came up against ambitious leaders who were no less patriotic, but not so arrogant and naive. Unlike Thatcher, they didn’t assume that if their country levelled its playing field, others would level theirs." 

(You can see why I feel Budgie will enjoy it) 

"Greg Thomson, Unison’s head of strategic organisation, told me ...‘When London Electricity was privatised, we adopted a policy of returning it to public ownership, and I’m pleased to think I delivered on that,’ Thomson said. ‘Obviously to the wrong nation, but you can’t be too picky’." 

"Thomson remembered an early trip to a European Works Council meeting in Paris, when one of the CGT [French union] men said to him at lunch: ‘There’s only one country that’s stupid enough to sell off its electricity industry, and that’s Britain’."

Actually, it's about more than just this aspect: he tries to give a critique of a quarter-century of energy policy.  It is, as I said, quite long (12,000 words) and it's hard to summarise it or offer a rejoinder in a blog post.  It deserves a rejoinder because Meek is a generalist (and a Guardianista), and despite a formidable research effort he has got a load of important details wrong.  Towards the end, he even seems to realise it's not as clear-cut as initially he tries to make it seem. 

"That’s not to say the French people will be winners as a result of the deal ... the British government might still decide the EPR is too risky and allow extra gas stations to take up the slack ... In which case the French people will be on the hook for EDF’s expensive acquisition of British Energy and its existing, worn-out British nukes."

Well precisely.  But you don't meet articles quite as interesting as this very often. So consider it recommended as a provocation !


Tuesday 11 September 2012

Does RDR prove FSA is still not first for purpose?

The future of free financial advice, outsourced to Nigeria?
What is RDR?  It is a change in the whole structure of the Independent Financial Adviser market in in the UK. After several scandals around endowment and pensions mis-selling, the regulator decided that two things needed to be done. The first was to make advisers take harder exams to become 'RDR's' so that the lever of advice offered was better. The second element though was to change how IFA's made money, now they would have to charge fees upfront rather than taking commissions - this change is a real problem for the industry.

The best comparisons I can think of are free phones and free banking. You may pay a little for your mobile, but most o the money is recouped by the provider through monthly charges. With Banking, our accounts are free, but hidden charges on overdrafts and poor interest rates help the banks make that up.

As we know from the Internet world, once something is perceived as free, any attempt to charge for it generally fails. But thee Government and its public sector advisors see commission as a bad thing per se and are happy to ban it; even the EU has not gone down this road.

Unsurprisingly, IFA's are up in arms about the regulatory changes, they way they need to record their dealings is now more process driven, so they are spending lots on new systems, plus their future business model is a tricky one making the case of investment challenging.

Personally, I have never paid anyone for financial advice, but I know plenty who do - if though the payments have to now be made upfront instead of 'hidden', will people want to pay? Maybe, maybe not, we will see. It is a huge change to a huge industry.

Clearly, people resent middlemen in general taking cuts and there is a good case to make that Financial Institutions and Banks have taken too much of a cut int he past few years, helping to create our economic disaster zone of an economy. But the principle of taking a cut is a good one, it is how the world works and provides the link between service and payment.

The FSA here is, as usual, failing to understand that its new rules will end a whole way of doing business - or perhaps it does not. How are these regulators qualified though to decide on entire industry business models, what industries have they run - plus where does it go next? No introduction fees for Funds and Investments at all - a move to people having to seek free advice with the diminution in quality that this entails?

After all, what sort of so called non-advice institutions may step in to help people in this brave new world of financial advisory services - why the main retail banks of course, the source of all the mis-selling scandals in the first place....

Monday 10 September 2012

North Sea Oil Gold Rush

The North Sea oil sector had a boost this week when the Government announced further tax breaks to companies working over older oilfields in order to enhance production - a welcome change from the dark days of 2010 when the Government was seeking to do the opposite and hobble the industry!
Often with AIM and FTSE350 companies there are many pitfalls to cross – the sheer lack of finance available has hindered both exploration and the all important move to “first oil” for many companies. However, over the last few months, M&A activity has been in the ascendance. This week Edison Investment Research published a piece of analysis in which they noted that since their previous review of the sector that, of the dozen players in the North Sea region that can be invested in, 6 have been approached or taken over in 2012. Whilst some of these companies like Encore and Nautical Petroleum effectively had to call time on their efforts to go it alone and accept offers some way below their potential value – they still managed to sell for between $8-12 dollars a barrel which is a not too bad return for investors. In fact this seems to be the benchmark level for North Sea players in takeovers

Despite the massive money printing exercises and bond buying by the major central banks, capital markets access remains tight however. What is noticeable in recent months though and encouraging for shareholders is that management of these companies are themselves now balking at further equity dilutions as they are finding their holdings being diluted too much. One prime example is Xcite Energy which has seen the decimation of its share price due to perpetual equity and attached warrant issuance and so structured a $155m RBL lending deal recently. Bearing in mind the corporate acquisition benchmark of an average around $10 to the barrel, and a typical undisturbed share price prior to acquisition of a discount of around 50% to $10 , this would imply an enterprise value of less than $6.50 per barrel being a good investment proposition. Xcite currently trades for around $4.80 a barrel implying 20% upside just to harmonise with the peer group. If one is optimistic on the Enhanced Oil Recovery (EOR) in relation to the believed 550m boe in Bentley then a share price meaningfully higher than 200p can be postulated in the event of a takeout.
Ithaca Energy, itself a successful producer, turned down an offer at 205p just a couple of months ago and promptly saw its share price halve and only recover today to 140p. This turning down of the bid does however demonstrate that as the field of companies suitable for take-over shrinks that those companies that address their intermediate funding needs are getting more pricing power when the raiders come knocking.
Below is the list of companies and their current resources that are listed on the FTSE and AIM markets. Of the North Sea players there are only a handful left in the smaller market – Enquest, Ithaca, Xcite, Serica, Faroe and Premier Oil. Premier is established enough that is an unlikely takeover target and indeed may in fact be a consolidator.
The lack of targets left in this politically stable, proven area of Oil exploration and, with easy access to the market and plentiful infrastructure, will help to underpin the prices of these remaining companies for sometime to come in our opinion. In fact, it is only a matter of time until the major players take out another few of these.

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In the Immortal Words of Jasper Carrott ...

... "Gummer is a bummer".

Not a subtle sentiment, but les mots justes for all that. John Selwyn of that ilk should have been pensioned off as Lord Gummer of Burger: but no, he is Lord Deben of DECC, and newly-appointed chair of the "Independent Climate Change Committee". 

But why ?  He is, surely, one of the 1990's prime candidates for Worst Cabinet Minister; his conflicts of interest have been well-documented, being up to his neck in the Severn Barrage; and predictably he has already delivered himself of some utter tripe: 

"I think there can be no growth unless there is green growth."  While he would not be drawn into criticising individual ministers, he said anyone who believed gas would remain cheap was making a dangerous mistake. "You have actually got to go for renewables. The facts are absolutely clear. We have to go down the line we said we would, and we have to do it at the speed we said, because this is the most cost-effective speed."

I once rode a train to Norwich with this buffoon, when he was in the Cabinet.  He boarded with an aide and a modest pile of papers.  On sitting down he announced to the acolyte that whatever else they did, they must work through the papers, and then they could enjoy the scenery.

He then immediately launched into the first of an unbroken series of anecdote-monologues, which occupied his small brain fully for the entire journey; and they departed with the papers untouched.  These are not among the Habits of Highly Effective People.

I say no more: Carrott has said it all.


Saturday 8 September 2012

Prince Harry and the Prince Imperial

LONDON — Britain's Prince Harry is back in Afghanistan to serve as a military helicopter pilot four years after his previous deployment there had to be cut short, the Ministry of Defence said on Friday.
The 27-year-old, who hit the headlines last month after he was photographed nude during a wild week of partying in Las Vegas, will spend four months based at Camp Bastion in the restive Helmand province of southern Afghanistan.

One of the loonier stories doing the rounds is a tinfoil hatter about the prince using this announcement to rehabilitate himself after his Vegas shenanigans.  Only those who believe everything is a conspiracy could believe that. Firstly, the MOD does not post a Prince to a war zone, without pre planning and a major security operation. Secondly, the pictures did no harm to Harry at all, except in the editorials of some faux moral newspaper columnists, anxious to show they had learned to behave after Leveson.

Its still very dangerous to send a royal into battle, so we tend not to do it. The skeptics might say that the Prince is in the heart of the British army's base in Helmand. He will never be alone unescorted. He flies the most powerful helicopter in the world, against backward, barbaric, tribesman armed with ancient weapons. .. That is all true. 

But it was a comparable situation for Louis Napoleon, Prince Imperial of France, only son of Emperor Napoleon III, nephew of the infamous dictator, Emperor Napoleon Bonaparte. He was in a British army camp of several thousand soldiers. Protected by artillery and machine guns. He was placed under strict non combat orders and everywhere he went he was accompanied by a large armed guard. He was fighting a backward,barbaric,tribal people armed mostly with weapons of ridiculous inferiority.

Young Louis was last of the bloodline of the Bonarpartists and hopes of a revival of that factions fortunes, rested with him. The Napoleon family lived in exile in England, fleeing there after France's and Napoleon III's defeat in the Franco-Prussian war of 1870. The old ex emperor died in 1873 leaving his only son.

The son was made a Grenadier on his birth. He took the review of the troops of France when he was two. His father wanted his son to be a part of the families great military tradition and so he was always surrounded by military men and uniforms and parades. He wore his uncle's sword. But he wasn't a good student. Handsome, athletic, rich, pampered, personable and charming he was a very popular young man in the social circles of London. Well liked by all , but especially by rank and file who he , unusually for the age, especially considering his social status and the class system of the times, he wanted to befriend. But he never learned military tactics or military methods.

After the British invasion of Zululand in 1879 and the terrible defeat of the army at Isandlwana a call for many more troops and officers went out. Men were rushed from all over the British Empire to Natal and prince Louis demanded he go. He had been an officer cadet at the royal Woolwich arsenal, earning the respect of his social inferiors. He was liked for his ability to muck in and take his fair turn at the duties as any commoner. He wanted to go to war. The head of the army had no concerns, although prime minister Disraeli was worried.  His mother Empress Eugene pressed Queen Victoria and eventually the prince went to South Africa, with the honourary rank of lieutenant.

Lord Chelmsford, who had more than enough to worry about, having already lost half his army in the war, really didn't need the headache. He attached the prince to his headquarters staff and insisted that the prince be accompanied everywhere by an armed escort and never get into danger.

The prince became friends with a lieutenant Carey, and Carey was given the task of keeping the bored and impetuous prince out of mischief by finding him something to do. The prince was a good sketch artist and had some topographical skill so he went out with the cavalry patrols when they were searching for the next camp and minor reconnaissance duties. On one patrol to check a stream Carey arranged for 80 lancers to accompany them.  On its return he and the prince were teased mercilessly about needing such protection from a few Zulu herdsmen.

On the next patrol, which the Prince insisted hurry along, they left without a full escort. There were just six irregular troopers, Carey a guide and the prince. Their orders were to reconnoiter the area and select a camp site for the advancing troops. The party went deeper into Zululand than they had been instructed. They searched some deserted Zulu homesteads and spent the afternoon resting by a river confident that the area had already been surveyed for possible Zulu presence. No lookout was posted. As they were preparing to leave...
..about 40 Zulus fired upon them and rushed toward them screaming. The Prince's horse dashed off before he could mount, the Prince clinging to a holster on the saddle - after about a hundred yards a strap broke, and the Prince fell beneath his horse and his right arm was trampled. He lost his sword, that once belonged to his uncle Napoleon Bonaparte.  He leapt up, drawing his revolver with his left hand, and started to run - but the Zulus could run faster. The Prince was speared in the thigh but pulled the assegai from his wound. As he turned and fired on his pursuers, another spear struck his left shoulder. The Prince tried to fight on, using the assegai he had pulled from his leg, but, weakened by his wounds, he sank to the ground and was overwhelmed; 
His body had eighteen assegai wounds, five deemed to be mortal. One had penetrated his heart and another had been stabbed through the right eye which had burst it, and penetrated his brain.

 The future emperor Napoleon IV was dead. He was barely twenty-three years old.

Two of his escort had been killed and another was missing. Lt. Carey and the four men remaining came together about fifty yards from where the Prince made his final stand—but not a single shot did they fire at the Zulus..

The outcry was unprecedented. France went into turmoil. Now everyone loved the dead prince, where previously he was held in esteem only by a minority. Some claimed it was all a plot by Queen Victoria. In England more newspapers sold about the Prince's death than about the earlier Rourke's drift and Isandlwana battles.  Mass was held in every Catholic church in England.  He was the last of the line.

Lt. Carey's very bad day actually got worse. On his way back to camp he met Evelyn Wood and Redvers Buller, two larger than life Victorian military figures. Carey waved them down and said "The prince imperial is killed."
"Where sir? Where is his body?" Buller and Wood used a telescope and could  see Zulus taking away some horses.
"Where are your men sir? How many did you lose?"
"I don't know," said the dejected Carey. "They're behind me."
"You ought to be shot! I hope you will be. I could shoot you myself," cried Buller. 
Both Wood and Buller were very brave. Both were VC holders.

None of that did Carey much good at his court martial. No officer had greeted him warmly since his first return. After a week he begged for a court of inquiry to clear his name. The court found him guilty, and in truth much of the fault for the disaster was his. You can read it here .In hindsight the Prince should have been retained at the headquarters as a staff officer and not left to go roving at all. But having made the decision to allow the prince some movement the orders to restrict those movements were very clear.
Carey was cashiered but the court recommended mercy.  By the time Carey returned to England his inquiry's sentence had been overturned by Queen Victoria, after special pleading from Louis' mother , who wanted no one to suffer further. Chelmsford was exonerated but most people still blamed him anyway even though he had his ADC's written instructions.  To take care that the Prince was not to go out without an escort when working for him, and in the matter of escort to treat him, not as a royal person, but the same as any other officer, taking all due precautions. ”  
Carey was free to return to his regiment.

He continued to insist on his complete innocence and wanted to be absolved. He wrote the Empress Eugene repeatedly. He wanted her to meet with him, so vindicating him. In the end she released a letter that Carey's wife had sent her to comfort her. The letter, written the night after the princes' death, stated clearly how Carey had panicked and fled. How he had allowed the prince to issue orders, even though he had no official command. And how he failed to make reconnaissance properly, had not posted lookouts and ridden beyond their orders. Carey was destroyed.
Bizarrely he went back to his regiment where he was sent to Coventry and no brother officer ever spoke a friendly word to him ever again. He stayed,in this odd life, for six years, before dying after being kicked in the groin by a horse.
All the prince's wounds had been to his front. He had stood and faced seven or more attackers bravely. Another Victorian legend, General Garnet Wolsey, who arrived in Natal to take command  just as Lord Chelmsford finally won the war,  could never understand the fuss over the prince's demise.

"A plucky young man, and he died a soldier's death. What on earth could he have done better?"

Friday 7 September 2012

Cat Among Pigeons: Worm Turning ?

Well at least a couple of Cameron's reshuffle appointments raise a smile: John Hayes to DECC and Owen Paterson to Environment, ha ha !

The wit and wisdom of Mr Hayes apparently includes deep skepticism about the claims of wind turbines:

' ... quoted as saying wind farms are a “terrible intrusion” and “renewable energy needs to pass the twin tests of environmental and economic sustainability and wind power fails on both counts”.'

They seem both to be hostile to subsidised schemes in general, and appropriately open minded to the potential of shale gas.

Cue apoplexy, (hopefully fatal) in all the usual quarters: is Mr P a CC-skeptic ?   Will Mr H put a stop to the subsidy-wallahs' gravy train ?

It is greatly to be hoped he will (though holding one's breath is not advised). Likewise a serious shale gas programme.  Time for this lethargic government worm to turn.



AIMing at ISA's

My attention has been drawn to a new Government e-petition submitted by David O'Hara. Here it is.

Share ISA's have long been in existence and successive government have increased substantially the amount of money that one can put into them, now over £10,000 a year. However, they are restricted to UK shares and Unit trusts/Funds.

This has created some strange oddities too in the rules as financial products have changed. You can for instance buy some very exotic ETF's which we now know have low correlations to the underlying assets and are in no way related to stocks, often commodities or FX. These highly complex structures are beyond me to understand and I have avoided since many were suspended in 2008  - however, they are fine for ISA's. How can a synthetic 3x leverage FTSE short not be highly risky as a product to buy?

Then there is a strange twist by which AIM companies that list in certain other major markets can be put into an ISA. A TSX or ASX listing amongst others will allow you to put a share into an ISA.

So what can't go in, well, normal AIM stocks.  The reasoning behind this is that AIM is too risky and you can lose all your money in dodgy companies. There is of course much truth to this, many of my previous key buys, like PPA or EME or XTA have proved long-term to be disasters. On the plus side since 2008 and investing mainly in AIM stocks my portfolio is up a mere 1000%; it's less than half of what it was in Jan 2011, but still, its done well. There is money to be made and it is not as if I trade much, having sat on most of my current portfolio for nearly 3 years now.

Of course, AIM is dodgy and the management is dodgy - but, um this is true of the FTSE100 too. Where is that Fred Goodwin guy or that nice Mr Diamond? Who runs and really operates some very strange FTSE mining businesses like ENRC - what is their approach to corporate governance? It is not all rosy in the FTSE garden by comparison.

Finally, the small stocks on AIM without foreign listing can be real UK SME's - pharma companies, telco's all sorts. These companies need the support of regular UK investors - it is why they went to the stock markets.

People should be free to gamble with their investments into supposedly higher risk companies - it is their money and the Government should be supporting small UK investing. I will be signing this petition.

Thursday 6 September 2012

UK House Building - A new start?

Work has started on Bill Quango MP's extention already
As the BBC points out there are 400,000 thousand applications for extensions and new home is the UK which are not being done. Many people know the trick of applying for planning, getting it and then selling on a property with the 'added-value' now embedded and so asking for a better price.

Less have been successful in getting that new price in the last few years with a deep recession and restricted mortgage availability - so how much of this 400,000 is in effect pure vapourware? Its quite a lot no doubt.

But, with construction lagging in the economy (although with very dodgy ONS data can we even really be sure this is true), the cry of something must be done has been raised in the media. National infrastructure projects like new airports, powerstations and roads are voter unfriendly and must be left to the next Government. The Coalition already has HS2 and that is enough bad news for home counties constituencies to take.

From a trading perspective I am not so sure this is good news for housebuilders as it maybe mean although they get more planning, people do extensions and so don't move. Instead, Kingfisher and other DIY businesses will move on this news to a greater extent.

So now, along with an improved national planning framework, we are to have a free-for-all on extensions to boost the economy. As ideas go this is not too bad. We have a bug shortage of housing stock and over-priced properties, so investment in this area should generate real returns, whilst potentially helping to balance serious crisis.

Now, if only they can find the strength to allow some private sector build some gas fired powerplants and an airport the Government might even help pull the Country from recession....

Wednesday 5 September 2012

What lessons can investors learn from the debacles that are HMV, JJB, MCHL, PMK & YELL?

The one and only, Mr Cyril Theret, Ex CEO Plus Markets, presider over pretty much the complete wipe out of his long suffering shareholders To say that it’s has been a difficult couple of years for investors fishing for the ultimate contrarian plays amongst the small/micro cap sector if the market is probably an understatement.
It is a fact of the markets that low stock prices, particularly in once venerable names, attract speculative players in the hope of bagging a “phoenix” that will rise from the ashes. Illustrating this point, even over 20 years later the company Next still has investors salivating in the hope of picking up a stock for pennies that turns into a £36 stock…
If this years roll call of dead ducks is anything to go by, the odds of this happening seem to be shorter than ever, probably akin to winning the lotto. What lessons can we learn from this as I also got stung in Plus Markets this year and in investing, it’s all about not repeating your mistakes.
For me, one of the the primary issues with regards to avoiding a banana skin amongst small cap and AIM stocks is one that we have touched upon before in our magazine and that one should pay particular attention to in the current economic environment where credit is not easy. That is to quite simply watch what Directors of these companies are doing with their own money and not what they are saying. Time and again they spin a story of hope to shareholders with a view to keeping the salary gravy train going as long as possible. The roll call of the worst culprits here are the Boards of Yell/Hibu, Plus Markets, JJB, HMV, GMG, MCHL & DES.
The “not so fantastic” Mr Simon Fox, ex HMV CEO & destroyer of approaching £1bn of shareholder value.
What is noticeable about GMG, MCHL, JJB, HIBU & PMK companies above is that there was absolutely zero directors buying in the 6 - 12 months period that preceded the collpase of the companies/decimcation of market cap (with the exception of GMG that had an automatic nominal directors share purchase system in place and so doesn’t count). ALWAYS WATCH what they are doing with their money - if they really believe the turn around plans then they’d put their hands in their pockets and show their faith.
With regards to JJB, I personally had dialogue with Mr Keith Jones and he would always obfuscate around the question as to why he and his fellow Board members would not buy stock when they were in fact actually almost compelled to in order to maximise their returns through a scheme put in place during the recapitalisation process. Now we know the answer why… 
Keith Jones, Ex JJB CEO  - sinking ship deserter and responsible for tearing up £20m of Mr Bill Gates money!            
Ditto with Mr Cyril Theret of Plus Markets (an “old friend” of this blog - I wonder where he’ll pitch up after he finally strips Plus dry of almost the last of their cash?) and the “wily” Mr Fox from HMV…
This magazine is a big advocate of making every public company director invest a fixed percentage of their after tax salary into their shares (preferably around 15%) - that way they are truly aligned with their shareholders. Run the company well, the share price goes up and so does your net wealth. Screw it up, company share price goes down and the Galapagos is off the hol menu that year for perhaps a week in Bognor Regis. Similarly, quite how “bonuses” can be paid to Directors in poorlyperforming companies is beyond us too.
The reason Boards get away with it is because of disorganisation, lack of time and apathy amongst shareholders together with being outgunned by the institutions that seem happy en masse to go with the status quo. Something has to give or faith in the integrity and morality of Public company Directors is likely to fall further through the floor.

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Tuesday 4 September 2012

The shuffle.

The reshuffle.

Previously we speculated on the most hypothetical of unlikely reshuffles. What needed to be done.
Osborne out. Cable out. May out. there was as much chance of that happening as there is of anyone ever saying 'I agree with nick' in a leader's debate, ever again.
It was a pastime activity. hope over reality.

However, in some subtle and clever ways, Cameron really has had a reshuffle worth having.

Ken Clarke has come away from Justice, where he was annoying the right wing media, and has a roving, unspecified brief.  Basically he's to help out at the Treasury. Help point out the carrots in any future pasty style taxes and such. And no doubt he'll be popping up on Newsnight to explain the government's position and expand on its ideas. He's not afraid of Paxo and he doesn't come across as an evasive lying politician.
A good move from Dave. Two birds- one stone. And Chris Grayling, who is a fairly competent performer had gone to make justice a little bit harsher for the Mail.

Jeremy Hunt we had pegged to leave meeja and sport. And he has. But instead of disappearing, he's got a big promotion. He's the new Health secretary. Wow!
 We knew Lansley was toast, and had hoped that Vince Cable could be moved from being the anti-business secretary to the 'saviour of the NHS.'
Well, Cameron didn't fancy that. Or maybe Clegg intervened to keep Cable away. Whatever..Lansley has gone {big tick right there. He's been a PR disaster,} And Hunt has taken over. It was bold of Dave to not give a stuff what the assorted Leveson Liberal media would make of Murdoch's poodle getting a bigger role in government.
Hunt is a Murdoch man. So at least the red tops coverage of the {watered down?} health reforms will get good coverage.

David laws finally limps back into government but at education. He was the Lib Dem education shadow for years and has a good grasp. He's  joining the ablest minister, Michael Gove, and will possibly allow one of the few areas of real government success, education, to proceed even faster.
He also tips out the useless Sarah Teather,which is a bonus.
Really, like Clarke, Laws is on a multi brief. he will advise the treasury as much as the schools. He 's back to help Clegg too. Possibly just in time. Shame that the PM and deputy weren't strong enough to oust Cable from business. But Cable has been on maneuvers and his power base is growing, so he must, regrettably, stay.

C@W also wrote { Sayeeda Warsi, Caroline Spelman, Cheryl Gillan, Theresa May} will be very lucky to keep their jobs in a reshuffle. And if they do will only be because it would bring up the misogynist Dave tag again if he knifed all his babes.

Three of the four weren't lucky. Another brave decision. Axing female MPs when he had already been accused of not respecting women took some courage.   
{Telegraph are already running a story about male dominated cabinet}

Theresa may survived. A Cameroon favourite I suppose she's done OK.  Not good. But not really bad. She's better than Jacqui Smith. {to damn with praise so faint its almost transparent}.

So overall, a pretty fair stab. The deckchairs have been rearranged. Now its time to steer the ship.

Justine Greening, a Bill Quango hot tip for promotion, got chopped. 
In the comments of that link you'll see regular commenter MEASURED spotted the reason why she's been pushed out to the non job of international development.

measured said...
Did anyone consider that Justine Greening, Secretary of State for Transport whose constituency is Putney, might have vested interests when it comes to a third runway at Heathrow?

Doh. Nimby, yet far more important to the future of the UK than HS2.

Well spotted measured.

Bribes Not Deductible? Shome Mishtake?

An interesting ruling from the Russian authorities: bribes paid by Russian overseas will not be tax-deductible !

"Expenses incurred while committing legal violations, including providing bribes or kickbacks, are not recognized for the purposes of tax assessment"

They are novices (at accounting, that is - not bribery, obviously). The Americans do this much more subtly. 'Expediting payments' (lovely turn of phrase) are just another category of business expense, deductible as usual under US rules.  Not all bribes qualify, but a very large proportion do.

Nothing like a nice semantic distinction to *ahem* keep the wheels turning ...


Monday 3 September 2012

Self-igniting euro collapse?

Loving this article from the peerless FT Alphaville today. over the sumemr lots of US companies have been thinkin about what to do to sustain their business if greece falls out of the euro. Bank of America is looking at a fleet of trucks to ship in cash from abroad (how advertising this to potential brigands is sesnisble is beyond me).

My reaction to this is that we are witnessing the further build up of the Euro crisis. bad enough is the Eurozone's inept performance at managing the crisis. Still every day senior German minister's gon on and on about not saving Greece. This forms the basis f the plot re Grexit to whcih private actors then work to.

By withdrawing all money from Greek bank accounts the Country is forced closer to bankruptcy - so the rhetoric in the media has a causal effect on Bank share prices and others in Greece.

In one weeks time is the meeting of the Trioka in Greece. After a summer lull, all the talk of eurozone collapse will return to provide and indian summer of hot air for the autumn.

What if anything can stop this cycle? I doubt myself it is possible, but when politicians are involved it maybe there is a massive printing of money or some other kind of mega-collapse that will allow Greece to continue in the Eurozone. the price for exit is a disaster of 2008 proportions, only this time piling into a much weaker Eurozone economy.

Sunday 2 September 2012

How are the market sectors working out this year?

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Monday will see the return to work of traders and maybe even some volume to the markets (well not quite Monday as the US is closed for the start of the NFL although they call it something else). Year to date it has been one of constant threat but little action, with the markets behaving like a hen=pecked husband to his wife. Eurocrisis, China Syndrome,  More QE, Less QE you name we have had it, and ye the market remain up on the year in the West, even if you can’t say that for the East. So what sectors have performed and where to look for the rest of the year, a continuation trend or reversal to a mean?

Interestingly some of the spreads across related industries are a nice dynamic. For example chemicals leads the way with mining and industrial metals the losers.  Clearly, if you are buying you products in more cheaply then the room for improving margin and pricing is there for Chemicals companies. With China on the slide and media commentary abounding that stocks of copper, iron and others are rapidly building in China’s ports, I doubt very much this will be a trend reversal candidate in 2012. Chemicals could well prove the winning sector come year end. Sadly for AIM, mining and precious metals mining are huge chunks of the listed market and so this does not bode well for the AIM market this year (nor the TSX or ASX if we look abroad).

More confusingly is the retail sectors. Leisure goods (see JJB this very week, dying for the 3rd time in 2 years with severe doubts anyone will even try a pre-pack yet again), food retail and personal goods are down, whilst general retailers and household goods have performed much better. It’s a split market, with seemingly cheaper purchases losing out and larger purchases holding on. It’s a difficult market to call, but I can’t see any retail sector recovering this year as the demand shy consumers grind through the recession. If anything, the larger general retailers may fall back a bit as the recession continues.

Financials generally, including insurance have had a dull year and with constant scandals and the Eurozone crisis coming to the boil, this remains a sector to avoid with limited upside short of some miraculous solution in Europe which does not exist.

A set of sectors set to continue there strong run is the Technology, Media and Telecoms sectors. Even Danny Boyle at the Olympics opening ceremony could see how mobile networking is driving a new revolution and the UK listings in this area have a number of decent takeover targets as well as utility stalwarts like Vodafone. Even BT has done a good deal on the Premier League rights – there must be something good in the water for sure!

The obvious stand out to change will be Construction. Every paper is full of demands for the Government to do something on construction and quite a few large announcements are due. Inaccurate ONS data has hindered the analysis of this sector too. A quick walk around the City of London soon shows how much development there can be, along with moves to boost housebuilding recently announced.

If your looking to trade short or long, the increasing correlations of movements by sector and across markets makes it well worth getting beyond micro-analysis and factoring in these wider trends into your stock picking analysis.