Today’s Spot Markets live session is with Ben Harrington, the founder and Editor of Betaville.
10:59Hello and welcome back to Spot Markets Live, the real-time markets chat that takes you on a whirlwind tour of the markets.
Is anyone out there?
We’ve been off the last two weeks but hopefully (staffing permitting) we will be back every Monday at 11 from now on.
Hello Ben, how are you?
Great to be back on here again
Likewise great to have you back.
I’m hoping the live audiences haven’t completely disappeared because it’s August.
yes anyone out there?
Summer is always a lull period for the markets, but perhaps 2022 will be different.
And that’s largely to do with the fact that we are already facing plentiful energy-related pressures and it’s not even winter yet.
Ben, last time you joined us, you gave us the big scoop about the French govt moving to buy the minority public stake in EDF.
What’s the latest on that?
yeah that was a good one wasn’t it
looks like it’s all moving ahead
the French government are offering EURO 12 a share to buy-out the minorities
That was at the top-end of the range of the rumours you referenced on here last time.
Rumours started about euro 7.84
now its trading just below 12
so that’s only about a 40pc premium!
So a decent bit of UNCOOKED to RARE that was
The background to the bid is that France is facing a potentially worse energy crunch than even Germany.
Javier Blas at Bloomberg has a very good write up of the issues here
So France is going to pay nearly $10bn to ensure the market doesn’t have advanced info on the state of affairs in its energy markets via stock market regulatory disclosures.
I just jest, i’m not sure if that would be the case. I actually don’t know how much transparency a fully nationalised entity gives on a live basis in a country like France. I would imagine it would still have to be transparent to some degree.
We will return to the energy story in a bit. But first lets run through the overnight stories
Not entirely markest related, but tensions seem to be resurfacing in Serbia/Kosovo
Here’s the AP on the story
PRISTINA, Kosovo (AP) — Kosovo’s government early Monday accused neighboring Serbia of trying to destabilize the country as ethnic Serbs blocked roads and conducted other incidents in the north apparently in a dispute over vehicle license plates and identity cards.
Officials in Kosovo had decided to resume the practice of requiring vehicles that enter from Serbia to replace Serbia license plates with Kosovo plates. The reverse is required by Serbia for vehicles from Kosovo that go to Serbia.
Kosovo also is planning to block its ethnic Serb minority from using only the Serbian identity cards when crossing the border.
I’m not geo political expert
Meanwhile, Nancy Pelosi is on her asian tour, and nobody is yet sure or not whether she will go to Taiwan
But i will note that BAE Systems is trading up this morning
Up 2.1% and third top gainer on the FTSE
It’s up 42pc year to date
definitely up since Feb, and definitely a better buy than bitcoin
What’s your view on geo political developments over the next three months?
It’s not going to get better I don’t think.
Everything hangs on China. But the interesting thing about China, is that it is also facing its own domestic financial woes
We sit in this unique juncture where every major geopolitical economic zone, stands to benefit from distracting from the domestic economic picture.
it’s really the perfect manifestation of the old Orwellian prophecy about the perpetual war
this headline from the New York Times last week made me giggle on that front
Basically, the point is that the same exact thing can be said about Biden. And everyone benefits at this point from exaggerating an external threat to maintain domestic confidence and order.
But moving back to markets…
We keep getting fairly dire economic data.
There was the debacle over whether we are really in a recession or not.
I’m more worried about inflation than recession
And while some good arguments can be made that this time is different, by and large this is a unique situation compared to more traditional recessions because of the resource constraints and the modernised nature of employment, and covid repercussions.
Inflation, recession, stagflation
we can have it all Ben
Interested in what the commenters think btw
do pipe up
In the UK we have the beginning of voting for our new PM
Rishi is writing a lot of checks the UK treasury can’t necessarily cash.
including promises of a potential 20% cut to taxes
For anybody true blue Tory the Conservative contest to become PM is ridiculous
sorry for anybody who is NOT a true blue Tory
they just throw a load policy ideas that they are unlikely to be able to keep when they become PM or decide against because “circumstances have changed”
Anyway on the UK domestic front the news from the CBI is bearish.
UK businesses expect zero growth over next 3 months
Here’s the Reuters blurb
LONDON, July 31 (Reuters) – British businesses do not expect any growth over the next three months, as a surging cost of living squeezes consumer demand, a monthly survey showed on Sunday.
The Confederation of British Industry (CBI) said members reported above-average growth in the three months to the end of July – slightly faster than in the three months to June – but expect this to peter out in the months ahead.
Other than that: Pearson and HSBC are top gainers.
Fresnillo, Rentokil, Interkek are the biggest losers.
On HSBC, looks like this is down to Ping An’s pressure to get board representation
Just coming back to inflation – I paid 21 quid for two glasses of wine in the pub the othe night
Readers might remember Ping An is arguing for HSBC to be broken up
Wow Ben. That’s pricey
do you live in Mayfair?
that was in a pub by Waterloo
can’t imagine what it’s like in Mayfair
Actually, would be fun to have a resource to collect people’s inflation experiences. Amusing bills.
I’m assuming if this inflationary spiral at pubs and restaurants continues there will be a buyers strike in the not too distant future
Having spoken to a number of hospitality proprietors I think there is a deep concern that if they raise prices too much, the customer base will collapse. But they also cant’ go on absorbing the supply side inflation.
It’s a real dilemma
Quickly just add the Times story on HSBC here.
but going back to inflation
Twitter is full of energy bill “then and now” comparisons.
FYI i don’t know who this is but his energy bill looks bad
let me try putting the image in again
i was trying to put up an image but it suddenly won’t work
Anyway just follow the link to see his energy bill
up to about £6000 from about £3000
@Willosaurus – FT had a story the other day about £8.00 a pint. Is that your local?
I find that getting a comprehensive account of the energy situation in Europe is pretty hard. So I am thinking of starting some sort of resource where info on the state of play can be consolidated. Interested in what readers think and/or what sort of structure might be useful.
But it’s August 1 now and i think there’s no doubt that some sort of shortages or rolling blackouts among commercial or office entities in europe is going to be inevitable at this point.
I wonder to myself if any escalation with the situation in Taiwan might actually be a political comfort in that it might make an implicit situation explicit (that NATO is in an active state of war) which might allow for wartime economy measures to kick in.
Certainly as of October when higher interest rates and higher energy prices begin to bite, we are going to face a squeeze that can’t be corrected for with usual monetary stimulus. The only solution may be a rationing regime of some sort.
Hints of this are already emerging.
Daily Mail has been more on top of this than other papers i find – at least on the quirky side of things
- Spanish workers have been told to take their ties off rather than relying on air conditioning.
- Germany has already begun turning off street lights in Berlin while Hanover will shut off hot water in public buildings. Oktoberfest and Christmas markets also face being scrapped, politicians have admitted, and breweries could be closed.
- In Austria, the city of Linz has stopped lighting historic landmarks at night while Salzburg is drawing up plans to follow suit.
Do we mind having the lights turned off Harrods Ben?
Surely the Qataris – who owns Harrods – can fund the lights with their own personal gas reserves?
They helicopter them in
with their luxury cars
But back to more concrete corp stories. Ben, anything caught your eye in the sundays?
the Mail on Sunday had a story about Natwest looking to buy Quilter
The story sent the stock up 17pc this morning
so somebody believes it
as well as Natwest, which let’s face it is really Royal Bank of ScotlanAmy-Jo’s reports also suggests private equity firms Bain, CVC and and BC Partners have sniffing around.
If Natwest goes ahead with the acquisition it would be the biggest deal the bank has done since Royal Bank of Scotland’s acquisition of ABN Amro, and for readers who have been around the City for than a decade we all know how that ended up.
Anyway, I doubt there isn’t the same amount of risk around Natwest – which The Sunday Times were suggesting is at the centre of a money laundering probe by the Isle of Man Financial Services Authority – buying Quilter.
Last time I checked though some of Quilter’s morning gains had been given up with the stock up 12pc
why do you think that is?
might be because as yet there has been no statement from any party involved
typically the Takeover Panel would apply pressure for a confirmation if there were / are any live talks
that’s what happened with Amy-Jo’s scoop on the Euromoney bid
the RNS was out at 7:00 am in the morning
(@willosaurus – Pearson is a funny company these days. I think the general house view at FTAV towers was err, bearish.)
so do you think this is a bit of a no-go story?
No I suspect Amy-Jo is onto something
probably just caught it a bit early
the story I mean
private equity firms have been sniffing around Quilter since 2019
Back then it was Warburg Pincus
definitely, something to keep an eye on
and I’m sure investment bankers are pitching it
question is whether the PE houses can raise the debt funding at the moment
anecdotally I’m told it’s very hard to get leveraged finance for big UK transactions at the moment
FYI, some wires reporting: PELOSI IS SAID TO BE ARRIVING IN TAIPEI TOMORROW NIGHT: TVBS SOURCES
If anyone caught Niall Ferguson’s assessment of the situation, I think it’s worth a read
“Taiwan will be next. You won’t have any computer chips. They’ll blow them off the face of the earth.”
as Ferguson notes – who said that?
can you guess Ben
Was it Elon Musk?
no, but someone equally controversial on Twitter
Anyway, Niall makes a good point
here’s the closing part of the column
In March, Trump had a phone conversation with the professional golfer John Daly that future historians will quote, whether they believe a word he said or not. “It’s like they’re afraid of him,” Trump said, referring to Putin. “You know, he was a friend of mine. I got along great with him. I say, ‘Vladimir, if you do it [attack Ukraine], we’re hitting Moscow’… and he sort of believed me, like 5%, 10%, that’s all you need.
He never did it during my time, John, you know … Why didn’t he do this during the last four years? … Xi didn’t bother me either. I told him the same thing.”
And Trump added: “Taiwan will be next. You won’t have any computer chips. They’ll blow them off the face of the earth.”
That’s the context
Niall says we better hope Trump’s words don’t turn out to be prophetic
but it is some interesting colour.
Sorry probably said Quilter is a wealth management company
What else have you got?
whoops I meant HSBC
already rebranding it ben?
Well The Sunday Times had another story about HSBC and it being pushed to give Ping An, it’s main shareholder, a board seat. And this morning the company unveiled some pretty decent ish figures with the banking giant reinstating the dividend.
Hong Kong Shanghai No Corporation?
Yeah, where do I send the invoice?
Any views on the whole HSBC situation Izzy? This situation seems more relevant for political risk specialists. And as a customer I’m becoming increasingly worried about whether I need to move my money out…! I mean who knows one day the Chinese might just decide … Please reassure me Izzy.
yeah, so shares up on the news. I think the key risk is a bifurcation of the bank. Wouldn’t necessarily be a bad thing for the rest of world division. But one does have to question the underlying political motives. Ping an has a very murky ownership.
oooh Roger does that mean my money is safe? … it’s just deposits
If we see more control over institutions and an asia split, this could be an interesting power grab into the hearts of the western financial system potentially by China. Although, clearly china is already well represented in there in other ways. And it’s the UK division that is definitely the dead weight.
But i wouldn’t worry about deposits in UK institutions as much as fx exposure.
that’s the really big issue. For now the dollar remains strong, but this is a reflection of the crappiness of the euro and sterling relative to ROW. The dollar as ever is a lifeboat currency, so when things go bad people tend to liquidate winners to pay for the costs of losers, and they use the dollar to park their liquidity.
For now the US is definitely more of a safe haven, because it isn’t as exposed on the energy front. But things could change quite quickly with a china confrontation.
The general view is that the West is more exposed to China than we were to Russia.
Because the GDP is so much bigger, the consumer supply chains are so much more entrenched, but i do wonder. I kind of think in some ways we can readjust and reindustrialise more quickly by restoring stuff we outsourced to China, than we can compensate for the energy shortages out of Russia. Though that’s not to say it won’t be painful.
Moving China out of the manufacturing picture could actually help us rediscover the true marginal cost of production for a lot of stuff that has been repressed by standards that we don’t want to really support. This could also encourage innovation.
Solar panels are a good example, currently drawing on cheap labour and fossil fuel power. Though I suspect if we restored solar manufacturing to the west, we would soon discover the cost of renewables is much higher than we really appreciated.
Ok – what else?
Other than that there wasn’t much else in the Sunday papers on the corporate front but I guess we are now entering one of the quieter periods of the year so no surprises there.
There is a bit of UNCOOKED around a UK small cap called Audioboom
Audioboom – oh yeah. What’s that?
It’s an AIM-listed podcasting business
It has had a fair few “interesting” shareholders,
Such as property developer Nick Candy
and a vehicle called Acqua that is backed by none other than Robert Bonnier, a Dutch financier that isn’t that well liked by the City of London after a few things went wrong, such as Scoot, in the past.
(@roger – yes it is a good thing about the UK bank being ring fenced. But still seems a significant potential “appropriation”)
Ahh… that sounds interesting. Is that the Nick Candy that tried to buy Chelsea FC and THG?
Is he the one married to Holly Vallance?
likes to talk a good deal
last summer All Active Asset Capital, which is linked to Acqua, offered £12.00 in cash and shares to Audioboom, which was rejected. Since then, its shares leap and collapse several times over amid multiple bid rumours, including one from Mark “The Kleinmanator” of Sky News, who suggested Amazon and Spotify were interested in it.
oooh, I’ll get a chart
yeah the stock recently collapsed after Bonnier’s vehicle sold some stock
all I can say is the bid rumour persists, according to sources, despite the naysayers trying to pour cold water over it. Make what you will of that.
Sounds like the usual London small cap spivvy goings on…!
The other decent UNCOOKED rumours involve US companies at the moment.
One of them is Farfetch
the online fashion house
that is involved Richemont, Alibaba and the French billionaire who runs Kering
oh you mean, françois-henri pinault?
married to salma Hayek/
the talk in the market is that Farfetch is now working with advisers after receiving takeover interest
There is also Ferguson, the plumbing and building products company that used to be a FTSE 100-listed company known as Wolseley.
so what’s the story around Ferguson?
There has been bid talk around the name for a couple of months, with some suggesting it could be the perfect target for another American group.
Btw – while holidaying in Spain, I got to sit next to Charlie Mullins of Pimlico plumbers on the plane.
Yeah, to be specific, he wasn’t sitting next to me, but the seat in front. And i originally thought he might be Rod Stewart.
I spoke to Mullins once
Any other decent uncooked rumours for us before we part ways?
Ben Harrington 12:11
sorry yes back to the UNCOOKED
On the private equity front cloud and tech company Blackline Inc has been tipped as a potential buy-out candidate, with UNCOOKED gossip circulating it has drawn interest from a European and US based private equity firms.
payments processor EVO Payments is rumoured to be in the sights of rival that is willing to make a stock offer for the business.
just to remind readers, Ben classifies his info in the following way
UNCOOKED: Market gossip as Betaville receives it. This scuttlebutt has just come in and hasn’t been checked with all of Betaville‘s well-informed RARE sources let alone formal journalistic channels (public relations executives, bankers etc). The rumour might be total codswallop, rubbish or nonsense – but then again there may be something in it, so it’s worth airing on Betaville.
RARE: Market gossip that has been tested with some of Betaville‘s USUALLY WELL-INFORMED sources. In fact, Betaville might have spent several days or weeks working on this story. However, the rumour hasn’t been tested through formal journalistic channels (public relations executives, bankers etc). The scuttlebutt might be complete rubbish – but then again there may be something in it, so it’s worth airing on Betaville.
There is also WELL-DONE
but we haven’t done one of those in a while!
back to EVO Payments
(@ciaran – hopefully we will get more engagement as it builds. Always best with a lot of comments)
Last year Shift4 Payments, a rival, attempted a tilt at EVO but it was rebuffed. I’m not sure yet whether the approach is from Shift4 or someone else. Word of warning with this one is that EVO Payments is supposed to have figures this week…
And that’s it for the moment
Yeah, that’s been really great ben. Thank you again for joining me. Hopefully you will be joining us again soon.
Yes always enjoy your company Izzy and your macro geo poltical viewpoint
Hopefully it’s all complimentary
And also amusing comments and pub talk from Willosaurus and Roger Francis
remember readers don’t be afraid to get involved with comments and stories
that’s how journalism works…
so on that note, it’s goodbye from us until next week. I am hoping to be back next week with a former M&A correspondent. But not confirmed yet. Do spread the word, and do fill out the application for a login if you want to join us next week and more regularly.
this is processed manually, so don’t panic if you don’t hear from us immediately.
I think this may be the quickest confirmation for a markets live
How about that readers you got some of the news 10 minutes early
Perfect! another great reason to tune in. ?
timestamp to prove it
But you could have read it a couple of weeks ago on Betaville Intelligence…
Alright on that note it’s truly bye from us! see you next week.