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Spot Markets Live Transcript: 01/08/22

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Today’s Spot Markets live session is with Ben Harrington, the founder and Editor of Betaville.


Izabella Kaminska 10:57

….

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?

Morning!

We’ve been off the last two weeks but hopefully (staffing permitting) we will be back every Monday at 11 from now on.

Those reading this in transcript form, if you fancy a login to help us expand the test over the weeks to come please email [email protected].

Today I’m joined by Ben Harrington of betaville again. You can check out Ben’s service at betaville.co.uk

Hello Ben, how are you?

 Ben Harrington 11:01

Hiya Izzy

Great to be back on here again

Izabella Kaminska 11:01

Likewise great to have you back.

I’m hoping the live audiences haven’t completely disappeared because it’s August.

Ben Harrington11:01

yes anyone out there?

Izabella Kaminska11:02

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?

Ben Harrington 11:02

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

Izabella Kaminska 11:03

That was at the top-end of the range of the rumours you referenced on here last time.

Rumours started about euro 7.84

Ben Harrington 11:04

now its trading just below 12

at 11.88

so that’s only about a 40pc premium!

So a decent bit of UNCOOKED to RARE that was

Izabella Kaminska 11:05

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

Ben Harrington 11:08

that’s worrying

Izabella Kaminska 11:08

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.

Ben Harrington 11:09

I’m not geo political expert

Izabella Kaminska 11:09

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

Ben Harrington 11:11

It’s up 42pc year to date

Izabella Kaminska 11:12

Ben Harrington 11:12

BAE Systems

Izabella Kaminska 11:12

definitely up since Feb, and definitely a better buy than bitcoin

Ben Harrington 11:13

What’s your view on geo political developments over the next three months?

Izabella Kaminska 11:13

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.

Ben Harrington 11:17

I’m more worried about inflation than recession

Izabella Kaminska 11:18

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

Ben Harrington 11:20

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”

Izabella Kaminska 11:21

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

Ben Harrington 11:23

Just coming back to inflation – I paid 21 quid for two glasses of wine in the pub the othe night

Izabella Kaminska 11:23

Readers might remember Ping An is arguing for HSBC to be broken up

Wow Ben. That’s pricey

do you live in Mayfair?

Ben Harrington 11:23

that was in a pub by Waterloo

Izabella Kaminska 11:23

yikes

Ben Harrington 11:23

can’t imagine what it’s like in Mayfair

Izabella Kaminska 11:24

Actually, would be fun to have a resource to collect people’s inflation experiences. Amusing bills.

Ben Harrington 11:24

I’m assuming if this inflationary spiral at pubs and restaurants continues there will be a buyers strike in the not too distant future

Izabella Kaminska 11:25

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

..

Ben Harrington 11:27

I’m here

Izabella Kaminska 11:28

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

Ben Harrington 11:29

@Willosaurus – FT had a story the other day about £8.00 a pint. Is that your local?

Izabella Kaminska 11:29

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?

Ben Harrington 11:31

Surely the Qataris – who owns Harrods – can fund the lights with their own personal gas reserves?

Izabella Kaminska 11:31

They helicopter them in

🙂

with their luxury cars

But back to more concrete corp stories. Ben, anything caught your eye in the sundays?

Ben Harrington 11:32

Yes

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

Izabella Kaminska 11:38

why do you think that is?

Ben Harrington 11:38

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

Izabella Kaminska 11:40

(@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?

Ben Harrington 11:41

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

Izabella Kaminska 11:42

Interesting

definitely, something to keep an eye on

Ben Harrington 11:42

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

Izabella Kaminska 11:43

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

Ben Harrington 11:44

Was it Elon Musk?

Izabella Kaminska 11:45

no, but someone equally controversial on Twitter

Ben Harrington 11:45

Nigel Farage?

Izabella Kaminska11:45

close

Donald Trump

Anyway, Niall makes a good point

Ben Harrington 11:45

Uggghhh

Izabella Kaminska 11:45

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.

Ben Harrington 11:47

Sorry probably said Quilter is a wealth management company

Izabella Kaminska 11:47

What else have you got?

Ben Harrington 11:48

HSNC

whoops I meant HSBC

Izabella Kaminska 11:49

already rebranding it ben?

Ben Harrington 11:49

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.

Izabella Kaminska 11:49

Hong Kong Shanghai No Corporation?

Ben Harrington11:50

Yeah, where do I send the invoice?

Izabella Kaminska 11:50

😂

Ben Harrington 11:50

But seriously

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.

11:52I’m worried!

Izabella Kaminska 11:52

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.

Ben Harrington 11:53

oooh Roger does that mean my money is safe? … it’s just deposits

Izabella Kaminska 11:53

Quoting from the wiki: In October 2012, The New York Times reported that relatives and associates of Chinese Premier Wen Jiabao controlled stakes in Ping An worth at least US$2.2 billion in 2007.

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.

Ben Harrington 11:55

Eeeek

Izabella Kaminska 11:56

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?


 

Ben Harrington 11:58

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

Izabella Kaminska 11:59

Audioboom – oh yeah. What’s that?

Ben Harrington 11:59

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.

Izabella Kaminska 12:00

(@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?

Ben Harrington 12:01

Yes

that guy

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.

Izabella Kaminska 12:02

oooh, I’ll get a chart

Ben Harrington 12:02

good idea

Izabella Kaminska 12:03

Ben Harrington 12:03

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.

Izabella Kaminska 12:05

Sounds like the usual London small cap spivvy goings on…!

Ben Harrington 12:05

Moving on…

The other decent UNCOOKED rumours involve US companies at the moment.

One of them is Farfetch

the online fashion house

and retailer

that is involved Richemont, Alibaba and the French billionaire who runs Kering

Izabella Kaminska 12:07

oh you mean, françois-henri pinault?

Ben Harrington 12:08

yeah

Izabella Kaminska 12:08

married to salma Hayek/

no less

Ben Harrington 12:09

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.

Izabella Kaminska 12:10

so what’s the story around Ferguson?

Ben Harrington 12:10

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.

Izabella Kaminska 12:11

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.

Ben Harrington 12:11

LOL

I spoke to Mullins once

Izabella Kaminska 12:11

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.

Izabella Kaminska 12:13

oh cool.

Ben Harrington 12:13

and finally

payments processor EVO Payments is rumoured to be in the sights of rival that is willing to make a stock offer for the business.

Izabella Kaminska 12:14

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.

Ben Harrington 12:15

There is also WELL-DONE

but we haven’t done one of those in a while!

back to EVO Payments

Izabella Kaminska 12:16

(@ciaran – hopefully we will get more engagement as it builds. Always best with a lot of comments)

Ben Harrington 12:16

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

Izabella Kaminska 12:17

Yeah, that’s been really great ben. Thank you again for joining me. Hopefully you will be joining us again soon.

Ben Harrington 12:17

Yes always enjoy your company Izzy and your macro geo poltical viewpoint

Izabella Kaminska 12:17

Hopefully it’s all complimentary

Ben Harrington 12:18

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…

Izabella Kaminska 12:19

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.

Ben Harrington 12:23

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

Izabella Kaminska 12:24

Perfect! another great reason to tune in. 😎

timestamp to prove it

Ben Harrington 12:24

But you could have read it a couple of weeks ago on Betaville Intelligence…

Izabella Kaminska 12:27

Alright on that note it’s truly bye from us! see you next week.


Comments

12:19
Willosaurus: cheers izzy – have a great week
12:18
C:Thanks to youse both
12:17
Willosaurus:thanks Ben!
12:13
C:I like the Spot Markets tone. Light and to the point.
11:55
Willosaurus:Ping An would just be the olympics no? Confirming and announcing what’s already happened.
11:53
RF: Depends how big the deposit is 🙂
11:52
RF:Good thing the UK bank is ring fenced
11:43
Willosaurus: now retweeted with “buy stonks” a million times
11:40
Willosaurus:also no position
11:40
Willosaurus:no messing
11:39
Willosaurus: Pearson up on results apparently. Bet you are delighted for them Izzy.
11:32
C:I know Germany. They are used to their comforts. The days when ‘Warmduscher’ (warm-showerer) was a valid insult are long gone.
11:29
Willosaurus:lol. no.
11:27
Willosaurus:At my local, grumblings about electricity prices … and then turned all the lights on in the garden (runing ambience imo). And they still have the outside electric heaters. Somebody turned one on last night. jfc
11:25
Willosaurus:But if the sound of war drums keeps getting louder, may as well blow it all down the pub anyway
11:22
C:@Willosaurus I hope you’re not reading Putin’s mind
11:18
Willosaurus:why not have all three?
11:15
C:Could Kosovo have regrets if Russia finds itself with spare military capacity, I wonder
11:10
RF:Opportunistic of the Kosovars to pick a squabble with Serbia when Russia is otherwise occupied
11:05
C:Good morning
11:04
Willosaurus:hello
11:00
RF:Morning!

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