Today’s Spot Markets live session is with Ben Harrington, the founder and Editor of Betaville.
Comments from Izabella and Ben that address audience questions have been put in bold.
Spot Markets Live – 04/07/22
The usual seance beginning!
Is there anybody out there?
Hello and welcome to Spot Markets Live, the real-time markets chat that takes you on a whirlwind tour of the markets.
Happening every Monday at 11 for now, with a limited controlled live audience until we get the tech up to scratch.
Hello to the commenters
But, soon enough, we will roll things out further. Do spread the word.
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, the founder and editor of Betaville.
Hi Ben here
Izabella Kaminska 12:03
Ben’s always got his ear to the ground in the UK equity market so is more than a worthy partner for today’s chat. Neil Collins will be back next week.
Happy July 4th! That means US markets are going to be dead.
Let’s do a quick market overview.
The FTSE is up about a percentage point at 7235 ish.
The main gainers are the energy companies, BP and Shell on more bullish noises from the world’s top-tier energy analysts. We’ll have a bit more about that in a second.
Also up is BT GRoup, Spirax and Auto trader.
BT Group staff said last week they would be joining the general strike, so perhaps today that’s up on a bit of a relief rally.
Spirax-Sarco meanwhile is a valve maker and has announced it is in talk to acquire Vulcanic Group, under the auspices of a deal being managed by French private-equity Qualium.
Antofagasta leads the losers followed by INtermediate Capital Group, Kingfisher and Ocado.
But Ben, hello down there, you were looking at this AO story, right?
It was in the Sunday Times this weekend
Sam Chambers, retail hack, had a tale about credit insurers withdrawing cover.
shares are currently down 15pc… in reaction?
Izabella Kaminska 12:11
Yeah, it’s an interesting story
And here’s the longer-term chart
Ben Harrington 12:11
AO World has really gone from lockdown hero to serious loser
as a stock I mean
Izabella Kaminska 12:12
My first instinct on AO was oh this is all a bit Greensill. But of course, it’s not. This is just what happens during a downturn in the sector. It’s a bit of a known known. From the TImes story:
Credit insurance is a vital part of the retail supply chain, protecting suppliers against the risk of customers going bust between the point of accepting an order and payment being made. When cover is not available, suppliers tend to demand payment upfront, damaging a retailer’s cash flow.
In its annual report last year, AO said it was “heavily reliant” on its suppliers and their insurers maintaining limits at existing levels. It said worse terms could cause cashflow issues but that it had enough liquidity to cope. AO and Atradius declined to comment.
I guess we can expect more of this sort of stuff to come.
Ben Harrington 12:01
an interesting side snippet
re AO World
rumour was before the THG float
it was looking at a tie-up with AO World
possibly as a way to gain a listing
ie reverse into AO World
Suspect that is now consigned to deal bin
Enjoyed the Julian Richter column in The Sunday Times
great humble piece giving first-hand insight into Spacs
Here is a link to the piece in case you missed it
Yeah, spacs have obviously been the flavour of the last few years, but like most things that were on the up during covid are now having a morning after the night before effect.
So what’s the thrust of the piece here?
So Julian, the boss of Richter Sounds
teamed up with Archie Norman and Nick Leslau
to set up Knutsford Spac some twenty years ago
and it went from hero to zero or near to zero
a bit like many of the recent Spacs 18 months
of the last 12 months
It’s just great honest insight into that experience
and makes you wonder what’s going to happen to other potential Spacs
like the one being led by Ian Osborne – Hedosophia.
For those of you who don’t know Osborne is a young super secretive dealmaker that once used to work for David Cameron – his firm is Connaught, whose directors once included one Sir Simon Robey, of uber dealmakers Robey Warshaw. Sir Simon has left and now Osborne (who I don’t believe is related to George Osborne) is trying his hand at a Spac. Good background piece on Osborne in the FT here:
So anyway let’s not get too bogged down by Spacs
What else have you got?
specifically in the sundays that caught your eye?
Among the small caps, there are a few shenanigans around M&C Saatchi – the well-known ad agency at the centre of a two-way takeover tussle.
Next 15 Comms had a stock offer recommended but now directors at the company have had to withdraw the recommendation because its share price has fallen and as a result so has its offer.
that’s the background
Meanwhile, Vin Murria – the technology entrepreneur that has become one of the largest shareholders in M&C – has had her £254 million cash and share offer rejected by M&C’s board.
But over the weekend the Mail on Sunday’s Stock Watch column was suggesting directors at the company were threatening to leave the business if Murria’s hostile bid succeeds and that in turn means she might walk away (not sure I follow the logic of that but that’s what the column was suggesting).
The Sunday Times, though, was reporting in its Prufrock column that M&C was citing in its defence doc “national security” concerns around Murria’s bid because of US/UK/Australian government work.
So I suspect a bit spin and counter spin emerging in the Sunday diary columns from the various parties involved
This is all good stuff. But I suspect the readers want to know about what you’ve got in the uncooked realms?
I will try to explain
Here we go
To be clear, this story is UNCOOKED. I have pasted the definitions of UNCOOKED below in case you don’t recall their definitions.
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.
so what have you got for the exclusive Spot Markets Live trial community 🙂
Something in small-caps maybe?
Yes in the small-cap world bid talk around Audioboom has been growing louder.
No pun intended
All Active Asset Capital offered around £12.00 a share for the online podcasting business last summer and since December 2021 been takeover talk.
Then Mark “The Kleinmanator” Kleinman stepped in with a “scoop”
claimed Amazon and Spotify were taking a look at Audioboom
But the latest gossip is that Aqua as part of a JV with Vivendi, the French media giant.
are hatching a plan to buy the business
Weird spelling for Aqua actually, I think it’s Aaqua
Aqua, sorry Aacqua I meant, already owns 18pc of Audioboom but readers should be warned – it is led by none other than the Dutch financier Robert Bonnier who has made and lost several fortunes for himself and investors.
The latest gossip was that Aqua/Vivendi have NM Rothschild and BNP working on a bid.
Audioboom shares have already been on a wild ride – gone from £10.00 in Dec to £22.00 in the Spring to back down to £8.00 last week.
So make what you will of that
But this is uncooked right?
TO BE CLEAR THIS UNCOOKED!
Is there anything else on the smallcap front?
No, but a few things over in Europe
Late last week Exor the Agnelli family vehicle agreed to buy a stake in the holding company of the Merieux family, Institut Mérieux, vehicle for EURO 833 million.
I was wondering what that might mean for the BioMerieux / Qiagen merger rumour
BioMerieux, which is controlled by the Merieux vehicle, had been looking at a merger with Qiagen but the talk was it might have struggled to raise the financing for a cash component part of the deal.
With the backing of the Agnellis some might start to speculate the deal could be back on? Let’s see…
Did you say some other stuff in France?
Some more UNCOOKED on Electricity de France
otherwise known EDF
Currently having a few issues with a bunch of nuclear power stations I hear…
but go on…
Rumours circulating last week that the French government is about to make an offer for the 15pc or so it doesn’t own of Electricite de France.
Whoa. That would be something
and kind of makes sense
Talk in the market is the nationalisation move could be “imminent”.
That’s the piece in March from Bloomie with Macron suggesting the idea
Now the gossip is the minorities might get bid between EURO 10.8 and 12 for the shares by the French government
I just googled the latest on the reactors and err, the Express has this panic porn in it. I mean what are the consequences for a power failure of this proportion in France? Catastrophic frankly. And EdF is basically a near-monopoly in the country.
This story is UNCOOKED
But it’s on the verge of being upgraded to RARE
Ooh, well there you go.
I mean this is all the product of underinvestment due to nukes even in France falling out of favour.
Dario – that’s a good point. Could the french government be front-running its own buyout by distributing reactor crack noise?
ok whilst you debate that I will just give the definition of RARE
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.
But there is I believe also Well Done 🙂
but the French don’t like that very much
they prefer TRES BLEU
It is basically Zombie level
What else shall we tuck into?
What about that bit of rare about Atos that you published last week?
yes … looks like egg on the face for me … or maybe not
Last week Capgemini issued a strong denial to a Betaville RARE ALERT about rumours of its interest in buying some or all of Atos.
The odd thing was I offered Capgemini the opportunity to comment on the piece and Victoire Grux the company spokesperson simply said the comment “doesn’t comment on market rumours”.
24 hours later and the company is issuing a vehement denial to little old Betaville’s RARE story to every newswire out there.
Neither confirm nor deny
ah. so they finally committed to a denial
I guess that’s France for you … I remember last year when the boss of La Banque Postale denied it was going to buy out the minorities of CNP Assurance after Betaville published an UNCOOKED alert about the tale then two days later …
I’m not saying that’s going to happen with Capgemini and Atos but well just shows that French companies play on a completely different field to British companies when it comes to the “truth”.
Well, they call it Verite after all.
So what do you think is going to happen with Atos then?
It’s been very strange. Atos has unveiled multiple profit warnings and also seen its new chief executive resign after a fall out with its chairman over strategy.
The stock has been shattered as a result
but there have been multiple parties circling for the last twelve months
like Thales and Airbus
Atos is a French multinational information technology service and consulting company headquartered in Bezons, France and offices worldwide. It specialises in hi-tech transactional services, unified communications, cloud, big data and cybersecurity services
For those who don’t know.
yet I’m led to believe it is one of the most shorted stocks in Europe
so real bears versus bull stuff
Let’s revisit the commodity story, and particular that JP Morgan call for $380 oil
That was in the Sunday Times splash.
Yeah, so this is the great debate in the market. Will prices fall on the back of demand destruction or will they keep going up. Jeff Currie of Goldman is on the up and up too.
And really one of the issues is that there are very different substitution effects this time round to the last time we saw this sort of tightness in 2008.
The other fundamental constraint is a lack of refining capacity and dwindling reserves, including the draining of the US strategic reserve.
Worth a read
Regarding the refining issues, Bloomberg has the Goldman write-up and notes:
Global retail fuel prices are at record dislocation against crude and there are numerous structural difficulties for which there are few quick or easy fixes, according to a note from Goldman Sachs dated July 1.
Aren’t we all screwed if oil goes to $380 a barrel?
(unless you have long oil position?)
Short answer: yes. Unless you have a nuclear plant.
Adding to the bullishness, what has gone less noticed by the market is the conclusion from the Caspian Summit this weekend. Mind you, you’ve got to take this source with a pinch of salt as it’s Russian.
But they make a worthwhile point that the mainstream press has been more focused on the size of tables at the summit than the actual substance of the meeting.
The issue here is that the Caspian is a strategic route for Russian oil from the Black Sea to India.
What has emerged from the summit is that all the Caspian nations are going to protect these Russian cargoes, and the Caspian Sea itself is going to be off-limits to any western non-commercial presence.
This is the route they are trying to develop (via the same website):
Why are we still buying oil from the RUSSIANS!?
Less oil these days, and more gas.
Well, gas then?
Well, the issue is we have no choice
So Putin has the west by the …
There aren’t any alternatives that can cater to our deficit issue.
Putin has us by the balls. And he can also keep selling to India
so this route is very important, as it gives Putin extra optionality
As Tribune India reported:
“In the latest case, cargo from St Petersburg left the Russian port in Astrakhan. It was shipped south to Iran’s Anzali Caspian port, and then transited south via road across Iran to the Bandar Abbas port. From there, goods were shipped to Mumbai. The entire journey took 24 days and is likely to become quicker once the trans-Iranian railway is completed next year.”
He knows western democracies so leveraged can’t tolerate high inflation
and high rates
Russia’s control of Dagestan is critical to this route’s success though. For now, that doesn’t seem an issue, but the region has been beset by troubles and rebellions before.
Is that correct?
According to Le Monde
France’s most respected newspaper
Shareholders are trying to get the Atos chairman kicked out
let me find the link
Going back to oil:
I think this is the fundamental issue that economists and market watchers still don’t understand. You can’t temper commodity-shortage-fueled inflation with monetary contraction. We are entering a rationing world. And yes, that means physical pain and shortages that can have a meaningful impact on our ability to operate as a functional society. When hospitals start having to shut down because of no power for generators. It’s a problem.
Now, the early days of my journalistic career were spent in Baku, Azerbaijan getting to grips with the pipeline politics of the day. So I find this all quite fascinating. At the time (c. 2003), the newly unearthed Caspian crude was being developed by consortia led by BP.
The plan was to pipe the oil into the Mediterranean basin via the BTC pipeline which offloaded at Ceyhan in Turkey. This pipeline was politically very complex to get underway, in part because it was a workaround around Russia.
So complex there was even a James Bond plotline roughly linked to the whole thing. Remember the World is Not Enough?
Anyway, the Americans spent a lot of time wooing the regional authoritarians to get the deal done. And they managed it, and it was considered a big success.
For the Caspian nations to about turn now so significantly I think is at a minimum politically embarrassing. And at a maximum geopolitically compromising.
Very James Bond
While we were talking the Swiss reported a 29-year high of 3/4% inflation btw. So even the swiss are now embroiled in the softening currency dynamic.
gotta go now as we are over 10 mins past the hour
and I have a leaked lunch to record with Helen Thomas of Blonde Money 🙂
Ben, thank you so much for joining me
It’s been great
thanks for having me Izzy
Hopefully, we can also encourage a larger rabble. It being a holiday today was not optimal.
Let’s go get some burgers!
I’m quite hungry now
but it’s a salad for me
or maybe fried courgettes with houmous
Take care, everyone 🙂
definitely raw then!
ciao ciao 🙂
Audience Comments (inverse order)
13:13 DGG: bye!
13:12 JC: Thanks everyone 🙂
13:10 JC: I think I peaked with Stake Tartare.
13:10 JC: Haha sadly not.
13:10 DGG: fascinating
13:03 JC: I have a bicycle. That’s the same as being long oil, right?
12:55 Izabella Kaminska: Very funny
12:54 DGG: LOL
12:54 JC: STAKE TARTARE?
12:54 JC: Is an ill-founded rumour about someone buying a share in Atos…
12:50 DGG: so rare you can still hear the cowbell’s ring
12:50 JC: “Still Mooing”
12:49 DGG: Should this uncooked rumour ever end up so well cooked a french chef would barf, I think that would make sense !
12:48 DGG: I heard interestingly Germany produces the nuclear warheads for France’s submarine fleet. Rapallo 2.0
12:48 DGG: behind public panic porn usually*** and definitely not always
12:47 DGG: The coterie of private influence behind public panic porn would indicate maybe actors for the french state are looking for a tasty discount
12:47 JC: Does the scale go up or is it just uncooked and rare? Do we get medium, medium-well…
12:44 DGG: TIL EDF is electricity de france
12:43 Izabella Kaminska: Btw the podcast wars remind me of the plot of Working girl
12:40 DGG: for an actual platform, i’m assuming pre-podcast adverts or data mining of audience interests?
12:39 JC: I am a podcast addict but I’m not clear where the profit happens.
12:36 DGG: Podcasts are a fantastic medium. Now with the global recession, even more people will become glued to their screens – especially mediums that allow one to commute/walk around while integrating information
12:31 DGG: haaa
12:28 DGG: Why would there be national security concerns if saatchi is a UK company and the government work is five eyes – related? curious
12:19 LP: Currently the chat is text only, however audio features are planned for release in the near future
12:19 MM: Is there a way to get audio or strictly chat?
12:02 DGG: hi ben!
11:58 DGG: gooood monday morning
11:58 JC: Rabblerabble morning.