Good Afternoon
The day before NAMA and I really get the impression that the news wont
be a surprise and that we will have been through the details of all this
so much that it will be a bit of a damp squibb news wise. Perceptions
though are harder to pin down and tomorrow could be one of these days
when suddenly the mists become clearer and we realise that the problem
loans will now be a problem for the taxpayer to worry about and that the
banks merely have a capital hole to plug to satisfy the markets and to
be in a position to fulfil their obligations under the state guarantee
and the NAMA arrangement to begin to provide liquidity back into the
Irish financial system.
AIB is the stand out underperformer , the Bank has been slow off the
mark in addressing or finding solutions to its problems , time and time
again this year the management of AIB have been left trailing behind the
newer fleet footed management team at BOI. The ratio chart of the two
banks which over the long terms tends to regress to a mean has swung
quickly away from AIB. Maybe tomorrow just for a trade , AIB will be
seen as the place to go to look for the leveraged trade o NAMA. AIB
certainly has had a lot of questions but simply as of tomorrow it will
be confirmed exactly how much capital they need and they then have the
option to dispose of the stake in M&T or Poland should they choose.
Either way , the market seems determined to take the Nama news in its
stride and also determined to interpret the outlook positively.
There may also be a fresh look taken at Ireland by some international
institutions who got badly burned but who may come back and realise that
there are some quality names which have been a bit quiet and could come
in for a bit of attention as they have lagged the high beta (trash )
rally...DCC , Paddy Power have been quiet but could rally from here....
CRH weighting in the Eurostoxx 50 index is expected to be announced
tomorrow...funny but the unpopularity of the stock continues to be the
feature and there are those lining up to short the stock into the
auction tomorrow before the Stock goes into the index on the basis that
the recent performance will be given away after the index buying is
completed. At some stage though it is going to be right to nbe long CRH
, I think the time is coming .. I would only short it as a trade but I
am not covinced this is the right trade... I think it will surpruise
positively at some stage and the crowded trade is to be negative on the
stock so it could move sharply the pther way.
Investors in Elan have been learning that they consider $115m to be
immaterial... at least that is what they used to describe the clause
with J&J up to the time when they were forced to accept a $115m lower
investment for the sae stake from J&J. The market knew this ahead of
time so the price of Elan has rallied after its recent fall and it looks
interesting here although there was an announcement of a further two
cases of PML reported.
Have a good evening
Liam
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