Good Afternoon ,
6.55 is the closing spread on the irish 10 year bond tonight ahead of the auction tomorrow. The doomsayers in the ascendancy. I could not resist looking at the relationship between public utterances by journalists and politicians about the Irish situation and the pricing of bond markets. It became clear to me last week that there is a very Irish agenda to hurt ourselves. It is true that large institutions would surely have their own view of the maths involved and would have assigned probabilities about the Irish ability to pay. It is also interesting that the problem is not an Irish one but that Irish debt is widely owned internationally. Indeed 85% of the bonds are held abroad so any talk however loose about a default is going to impact on the perceptions of the International investors. Well on Friday CNBC covered the stories in the Irish independent (about Anglo defaulting and the other which mentioned the IMF and bang ! away went the bond yield.
The corporate news today was light until a story emerged about price rises in linerboard which had been announced for September not holding and indeed coming back . the story was in the influential Pulp and Paper weekly. International Paper fell -10% at one stage. It is very poor news if these prices rises do not hold and SKG which is very highly leveraged has made much about it being about to pour off cash and pay down debt., Any fears about this being not a realisable ambition will have severe consequences for the share price. It is the ultimate geared play on the cycle here. SKG fell -5.25% to 7.40 with plenty of downside potential from here if the pricing pressure continues.
Building related stocks did well today with Grafton and Kingspan both up over 2% , CRH is still struggling however but was up just under 1%.
The defensive food stock were all up as well with Glanbia , Aryzta and Greencore all up close to 2% , Kerry has been a dcent performer so it has lagged this time.
The airlines stocks continue to fly…Aer Lingus +4% at eur1.oo and Ryanair up +2.7% at eur3.84 making up ground after the special dividend.
Lets see what tomorrow holds , all eyes on the Auction …
Have a good evening ,
Liam
___________________________________________
Liam Boggan
Merrion Stockbrokers
Tel.: 353-1-2404171
Mob:353-87-2313505
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