Liams Last Post : Irish Bond yields explode as loose talk unnerves markets , Aer Lingus seen as a bid target.

Liams Last Post

 

With Irish 10 year bonds yielding 6.41% , there is little by way of any other story to tell. It would appear to me that many politicians and commentators are engaged in a typically irish tactic of destroying whatever good work is going on to build the credibility of the state by loose lipped mentions of the IMF and defaults…I wanted to run a correlation today and ay yet o so to establish which politician or commentator has done more damage in terms of looking at the impact on the Irish CDS spread or Irish 10 year bond yield in the aftermath of their utterances in public or on twitter. What has changed from last week ? not much but a lot of loose chat and politicians referring idly to words like the IMF…

 

 Take a look at the influential Zero Hedge Blog…to see if no one is picking up this chatter…

http://www.zerohedge.com/article/risk-news-ireland-negotiating-bondholders-over-anglo-irish-default-country-prepares-call-imf

 

And the euro seemed so happy after its recent surge, that it completely forgot it is backed by an insolvent continent. Luckily, here's Ireland to remind us stuff is much, much worse than expected. According to the Irish Independent the Labour Party, Eamon Gilmore, came very close to suggesting that Ireland is considering defaulting on its debts "when he talked about the Government "negotiating'' with bondholders in Anglo Irish Bank." Additionally, the same newspaper also reported that Ireland is on the verge of calling in the IMF for a bailout, citing "a report from Barclays, one of Europe's largest banks, said Ireland may yet need financial help from the IMF or the EU if conditions got any worse. But a spokesman for Finance Minister Brian Lenihan said last night: "The Government's strategy for dealing with the economic and financial challenges has been commended by the EU Commission, the European Central Bank and many other international experts." In other words, domino #2 has at most a few more days. Net result of all this: Irish-Bund spread explode, and gold hits a new all time high of $1,282.

 

Corporate news is thin on the ground , there was a couple of interestingly timed stories about Aer Lingus being quietly put up for sale in bothe the times and the Australian newspaper. Yes the r is value in Aer Lingus , yes the management team have done a great job and yes Christophe Mueller seems to have had a very strong impact on the firm in a very short space of time. Also yes very interesting that two newspapers would both speculate about Aer Lingus at the same time…methinks no smoke without fire…

 

I spent some time in London during the week , the consensus opinion seems to be that markets will continue to be turbulent and the bulk of guys I met were mindin a defensively postured portfolio as the evidence of a slowdown in the rate of recovery in a wide variety of metrics becomes inescapable. Markets though are in general robust and holding within relatively narrow ranges.

 

Norkom was the disaster of the week in Ireland with a shock profit warning with EPS forecasts falling from 9.5c to 2.5c.

 

Tullow oil looks like it has weathered the storm in Uganda and the shareprice has settled.

 

Paddy Power which you will all know is one of my favourite stocks has come back to within buying territory now after delivering a very strong set of results. The sector got downgraded by a bulge bracket form and paddy Power has come down with it. This is an opportunity….

 

I am doing the Wexford Cycle tomorrow , 136km charity cycle . I hope the wind is behind me and it stays dry… I hope you have a fun weekend !

 

Have a good one

 

Liam

 

 

 

___________________________________________

Liam Boggan

　

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