Liams Last Post : white christmas ecomes a retailers and travel nightmare

Good Afternoon ,

 

Well , it looks increasingly likely that we will get a white Christmas but it is turning into a retailing and air Travel nightmare with more airports closing and more delays due to the extreme weather.

The markets are determined to end the year with a dose of Christmas cheer and determined to ignore any bad news. The irish Financials rallied today after the The European Commission has authorised under EU state aid rules emergency measures for three Irish banks. The worrying item is covered by FT alphaville saying that Anglo Irish Bank will furthermore receive a guarantee covering certain off-balance sheet liabilities (derivatives, clearing transactions and transactional arrangements) that will ensure that Anglo Irish Bank can continue its daily activities as a going concern. 

 

There was also the comments re After all, we had Friday's announcement of a EUR/GBP swap line between the ECB and the Bank of England, on behalf of the central bank of Ireland in order to meet potential liquidity needs from Irish banks.

The continuing concerns re Irish Banks liquidity is an ongoing source of concern but the markets appear to have shrugged it off as a risk factor in ireland or at least seem to worry for only short periods of time before the stocks recover.  Irish 10 year bond yields are back up at 8.87% … clearly someone is worried…

Anglo had an announcement themselves this morning that bond holders had agreed exchange 307 million euros ($404 million) of its so-called lower Tier 2 bonds due 2014 and 459.5 million euros of similarly ranked notes maturing 2016 at an 80 percent discount to par value.     The lender is convening bondholder meetings this week to insert clauses into the bonds' documentation giving it the right to repay the notes left outstanding at 1 cent per 1,000-euro face amount.

Not much corporate action in Ireland , markets mostly up. Aer Lingus down a tad as it is really exposed to the bad weather in the UK and Ireland with sevee disruptions looking likely to continue through the next while.

Have a good evening , I am off to santa with my  kids..

Liam

 

 

 

 

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

Disclaimer www.merrion-capital.com/disclaimer.html

Merrion Stockbrokers Limited (registration no. 307878) is a limited liability company whose registered office is at Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.

 

 

 

 

Liams Last Post : markets rise on QE , Spain comes into focus now .

Good Afternoon ,

 

Liams Last post has been a bit sporadic because of marketing and client meeting commitments. The markets continue to grind higher as the liquidity injections from the FED feed into the US equity markets and the wave of liquidity is lifting all stocks.

 

Irish corporate news continues to be light , We have been marketing our view on CRH lately and the hold recommendation does seem about right given the challenges the stock faces and a background whereby the sector peers are turning more bullish about the inflection point being this quarter.

 

The clouds continue to gather for Spain , it is remarkable ..i continue to be fascinated . The sequence is copycat like. The Government talks austerity and reform , The central bank behaves cautiously. The Ratings agencies downgrade the outlook for the Banks , the banks fall , the bond yields rise , the ratings agencies downgrade the outlook for the Sovereign state, the banks fall , yields rise and a bond auction happens where coverage is paltry and so the contagion effect seeps into the psyche of the markets. Of course at this stage Spain has been joined by Belgium to face the scrutiny of the ratings agencies.

Ireland as a market game is done for the time being. The Bank subordinated debt holders now await their fate after the passage of the Bank Stabilisation bill which got railroaded through the Dail last night.

 

Have a good evening .

 

Liam

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

Disclaimer www.merrion-capital.com/disclaimer.html

Merrion Stockbrokers Limited (registration no. 307878) is a limited liability company whose registered office is at Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.

 

 

 

 

Liams Last Post : markets off to the races , Euro problems recede , Aer Lingus takes off against my expectations..

Good Afternoon ,

 

Markets opened sharply higher this morning , very little corporate news, there seems to be more of a belief that a political solution to the European crisis may come about. The Germans are still resisting and but the pressure on Spain seems to be abating and the market has had a decent bounce.

 

Irish Financials are rallying also now that the Budget is almost out of the way.  Various components of the Budget are being voted on but comfortably passing so all quiet politically, The news of Fianna Fail infighting is hardly worth mentioning.

 

There is life in the Irish Financials on the back of Bank of Ireland announcing an exchange offer for the sub debt, This if successful will lead to a capital gain of eur750m which is   sizeable step on the road to raising the extra capital required by private means. AIB is also miraculously hanging in there still on the belief that the Govt will inject fresh equity at 50c per share. Not exactly a credible reason for the stock to trade at these levels as the govt could always change the terms….

 

The Construction sector continues to feature in the year end rally stakes as this dog of a sector has a long way to go to catch uup in relative performance terms. Grafton has also been a beneficiary of the rally in the UK merchants. I still like this one and would urge that it be bought here.

 

Aer Lingus has taken me by surprise , I thought that there was enough taken out of peoples pockets in the Budget to really knock confidence  but the market is reacitn to the travel tax news which is a positive.. Ironically it might encourage Ryanair to increase capacity inDublin which would increase competition rather than increase traffic. Better for the consumer. Not sure how it will play out for the carriers. The plight of Ireland has some punters thinking that the state will sell the stake to Ryanair. All I can say is having met the Department of Transport last year , I think that they may sell the stake but I don't think they will sell it to Ryanair under any circumstances as it goes against a pretty wel thought out public policy position re competition and international connectivity.

 

The oils are also in favour even the tiddlers , an interesting sector with lots of newsflow to continue for the next few months… watch this space.

 

Abbey had results this morning ,  a true deep value plc.  Guidance that the outlook is quite bleak would upset most people but Charles Gallagher is a notorious bear. The news that they are commencing the last phase of a project in Kilcoole outside Dublin is an interesting counterpoint to the bearishness. Abbey are saying that House prices have continued to fall slightly in the UK is not new news either but it seems like a relatively steady state now .

 

Fitch news about the latest down grade of Ireland was entirely expected , the news that they now consider the outlook to be stable probably does reflect an inflection point at the bottom of one hell of a long fall. Well hopefully we are at the bottom and not on another ledge…

 

Have a good evening.

 

Liam

 

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

Disclaimer www.merrion-capital.com/disclaimer.html

Merrion Stockbrokers Limited (registration no. 307878) is a limited liability company whose registered office is at Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.

 

 

 

 

Liams Last Post : ECB bond buying forces short squeeze in Irish Bonds , US employment numbers disappoint , ICG sells Pride of Bilbao.

Good Afternoon ,

 

Markets opened higher this morning after the third straight triple digit gain day in the USA .European markets had rallied into the close yesterday on the back of strong buying of peripheral bonds by the ECB in decent sized euir100m tranches for the first time and four times bigger than previous forays into he market. This effectively triggered a short squeeze and the consequent rally which strengthened the Euro also. There was no big bang announcement from the ECB but they did put their money where their mouth was. As one commentator put it Jean Claude Trichet has finally learned the Bernanke's lesson on Central Banking: when all else fails, buy it all…

 

The rally in Spain and Portugal and for that matter Irish bonds was quick as the market had gotten quite oversold over the past couple of weeks and there was little resistance to the rally. My trip to London earlier on the week had affirmed that the consensus trade is short spain and so it was easy to trigger the pullback. What remains to be seen however is if this pullback is anything more than a technical retracement to previous support levels.

 

Irish Bonds quietly slipped under the 9% level and moved quickly to give up nearly 100bp of yield , A massive rally in the underlying price of Irish Sovereign paper. Spanish paper remained stubbornly above the 5% levels for 10 year paper.

The macro themes continue to dominate as the reporting season is very quiet now and from an Irish perspective we were scraping the bottom of the barrel looking at UK housebuilder Berkeley results to have anything to say this morning. Hard to get a real feel for the relevance of Berkeley to Grafton or Abbey. Berkeley specialises in the south of England ,and announced an 18.5% rise in half year profits to £61.6m. Managing director Rob Perrins said: Today's results, which show an increase in both earnings and sales reservations approaching 20%, demonstrate the underlying resilience of the housing market in London and the south east over the last six months. Overall this strong performance provides the board with confidence that Berkeley can outperform management's original expectations for the current year and is well placed for the following year.

ICG announced the sale of the Pride of Bilbao today. This had been on the cards for quite some time though the ICG management team had tried to steer the market to believe that this might just be re-chartered.  The total consideration for the sale is €37.7 million, payable in instalments over 5.75 years, up to September 2016. (The transaction is in the form of a bareboat /hire purchase agreement under which the vessel is chartered by ICG to St Peter Line and on payment of the final hire payment in September 2016, title passes to the charterers). Delivery is expected to take place in December 2010.  The transaction effectively brings ICG into a net cash position and the underlying conundrum posed some time ago by Eamon Rothwell the CEO remains to be resolved. This is a company now in a net cash position where the shareholders are geared so it probably moves the final solution to the corporate ownership or future of this one a step closer.

 

The Irish Market peaked at about 10am this morning and then fell like a stone dragged lower by CRH and Ryanair .

 

At 13:30 the US Nonfarm payroll data sparked a reversal in the markets with the all European markets dipping.. The U.S. economy added fewer jobs than expected in November and the unemployment rate rose to its highest level since April, underlining the continued weakness in the labour market 17 months into the recovery. Nonfarm payrolls rose by 39,000 last month as private-sector employers added only 50,000 jobs, the Labor Department said Friday. The October number was revised up slightly to show a 172,000 increase from a previous estimate of 151,000. The unemployment rate unexpectedly rose to 9.8% last month. The bad news within the numbers also contained news that Hourly earnings remained flat vs expectations of 0.2% increase.

 

New orders received by U.S. factories dropped 0.9 percent to a seasonally adjusted $420 billion in October, The Commerce Department said October's decline followed an upwardly revised 3 percent gain in September orders while August orders were flat. Economists surveyed by Reuters had predicted a slightly steeper 1 percent fall in October orders.

This afternoon Moody's continued their slow but steady demolition of Ireland saying that  the only six TRIPLE-A rated Irish bonds may be downgraded because they are backed by large numbers of Irish home loans. Credit ratings agency Moodys is considering the downgrade for the bonds from 'AAA' status, saying that the rating is unrealistic. If the bonds are downgraded, it essentially means that loans will be more difficult to secure. Subordinated bonds for Bank of Ireland, AIB and Irish Life & Permanent are also under review by Moody's with a view to being downgraded.

Moody's also warned that  that the severity of the recession here "will leave a lasting legacy on the performance of Irish residential mortgage loans". The agency has constructed a profile of the typical person most at risk of defaulting on their mortgage. They are more likely to be self-employed, have bought in 2006 or 2007, and not live in Dublin or Cork.

The good Old Oirish yes OIRISH Government confirmed that the provisional calendar for the houses scheduled the Christmas break to start on Thursday December 16, with TDs and Senators returning to duty on Wednesday January 19 – 35 days later.  So no rush to have that election then…a well earned rest after al the stress ….

Watch this for a laugh…or a cry… 

http://www.youtube.com/watch?v=nD2Vr7lb-D4&feature=player_embedded

Have a good whiteout weekend !

 

And I will leave you with this thought…..

  A driver is stuck in a major traffic jam just outside Dublin on the M50 motorway.
Nothing is moving.  Suddenly a Garda knocks on the window. The driver rolls down his window and asks, "What's going on?"
"Pensioners" have kidnapped Brian Cowen, Brian Lenihan & Mary Harney, and a bunch of Bankers.
They're asking for a €30 million ransom, otherwise they're going to douse them with petrol and set them on fire.
We're going from car to car taking up a collection."
The driver asks, "How much is everyone giving, on average?"
"About a litre."

 

http://www.bbc.co.uk/news/uk-scotland-11901718     nice sat photo of UK and Ireland this morning…

Liam

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

Disclaimer www.merrion-capital.com/disclaimer.html

Merrion Stockbrokers Limited (registration no. 307878) is a limited liability company whose registered office is at Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.