ICAP Share Discussion Threads

[jeffian] 17/10/2012 23:09

"The Euro is only the problem while the wrinkles are ironed out."

There speaks a true Europhile! You're not on the Brussels gravy-train are you, Rennes?

I have all the patience in the world and I will be vindicated. There is a pile of poo coming in the Eurozone. Let's hope IAP is set up to benefit from the volatility in all the 'new' (old) currencies.

[jeffian] 17/10/2012 16:51

"At heart the Euro is a Geopolitical must - and the economics are a mere side show for the chattering classes." Indeed, and because of that mindset, what the politicians can't get their minds round is that the Euro IS the problem and will condemn the eurozone to this paralysis for years to come.....unless the people of Greece, Spain, Italy etc. actually flex their democratic muscle. Interesting to note that M. Hollande's 'medicine' appears to be adding France to the basket cases.

Something has to give.

[rennes] 17/10/2012 14:54

@Jeffian

Sorry been off for a while and returned yesterday to see that your posts of the 6th September :
"What do you reckon, Rennes? Will it work? My view is that it's all talk (and to an extent it's working today but for how long?). People often use the 'King Canute' analogy but they don't seem to learn the lesson. ECB can buy as many bonds as it wants, but the tide is still coming in.
Still, it's done the usual Euro-job (kicked the problem down the road to the next summit). "

Yes my friend we sit here now on the 16th October and the strategy is working . There are only three ways to exit the crisis - 1. Stagflation for some time. 2. Inflation 3. Austerity and Budget Cuts .....all three will be deployed.

Far from provoking a Grexit - this crisis will cement in the new financial infrastructure for Europe so that nothing like it can happen again. The Troika - EFSF, ECB and IMF will all contribute to this forward solution.


At heart the Euro is a Geopolitical must - and the economics are a mere side show for the chattering classes. That is what all you doom naysayers are missing!

By the way don't forget those ECB bonds were sterilised! - as I understand it the Greek Banks had to buy an equivalent amount of German Bonds.

[davidosh] 12/10/2012 12:41

I have just picked some up at £3.20 as the yield is very tempting in a big cap with such strong cashflow, miniscule debt and the potential for a re rating if markets pick up for them.

[mrthomas] 06/10/2012 04:08

have brought this share in the past and will buy again if get to 320 or below as good management team strong b/s cash flow

[cwa1] 26/9/2012 07:45

Hmmmmm. Not the most upbeat of trading statements. Doubt the market will be too keen on it. Was the right thing to wait Flagon by the looks of things.

[flagon] 12/9/2012 09:40

May well have to CWA1 but at least I'll be able to sleep at night !

[cwa1] 12/9/2012 09:25

Sounds sensible Flagon. I've traded in and out of it a couple of times myself and am currently out. However IF the trading statement is upbeat you'll most likely have to pay considerably more for the privilege of buying!

[flagon] 12/9/2012 09:13

I've no position here.

Although I like the company, management and dividend I'm
not too sure about the stock. It's bounced off the £3 or so level several times
in the past - may do again. However, I need confirmation that there hasn't been
a hiccup in trading so I'll wait for the trading statement that's due.

Flagon

[cwa1] 12/9/2012 09:02

Hmmmm. Have just found out that Morgan Stanley have downgraded this morning-which is possibly the reason for the drop. They've gone for "reduce" with a target price of 312p from their previous target price of 415p, a fairly savage downgrade by anyone's standards.

[flagon] 12/9/2012 09:02

ICAP have been downgraded with a lower target price today.

IAP Morgan Stanley Underweight 328.60 338.20 415.00 312.00 Downgrades

link ->http://sharedealing.nandp.co.uk/broker-views/IAP/ICAP-news

[hyden] 12/9/2012 08:57

I'm thinking that myself. They have a pre-close TS due around the end of the month so may be best to wait until then before buying?

[cwa1] 12/9/2012 08:39

Ah OK. Thanks for that Hyden. Possibly a buying op coming up then?

[hyden] 12/9/2012 08:34

Being booted out of the FTSE100 today, I guess.

Edit: Decision is taken today but changes won't take effect until Monday.

[cwa1] 12/9/2012 08:32

Any thoughts on the reason for this morning's dip?

[jeffian] 06/9/2012 22:57

What do you reckon, Rennes? Will it work? My view is that it's all talk (and to an extent it's working today but for how long?). People often use the 'King Canute' analogy but they don't seem to learn the lesson. ECB can buy as many bonds as it wants, but the tide is still coming in.

Still, it's done the usual Euro-job (kicked the problem down the road to the next summit).

Tick tock!

[jeffian] 20/8/2012 10:26

Who needs "the market", eh?!

"Last week Greece completed its largest debt sale in two years, ensuring that it has sufficient funds to repay €3.1bn in bonds held by the ECB which mature today and avoiding a default.
The Greek Public Debt Management Agency sold €4.1 of Treasury bills. However, buyers were mainly Greek banks, which essentially borrowed from the ECB at one window, through the Greek central bank, to repay it through another."

[jeffian] 02/8/2012 14:00

"Citywire Money > News Share this page: Stay connected:
Markets dive as Draghi doesn't commit to action
MARKET BLOG: Stock markets slide back as Mario Draghi does not deliver immediate policy action.
by Chris Marshall on Aug 02, 2012 at 13:54"

Surprised? Of course not!

You can talk about it or you can do it. Eurocrats and Eurozone politicians seem unable to grasp that there is a difference.

[jeffian] 31/7/2012 19:32

Billy Ray: "Louis?"

Winthorpe: "Not yet."

[rennes] 31/7/2012 12:11

ETRACT FROM Money Week - which considers this problem

Draghi has three options

There are loads of things Draghi could do to 'save' the euro. But it all boils down to three options.

He can stall for yet more time. He can talk a big game, but wait and hope for the politicians to agree among themselves on a more permanent solution. Trouble is, after his big build up last week, this would send markets into a swoon. And the ECB has been trying to push the politicians to do more for several years now, and it hasn't worked yet.

His second option is to put another sticking plaster over the problem. It can be a big plaster or a small one. The point is, it's temporary. So we're talking about another batch of LTRO (a limited form of quantitative easing), or promising to buy a set number of Italian and Spanish bonds.

That's all fine. Markets might rally further, or they might not, depending on the size of the plaster. But it'll wear off eventually. Because if the intervention has a specific, limited size, then the market will wait until the money is used up, then start panicking again.

His third option is to go for a solution: unlimited intervention. In other words, he prints money and uses it to put a cap on eurozone bond yields. That would cause a major rally, as it would be the full-blown European equivalent of quantitative easing.

There would be further problems down the road, but we can discuss them in more detail if it comes to that.

So what'll he do?

Europeans want the euro: but they all want a different type of euro

It boils down to politics. We've said it before, and we'll say it again: whether or not the euro survives is a political question.

The majority of voters in eurozone member countries still seem to want to hang on to the euro. Psychologically, this makes sense. The tougher times get, the less people are prepared to deal with yet another potentially traumatic change.

You just need to look at Greece to see this. The Greeks backed away from full-blown rebellion against austerity when they realised it might cost them the single currency. The Irish acted similarly back in 2008 and 2009, when their crisis was at its height.

The small 'peripheral' countries view the euro as a badge of respectability. It's a sign that their small, sometimes highly dysfunctional, economies have earned a seat at the table with the big boys and girls.

So the eurozone's members all still want the euro. The real problem lies in the type of euro they want. The Germans and their allies want a 'hard' euro, while the Greeks and the other peripheral countries want a 'soft' euro.

You could spend weeks, months, years debating the rights and wrongs of all this. Indeed, that's all the comment sections of the financial papers have been doing during that time.

But that's not much use when it comes to figuring out how to make money out of this situation. And nor is second-guessing the action of the ECB, because in reality, none of us can predict how this will turn out with any confidence.

It doesn't matter what Draghi does: Europe is cheap

But here's the good news: you don't have to. In the long run, it doesn't matter what Draghi does, from an investment point of view. Europe is cheap.

Yes, there may be a fair bit of trauma ahead. One or more countries might leave the euro. Maybe the euro itself will be dismantled. But Europe is cheap.

If you buy assets when they're expensive, you have to cross your fingers and hope for perfection. Most of the time, it doesn't work out, because expensive markets eventually get cheap again.

But if you buy assets when they're cheap, it gives a lot of room for bad things to happen. If markets are priced for an apocalypse, you only need to muddle through for things to look a lot brighter.

We've been banging on about the Shiller p/e – which looks at how cheap or expensive a market is compared to long-term average earnings – for a while now. But I recently read a fascinating paper by Joachim Klement of Wellershoff & Partners that looks at just how effective the ratio is.

To cut a long story short, Klement finds that while the Shiller p/e isn't particularly effective over the short-term, once you get to time horizons of five years or more, it becomes very effective indeed.

In other words, if you buy a market when it's cheap based on the Shiller p/e, there's a good chance you'll make a decent return on a five-year basis. And if you buy when it's expensive, your returns won't be so good.

His conclusion? Just now, the best bets among global markets are European countries. They "promise very high real returns over the coming years that should be significantly higher than historic averages." By comparison, the US and most emerging markets look expensive.

So is now the time to buy?

[jeffian] 28/7/2012 10:11

Rennes,

I think you're the one that's in denial. Regardless of a Grand Plan for Europe, the simple fact is that Greece (for one) cannot pay its debts and this will become apparent as early as next month when it can't meet the next scheduled repayment and has to go back cap-in-hand to ask for more support, with everyone knowing that this cycle will happen indefinitely. The ONLY thing that could possibly avoid a Greek exit from the Euro is the Germans stating unequivocally that they will support it indefinitely (is that your "bigger picture"?). I'm not saying that won't happen, but I wouldn't like to bet the farm on it! If they don't, Greek exit is inevitable sooner or later and that will be the trigger for who-knows-what. It may calm the markets for a nano-second for Mario Draghi to wheel out the "do whatever it takes" line, but saying it and doing it are two different things! WHATEVER it takes? What, like mutually guaranteed Eurobonds for example? Nein, danke!

[rennes] 28/7/2012 08:54

Jeffian- This is just Wishful Thinking borne from an insular attitude and an inability to see the bigger picture.

[jeffian] 26/7/2012 10:31

Whether it staggers on for a few months or even years, the final outcome is inevitable. The longer they put it off, the longer we are all condemned to years of Japanese-style stagnation.




"It's now plain as a pike staff that the euro isn't going to survive the crisis in its present form. The politics of the eurozone are like the problems of Britain's coalition Government magnified hundreds of times over. National differences make the sort of things necessary to save the euro virtually impossible.
For the time being, the UK Government maintains the charade of public support for eurozone leaders in their attempts to keep the show on the road. To do anything else would be regarded as a declaration of war. But Cameron and Osborne must know that a major upheaval lies just around the corner, with Greece going first, and then in the face of German intransigence, others following quickly in its wake."