Newspaper Briefing, including ‘QE prospects dwindle’ – Daily Telegraph

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The Times

Bet of the Day: Thomas Cooks interim results are less about financial performance the struggling tour operator has revealed that it lost 262.7 million over the first six months of the year and more about the latest attempts to turn the business around and recent trading.

Deal of the day: An encouraging update on its efforts to develop a treatment for prostate cancer spurred ValiRx 39.7% to 0.545p. More than 150 million shares changed hands, against an average of about eight million. Physiomics, another, similar biotechnology minnow that has a revenue-sharing deal with ValiRx, was dragged 4% higher to 0.13p on its coat-tails.

Gilts: U.K. Government bonds eased amid hopes that the European Central Bank may be prepared to take fresh steps to ease the suffering of the Continents beleaguered lenders. The June gilt future settled 21 ticks lower at 119.45, as investors summoned the courage to nibble on shares. In the cash market, the yield on ten-year gilts rose two basis points to 1.78%.

Spains Bank Chief goes as the locals stop shopping: The disarray in Spain worsened as the countrys Central Bank Chief stepped down early and a record plunge in retail sales suggested that the countrys recession was deepening. Miguel ngel Fernndez Ordez will leave his post a month sooner than expected after attacks over his supervision of the banking sector and handling of Bankia, the stricken lender that is in the midst of being nationalised.

Busson in sale talks as sparkle fades for the hedge fund star: A potential sale of EIM comes after the amount of money that the fund-of-funds firm manages is believed to have halved from its peak of more than $14 billion before the financial crisis, making it harder to make a decent profit.

Fraud office under fire after record City fine: The Serious Fraud Office has come under pressure to explain why it dropped a fraud investigation against a hedge fund manager after the main City regulator ruled him guilty of a deception against his clients. Alberto Micalizzi, Chief Executive of the London-based Dynamic Decisions Capital Management, was hit with a 3 million fine and a City ban by the Financial Services Authority.

European currents slow down Brewin Dolphin: Underlying half year profits at Brewin Dolphin fell by 17% to 18.9 million as well-heeled investors held back in the face of the sovereign debt crisis. Reduced client activity led to falling commission levels, while the Wealth Manager also suffered a net 100 million outflow of funds from defecting customers.

For once, its not the Euro to blame for poor results: Investors were sucking their teeth and blowing out their cheeks after a chill European wind blew through the third quarter figures of Wolseley. Shares in the builders merchant fell by nearly 5% at one point after it said that profits in its businesses across the Nordic countries had more than halved in the quarter to April.

BP faces lies inquiry over Deepwater Horizon spill: The U.S. Government is investigating whether BP staff lied about the amount of oil that spewed into the Gulf of Mexico in the Deepwater Horizon disaster in 2010. If prosecutors can establish that BP employees mis-stated the leakage, they may be able to bring obstruction of justice charges against individuals, including Senior executives.

Taking a stake in Moss Bros suits Soros: George Soros has a fortune valued at $22 billion (14 billion) by Forbes and is famed for forcing Britain to leave the exchange-rate mechanism on Black Wednesday in 1992 by betting massively against sterling.

Samsung wheels out a smarter Galaxy: Samsung released the latest edition from its Galaxy range of phones, as the Korean manufacturer aims to outsell its predecessors which helped it overtake Apple and Nokia as the worlds largest smartphone maker.

The Independent

Debt-ridden law firm Dewey LeBoeuf goes under: The clients and partners of Dewey LeBoeuf were picking up the pieces after the biggest-ever failure of an international law firm. The firm filed for Chapter 11 bankruptcy protection in New York late on Monday, marking the conclusion of a long death spiral that began earlier this year when it tried to cut the pay of its generously remunerated partners.

Private equity asset sell-off: Banks burdened with assets they were forced to acquire when loans went bad during the financial crisis, are looking to offload many of them, which is a major opportunity for private equity. So says Electra Private Equity, the investment trust chaired by former City regulator Colette Bowe.

Topps bears up despite economic strife: There was a small reason for optimism about the retail sector when Topps Tiles delivered results that show it is at least holding its own. The tile specialist saw sales in the half year to March slip by 2.6 million to 86.6 million solid enough given wider economic strife, according to City analysts.

Volex counts the cost as customer Apple goes green: Volex has paid the price for a green push by the consumer electronics giant Apple which wiped out its profits growth this year. Apple is the biggest customer of Volex, which is 23%-owned by the billionaire financier Nat Rothschild, and which makes the power cables and U.S.B leads used in everything from laptops to iPhones and iPads.

Digital gifts read well at Quercus: E-books made up 25% of sales at Quercus, the Girl With The Dragon Tattoo publisher, during the first three months of the year, in yet another sign that digital adoption is growing fast. Quercus Chief Executive Mark Smith said e-book buying was seasonal, with sales spiking after Christmas when people received Kindles and other e-reading devices as gifts.

Hoxton Hotel changes hands: A trendy East London boutique hotel popular with celebrities, including Alexa Chung, has been sold for more than 65 million. The Hoxton Hotel has been sold by its founder, the Pret A Manger joint founder Sinclair Beecham, and the private equity firm Bridges Ventures to a small private equity fund, Ennismore Capital.

Financial Times

Bank urged to adopt mortgage powers: The Bank of England will come under fresh pressure on Wednesday to take on powers to restrict mortgage lending during a housing boom, despite claims by central bankers that the issue is so sensitive it should be left to politicians.

Rockefellers and Rothschilds unite: Two of the best-known business dynasties in Europe and the U.S. will come together after Lord Jacob Rothschilds listed investment trust and Rockefeller Financial Services agreed to form a strategic partnership. RIT Capital Partners is to buy a 37% stake in the Rockefellers wealth advisory and asset management group for an undisclosed sum, giving Lord Rothschilds London-listed trust a much sought-after foothold in the U.S.

Kleinwort parent pressured to spin off assets: The parent company of Kleinwort Benson is facing pressure from activist shareholders to break itself up and spin off all its assets. Kleinwort, the private banking and wealth management group with roots stretching back to 1786, was acquired in October 2009 by RHJ International, a Brussels-listed private equity fund, from Commerzbank, the German lender.

Renold predicts slower growth: Renold, the maker of industrial chain, gearboxes and couplings, has been freewheeling along the road of global industrial expansion in the past year. The group has returned to a healthy pretax profit after boosting sales and keeping costs down, but a change of gear is likely as resistance gets tougher.

Investors approve Lonrho pay plans: Investors have voted to approve this years pay plans at Lonrho, the London-listed Africa-focused conglomerate, despite a controversy over them that sparked the resignation of a Senior Independent Director. Sir Richard Needham quit on Monday after discovering he had not been given a seat on the boards remuneration committee.

WPP Chief faces investor revolt over pay: Sir Martin Sorrell, Chief Executive of WPP, faces a shareholder revolt over his pay after an influential advisory firm recommended investors in the advertising group vote against its board remuneration policies.

JPMorgan Cazenove tops league table: JPMorgan Cazenove has comfortably maintained its status as Londons leading corporate broker by number of clients, according to the latest rankings from research group Morningstar, after a period of turbulence and consolidation in the sector.

Kuwait to invest in U.K. oilfield: Kuwaits national oil company has committed $500 million to fund the redevelopment of Britains first producing, but now abandoned, North Sea oilfield in a deal endorsed by the U.K. government. The re-entry of Kuwait into backing North Sea oil developments follows changes in tax allowances announced in the Budget aimed at encouraging a renaissance of investment in marginal fields in the maturing basin.

Lex:

Research In Motion: accidents happen: After the market closed on Tuesday, Research In Motion announced that: (a) an operating loss was likely in the fiscal quarter, which ends this week, as competitive pressure continues to build, especially in the U.S.; (b) worldwide subscriber base growth would continue to slow; (c) cost cuts were ongoing; and (d) investment bankers had been hired to consider strategic options. RIMs share price fell 8% in after-market trading. RIM has shown a consistent pattern of falling unit sales for four quarters, and falling profitability for six. Subscriber growth was already close to flat. The company almost racked up an operating loss last quarter. Cost cutting was already a matter of survival.

U.S. homebuilders: stops and starts: A house is something to live in, not an investment. So most Americans have been forced to conclude after a miserable six years: the Case-Schiller home price index is down a third from its 2006 highs. Shares in the five biggest by sales (Pulte, DR Horton, Lennar, NVR and Toll Brothers) have returned an average of 50% in the past six months, crushing the wider market. Prices continue to fall, but the pace of year-over-year declines has slowed, to under 3% in March, and the month-over-month results have turned positive. Housing starts rose 30% year on year to an annualised rate of 717,000 in April and have been growing for eight months. Aggregate home sales revenues for the five big builders were up nearly a fifth in the most recent quarter, with both units and prices showing improvement, after declining last year. But current valuations might give pause: forward price to earnings multiples vary from an above market 15 times (at Pulte) to a downright premium 33 times (Toll). In 2002, for example, the bubble had yet to get going properly, but Pulte still sold 29,000 homes in the U.S., almost twice the number it did last year.

Repsol: fighting back: Making the best of a bad situation was going to be the challenge for Repsol. Argentinas expropriation of most of its 58% stake in local producer YPF robbed the Spanish company of more than a fifth of its after-tax earnings, with little likelihood of compensation for years to come. Emphasis is being added on the upstream business, with production due to grow at a higher 7% annual rate, and reach 500,000 barrels of oil equivalent a day by 2016. Achieving that will require investment almost 15 billion out of a 19 billion capital expenditure programme over the next four years. Pencil in 4 billion-plus from non-core disposals and treasury stock sales, and that leaves 8 billion-plus to fund debt reduction and a reduced dividend ratio of 40-55%. There will also be risks: Brazil and Venezuela, as well as the U.S., will need to become much bigger contributors to production by 2016, and an $80-a-barrel oil price would cut expected growth in earnings before interest and tax in half.

Lombard:

Old money alliance will attract new wealth: RIT Capital Partners, the investment trust that he chairs, is buying a 37% stake in Wealth Manager Rockefeller Financial Services for something under 100 million. The vendor is Socit Gnrale, which acquired the holding at the top of the cycle in 2008 for up to $500 million, according to scuttlebutt at the time. Shares in the French bank have halved in 12 months and it is under pressure to bolster capital strained by exposure to Eurozone debt. Both Nathan Mayer Rothschild, founder of the U.K. branch of the banking dynasty, and legendary oilman John D Rockefeller have been credited with the axiom buy while the blood is running in the street. Appropriately, RIT and Rockefeller Financial Services, a descendant of the Rockefellers family office, are now set to do some bargain-hunting together.

Blind faith: Declinists characterise our era as deficient in trust. But the case of Alberto Micalizzi, who faces a 3 million fine for allegedly lying to investors, shows how plentifully it greases the wheels of finance, even after an investment scheme has imploded. Mr Micalizzi is an academic expert on options pricing. Just like Myron Scholes, a principal of Long-Term Capital Management, the U.S. hedge fund that collapsed in 1998. Mr Micalizzis own fund, Kensington-based Dynamic Decisions, came a cropper in 2008. Its strategy of buying or shorting related stocks chalked up losses of at least $390 million. Before Dynamic Decisions went into liquidation with assets of $10 million in 2009 it was able to attract $41.8 million from one new investor, who should perhaps have done better due diligence.

The Daily Telegraph

Europes debtors must pawn their gold for Eurobond Redemption: Southern Europes debtor states must pledge their gold reserves and national treasure as collateral under a 2.3 trillion stabilisation plan gaining momentum in Germany.

Blackberry maker RIM warns of significant job cuts: Research In Motion has warned of significant spending and job cuts amid fierce competition from its rivals, as the BlackBerry maker said that it could report its second consecutive quarterly operating loss next month.

QE prospects dwindle: Spencer Dale, the Banks Chief Economist, said policy is very stimulatory and Ben Broadbent, an external member of the rate-setting Monetary Policy Committee (MPC), argued that inflation is not falling fast enough to justify more money printing.

Christine Lagarde attack on Greece backfires as she pays no tax: Christine Lagarde, the International Monetary Fund Managing Director who provoked an angry reaction from the Greek people after telling them to pay their taxes, does not pay tax on her own salary, it has emerged.

Barclays calls off sale of French and Italian arms: Barclays has decided against the sale of its businesses in France and Italy ending speculation the British bank could offload large parts of its European retail operations.

Lotus Owner reassures U.K. workers: The Malaysian Owner of Lotus has given a vote of confidence to the car makers 1,200 U.K. workers and insisted it has no plans to sell the company.

The Questor Column:

LoveFilm deal puts Entertainment One in pole position to mop up more Amazon business: The cartoon characters Owner, film and television distributor Entertainment One, has seen its shares drop from around the 155p mark to below 130p, amid rumours that it is looking at buying one of its Canadian peers, Alliance Films. Analysts have concerns about Entertainment Ones ability to fund the deal, and their doubts were confirmed as Chief Executive Darren Throop confirmed that the company would have to place more shares to get the potential acquisition over the line. Meanwhile, a more than 100% surge in full year pretax profits and steady growth of Entertainment Ones digital revenues point to a healthy underlying business, and a good opportunity to buy. Lucrative deals such as its five-year licensing arrangement with Amazons on-demand service, LoveFilm, are replacing a slump in traditional DVD sales. Whats more, the LoveFilm deal puts Entertainment One in pole position to mop up more Amazon business when it extends into new territories. Entertainment One at 136.5p +1p. Questor Says Buy.

Betting sector worth a gamble despite Spanish tax: 888 Holdings became the latest gaming company to hand over millions of Euros to the Spanish taxman after the countrys authorities called for taxes to be paid under two laws that did not previously apply to foreign gambling operators. While theres a distinct possibility that the backdated tax will be challenged through the courts further down the line, 888 has paid up 8.7 million (6.9 million) to meet the demand. Bwin.party digital has handed over 33 million, Betfair has agreed to pay a sum of not more than 10 million and Sportingbet is taking a 17.2 million hit. Panmure Gordon has a Buy rating on 888, saying a Spanish licence will allow it to invest significantly in the market to secure meaningful market share. The gaming company, which had cash and cash equivalents of $81.85 million (52.1 million) at its year-end, has sufficient liquid resources to meet the payment, according to Panmure analyst Simon French. Numis is similarly bullish about bwin.party, which generates about 5% of its revenue in Spain and has a healthy cash pile of 198 million. Online gaming. Questor Says Buy.

Buy Brewin Dolphin for its yield: Mr Matheson was cautiously optimistic as the Investment Manager reported that funds under management grew 7.1% to 25.7 billion, and posted a 3.3% rise in pretax profits to 12.3 million in the six months to 31 March. The result was helped by lower fees from the Financial Services Compensation Scheme levy, the compensation scheme that pays out to consumers should a company collapse. The results enabled Brewin Dolphin to maintain its dividend at 3.55p, payable to shareholders on September 21. Brewin shares have fallen by about 13.5% over the past year, outstripping the FTSE 250, which has fallen by about 12%. However, the companys shares currently yield an attractive 5.1%, a figure that is expected to rise to 5.3% next year. Questor believes that high-yielding shares should be the cornerstone of any investment portfolio, as reinvesting dividends is one of the best ways to grow an investment portfolio, with a lower risk than investing in high-octane growth shares. Brewin Dolphin at 143p+0.4p. Questor Says Buy.

The Guardian

Booming business in China helps Jaguar Land Rover to 1.5 billion profit: Jaguar Land Rover, a business that was battling for survival three years ago, has reported record annual sales and a 35% increase in pretax profits to 1.5 billion on the back of booming business in China.

Facebook shares fall below $30 as U.S. authorities begin investigation into IPO: Facebooks shares dipped below $30 Tuesday as the companys shares hit new lows and continued to struggle in the wake of its massive initial public offering (IPO).

U.S. housing prices hit new lows in crunch week for economy: U.S. home prices reached new lows in the first quarter of the year, according to a closely watched survey of the housing market. All three Standard Poors Case-Shiller home-price indexes ended the quarter at new post-crisis lows. Home prices are down about 35% from their peak in the second quarter of 2006.

Private sector pay deals average 3%: Median pay settlement for whole economy drops to 2.8% after another round of public sector pay freezes. Pay deals are running at an average of 3% in the private sector, according to Incomes Data Services and a separate study by Labour Research.

Thomas Cook shareholders agree 330 million sell-off: Thomas Cook has won shareholder approval to sell parts of the business, after warning that a failure to do so could lead to its collapse. The 171-year-old tour operator held a private meeting with investors to discuss the planned sale and leaseback of part of its aircraft fleet and the disposal of five Spanish hotels to raise 239 million.

Daily Mail

BP makes return to troubled Libya as Shell heads for the exit: BP has announced plans to return to Libya, a day after its arch rival Shell packed its bags and left. The energy company is expected to spend more than 12 billion in the hope of producing its first oil from Libya within a decade.

Britains ailing economy shows signs of life as retailers take on more staff for the first time in nearly a decade: Britains ailing economy showed signs of life as it emerged retailers took on more staff this month for the first time in nearly a decade. The CBI said the number of people employed in the sector, including on the high street, in shopping centres and at car dealerships, increased in May ending a decline dating back to February 2003.

Hedge fund manager fined record 3 million and banned after covering up catastrophic losses: A hedge fund manager has been fined a record 3 million and banned from working in finance after covering up catastrophic losses of a quarter of a billion pounds.

Broker Views:

Hardy Oil Gas: Arden Partners Ltd maintained a Buy rating on the stock, with a target price of 296.00p

Essar Energy: Arden Partners Ltd maintained a Buy rating on the stock, with a target price of 243.00p

Optos: Canaccord Genuity Corp maintained a Buy rating on the stock, with a target price of 306.00p

Pendragon: Arden Partners Ltd maintained a Buy rating on the stock, with a target price of 20.00p

AMEC: Arden Partners Ltd maintained a Buy rating on the stock, with a target price of 1395.00p

Inchcape: Nomura maintained a Neutral rating on the stock, with a target price of 440.00p

Daily Express

Woodford gets 10 million: The former Boss of Olympus has won an estimated 10 million unfair dismissal payout from the Japanese camera giant after blowing the whistle on a corporate fraud scandal.

Printer cagey on drachmas: Money printer De La Rue has cashed in on strong demand for banknotes and passports but stayed quiet over talk it was stockpiling new Greek drachmas. The group, which produces more than 150 national currencies, stamps, driving licences and cash sorting equipment, printed 6.4 billion banknotes last year, 8% more than the previous year.

Dont be tripped up by a lack of travel insurance: Holidaymakers are being urged to check they have as much protection in place as possible to avoid being left out of pocket when heading overseas. New findings from Lloyds TSB show nearly a third of those who have trips booked abroad in the next 12 months are concerned about disruption to travel plans by factors outside of their control.

The Scottish Herald

Bankers acted as salesmen: Royal Bank of Scotland business bankers were acting purely as salesmen when they introduced small businesses to interest rate swaps in 2007, the Court of Session heard from the banks own counsel.

North Sea strategy targets extra 890 billion in revenue: Alex Salmond has published a strategy for the key oil and gas sector that Ministers believe could help unlock an additional 890 billion production revenue over the life of the North Sea.

U.S. fund switch gains approval despite protests: The U.K.s only investment trust tracking the U.S. stock market has morphed into a more expensive actively-managed fund despite private shareholder disquiet.

Iomart in hunt for potential takeover targets: Iomart is still on the acquisition trail after reporting another year of record results which saw pretax profits more than double from 2.8 million to 5.8 million.

IT firm 365 secures contracts: A new IT company has secured early success with a string of international contracts and set up a joint venture in Malaysia. 365 Collaboration, based in Aberdeen, provides training and implementation for cloud computing-based Microsoft services such as Sharepoint and Office 365 as well as web design.

Enquest sells stake in field: Enquest has agreed to sell a stake in a North Sea field to Kuwaits state oil firm for around 300 million.

Wealth Managers underlying earnings down by 17%: Wealth Manager Brewin Dolphin has seen underlying earnings plunge 17% to 18.9 million in its first half as rocky financial markets led to reduced trading.

The Scotsman

Germans 9 million Scottish laser research centre in Glasgow: The German technology outfit that invented the MP3 digital music file will unveil plans to open a British base at Strathclyde University and commit itself to creating 80 jobs in Glasgow. Fraunhofer Gesellschaft, Europes largest contract research firm, will use the centre to develop lasers for use in the energy, healthcare and transport industries, building on scientific research already going on at the university.

Fall in commercial rents unchecked for a full year: Rental income made by owners of commercial property in Scotland as well as asset values have fallen for the fourth consecutive quarter, a new report suggests. The Scottish Property Quarterly from agency CBRE notes that the pace of the rental value decline has been relatively stable over the past few quarters but that the severity of the fall in capital values is increasing.

Sparrows hoists headcount as it plans to hire 65 more staff to drive growth: Offshore crane specialist Sparrows was poised to outline measures to recruit a further 65 staff, taking its headcount towards 1,700 workers, as it targets emerging markets in Brazil, the Middle East and West Africa. The jobs will come on top of the 143 posts created last year by the Aberdeen-based firm, which was founded in 1973 and now has 19 bases globally.

Bentley adds class to Xcite shares: Xcite Energy revealed that it had struck 2,200 feet of oil during the first stage of appraisal work at its Bentley field in the North Sea. The Aberdeen-based explorer, a favourite among private investors, was one of the most hotly-traded stocks on the market, according to share dealing website Interactive Investor.

Wolseley warns of risks from the high pound as Q3 profits rise 10%: Plumb Center owner Wolseley reported a 10% rise in third quarter profits but warned that the stronger pound was likely to impact results this summer. The group said good growth in Canada and the United States, where it generates around half of its revenues, helped push trading profits to 139 million in the three months to 30 April, up from 126 million a year earlier.

City A.M.

Graff Diamonds $1 billion IPO fails to sparkle yet: Bankers to the $1 billion IPO of the Mayfair-based jewellery group Graff Diamonds said that the share issue did not yet have sufficient demand for the deal to go ahead.

Jump in adults priced out of flying the nest: Soaring rents and large deposits are making it increasingly difficult for young people to buy a home, industry data showed. Figures from the Office for National Statistics (ONS) recorded a 20% jump in the number of young adults living with their parents since 1997, while figures from Rightmove showed that 30% of tenants spend more than half of their take-home pay on rent.

RBS gears up to sell Direct Line: Royal Bank of Scotland (RBS) appointed UBS to advise on the sale of Direct Line Group, the insurance division that it is preparing to take public.

Greggs lifted by government rethink on VAT: Shares in the U.K.s biggest bakery chain Greggs leapt eight per cent as businesses welcomed the governments U-turn on its controversial changes to the so-called pasty tax. Plans in the Budget would have seen foods charged 20% VAT if they were sold at above ambient temperature, hitting shops such as bakers, which sell goods hot from the oven.

Ashurst sees revenues increase: Law firm Ashurst posted a 6% rise in turnover for its 2011-12 financial year, with revenues rising to 322 million from 303 million in the previous 12 months.

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Wednesday, May 30th, 2012 EN

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