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Markets Live: Friday, 10th March, 2017

11:01 am PM11:01amHi there Arlington Morning PM11:02amWelcome to Markets Live PM11:02amFriday Patience Morning all.. Otter Hello Friday Friends! blankcanvas Dia dhuit 11:02 am PM11:02amTony T pointed this out this morning Twattington-Burbage Morning PM11:02amBrian Winterflood: Diamond geezer To the PLC Awards at Park Lane’s Grosvenor House Hotel. Hosts PwC were still pink-cheeked from their Oscars scrape but had a decent line in self-mocking gags, including at one point producing two red envelopes with a flourish. Tributes were paid to Brian Winterflood, the East End-born entrepreneur

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Hi there

Arlington Morning

Welcome to Markets Live



Patience Morning all..
Otter Hello Friday Friends!
blankcanvas Dia dhuit

Tony T pointed this out this morning

Twattington-Burbage Morning

Brian Winterflood: Diamond geezer

To the PLC Awards at Park Lane’s Grosvenor House Hotel. Hosts PwC were still pink-cheeked from their Oscars scrape but had a decent line in self-mocking gags, including at one point producing two red envelopes with a flourish. Tributes were paid to Brian Winterflood, the East End-born entrepreneur turned City legend, who has retired after 60 years in the Square Mile. But having graciously accepted the adulation, Winterflood had a parting shot at Close Brothers, who bought his firm Winterflood Securities in 1993. The hall cringed as the octogenarian complained that no one from Close Brothers had sent him so much as a well-wishing card. Not so close after all.

Soundbuy Oi
German GM everybody
LongandWrong Morning all!
Boncoeur @PM: Tony T pointed out that it's Friday? He's a very perceptive man!
CommentGoesHere Hapy Friday Otter, and to all

I had no idea Brian Winterflood had actually gone

Soundbuy Just us?
Otter @Comment what is the weekend plan?

He's said he was retiring last year -- from his honorary post at Winterfloods


But now he actually has gone


Why isn't he Sir Brian or Lord Winterflood, for that matter

LongandWrong Brian is a nice guy. I was at a function and shared a table with him once
CommentGoesHere @Otter - stand-up comedy (watching, not performing) and a meal or two with friends, I hope. Have a good one yourself.

Given all the goons handed seats in the House of Lords over recent years




You can see nice photos of the winners in their tuxes here:

LongandWrong Gongs often to to less deserving

Metro Bank won New Company of the Year, I see.

OJatHome All the old Close guys have gone but nevertheless, pretty poor. I suspect the real grievance is about something else altogether though



Here's a more elegant portrait of Brian


Otter He looks like an old Douglas Carswell.

Not universally popular amongst WINS market makers

Boncoeur BT Openreach?

He was tough on some of them

LongandWrong @otter thats unfair!!
Otter Did you know that the doctor in the Last King of Scotland was Douglas Carswell's dad?

But yeah, done more than anyone to establish and develop the listed SME scene in London


And he should be Sir Brian

FATDAZ Brian is among the last of a dying bred the true city gent and an innovator

Where do we start Bryce, stock wise?




I guess so.

BT Group (BT.A:LSE): Last: 344.65, up 14.45 (+4.38%), High: 349.20, Low: 337.80, Volume: 23.97m

They must be smirked at the BT HQ

FATDAZ @otter no I didn't I love that sort of trivia / background

Ground everyone down


Eventually everyone happy to have a fudge


Openreach has legal separation and not much more

Residual @otter Wow - James McAvoy really has aged well

Yup. This is on Ofcom reaching a voluntary agreement for legal separation of Openreach where BT does nearly nothing and Ofcom crawls back into its box without anything it set out to achieve.




Now, it's not a huge surprise.


As outlined previously, here and elsewhere, it did seem BT had a reasonably strong negotiating hand


Because of Article 50

FATDAZ Morning btw

The background here is that, if BT and Ofcom hadn't found any common ground, the next stop would've been the European Court


Meaning the Government would be passing to the EU for adjudication an entirely domestic dispute over some poles and wires


Which would look a wee bit awkward right at the start of the A50 process.

erlkin is it just me......or is the left side blank?
FATDAZ @residual lol

this is true

Arlington that's just you I'm afraid

The political pressure on Ofcom must've been considerable, we can speculate. And BT would've needed to do nothing other than fillibust.

FATDAZ @erkin seeing comments here ok

(Is fillibust a word? It is now.)


As it stands, we have ............ well, we have kinda nothing, really.

squarepeg LRD very strong on Berenberg note- XR next week

The government agrees to extend the Crown Guarantee to Openreach, which is the insurance policy on BT going bust.


BT going bust is an unlikely scenario, of course, though it's a comfort to the pension scheme trustees.


And Openreach will sit inside BT like a Russian doll

none Aldermore? Down 7% on AnaCap sell off
Boncoeur @BE: ken wolstenholme in dictionary corner today.
SoS I see Tim Martin having a rant about dinner parties

Legally separate and distinct, but still completely enclosed within the parent company.


Will that make any difference operationally? It's not obvious why it would.

Twattington-Burbage It'll probably save BT millions in future litigation costs...they're always in some sort of dispute with Sky over the competitiveness of BT owning all of the telecoms infrastructure.
Pseudonym Lord Winterflood sounds a bit too Game of Thrones..
FATDAZ re BT and Open Reach not that different to Lloyds spining off TSB except that TSB were quoted and so vulnerable to acquisition

There's nothing in the settlement about more investment on the network, which was what Ofcom was pushing for in the first place.

Arlington @Pseudonym Winterflood is coming...

Course, there's still the Wholesale Local Access review to come though, and maybe Ofcom can't preempt that.


Worth noting, though, that BT remains in charge of the Openreach spreadsheet. This really isn't a devolution of power.

FATDAZ @anacap placing price 220p ? so reflecting that I believe
Flaneur Sir Brian Winterflood? Very game of thrones. First of his name etc...

So ....... you're either expecting patsy management at Openreach (defying the whole point of separation) ....




.... or you're expecting tension further down the line between BT and Openreach management, where the only possible endgame is a full structural separation.


By that reading, it could be argued that Ofcom has added a structural fault into BT's management


That might, or might not, play itself out to an endgame.


I buy the fault line argument


BT might now pull itself apart. Or it might not.


Funny kinda regulation though.

Boncoeur @BE: At least the assets and liabilities will be booked separately, easier to hive off later.

Here's Goldman.


We make 5 key points:


And they do. Count 'em.

Forester Hmm left side blank for me as well. Going to boot up Chrome

1 ) We would not expect a legally separate Openreach to make materially different
strategic or investment decisions compared to if it were a legal part of BT. Crucially,
we believe Openreach, as a legally separate entity, will continue to prioritise ‘Future
of Fixed’ copper upgrade technology investment (subject to conditions set in
an upcoming Ofcom “WLAR” review), which we see as value accretive. This
compares to fibre-to-the-home (FTTH), which we see as likely value destructive.
While today’s news is a positive for BT in our view, we expect further ducts and
poles regulation to come with the WLA.


2) It does not appear that BT has had to commit to any material FTTH roll-out to
reach the agreement. This was a key concern expressed by investors, with a concern
that FTTH would be value destructive.

Flaneur SoS - got a link to Tim Martin?

3) BT will continue to set the capex budget for Openreach. The limit with regards to
capex decisions for Openreach is £1 00 mn and anything above needs to go to BT

Soundbuy Is it Tim Martin or Wetherspoons the City doesn't like?

4) While Openreach management will report to an independent Openreach board,
the reporting line into BT Group will not be severed. Ofcom states “Executives will
be accountable to the new Board. Openreach’s Chief Executive will in future be
appointed by, and accountable to, the Openreach Board. BT Group will be able to
veto appointment of the Openreach CEO, but only on notification to Ofcom. The
Openreach Chief Executive will then be responsible for other executive
appointments, and will report to the Openreach Chair – with a secondary
accountability to the Chief Executive of BT, limited to necessary legal, fiduciary or
regulatory obligations.” The BT CFO is on the Openreach board.

Residual @Boncoeur - agreed. Harder to say it's so operationally complex and therefore we'll have to juice customer bills next time ofcom come a-knocking
Boncoeur Tim Martin, Brexiteer, thinks immigration is necessary. Doh!

5) There is limited detail on the pension allocation.

Otter I like Tim Martin and his persistent selection of real ales.
Soundbuy Above for Tim Martin

Investor focus has been on Openreach treatment for the last 1 8 months and this has
been seen as the key regulatory uncertainty. As such, we see today’s announcement as
a material positive for the shares. But as we state above, we do not believe Openreach
decision-making will change materially as to the method of upgrading the network or
how to monetise it.


However, there are two more ongoing uncertainties for BT:
1 ) Wholesale Line Access Review (decision expect this “spring”) - this is potentially
more influential to BT returns. In this, Ofcom will decide whether Openreach will have
wholesale pricing flexibility on This is critical to its monetisation of the network
2) B2B - following the recent profit warning, this has resurfaced as a business unit with
limited visibility, at least for investors.

Paul Murphy (I'm sorry some of you are getting tech faults -- not comments on right. Please post system details.)

(I'm sorry some of you are getting tech faults -- not comments on right. Please post system details.)

Forester Wetherspoons is a great business and invested from the start - but toppy now

Goldman did that note a few days ago estimating that Openreach will have to charge £20 or thereabouts for fibre-to-home, which is rather more than the £7 is currently charges for fibre-to-cabinet.


They're very down on infrastructure cost generally.


Deutsche, less so.


Prima facie this is a significant capitulation by BT to all of Openreach’s
demands (though the red line of asset transfer to Openreach has not been
breached). There may yet be implications for the pension but the risk appears
to be minimized which is supportive for BT shares this morning. Today’s
agreement does not end uncertainty over BT’s operational performance and
BT’s investment levels however and BT will be expected to change its
behaviour, likely with higher associated investment. The upcoming regulatory
review of wholesale line access may incentivise investment by reducing FTTC
returns in favour of FTTH deployment and competitive pressures remain (fixed
and mobile). In the absence of any further information on strategy and
investment levels it is hard to take legal separation as a positive as BT Group
other than the form of separation avoiding of a one-off pension top-up (top-ups
may increase anyway in light of a c£13-14bn deficit as of June 2016). With
legal separation the threat of full separation is maintained should BT not
deliver on its obligations; BT will have higher operating costs and will
potentially see higher investment levels to appease what is seen to have been
shortcomings in the Co's strategy to date. A course of further appeasement (eg
greater FTTH roll-out) may impact cashflows in the medium term alongside
ongoing pressures from competition. We view the risk-reward balance as more
favorable elsewhere in the sector at this time.


So. Sector wise .....

Talktalk Telecom Group PLC (TALK:LSE): Last: 173.80, up 0.4 (+0.23%), High: 174.40, Low: 170.30, Volume: 215.62k
Vodafone Group PLC (VOD:LSE): Last: 204.78, up 1.38 (+0.68%), High: 205.03, Low: 202.50, Volume: 13.24m
Sky PLC (SKY:LSE): Last: 996.00, down 0.5 (-0.05%), High: 997.50, Low: 995.00, Volume: 889.51k

And that's that.

Soundbuy Wetherspoons dry sales 18% in 2000, double that today
Forester @soundbuy Agree. if you go in on "Fish Friday" or "Curry Wed" they are rammed with families during "off peak" drinking times. Good value. My 16yo lad spends most of his time in there!

So, Draghi spoke yesterday, after we closed up

FATDAZ looking at headline figs in JDW apart from drop in FCF per share not much not to like is there ? ( but I say that not knowing forecasts)

Quite a delicate message he was getting out


Yeah, growth and inflation forecasts are up

wayneJ I have suggested this before - but why does Sky not have to open its box to third parties in the same way that it wants OpenReach opened up?

But he's not rushing to follow the US trend


Here's a bit of Reinhard Cluse , UBS


ECB signals a steady hand, while acknowledging an improved outlook
The ECB signalled policy continuity today, by reiterating its commitment to a substantial degree of monetary accommodation, while at the same time tweaking its language to acknowledge good data and reduced downside risk. As such, we think ECB President Draghi successfully managed a delicate balancing act. As we had expected, the ECB maintained its interest rate easing bias, but did not prolong the TLTRO-2. The ECB's new staff macro projections contain higher forecasts for growth and inflation.


ECB expected to taper in January 2018, with a decision on 7 September
Our call remains that the ECB will buy assets worth €60bn from April to December 2017, but start to taper QE as of January 2018, over 6-9 months, with a decision likely due on 7 September. We expect the ECB to "tighten" its communication in the upcoming meetings, particularly on 8 June, after the French presidential elections. Our central scenario remains that – in line with the ECB's guidance – interest rates will only rise once QE has come to an end.

Soundbuy @FATDAZ - re JDW, never held but like their ops. Last man standing re pubs in many areas.....
Boncoeur @PM: When he said no new TLTRO, markets spiked. This was a tightening.

Taper still a good way off

wayneJ Secondly I for one would be interested in paying for FTTH given the poor service on poles that we have; but even when people want to hand over their money no one at BT knows how to offer the service

Rates Strategy: ECB's "steady hand" approach prevails
Mr Draghi showed no urgency to address distortions in the German bond market. Thus, German front-end yields seem bound to remain structurally low, the Bund curve steep and swap spreads wide. Upward pressure in money market rates continues as doubts in the market prevail about the sequencing of rate hikes vs QE tapering. At this stage we see poor risk/reward in front-end Eonia forwards despite elevated levels. Strategically we retain a short duration bias for 10y Bunds alongside a steeper curve as well as US and German yields converging in real and nominal terms over the long run, which should also support the EUR. Today's developments and market reaction support this view.

Forester @soundbuy if fact I stayed in a Wetherspoons hotel last summer....and if was not bad at all! (and cheap)
FATDAZ @wayne J good question i wonder if there is/ was an issue with capacity in skys satellite network although I think the Q box does away with need for a dish if I am not mistaken
wayneJ Thirdly is the OpenReach / BT relationship any different from the News / Times relationship where the Times is guaranteed independence?

But here's also a bit of Greg Fuzesi at JPM

erlkin gold a buy yet?

Talking about a little muddle in the message

SoS @flaneur its the announcement:

In our view, the main message is that the ECB is feeling better about the outlook and therefore inching towards an eventual exit, without being in a huge rush right now. But, two aspects of today’s meeting are worth noting, both of which muddle the message.


First, the ECB has once again undermined its own forward guidance. When asked about the “or lower” pledge on rates, Draghi read out a statement he made one year ago, which said that the ECB no longer expects rates to be cut further. Hence, it seems that the easing bias on rates has already been meaningless for a long time. When asked about the exit sequence, he said that the guidance of rate hikes starting “well” after the end of QE was just an “expectation”. Hence, this also makes it sound pretty meaningless, as opposed to like a well thought out and collectively-agreed strategy. Finally, Draghi emphasized that the pledge to use all instruments, if needed, was dropped today in order to signal less “urgency” about downside risks. This contradicts the pledges on lower rates and additional QE. At this point, Draghi added somewhat triumphantly that, due to the improved outlook, not a single governor felt the need to ask about further TLTROs (the last tender is later this month).


Second, the outlook has certainly improved in terms of growth and unemployment. But, the staff forecast looks very ambitious on wages and inflation. Headline inflation was revised up a bit less than we had expected this year to 1.7%oya. But, this year’s core inflation was not cut, even though the trajectory through to February looks stuck at 0.9%oya. And, for 2018 and 2019, it was actually raised by one tenth to 1.5%oya and 1.8%oya, respectively. Hence, from a current starting point of 0.9%oya, the ECB staff expects core inflation to double over two years. This appears to rely on a sharp pickup in wage growth from 1.3%oya last year to 2.4%oya in 2019. Given that unemployment is expected to fall back to (or even a tick below) the NAIRU by then, some pickup in wage growth is likely. But, the 2019 forecast on wages is in line with the 1999-2007 average, whereas experience in the US and UK suggests that wages are slow to rise in the current recovery even once unemployment is back in line with the NAIRU. Hence, the forecast on wages, productivity and core inflation looks ambitious to us (see first two charts).

wayneJ @BE - the issue with £20 per month for FTTH is that there are areas of the country where people are willing to pay that cheaper than my daily ticket into London (including the mandatory coffee etc)
FATDAZ @soundbuy yes JDW seem to make it work where others sadly cant

Overall, it is striking that ECB rhetoric and staff forecasts are moving in a hawkish direction, despite ongoing disappointment on core inflation and wage growth. In our view, this reveals a central bank that is gradually moving towards the exit. As a result, we continue to expect QE to be tapered down to zero during 1H18 and very gradual rate hikes to start in 4Q18. Today’s meeting has created uncertainty however around the exact timing and sequencing.


So similar expected timetable on the euro taper


But Greg is notably more nervous than others ive read


I will try and do a little LR pack later


So did this Aldermore placing come as a surprise later yesterday?

Mouselet The fibre-to-the-home market is at the moment spectacularly exploitative: for 10Mb/s I would be charged £2827.50 install and £416.80 per month. ( because they assume that if I want this service I'm a VC-funded internet company
erlkin i'd bet albert Edwards is typing ...

Deutsche, was it?

Aldermore Group PLC (ALD:LSE): Last: 224.10, down 15.9 (-6.62%), High: 224.63, Low: 221.00, Volume: 3.37m
FATDAZ re BT Open reach Sky etc what ever happen to idea of data transmission via the national grid ?
wayneJ @Mouselet that is interesting. I believe BT did trial FTTH at a much cheaper rate?
Boncoeur @erlkin: Albert Edwards

Certainly wasn't flagged.


Deutsche and RBC did the business


This is Anacap Funds slotting 51.7m.


AnaCap the seller



Mouselet FATDAZ: bandwidth is nothing like high enough on the actual national grid; getting permission from National Grid and running fibres on pylons with all the delightful worker-safety issues may have turned out more expensive than digging holes

They've been regular sellers since the IPO in March 2015.

Pseudonym Does anyone offer genuine FTTH? Does anyone have a back-end network that could really support it?
Otter AnaCap = The Anarchocapitalist Syndicate



192p, then again at 286p.


Now at 220p


The shares seem to have taken a hit on the capital guidance as much at the placing.

erlkin thanks Bon.....anyone have his blog site avail?

Suggesting that a divi this year won't happen.


Which has been a theme of the banks recently

FATDAZ @ mouselet thanks back to the drawing board then ,
Flaneur @Boncoeur - reads like a scorched earth policy from the Fed as a 'payback' for Trumps election.
Mouselet FTTP is 'available to 3% of British households' and the 3% does not include the street full of tech workers ten minutes by bike from the Science Park where I live
Boncoeur @erlkin: it's proprietary and SocGen charge lots of money for it, best to get the snippets as reported by jornos.

Investors, or possibly just sellside, overestimating how keen management will be to erode the CET1 with shareholder returns.


Here's Gary Greenwood at Shore.


Aldermore’s 2016 full year results showed double-digit growth in lending and profitability, both slightly ahead of our own and company-collated consensus expectations. The outlook statement was confident and indicated upside risk to earnings estimates, which we have upgraded accordingly. However, we think updated guidance by management on capital requirements also means that the commencement of dividend payments could now be delayed until 2018. In addition, we note that Aldermore continues to lag behind its quoted peers in terms of capital strength. That said, we think this is already reflected in the share price and, with the stock trading at a significant discount to our revised fair value of 310p (from 250p), we re-iterate our positive stance.

erlkin thanks & happy friday
wayneJ @Mouselet - I find it bizarre - the telcom industry seems obsessed on number of houses passed rather than adjusting for the probability of a customer signing up
Mouselet I think mostly I would use asset managers other than the kind of asset managers who think paying good money to get to read Albert Edwards earlier is a better use of money than giving it to Oxfam
wayneJ Was hoping Hyperoptic or similar would open up in our village

And Goodbody.

Mouselet grumpiness of the day: after bonus-month I wrote a medium-sized cheque to Oxfam and another to Practical Action. I received replies, which had half a sentence of grudging thanks and then 'have you considered monthly donations' from Oxfam and 'have you considered a legacy' from Practical Action. Grump.

The Aldermore shares placing should help improve liquidity in the stock and follows
hot on the heels of Pollen Street Capital and BC Partners’ bid for another challenger
bank, Shawbrook. On the potential for TSB to bid for Co-Op Bank, we believe that
the deal presents considerable strategic merit for the former, providing it with a
network of scale in the North to complement its Southern bias – so, complementary
from a geographic presence perspective. However, in the event that the bid were
successful, we would expect a significant branch rationalisation programme – as
TSB is already progressing the ‘rightsizing’ of its existing branch estate.

Pseudonym Having FTTC through virgin and it's more than I need, I'd be surprised if the market for FTTH is anything other than a swipe at goldilocks pricing for the real high-rollers.
FATDAZ re Albert Edwards here are the opening paras Make no mistake. Unlike most in the markets, I remain a secular bond bull and do notthink this 35 year long bull bond market is over. I believe the US Fed has createdanother massive credit bubble that will, when it bursts, lay the global economy verylow indeed. Combine this with the problems of a Chinese economy dependent onincreasingly ineffective injections of credit to produce increasingly pedestrian GDPgrowth and you have a right global mess. The 2007/8 Global Financial Crisis will looklike a soft-landing when the Fed blows this sucker sky high. The seeds for thatdebacle have already been sown with the Fed having presided over one of the biggestcorporate credit bubbles in US history. All that is needed now is for the Fed to sprinklelife-giving rate hikes onto these, as yet dormant, seeds of destruction. AcceleratedFed rate hikes will cause tremors in the Treasury bond markets, forcing rates up, mostespecially in the 2 year – just like 1994. But as yet another central bank-inspired globalrecession unfolds, I believe US 10y bond yields will ultimately converge with Japaneseand European yields well below zero – in other words, buy 10y bonds on weakness!

That's referencing a Bloomberg story about Sabadel moving closer to launching a bid for Co-Op Bank


Sabadel being the owner of TSB, of course.

Mouselet Saving two pieces of paper at the price of making your donors think you're more interested in cash flow than in your charitable activities is not clearly obviously the right way to proceed
FATDAZ sorry about formating

JD Wetherspoon seems to be interesting the ROTR, for reasons that escape me.

J D Wetherspoon PLC (JDW:LSE): Last: 928.50, down 36.5 (-3.78%), High: 976.00, Low: 921.00, Volume: 205.53k

It's .... mixed. Very.

Mouselet it is 2017, why on Earth is someone saying that a bank merger makes sense based on the distribution of branch locations?

H1 slightly ahead, outlook raised by a fraction.

FATDAZ @mouselet yes have experienced similar wonder if that attitude reflects ways that the staff are rewarded i e extra money for them if you sign up for DD

But like-for-like sales are lower and costs are rising.

Soundbuy Cheers Fatdaz - need a beer after that......
Boncoeur @fatdaz: thanks. very interesting, rate hikes normally mean yield curve normalisation and so higher bond yields so sell bonds. But Albert is arguing it will all go pear shaped meaning bonds will be the safe haven. Hmmm.
erlkin "sprinkle life giving rate hikes onto the now dormant seeds of destruction"....AE at his finest i'd say

The headlines and the underlying trends seem to pull in opposite directions.


Oh, and openings look quite slow.

FATDAZ Re Albert love him or hate him he is least consistent

10-15 openings targeted for the full year.

CommentGoesHere @Mouselet - I guess 'network' may not mean 'branches' anymore
Bluesky21 @ FATDAZ Yes, broken clock right 2 times a day kind of consistent

Having only opened two pubs since the start of the year

Mouselet My line has always been that 'QE will have disastrous consequences given rate hikes' is like 'Visiting the zoo will have disastrous consequences given that you jump in the bear pit' - not jumping in the bear pit is an available option
FATDAZ @soundbuy you are welcome and that reminds me a local beer festival kicks off to day thanks
Soundbuy Does Albert give a date for this financial armageddon as was looking to get away in late July
Mouselet and Japan sits there and demonstrates that rates at zero forever sort of basically work-ish
wayneJ @Mouselt - you have to appreciate that published research is like a brochure - the real value add is then often speaking to an analyst and having a dialogue - sometimes over months - on an idea.

The wrinkle there is that they have 17 pubs for sale, so the estate is shrinking

Boncoeur Does Albert have a sandwich board?

For a second year running, I think.


I'll not make any value judgments here on whether the world is better with fewer Wetherspoons ....

alewis2005 london pubs seem to be ether spoons, sam smiths, or 'oh **** it's £5.50 a pint'
FATDAZ @Bluesky 21 LOL thats tad harsh but whatever your take he always makes you think and consider things from diff angles his notes are ones I always read

..... instead, here's Morgan Stanley.

erlkin i would think the trump admin would want this shakeout sooner rather than later as for timing
SoS I suspect Philip Hammond and Tim Martin would not get on if they met

JD Wetherspoon announced H1 total sales growth of +1.4% to £801m,
with EBIT +32% to £65m (MSe £63m), reflecting a 170 bps rise in H1 margins. As it
had already announced its H1 sales growth and margin expectation, there were
no major surprises to the EBIT line, but adjusted PBT of £51m (+43%) and EPS of
33.8p (+52%) were slightly above our expectations of £47m and 32p respectively.
Current trading has deteriorated slightly, with 2.7% LfL sales growth in the first 6
weeks of H2, compared to 3.2% in Q2. The company is "aiming for a slightly
improved trading outcome" for the year compared to its expectations at the last
update, noting a better than expected H1 offset by an expectation of lower LfL
sales in H2 and more cost pressure. EBIT margins were up 180bps to 8.1%, but
the company had previously flagged the impact of "significantly higher costs",
citing a 4% rise in labour costs, £7m for business rates and £2m for the
Apprenticeship Levy, in addition to inflation in other areas. The company has not
updated guidance for openings in the year, raising the potential for fewer than
the previously targeted 10-15 pubs to be opened in the year and further pressure
on total sales growth.

Twattington-Burbage or £7.50 for a G&T!

We assume LfL revenue growth of 2.5% for the full year, with flat
margins leading to our EBIT forecast of £118m (+3%) and PBT of £87m (+7%),
slightly ahead of consensus at £113m and £82m. At the F16 results, the company
said it expected a slightly improved trading outcome for the current financial
year, and updated this at the Q2 release given the stronger-than-expected H1
performance, stating its expectation is now "slightly improved" compared to its
expectations at that time. The stock is trading on 16.5x 2017e P/E and 9.0x
EV/EBITDA. We recently discussed the significant industry headwinds in this note
and see downside risks to forecasts in the medium term, and a high valuation,
and rate the shares Underweight.


Was just reading through TIm Martin's rant about taxes -- pubs vs supermarkets

Forester Not my thing but Spoons has cider at £2 a pint....still get tipsy for a tenner just like in the good old days!

On one level you can see his point

Boncoeur Macron to win Elysee

The tax discrepancies have helped kill pubs and made people drink themselves senseless at home

Mouselet What pub wants the kind of customer who would otherwise be drinking Tescco cider at home?
Soundbuy In the SW JDW do cask ales for £2.19 to £2.39.................
Arlington @Mouselet business is business

But hasn't Wetherspoon also helped kill the broader culture of pubs by making people think they are generally filled with boozed up fat blokes eating sausages?

Mouselet The point of a pub is the table not the booze, the extra price of the booze over Tesco is what you're paying for the table
Boncoeur @PM: what tax discrepancies?
SoS Government want all pubs to shut down - that's where revolutions are fermented
FATDAZ Re banks still find it hard to believe that sabadel were in a fit state to buy TSB I wonder how they avoided firestorm that hit all other spanish banks ?

Well, there is that.

Soundbuy PM - you're thinking of Germany.......

Bonceur -- read the statement http://www.investe...1703100700080837Z/

Boncoeur @PM: yeah, ghettoissation of the pub drinking classes.
erlkin gallon of beer 10$ gallon of regular unleaded 2$ and only takes a sip to get snookered
alewis2005 @Mouselet you tell me that with a straight face when talking about all Bar One etc. They don't have tables on principle :(

Soundbuy -- yeah, cheap burgers rather than sausages


I'm going to lay down a controversial opinion here .... 99% of pubs aren't that good. Certainly the metropolitan ones.


Completely agree

FATDAZ @mous;ett exactly what about a BYO with tables games music etc you bring drinks but pay for admission / member ship
Boncoeur @BE: Define a "good pub"
Arlington @BE agreed

Pubs also destroyed by flat pack pubs

Mouselet And Wetherspoon's is an absolutely genius high-grade provider of perfectly adequate not-that-good pubs
chopper bear Resturant group rallied a lot this week after results

I really don't mind paying £9 for a double gin in a nice place. But when were you last in a pub that was a nice place?

Patience Norwich has many good pubs :-)

There are still a few around


But you have to search them out

Mouselet BE: Yesterday (for reasons going back to the arrangement of lectures in the early nineties, Thursday is pub night for my social circle)
Otter Norwich has a church for every week of the year, and a pub for every evening. This is what I learned for Betjeman
dr000 lot's of good decent & nice pubs in the countryside (independend) preferred

We don't spend much time in the weeds these days

Chrispy Fatdaz, I'm not sure that Albert is factoring into his treasury yield forecast the unhelpful noise of Trump tweeting while the Fed is trying to manage a new crisis.
FATDAZ @p[atience really like Norwich i could deffo live there
wayneJ Doesn't Albert either own or live in a pub (can't remember which or both)?

That's true.


But i have one to look at

SoS My countryside local has just shut down - it's very sad, mostly tax I suspect

Kodal Minerals

Kodal Minerals PLC (KOD:LSE): Last: 0.3298, up 0.0973 (+41.85%), High: 0.33, Low: 0.315, Volume: 613.02m
Patience Good pub - no background music or one-armed bandits, real ale as well as lager, drinkable wine. Conversation.

Kod by ticker...

Boncoeur @BE: May I recommend the bars of posh hotels. Subsidized by charging US high rollers a fortune for a room, so for example Artesian Bar at Langham's
Mouselet I guess everything that was killed by people suddenly noticing that drink-driving was bad died some time ago.

This has featured here before of course

dr000 @PM there is a book for pubs, best pubs... or sotested some, quite consistent
FATDAZ @chrispy that might be better directed to the author himself lol
Patience @FATDAZ - came in 1973 to go to uni, never left :-)
BarrowBoy low margins (high tax) on beer mean economies of scale are important. Hence big pubcos have advantage over (nicer?) independent shops

Floated by Spangel as a ludicrous Norweigian resource punt

FATDAZ @patience :) indeed
Mouselet boncoeur: Seventeen quid for a subsidised Martini ?!??!

Private placing at 0.7p, float at 1.2p by memory, quickly followed by SP Angel 'analysis' speculating that the stock could fly to 30p soon.


Which it didnt


Norway never got off the ground

dr000 who the hell likes standard/international beer (except from Frankonia in Germany) vs local brewed stuff

Pivoted to copper, but with out any luck there

Boncoeur @Mouselet: yeah, so what?

So Kodal becomes a sub-penny dreadful

Arlington @Boncoer how good can that martini possibly be?
Twattington-Burbage @Mouselet I once paid £18 for a glass of pinot grigio
Patience @BarrowBoy - not so - pubcos charge tenants at least 30% over market for beer. Only way to make money is to own freehold.
Boncoeur Expect £15-£20 for a decent cocktail ion a decent bar.

But look at it now - suddenly up 40%, albeit from a fraction of a penny

Twattington-Burbage It wasn't worth it
Mouselet I find that prices like that make me very rapidly teetotal
Michael Milkem Mali, China, AIM, Spangel.. sounds like a recipe for disaster
doodle fat finger?

here's whats happening, quickly...

erlkin 18$ for a beer at yankee stadium duh
Twattington-Burbage @Boncoeur I thinks it more 12-15

Kodal pivoted again a while back to lithium, maybe, in Mali

SoS Talking booze I notice my Chapel Down shares have being going great guns, but I'm not sure why which is a bit disturbing
Patience @Twattington - in London I recommend Vinoteca as a wine bar.
Twattington-Burbage I'll have a look thanks
Arlington @erlkin I'm assuming that was warm beer in a plastic cup?

Now they've found a Singapore entity to buy £500k of stock at above the market price -- with a view to doing a lithium supply agreement into China

Binocular AutoTrader anyone?

Assuming Kodal actually gets access to lithium in Mali


But wait.

Binocular Any view on the CS Note?

The Singapore entity has bought a small amount of stock at above the market price (causing today's) spike and will now inject some more than £4m at a 65% premium to yesterday's price...

Patience @erlkin - pricier than the Emirates stadium! :-(
FATDAZ if you like a wine bar then the italian Enoteca have some v nice places in the sqaure mile and Mas Q Menos a spanish Tapas place has a great 2 for 1 happy hour 4 till 7
PM11:46am sometime over the next month, after doing some due diligence

rw42 I was nearly shocked sober at paying £11 for a double G+T at a silly hour of the morning last friday..

Don't that sound a smart thing to do if you are the Singaporean firm?

Otter @FATDAZ are we all invited?



So does it look like you are trying to manufacture momentum in the price?

erlkin watered down warm brew a real ny bargain


Michael Milkem @rw42. How much of that is due to 'posh' tonic mixer?
FATDAZ @rw 42 standard price for a drink in London hotels for may years


Boncoeur Tim Martin is ranting, at end of the day of course home entertainment is cheaper, dur!
alewis2005 @Boncoeur not so on the cocktail front. try Milk and Honey, Opium, Looking Glass, Found, Callooh Callay, Happiness Forgets etc. They're all top notch cocktail bars with drinks around the £10 mark (some a bit steeper, but nothing up at the £20 mark)
Forester To be fair to Spoons, when they started out they wer ethe ONLY places in many city centres where you could get real ale and be able to hold a conversation. 20 years on everyone is into craft ale, beards and conversations!

Kodal says...

rw42 Tis why i don't go for a drink in hotels often!

· Agreement is with Suay Chin International Pte Ltd ("Suay Chin"), a Singapore registered company formed to take advantage of its extensive connections to supply the Chinese lithium market with a range of clients from acid producers to lithium carbonate producers and to the final lithium-ion battery manufacturer.

· Suay Chin has strong support from Shandong Mingrui Chemical Co Ltd, which is a long-term supplier to existing lithium carbonate producers in Shandong Province.

Twattington-Burbage Vagabond is quite good for wine lovers

Yet Suay Chin was only registered as a company in the middle of January




And it's registered to what looks like a block of residential flats in Singapore


Give me a mo

Boncoeur But the ambiance, and mise-en-scene look at this
Pseudonym At least 'poons doesn't try to pin the blame on Brexit.

Markets Live: Friday, 10th March, 2017

Arlington @Boncoeur that does look lovely actually
Twattington-Burbage @Pseudonym because they supported it!
Soundbuy @ Forester - agreed re JDW, boy's done well........
FATDAZ you can get a pint for sub 3 quid local to me and sometimes that can be discounted but the ambience of the place is decidedly lacking so as with most things you pays your money and you makes your choice

Omg smile


Guess I shouldn't say any more on this.

Arlington it's the constant dilemma of cheap drinks vs good atmosphere
Pseudonym @TB Did that need a rim-shot?
alewis2005 @PM HDB is the acronym you're looking for there

But, from day one, has been like a text book warning of why AIM resource punts are generally a really quick way to lose your money

Arlington finding a healthy mix between the two is a challenge
Twattington-Burbage Scarfes Bar is great!

The ROTR have gone into full pub-bore mode.

Twattington-Burbage Really nice decor

Well that was bound to happen


Just to address a couple of points among that .....


@Boncoeur: for professional reasons, I've spent quite a lot of time over the years meeting contacts in upscale hotel bars. The thrill palls quite quickly to having an Estonian chap in a waistcoat bring you a £20 G&T, while surrounded by elephantine Texans sitting sullenly and avoiding eye contact with their wives.

FATDAZ @arlington well summed up sir
psudome Park Bench nice in spring
Arlington @Twattington-Burbage you can take me there next week then mate
alewis2005 @Boncoeur didn't Artesian win best bar in the world a few times?
Blue horseshoe... Still speculating buyers around Old Mutual

Second the recommendations for Vagabond and Vinoteca. Both fine, reliable places.

Boncoeur @BE: haha
Twattington-Burbage @Arlington will do
doeswalk Are Frankfurt listed credit card service providers unmentionable?

And London cocktail bars can mostly sod off.


There. Done.

Pseudonym @BE Where do you get these cheap G&T's?
Boncoeur @BE: Dour.
Mouselet BE: Thank you
alewis2005 @BE you need to learn the ways of the hipster

@Blue horseshoe mentions Old Mutual, for approximately the hundredth time.

Old Mutual PLC (OML:LSE): Last: 225.07, up 0.17 (+0.08%), High: 226.80, Low: 223.22, Volume: 6.15m

So there is a slightly more specific story around today.

Arlington Dour is okay...

But I'm not going to tell you what it is, because we've absolutely no idea whether there's any truth in it.

Arlington @BE oh you tease
Boncoeur @BE, @Arlington: why are there no Scottish themed pubs, like Irish pubs, in London?
Claret Come on we dont mind
Arlington because we hate the Scottish & Irish...
man from dunoon go on
man from dunoon tell us!!

You tease Bryce

Residual @BE - this the old break up story?
man from dunoon let me guess anyway

It's fair to say, though, that bandits Bandit3 through Bandit10 are already in Old Mutual and the stories we're hearing are ......... well, they only sort of make sense given the backdrop of Old Mutual breaking itself into four.

Alchemy30 Please :-)
man from dunoon insurance
man from dunoon there you go!!
Residual Also what was that old thing about BAE systems
man from dunoon how very PRUDENT of you to be cautious

It's fairly easy to link buyers to the bits, but not all four of the bits. Anyway, we'll say more when we can but currently we can't, because it's not our job to ramp stuff randomly based on any old market rumour.

Flaneur @Boncoeur - its a real mystery that. I'd love a bar stuffed full of dour, pasty presbyterians. Lets call it 'Fun Vaccuum' to boot.
Claret shame

(@Residual: that one looked to be a red herring.)


Anything to wrap up on before I share this tweet Kadhim just shared?

Boncoeur @Flaneur: How about "The Flying Dour Beastie"?

A very funny news clip

chopper bear any good drinking spots to recommend in rome ? off there in a few hours

Oh, go on.


Sweet and funny


You'll have to click. You don't need sound

Soundbuy Kid no2 is super quick......


Residual @chopper drinking spots no, but Pinsere is a bitchin' lunch for 5 EUR. Near the main station

That's great.

Arlington @chopper bear 'Fluid' is quite nice
Boncoeur superb video!
chopper bear whats a bitchin lunch ?
Arlington bit tricky to find though, I warn you
erlkin that nanny is in trouble
Residual Synonym for "good"

One minute! Auto Trader mentioned above somewhere!

Claret brilliant

Here's that!


Credit Suisse!


Downgrade to Underperform: We downgrade AutoTrader (AUTOA) to
Underperform and reduce our target price to 360p (from 390p) as we believe
the current valuation doesn't correctly reflect short-medium term risks around
the cycle, with (Average Revenue Per Retailer) ARPR gains likely to become
harder to obtain and longer term risks around autonomous vehicles

chopper bear cheers guys
FATDAZ can relate to that usually the dog goes made at the postman at key point in interview lol

Cyclical issues approach: We believe the industry is in cyclical flux with
timing hard to call but expect new car sales to slow, pressuring retailer
industry profitability. We also expect used car prices to fall eventually,
causing some smaller retailers' gross profit margins to fall.
■ Underlying price rises and cyclical pressure will squeeze retailers: We
construct a proprietary view of the financials of independent UK used car
retailers and hypothesise that the cyclical issues coupled with largely
underlying price rises could effectively wipe out the operating margins of
some less agile smaller retailers causing many of them to fold. This would
lead to a further decline in AutoTrader retailer membership.
■ Autonomous threat won't go away: We continue to believe driverless
technology could eventually reduce auto transaction volumes. We don’t
expect the impact of this evolution to be felt in the near term but believe with
press and market attention on the issue rising the threat will not go away.
■ Cut estimates by 1-3%: We cut our underlying operating profit forecasts by
1% (FY17) and 3% (FY18) as we lower forecourt numbers (FY19 -2.5%). Our
EPS forecasts fall 1.4% (FY17) and 3.1% (FY18) as we update our buyback
estimates. We are 2% below consensus for FY18.

Auto Trader Group PLC (AUTO:LSE): Last: 382.00, down 18.7 (-4.67%), High: 392.40, Low: 381.90, Volume: 4.05m


blankcanvas Mad dogs and Englishmen ....
Pseudonym @Chopper A bitchin lunch is where they put dog in it.
SoS Cmon England (vs Scotland)

I have never understood Auto Trader's valuation -- but to cite self driving cars as a longer term threat...



Soundbuy bon w/end all..........

Meh. W'evs.


Anyway, we are done for the week

Patience @Residual - also recommend the Bean Restaurant just across the Tiber from SW corner of Citta Vecchia

Thanks Bryce


And cheers to all those joining us on the right

Alchemy30 thanks !
Arlington bye all, enjoy your weekends
Boncoeur payrolls! +250,000
Soundbuy Off to Wetherspoons for 1/2 a bucket of G&T for a quid......
Patience Good weekend all
Boncoeur bye
SoS Thanks Left and Right

Along with all the RabbleAdvisors


Back on Monday



LongandWrong Brilliant!!
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Paul Murphy
Paul Murphy is the founding editor of FT Alphaville and an associate editor of the Financial Times. He joined the FT in London in 2006 as development editor of, concentrating on the expansion of the online business. Prior to that, he served as the Guardian’s financial editor for seven years. He has also held senior positions in business journalism at the Sunday Business newspaper and the Daily Telegraph. Murphy is a graduate of the London School of Economics.

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