This Markets Live session ended at 12:05 on 31 Oct 2016. Participants in this session were: Paul Murphy and Bryce Elder

I thought i had a scary chart to share

Or ive binned it or something

Let’s have a pic instead

Ralph Mupita, departing Old Mut

Dont know whether it’s just me, but there is something maybe weird about this announcement

Old Mutual: Resignation of Ralph Mupita, CEO OMEM

Nah, re-reading it, think i was wrong to be suspicious

Old Mutual PLC (OML:LSE): Last: 200.80, up 1.5 (+0.75%), High: 200.80, Low: 196.80, Volume: 4.01m

He’s been there 16 years and now he’s off

Where do we go first Bryce?

Got to have something to say about the only big business managing to float is a maker of colostomy bags…

BoE thing’s nonsense and politics are a different type of nonsense, so sure, why not go for colostomy bags.

What’s the upshot here?

Big business, colostomy bags

ConvaTec Group PLC (CTEC:LSE): Last: 242.12, up 2.12 (+0.88%), High: 248.75, Low: 238.00, Volume: 833.21k

People living longer, spend greater part of their life incapacitated

………………………… K.

This is valued at somewhere north of 4bn

But they actually struggled to get this away

Familiar theme with floats of late.

11 advisers / sales teams

But that’s not the only float today!

Golden Rock Global Plc (LSE: GCG), a special purpose acquisition company (“SPAC”) incorporated in Jersey and formed to undertake one or more acquisitions of a target company or business in the fintech sector, is pleased to announce its entire issued ordinary share capital consisting of 16,000,000 ordinary shares of par value of 1 pence each (the “Ordinary Shares”) will be admitted to the Standard Listing segment of the Official List of the UK Listing Authority and to trading on the London Stock Exchange Main Market for listed securities (together, the “Admission”).

· Following Admission, Golden Rock is seeking to acquire one or more target companies or business in the fintech sector. While not limited to a particular geographic region, the directors expect they will initially focus on acquiring companies or businesses in Australia, Europe and/ or North America;

· Strong board with many years of business experience of operating in the financial services industry, particularly in the areas of acquisitions, corporate and financial management capital markets and trading;

Courtesy of Andrew Raca at VSA

Chairman is one Ross Andrews

But when we dig in a bit we see that Golden Rock Global has just one exec

Who presumably will be really busy

Wei Chen, Executive Director
Wei Chen has over 10 years of experience in the financial services industry. He is an entrepreneur who has invested
in and operated businesses in the financial services and fintech sectors, growing them organically and by acquisition.
In 2005, when the IT sector was only in its infancy in China, Wei Chen established and became the chairman of Le
Mai Information Technology Ltd (“Le Mai”) in Zhuhai City, China. Le Mai focuses on the development of software for
forex trading analysis by financial institutions. In 2013, Mr. Chen further expanded his business into the financial
segment focusing on Contracts for Difference. In 2013, Wei Chen invested in Goldland Capital Group Pty Ltd
(“Goldland”), in which he is a major shareholder and director. Goldland is an electronic trading platform principally
for forex traders and is regulated by the Australian Securities and Investments Commission.

Let’s google Le Mai Information Technology


Maybe all the info is in Chinese

(@Mouselet: it’s not something I’ve looked into. Yet.)

Stock is trading at a spread of 14/18

Which is about all you need to know, i guess

Golden Rock Global PLC (GCG:LSE): Last: 15.00, up 15 (), Volume: 28.00k

I’m sure Golden Rock won’t turn out to be another Gate Ventures

Which is still pretending to still be a listed company

Gate Ventures Plc, an investment company focused on the media, entertainment, e-commerce, fashion retail, consultancy & operational projects, today announces that it has completed a £2.25 million fundraise at 6 pence per share.

No lack of uncertainty, if we’re looking to blame something.

The US polls, of course, and Schrödinger’s Carney.

Mark Carney, governor of the Bank of England, is ready to serve a full eight-year term, facing down Brexiter critics campaigning for him to resign ahead of time.

Mr Carney has told friends that he is likely to make a statement on his future this week to put an end to damaging speculation.

The Times stuff, i mean. Gossip now = slash news

Throw away comments = ‘confirmation’

(We had this last week with Anthony Browne from the BBA, saying some banks would leave the City before Xmas = splash news in the Oberver)

(No they’re not. It was just loose talk inserted into an interview.)

It is all rather silly. We’ve seen a slew of reports saying basically the same thing, but with opposite headlines, all based on actual information that can be measured in microns.

As for actual news, we have mortgage approvals on the tape.

Down 10% YoY in September.

I thought Brexit was supposed to have no effect???

We can go on for a long time about correlation and causation here …………

The facts are that approvals are down 12.4% over the last 3 months (post-Brexit)

And 0.9% for the year to date.

That’s clearly bad news for the challenger banks in particular, which are all up quite a bit of course.

Follow-on effects for the builders’ merchants suchlike as lower churn feeds into fewer new kitchens.

Travis Perkins PLC (TPK:LSE): Last: 1,323, down 33 (-2.43%), High: 1,350, Low: 1,318, Volume: 314.39k

But why is Virgin at the top of the 250 board?

Trader Gordon pushing his “challenger banks are massively underappreciated” thing.

Here he is on Virgin Money.

Virgin Money Holdings (UK) PLC (VM.:LSE): Last: 336.60, up 9.1 (+2.78%), High: 338.10, Low: 327.10, Volume: 327.55k

n our view, all the difference in the world; we are expecting a glorious week ahead for the UK challenger banks with (we think) Virgin Money, OneSavings and Shawbrook set to completely destroy absurd consensus expectations over the next three days. BBA data (just out) shows September mortgage approvals of £11.8bn, up 4% MoM, consistent with the robust Q4 mortgage market commentary from RBS (Sell) on its Q3 IMS call last Friday. CML data showed an 11% QoQ increase in gross mortgage lending in Q3 2016. BUY.

Virgin Money is due to release its Q3 IMS tomorrow (1 November). We forecast net mortgage growth of £1.0bn in Q3 2016e vs a consensus expectation of £0.65bn, a c.50% beat.
As a reminder, in Q2 2016, Virgin Money delivered (record) gross mortgage lending of £2.2bn, and (record) net lending of £1.1bn. We now know that, according to CML data (page 2, Figure 2), UK gross mortgage lending in Q3 2016 increased by 11.4% QoQ yet consensus still suggests that Virgin Money’s net mortgage lending could fall by 41% QoQ in Q3 2016. Really?
Moreover, looking further ahead, consensus currently expects Virgin’s net lending to run at a similarly low level through Q4 2016 and 2017. We regard these consensus expectations as in stark contrast to observable facts.
Today’s BBA data shows September mortgage approvals of £11.8bn – up 4% MoM. Moreover, within this data, approvals for remortgage of £4.5bn are up 5% QoQ, up 2% YoY. As a reminder, c.60% of Virgin Money’s mortgage flow is now in the remortgage segment.
For us, the key to correction of consensus expectations lies in delivery of sustained volume growth, supplemented by disclosure of the challengers’ plans for utilisation of the Term Funding Scheme. For Virgin Money, we are 5-28% ahead of consensus through H2 2016-2018e. For OneSavings, we are 15-38% ahead. For Shawbrook, we are 16/12% ahead in 2017/18e.
For Virgin Money, our Buy rec and 385p TP are reaffirmed ahead of tomorrow’s Q3 IMS which should, we think, be absolutely tremendous.

Pretty soon the price will be back to pre-Brexit vote levels

Actually, fell from 366 to 205 after the vote

Maybe that was a tad over reaction

Otherwise in news, I guess we have WPP.

WPP PLC (WPP:LSE): Last: 1,770, up 62 (+3.63%), High: 1,777, Low: 1,750, Volume: 2.53m

Which is top of the Footsie board

It’s a reassuringly small beat against consensus, which is important largely because all its peers missed.

Goldman can summarise for us.

WPP reported 3Q16 revenues of £3,114mn, 1%2% ahead of GS ZF consensus. Net sales organic growth of 2.8% was slightly ahead of GS/cons. of 2.6%/2.7% with a better than expected performance in the US.

This is reassuring given all other agencies have missed 35bp on organic growth incl. 240bp in the US, which has weighed on WPP shares (-6% since PUB results). Key takeaways: 1) US was +3.1% vs cons. 2.7% with all divisions performing well except custom/ healthcare research.

Europe was also better than expected at +3.2% vs. cons. 2.5% with good performances in Germany/Italy partly offset by weaker France/Spain. UK was slightly ahead at +2.7% vs. cons. 2.5%, although slowed from +3.4% in 2Q due to Brexit-related caution. ROW was softer at 2.2% vs. cons. 3.2% though Greater China turned positive. 2) Market research slowed to flat in 3Q (1H: 1.0%) due to weaker custom and tougher comps. 3) WPP reiterated FY guidance of organic growth over 3% (GS/cons. 3.0%/3.1% implying 2.0%/2.2% in 4Q)- which is reassuring given 170bp tougher comps in 4Q – and operating margins up 30bp cc (GS/cons: 40bp incl. 10bp from FX).

We leave our 2016/17 organic growth estimates unchanged at 3.0% (cons. is 2.7% in 2017), with FX impact of 9.6%/9.0% and EBITA margin growth of 40bp/30bp. We increase our interest costs to £175mn and minorities to reflect FX in 2016E, but include c.£12mn benefit of refinancing over 2017/18. Our 2016/17E EPS changes slightly to 112.1p/134.7p (cons: 109.4p/122.9p).
At 12.7x 2017E P/E, we see valuation as attractive given c.3% organic net sales and a c.13% EPS CAGR 2016-19E, with c.3% 2016E div. yield. We remain Buy. Our 12-month PT increases by c.1% to 2082p (2070p) to reflect our estimate changes and is based on 15.5x 2017E P/E (unchanged).

And Citi, saying similar ………………

Slowing trends in the US reported by peers have led investors to question whether there is something structurally awry for the agency groups. WPP’s 3Q results should go some way to assuaging these concerns. Not only has overall group growth come in mildly ahead of consensus expectations (2.8% vs. 2.7%) but the performance in the US shows no change from the 1H when adjusted for the phasing of the comps. Looking beyond revenue, WPP has indicated 9M profitability is tracking ahead of expectations (40bps of margin improvement), which indicates upward pressure to consensus forecasts for the FY16E (1%-2%) and FY17E (3%-4%). With the group on 14.0x 2017E P/E and nearly a 3.3% yield (and having lost

£1 off its share price in the past few weeks) we think the 3Q is more than enough to steady the ship. We rate WPP as a Buy with a £21 price target.

The beat “should help assuage concerns that the slowdown is structural,” says Citi ………..

….. There were concerns that advertising is in structural decline? I think I must’ve missed that.

Current consensus (from Bloomberg) stands at 110p for 2016E and 123p for 2017E. In both cases we would anticipate the consensus estimates to move up, by around 1%-2% for 2016E (to 111p to 112p) and 3%-4% for 2017E (to 127p-128p). Critically, though, this entails little or no change to u/l net sales growth forecasts which for consensus are 3.1% and 2.7% for 2016E/2017E.

Oh, and while on the theme ……….

……….. mildly interesting (though rather muddy) story in the NYT about publishers abandoning clickbait providers such as Outbrain.

Seems the race to the bottom has hit a level when even publishers are feeling bad about accepting the cash.


Oh, lordy ……. If we must ……….

Just Eat PLC (JE.:LSE): Last: 550.50, up 15.5 (+2.90%), High: 552.87, Low: 533.50, Volume: 946.50k

So, this is mostly pre results, and the push from Berenberg on Friday.

Saying the numbers should be fine.

… But also, it could plausibly be pinned to this Uber judgement on Friday.

The idea being that if Deliveroo is forced to treat its riders as actual employees, it’ll be a weaker competitor.

And let’s ignore the acres of sellside over the past several years that has argued against Deliveroo being an actual competitor of Just Eat. Because, y’know, buy and stuff.

So we need to keep financing our short here

Want Jefferies on this? David Reynolds, of course.

With the claimants winning the right to be classed as workers rather than self-employed, they will be entitled to holiday pay, paid rest breaks, the national minimum wage, etc, etc. As yet, it only affects two people, but if ruled to be applicable country-wide, it could impact Uber’s 40,000 drivers, as well as those at similar ‘gig’ economy businesses, like Deliveroo. And we have yet to consider the impact on customers and how much they may soon need to pay to cover these extra costs.

Does this impact Just Eat? Only in the sense that it negatively impacts its competition. UberEats and Deliveroo both use self-employed drivers/cyclists and so if this is ruled to be applicable to all drivers then the costs, in an already financially strained business model, would instantly go up, making the business less profitable and less attractive to investors.

Reminder of our JE thesis.

The UK, Just Eat’s key market. The home market, one of the most attractive geographies for online takeaway food aggregators and at H116, £111m revenue, +44% YoY growth, 64% Group, driving £58m EBITDA, a 52% margin, +770bps YoY.

The bear perspective. Just Eat being competitively outflanked by the ‘last mile’ business models and the existential threat continues to grow, will Deliveroo et al leverage a foothold in the casual dining fraternity to launch an assault on the independent takeaway sector, Just Eat’s core business customer. The order growth trend in the United Kingdom thus far indicates the challenge, Q116 +40%, Q216 +34% and what next for Q316 +25%?

An alternative, more balanced view. The timing of Easter makes the actual Q1/Q2 order growth rates c.38%/36%. The 2015 comps thus +50%, +50%, +50% and +44%. In recent investor meetings, Just Eat saw consensus Q316 UK order growth expectations at c.+26. And then they released official consensus the day after our 12 October note thus: +27% UK, +36% Group, for Q316. The major rebranding and advertising campaign in the second half September, probably too late to drive Q3, but will drive Q4.

Are we too relaxed? 1 March, FY16 guide, revenue £350m, needed c.+29% UK order growth. The most recent H116 guide, 28 July, £368m and H116 UK order growth +37% (Q1 +40%, Q2 +34%) implying c.+21% order growth for H216, consensus sees +26.6%…

In conclusion. This ruling highlights another reason why last mile delivery and the so-called ‘gig’ economy is a tough market to play in and strengthens JE CEO David Buttress’ decision to never go into delivery. On these grounds and more, Buy.

Numbers due on November 2, so we get to go through all this again on Wednesday.

Because we don’t talk about the competitive dynamics of delivery logistics for tinfoils of chicken chow mein enough here, I feel.

I found those scary charts, btw

You’ll catch em all at Bond Vigilantes

Swedes has an interesting idea

Are the Rabble working for the FT?

Maybe check with our union Swedes

You could be up for 6 weeks holiday, sabbatical after four years, etc


I think, in terms of the common law definition of work, we’d have to be providing the rabble with some form of compensation in return for their time.

And I’m not entirely convinced we’re doing that right now. Not on a quiet Monday, certainly.

Keep meaning to have a look at 88 Energy

This is NOT a buy recommendation

Australian listed thing with a listing over here

It comes out with updates all the time

Which makes me suspicious


· Finalisation of well design for Icewine#2 – spud on schedule for 1Q2017

o Permitting remains on track for completion by year-end

So Project Icewine is still at the Adobe InDesign stage

And they’ve done the paperwork for a permit

Do read back on their history of announcements…..

There’s none. Well, very little.

Deutsche has something out on the engineers.

Largely positive on things such as GKN ……….

GKN PLC (GKN:LSE): Last: 316.95, up 1.75 (+0.56%), High: 317.50, Low: 313.50, Volume: 894.47k

And Bodycote, Halma, Smiths, Weir ………

The cycle of low growth will continue for UK Industrials. Our forecasts
discount 2016-18 sector average organic growth remaining substantially below
2011-15. Across all major regions macro data remains mixed, underlining the
lack of direction in the global economy and supporting low industrial capex
growth. However, within certain key UK Cap Goods end markets of NAM O&G
(upstream onshore) and Mining OE we believe we are at an inflection point.

While Brexit has potential to underpin a revival in UK manufacturing, the exit
roadmap remains unclear. Near term the depreciation of the UK£ has created a
strong currency tailwind for the sector. We are of the view this has not been
fully captured by median consensus, with greatest upside risk to 2017. Our
2017 company PBT forecasts are an average +5% relative to consensus. DB FX
strategists forecast sterling depreciating further from current levels.

Against the current low demand backdrop in this report we screen the UK Cap
Goods sector for relative winners across margin expansion, payback on R&D
investment, economic profit generation and pricing resiliency. With the UK£
having depreciated against all major currencies, the sector has become more
attractive to potential acquirers in our view. We also run a sector M&A screen
which identifies six companies meeting at least six of our M&A criteria.

……… I’ll come back to the fantasy M&A line.

with UK Capital Goods now trading at a
15% premium to its 5 year through cycle EV/EBITA. An FX tailwind, perceived
bottoming of resources end markets and a fall in the equity discount rate have
all likely contributed. On a sub segment level the premium between UK
defensive and cyclical stocks has widened with Halma and Spirax valued in
line with consumer staples. We see no further scope for multiple expansion
within the defensives, rather upside to the current price will come from better
than sector average growth. Looking regionally, and when comparing UK
Capital Goods to Europe, there is no major valuation discrepancy, with the UK
trading above European Electricals but below European Mechanicals on
EV/EBIT and PE multiples. This in line with the historic trend.

Right, so who’s buying what?

The company satisfying the largest number of criteria in our acquisition screen
is GKN. The only criteria it does not fully meet are that its end markets are not
our favored for consolidation and its pension deficit at c38% of market cap is a
material issue for any acquirer. Recently there has been an increase in press
commentary highlighting GKN as a potential M&A target. The FT (06/09/2016)
linked GKN with a 450p share offer by SAIC Motor.

Er, taht table is quite difficult

Of those companies scoring greater than 6 on our screen we would highlight Rotork and
Spectris as the more likely candidates over Halma, Spirax Sarco and Smiths. The
decentralized operating structure at Halma will provide an obstacle to many
potential acquirers, while we see the valuation of Spirax Sarco as a hurdle to any
approach and Smiths is a conglomerate with any corporate action likely a
divestment in our view. Elsewhere, IMI and Weir satisfy 5 criteria.

Want another unreadable table?

Blue on black is not a good look, DB.

Right click and open in new window if you want to make it legible.

And, since it’s raised, we don’t have anything whatsoever to say on that damn GKN-SAIC Motor rumour noted above.

It joins the long list of rumours that looked good but went absolutely nowhere. Which has been the story of 2016, quite frankly.

We haven’t anything to say on GE / Baker Hughes, either

M&A in the US is just rampant

Run out of road, with stock buy backs. SO QE now just being used to lessen compeition

Great use of central bank funds

Yeah, and this particular one has the feeling non-excitement about it.

Let me grab UBS to find some readthrough.

and Baker Hughes revenues are annualising at ~$12bn and ~$10bn and a combination
would create the second-largest oilfield services firm by revenue. If a deal were to
happen, the combined group would bring together capabilities across the offshore (via
GE’s subsea trees and flexible pipes) and onshore (Baker Hughes’ pressure pumping
and GE’s electric submersible pumps and artificial lift). Both companies have been
acquisitive in the past, with GE spending ~$11bn on oil & gas acquisitions over 2010-
13, including Wellstream’s flexibles, Wood Group’s submersible pumps and Lufkin’s
artificial lift businesses, and Baker buying BJ Services for $5.5bn in 2009.

Consolidation has always been a feature of the oil services industry. Schlumberger’s
acquisition of Cameron and Technip’s proposed merger with FTI reinforce this. The
potential creation of another larger oilfield services firm puts pressure on the more
narrowly focused European oil services firms (eg, Aker Solutions in subsea, Saipem in
offshore and onshore construction and drilling, Subsea 7 in SURF installation) to look to
expand their offerings. While there has been an increase in the number of alliances and
joint ventures since oil prices collapsed in 2014 (see Figure 1 overleaf), the project
market has been quiet and it is difficult to demonstrate that these alliances are
sufficient to deliver the structural changes needed to lower development costs.

The level of consolidation, especially along verticals that are considered to be high on
the value chain, is already quite concentrated (see Figure 2). Consequently, we think
combinations rationalised on complementary skills and vertical integration are more
likely to happen over transactions based on consolidating market share. It is worth
noting that Halliburton and Baker Hughes called off their merger, which faced
resistance over antitrust concerns.

Here’s that market share graph, in case you care.

We started with colostomy bags and are ending with umbilicals. It’s a diverse show, if nothing else.

Theresa May has publicly backed Mark Carney as governor of the Bank of England, rejecting calls from Brexiter critics campaigning for him to resign ahead of time.

Back tomorrow at 11am sharp

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