Friday, 27 July 2012

The great pretender . . .

Mario, Mario when are you going to learn? Perhaps never. What is he talking about? Bumblebees? This guy is a joke, but clearly the market is not in the mood to fight back while the main policy makers in Germany are on vacation.

On to things more important than one man's delusions.

Does Mario Draghi have a Facebook account? I really can't be bothered checking. Maybe if he did it might generate some revenue for the hoodie crew at Facebook. The stock trades around 24 bucks now v. a 38 dollar float price. In year on year comparisons they made 11 cps a year ago and now they lose 8 cps. That is not impressive for a stock built on the promise of growth not shrinkage. Revenues were up 32% from a year ago and this compares with the previous years growth of 45%. So has Facebook already matured, are they going to become a company of no margins? It looks more and more like we will be waiting for a monetizing miracle that will never happen. In my mind this stock is heading to 10 bucks and a restructuring . . . .stick with Google.

You have to love Ex-Citigroup boss Sandy Weill's pronouncement that banks need to be broken up into retail and investment banking arms. The high priest of the bankinssurance model had a St Paul moment and converted on his way to Damascus. Take DB, they already have CEO's running the two divisions. The First question that DB need to ask is can they survive in their current form with a non-competitive tier 1 capital of 7.2%. At the very minimum they will have to cut a swathe through their headcount and tell shareholders that dividends will not be coming back any time soon. After all that what would you pay for DB's individual units . . . more or less than the current 0.5x Tangible Book Value?

I'm going to cut this Friday edition of the blog a little shrt to prepare myself for the Olympic cycling. It's going to be a challenge down here as most of these events will be taking place around 1am Sydney time. I'm considering some spread betting to keep myself awake . . . the over under on UK golds in the cycling is 5.2. I reckon thats probably a buy. Chris Hoy 1, Wiggins 1, Cavendish 1, the girls 2 and another couple on the track. The downside is 4 in my view, the upside 7? Also I think UK gold at 23 is a buy, but less certain than the cycling bet. And for the Aussies a sobering thought is I reckon up to 10 of those golds are in events that put the poms and the Aussies in a head to head. Should be fun in certain pubs around London?

Bon Weekend!

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