Tuesday, 11 December 2012

Awake . . . but . . .

I woke up feeling a lot better ready to do some work on some housing numbers from Florida. Unfortunately I made the mistake of unstacking the dishwasher and pulled something in my back. A couple of voltarins later and at least I'm sitting up straight. Unfortunately this means two bad things down and obviously a third to come. Who knows what that might be, but I suggest you stay away from me for now.

Moving on to something more pertinent. The UCI has released it's license holders list for 2013. The list  is notable because it drops Katusha and a lot of Russian money out and includes Argos Shimano and further Dutch cash. Katusha will now have to rely on invitations to get into the major events. This shouldn't be too much of a problem, but no doubt makes it hard to budget for the year ahead. The luckiest team in the world must be Saxo-Tinkoff Bank given all the question marks surrounding management and riders at the Danish team. For the record then:

WorldTour licence holders:
Astana (2011-2013)
BMC Racing (2011-2014)
Cannondale (2011-2014)
FDJ (2012-2014)
Lampre-Merida (2010-2013)
Lotto Belisol Team (2012-2015)
Movistar (2011-2013)
Omega Pharma-Quick Step (2012-2014)
Orica-GreenEDGE (2012-2013)
RadioShack-Nissan (2011-2014)
Sky (2010-2013)
Vacansoleil-DCM (2011-2013)

WorldTour license renewals:
AG2R La Mondiale (2013-2016)
Euskaltel (2013-2016)
Garmin-Sharp (2013-2014)
Rabobank white label (2013-2014)
Saxo-Tinkoff (2013-2014)

New additions:
Argos-Shimano (2013-2016)

I'm trawling the bike market to find a bike for my sister-in-law and was checking out the latest in specials from my man in Italy when I came across what must be the loudest machine ever to see the tarmac:

I'm a fan of bike bling, but these wheels don't just yell, they positively scream at you. Not for me personally, but if you're up for it you get the full package for Euro 4300 and in my view a bargain. I haven't ridden a Fuji, but have heard some good things about them. Check the reviews in the better magazines. Be warned though, you will be the centre of attention and some jokes depending on your skill level.

The market got going last night with a rumour that Jamie Dimon was going to be the next Treasury Secretary. This of course seems highly unlikely given the Obama Administration's current stance on banking. Notice I didn't say it was because Mr. Dimon would not be interested. You see it's my understanding that there are some very important personal tax savings one can make when jumping from the private sector to the US Cabinet. Far be it from me to suggest that serving one's country wouldn't be enough of a reward in it's self for Mr. Dimon, but there's always the fringe benefits to consider.

Elsewhere in tax I saw a great story about French film star and wine maker Gerard Depardieu. The big man is taking his act to Belgium proving once again even those on the political left know when something stinks.

In this case the promise of a huge trickle down effect from President Hollande's much trumpeted wealth tax looks likely to be a mere drop and in fact may cost France plenty in the long run. The problem is that this 1930's thinking has no place in a world where home is usually no more than 24hours away and the internet etc. enables even the most ardent francophile to remain culturally loyal while safely ensconced in their modest villas in any tax jurisdiction offering appropriate terms.

Perhaps all this talk of tax avoidance needs to be tempered by what happens when you get it wrong. In this case money laundering by HSBC and Standard Chartered is set to cost those two institutions around $2.5bn in fines. It's costly lesson for shareholders and even when reading the cases it seems like institutional slackness rather than outright criminal intent. This of course is the problem with mega financial institutions . . .  it takes only a very small amount of rot to erode the greater part of the company. No one is in the mood to sanction apologies alone.

Just to prove that even the best run companies make mistakes ThyssenKrupp booked a €5bn full-year net loss after taking a €3.6bn writedown on steel plants in Brazil and the US. There could be some interesting assets in this lot if you think normal growth comes back anytime soon. I'd suggest for anyone interested you run a table on current steel company valuations and look into cashflow specifically and see if there's some cheap bonds trading around the traps. At least having something higher up the capital structure will give you protection and exposure to a bounce back. The equity of course may be the first call for companies seeking to de-lever.

Finally I return to our old favourite . . . there's not much rot in Apple (AAPL), but it's now sitting on some major support lines around $520 and looks to me like investors have now punished it for not announcing a special dividend before the year end. It seems credible that this "non-news" plus recent flattening of growth expectations has caused the rotation into other S&P stocks, specifically those giving cash back to investors before any tax rises in the new year. Apple reports next on January 24, though we are likely to get some sales numbers before then. As I've said before I'm not a shorter of the stock and am now waiting for an entry point. Watch for the 450 - 480 range as a place to initiate a position.


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