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TIM MORGAN
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BARACK Obama set the tone for a more assertive second term with his second inauguration speech yesterday afternoon. Being true to our founding documents does not require us to agree on every contour of life; it does not mean we will all define liberty in exactly the same way, Obama said, as he addressed fewer than half of 2009s record 1.8m crowd.
DEBT CEILING HOPE: Page 3
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The latest public borrowing figures will be published this morning. In the last six months gilts have gone from yielding 1.5 per cent to over two per cent. So even though gilt prices are heavily manipulated through the [Bank of Englands] extensive quantitative easing programme, there are signs that lending to the UK state is less popular than before. Former Bank of England official Andrew Sentance last night hit out at
the UKs benign neglect of sterling. The Bank governor talks down the pound if the markets see that as the view of the authorities, then they need good reasons to bet against it. And they dont have good reasons at the moment, Sentance told City A.M. Itll take stronger growth and lower inflation [for the pound to recover] and it doesnt look like were going to get that, he added. CURRENCY WAR CLAIM: Page 2
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FTSE 100 L 6,180.98 +26.57 DOW 13,649.70 (CLOSED) NASDAQ 3,134.71 (CLOSED) /$ n 1.58 -0.01 / 1.19 unc /$ 1.33 unc
NEWS
NE of the greatest risks facing the world economy is a wholesale crash in government bonds markets. Yields on UK gilts, US Treasury bonds and others are still much too low and that means that capital values are too high (the price of fixed income securities move inversely to their yield). Given the extraordinarily large size of government bond markets, and the fact that so many banks, insurers and pension funds are big holders, sometimes for regulatory reasons, this will trigger wealth destruction on a massive scale. Such a correction has already quietly started. As Leigh Skene of Lombard Street Research points out, yields on 30-year US Treasury bonds rose 0.7 percentage points from their July 2012 lows to 3.13 per cent on 3 January, before falling back a little.
EDITORS LETTER
ALLISTER HEATH
This cost Treasury owners 16 per cent of their capital. Those who bought gilts at their peak are also nursing severe losses. But while many commentators agree that US bond markets at least will eventually experience an even greater correction, many still cling to the hope that other bond markets, as well as noncredit assets, will remain insulated from the looming storm. So Im grateful for M&Gs retail bond team for some fascinating num-
ber-crunching which shows why the bears are right to fear the worst. The great US bond market crash of 1994 saw US Treasuries lose just 10 per cent of their value, and the overall total return was just -3.45 per cent that year. The reason for this almost decent performance it felt far worse at the time is that yields starting point were much higher; even a smallish correction today would be immensely greater. But the experience of 1994 was that while American bond markets were hammered, other risk assets including in emerging markets actually sold off even more heavily in reaction. The Bank of America Merrill Lynch emerging market debt index lost 15.33 per cent; and even more remarkably the MSCI emerging market equity index lost 8.67 per cent. Nobody knows for sure how it will
play out this time. Perhaps emerging markets are now deemed less risky than US bonds. Gilts would certainly be caught up in the fallout and in any case they are horrendously overvalued also, with prices propped up by quantitative easing. My guess is that money will pour into equities in most markets, pushing up their prices. This is undoubtedly one reason for the recent rally in stock markets. The S&P 500 rose very slightly in 1994. One can never accurately predict the timing of crashes. But those who believe that it is easy to forecast which assets will turn out to be safe havens amid the inevitable carnage is clearly deluded.
SNOW EXCUSE
The authorities and transport companies reaction to the current, eminently predictable bout of snow has
been better than it was in recent years. Many councils kept main roads relatively clean, though side roads were often neglected. But the progress hasnt gone far enough. It is an outrage that so many trains and flights have been cancelled; the lack of information was appalling. Far too many schools shut unnecessarily, making it nigh-on impossible for many parents to work, jeopardising jobs, livelihoods and the economy. This cant go on. Transport companies must make more of an effort and adapt to the new normal several days of snow every winter. Schools need to stay open. London is a modern, prosperous metropolis: a few inches of snow must never again be allowed to defeat us. allister.heath@cityam.com Follow me on Twitter: @allisterheath
Ruth Horgan is the latest regulatory specialist to join HSBC after its money-laundering scandal
But the group has also started running mass workshops for banks, training hundreds of staff at a time as banks try to make sure employees at all levels know how the rules work. We are seeing more people from operations and sales backgrounds, for example, who have put a lot of time into their particular roles and then look to move across to compliance, said Bowdler. That means the group expects to train roughly 1000 bankers in the UK this year, as well as 2000 to 3000 internationally. Major banks have made high-profile hires in compliance to show they are guarding against any more scandals. Barclays has taken on former Financial Services Authority chief executive Sir Hector Sants to head its regulatory relations department. And HSBC yesterday announced it is hiring veteran KPMG partner Ruth Horgan as global head of regulatory compliance. The institution has had to change its procedures radically following the money laundering scandal, upping its budget to deal with the threat nine-fold since 2009.
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NEWS
1963 2007
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1968
Crest is taken private in a debt-fuelled 1.2bn takeover by Scottish entrepreneur Tom Hunters West Coast Capital and mortgage lender HBOS
2011
William Rucker, the chief executive of Lazard London is appointed chairman. Crest signals that a oat is one of a number of options being explored by its owners Varde Partners and Deutsche.
1972
2009
2012
Crest buys Camper & Nicholsons, the leading yacht maker, and changes name to Crest NicholsoN
Crest becomes majority owned by a consortium of 24 banks after a 648m debt-for-equity swap
1983
2011
2013
Skinner retires and the company starts to sell-off its non-housing businesses
2005
US distressed debt specialist Varde Partners takes control of the rm with Deutsche Bank after buying up Crests 500m debt pile.
Crest announces its intention to return to the stock market and also announces a return to prot.
Crest Nicholson was one of the highest profile casualties of the 2007 housing crash
ADVISERS
DEREK SHAKESPEARE
BARCLAYS CAPITAL
BARCLAYS Capital and HSBC are acting as joint sponsors, joint global co-ordinators and joint bookrunners on Crest Nicholsons initial public offering. Derek Shakespeare, a managing director at Barclays investment banking division, is leading the effort for the bank. He recently advised Redrow founder and chairman Steve Morgans vehicle Bridgemere and fund manager Tosca on their bid to take over the housebuilder, which was eventually scrapped. Shakespeare has also advised Lufkin, the US oileld pumping equipment provider on its $127m acquisition of Scottish oil services provider Zenith Oileld Technology in March 2012. He is joined by Chris Madderson, part of the banks UK origination team and Ben West in the equity syndicates team. HSBCs advisory team was led by Nick Donald, head of equity capital markets (ECM). Donalds previous deals include acting as joint bookrunner for miner Lonmin on its $817m rights issue in November and he also advised packaging company DS Smith on its 466m rights issue in February last year to buy Swedish rival SCA Packaging. Simon Cloke, head of diversied industries at HSBC and ECM director Stuart Dickson worked with Donald on the deal.
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NEWS
The Prime Minister quickly rescheduled his speech on Britains relationship with the EU
David Cameron to give delayed Tesco in new speech on EU links tomorrow online push
BY JAMES WATERSON
DAVID Cameron will finally deliver his speech on Britains future relationship with the EU tomorrow morning, Downing Street confirmed yesterday. The speech was originally due to be delivered in Amsterdam last Friday but was delayed due to the Algerian hostage crisis. Although the Prime Ministers aides wanted the announcement to take place on the continent for symbolic reasons, time constraints mean it will now be at a central London location. The PM is expected to set out which powers he wants to repatriate from the EU, and promise a referendum on any new deal if the Conservatives win a majority at the 2015 general election. A group of Conservative politicians want Cameron to table a straight in/out referendum while business leaders want an end to uncertainty about the EU. Yesterday Cameron responded to the Algerian hostage crisis by committing UK intelligence and counter-terrorism resources to the struggle against al-Qaeda across north Africa. FORUM: Page 18
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BY CATHY ADAMS
TESCO intensified its dotcom push yesterday by opening its fifth dark store near Crawley, West Sussex. The dotcom store, which will create 700 jobs, will serve only online shoppers. The supermarket typically offers an instore pick-up service for its online customers, but is ramping up its dotcom store presence thanks to growing demand in and around London. The Crawley branch follows other stores in the Home Counties in Enfield, Greenford, Aylesford and Croydon.
WHAT
At Lombard weve been working hard to raise awareness of the many benefits of asset finance and to highlight just how accessible this form of business funding really is. As a result, to October 2012 wed increased our year on year lending by 16% and were determined to see this figure grow further in 2013. Lombard: Funding Britain. Security may be required and product fees may apply. Call today to find out more. Call 0800 502 402. Typetalk 18001 0800 502 402.
GAP?
lombard.co.uk
Lombard North Central PLC. Registered Office: 3 Princess Way, Redhill, Surrey RH1 1NP. Registered in England No. 337004.
FUNDING
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HE decision by HMVs administrators Deloitte to honour gift vouchers and to pay proceeds raised for charity singles is a piece of luck for those caught out by the music chains crisis. While at first sight this is less heartwarming for the chains other creditors, it may in fact be slightly upbeat news for them as well. As administrator, Deloitte must act in all creditors interests in its attempts to keep the business a going concern. The vouchers move is therefore a bright sign, for two reasons. Firstly, as Deloitte acknowledged yesterday, the ability to honour vouchers depends on the circumstances of the case. Having reviewed HMVs financial position,
Fighting against the future can only buy so much time BOTTOM T LINE
MARC SIDWELL
Deloitte evidently believes things are not bad enough to justify failing to honour these vouchers. Second, such a PR-friendly move suggests a strong commitment to keeping some of the chains stores afloat the only circumstance in which consumer goodwill is vital to retain. But why has the picture suddenly brightened for HMV? Partly because a frontrunner has emerged, apparently willing to take on the struggling entertainment distributor: Hilco, which owns HMV Canada and is a specialist in restructuring troubled firms. Hilco took on HMVs Canadian brand in similar circumstances and it now boasts a re-energised business as the last nationwide bricks and mortar specialist retailer in CDs and DVDs north of the 49th parallel. However, no matter who takes the reins in the UK, HMVs stores have little chance without a business model that makes sense again. That either means adapting to new, digitally-focused consumer demand for which it is already rather too late or persuading content firms, also fighting a fierce rearguard campaign to protect their pre-digital margins, to back HMV as their last UK high street champion. So it comes as no surprise to hear the rumours that Sony, Universal and Warner are lining up to offer HMV special credit arrangements and cheaper wholesale prices on their recordings. As I wrote before Christmas, Trevor Moore had already signalled the firms intention to come cap in hand to suppliers in the new year. Recent events have only heightened the moves urgency. The start of 2012 saw the giant content firms ride to HMVs rescue. It seems they are on their way again. It is hardly a long term strategy though, so spend those vouchers soon.
NEWS
From a chain fighting to keep back the future to one embracing its possibilities. Tesco is opening another so-called dark store, the fifth of its warehouses designed to serve online shoppers, after a Christmas in which online food sales grew 18 per cent. On launch, the retailer conjured up images of its staff rolling trolleys up and down secret aisles on our behalf. However, this month it announced three dark stores will use robots to pick and pack instead, which sounds more reassuringly futuristic. Tesco has its problems, but with dark stores and its investment in Click and Collect, at least its looking for the answer in innovation, not nostalgia.
Pearson PLC
1,250 p 1,240 1,230 1,220 1,210 1,200 1,190
1202.00
21 Jan
ANALYST VIEWS
STEVE LIECHTI INVESTEC THOMAS SINGLEHURST CITI
2012 downgrades are expected but 2013 forecasts fall by even more given warnings in a number of areas. US higher education is still seeing drag given state budget pressure while college admissions are reducing. We retain our Hold guidance but cut the price target from 1240p to 1190p.
Our first standalone travel store, in the heart of the City of London, is a fusion of A&Ks 50 years of pioneering travel heritage combined with contemporary sophistication. Pore over traditional maps while exploring exotic destinations digitally. Connect face to face over skype-to-store with our teams on the ground around the globe for the latest word on the street. Get kitted out with all the equipment you need for your travels. And all while savouring a cappuccino, glass of wine or G&T, courtesy of our Sundowner bar.
A miss against consensus earnings is a comparatively rare event. We think the company will continue to post further market share gains as it did in 2012, but we are not convinced overall earnings momentum will improve until late 2013 or even 2014. We are neutral with a target price of 1310p.
While the downgrade may seem small, this is a stock that has (had?) a reputation for structural protection and earnings growth. It is clear the structural pressures are increasing within the business particularly in US higher education. We reiterate our Sell guidance with a 1050p target price.
How refreshing.
NEWS
cityam.com
Resolution Ltd
270 p 268 266 264 262 260
268.30
21 Jan
cityam.com
NEWS
Atari reached prominence in the 1970s and 1980s with its early video game consoles
Arcade game legend Atari looks for extra lives after bankruptcy
BY JAMES TITCOMB
THE VIDEO game firm behind classics such as Pong and Asteroids has filed for bankruptcy in the US. Atari, one of the firms credited with kickstarting the industry in the 1970s, is being separated from its French parent company, in a bid to isolate the business from the French firms debts and give it a chance to succeed on its own. Ataris Paris-listed owner was formerly known as Infogrames but changed its own name to Atari after it bought the US firm for $11m (6.9m) in 2008. The parent firms business has declined in recent years, and Atari US is seen as having a chance to revive itself as a developer of smartphone games based on its 1970s classics. The company, founded in 1972, had a string of arcade successes before making its own home consoles. Its hardware lost popularity in the late 1980s and Atari began to develop games for other systems, scoring hits with the likes of Roller Coaster Tycoon. It then fell into financial difficulty before it was bought out.
EasyJet plc
890 p 880 870 860 850
15 Jan 16 Jan 17 Jan 18 Jan 21 Jan
857.50
21 Jan
10
NEWS
cityam.com
FLOODING has hit the centre of Jakarta, resulting in at least 20 deaths and causing millions of pounds worth of damage to the Indonesian capital. Insurers now face a substantial bill for the catastrophe, although the floods do not appear to be on the same scale as Indonesias 2007 monsoon season which cost the industry $400m (250m).
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The new jobs website for London professionals
With the industrys fastest and most powerful server for virtualization, Cisco helps you move to a whole new level of performance.* Powered by the Intel Xeon processor, Cisco Unified Computing System is the server that moves yesterdays data center into tomorrows productivity center.
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THECAPITALIST
Transport bosses invite buskers with the X Factor to auditions
THE DIZZYING career arc of a reality TV music star often takes in a spot of busking along the way. But Transport for London has decided to turn the format on its head, inviting prospective London buskers to take part in a terrifying round of X Factor-style auditions to win a coveted spot serenading droves of weary commuters on the Underground. TfL has assembled a judging panel made up of music industry professionals, people from the capitals music scene and London Underground to size up the aspiring performers for the 150 busking licences on offer across the Tubes 37 pitches. The Capitalist recalls that PwCs Andrew Sentance is pretty nifty on the guitar...
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WITH just over six months until he picks up Sir Mervyn Kings mantle as governor of the Bank of England, Mark Carney must have been bracing himself for scrutiny from regulators and analysts. But he cant have been expecting criticism coming his way from dendrologists (trees and shrub experts, of course). Eagle-eyed leaf-lovers have claimed that the decoration on Canadas new $20, $50 and $100 notes far from being the sugar maple beloved by mounties and pancake devotees alike is actually closer to a Norwegian maple leaf. In response the Bank of Canada has claimed artistic licence, saying the image is stylised. Eh?
Its a sure bet that not everybody is only interested in finance at Davos
HE MOST important people in the world are currently packing their toothbrushes, making sure the neighbour will feed the cat and getting ready for five days discussing the global financial system in the Swiss Alps. But The Capitalist wonders whether those attending this weeks World Economic Forum or Davos to you and me really have much fun. Moreover, do those world leaders ever want to skip another roundtable on reforming ratings agencies and mess about on the slopes? Ladbrokes has been thinking along the same lines and has opened a range of markets for those whose mind instinctively drifts to less weighty matters than the financial crisis. You can get 8/1 on
Good odds on Merkel sledging antics
Germanys Chancellor, the nevercaught-smiling-in-public Angela Merkel, being hit with a snowball at any point during the event. Alternatively, a joint sledging session involving David Cameron and chancellor George Osborne is a hefty 100/1. And while Cameron insists his favourite band is The Smiths, theres a good value 33/1 that the Prime Minister is spotted on a night out with U2 frontman Bono. Alex Donohue of Ladbrokes said: Should Merkel get pelted during Davos the odds on who threw the snowballs will be pretty short. As for the serious stuff it doesnt look like there will be any immediate solution this week.
Davos has traditionally been a mysterious event, with the real business happening well away from the prying eyes of journalists. So its unfortunate that the entire 2,630-strong attendance list for this years event has been leaked to the Quartz website. It shows Barclays is sending chief executive Antony Jenkins but RBS Stephen Hester and Lloyds Antnio Horta-Osrio are missing out. Tony Blair, Bill Clinton and David Cameron will also be at the event. But the best job title on the list? Thats Rossanna Figuera, Ambassador of Good Things at food firm Wafels & Dinges.
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IN BRIEF
Goldman chief backs China
n Goldman Sachs Asset Management chairman Jim ONeill yesterday said China should be ditched from the Brics concept he originally coined because it had grown too important. Speaking at the London School of Economics, ONeill said China was so far ahead of its Brics counterparts Brazil, Russia and India it should not be included. China is of a scale of importance which is way more than the other three, he said.
LENDING TO FIRMS
2.8bn
200m
100m
70% LTV
billions
90% LTV
Loans Bonds Commercial Paper Equity Total
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
SOURCE: BANK OF ENGLAND
Lloyds pledges 6.5bn for first time buyers through this year
BY TIM WALLACE
LLOYDS is increasing its mortgages to first time buyers to its highest level since the group was dragged down in the financial crisis and had to be bailed out, indicating it is edging closer back to health. The banking group has promised to lend 6.5bn to 60,000 first time buyers in 2013. That is an increase on the 5bn pledged to 50,000 last year, and up on the 5.7bn loaned in first time mortgages in 2011, 5.6bn in 2010 and 5.3bn in 2009. Before that the figures are not comparable as that was when Lloyds merged with HBOS. The bank has been the biggest user of the Funding for Lending Scheme so far, drawing down 3bn from the Bank of England. It says it is using the cash to support mortgages and lending to small and medium-sized enterprises (SMEs). But the bank also noted it is hard for one institution alone to boost overall lending or the economy. The recovery in the housing market rests on growth in the wider economy, said Lloyds Stephen Noakes. Whilst the property market is likely to continue to be challenging, we remain committed to getting things right at the start of the chain, creating liquidity in the housing market and helping more people get on to the property ladder in 2013."
estimates
400 bn
cityam.com
NEWS
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IN BRIEF
EADS sees 2012 sales improvement
n European aerospace and defence group EADS achieved a very significant improvement in revenue and operating profit in 2012, chief executive Tom Enders said yesterday. All four of our divisions have delivered good performances in 2012, all exceeding our objectives, he said at a New Year media event. The firm, whose units include Airbus, space division Astrium and defence arm Cassidian, is due to publish full-year results on 27 February.
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540.00
21 Jan
Meggitt PLC
445 p 440 435 430 425 420
15 Jan 16 Jan 17 Jan 18 Jan 21 Jan
429.40
21 Jan
Afren hails top year as output and revenue hit record levels
BY CATHY ADAMS
OIL explorer Afren reported record production for 2012 yesterday, as it said full-year revenues were up 151 per cent. The FTSE 250 oil and gas company which made three significant exploration discoveries last year: the Okoro Field Extension and Ebok North Fault Block in Nigeria and a Kurdistan block said full-year production was in line with guidance at 42,830 barrels of oil equivalent per day. Full-year production for this year is estimated to average between 40,000 barrels of 47,000 barrels of oil a day. Record financial results are also expected, with sales revenues forecast to hit a total of $1.5bn (944m) for last year, a 151 per cent increase over the previous year. Additionally, Afren said it would ramp up investment spending to $620m, from $520m last year. In 2013 we expect to further grow our reserves base through a multi-well exploration and appraisal drilling campaign in both established and new basins, while continuing to grow our production base, chief executive Osman Shahenshah said yesterday. Analysts from N+1 Singer yesterday hailed Afrens trading statement a strong 2012 performance, with production coming in as per guidance.
CITYDASHBOARD
CITY MOVES WHOS SWITCHING JOBS
Edited by Tom Welsh
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manager at the fund management firm. He joins from Skandia, where he was a sales manager for 13 years. Webbs team will report directly to Adam Hughes, head of UK wholesale at Neptune.
Mayer Brown
The law firm has appointed Alistair Graham as a litigation partner in its London office. He joins from White & Case, where he was a partner in its London commercial litigation practice. Graham has previously worked as enforcement counsel to the FSA, where he assisted in the run up to the introduction of the Investigative Disciplinary and Enforcement regime.
EUROPE
REPORT
Investors sell off European luxury shares
Baird
The investment bank has appointed two London-based directors to its European investment banking team. Matthew Gehkre has worked at Baird since 2006. He was previously a fighter pilot in the US air force. Gary Page has been a member of Bairds UK investment banking team since 2009. He has also previously worked at Merrill Lynch.
Equifax
The credit information business has appointed Martin Hagerty to its banking and financial institutions team. He joins from HSBC, where he was most recently head of retail risk for Latin America. Hagerty was previously head of retail risk for the UK at HSBC, and has also held senior risks roles at Marks & Spencer, MBNA and at HBOS.
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LONDON REPORT
FTSE 100 soars to a 4 1/2-year high as investors take heart from the US
1,211.00
21 Jan
RITAINS FTSE 100 scaled fresh 4-1/2 year peaks yesterday, with signs of progress in US budget talks encouraging investors shift from low-yielding government bonds into higher risk, higher return equities. US Republican leaders signalled they would allow the government to raise the debt ceiling and borrow to prevent a default in the next three months without demanding immediate spending cuts from President Barack Obama. Britain, with a heavy dose of internationally-focused companies among its blue chips, was a key beneficiary of easing concerns about the US budget, together with recent signs of stronger economic growth there and in China. The FTSE 100 closed up 26.57 points, or 0.4 per cent, at 6,180.98, its highest finish since mid-2008. There are clearly some political issues that face us in the near term ... (But) if you are an investor, equities are cheap against fixed income, that combined with an improving global environment means there are plenty of opportunities," said John Haynes, head of research at Investec Wealth and Investment, who recommends some industrial companies and strong brand names like Unilever and Diageo. But the strong gains, which have put the FTSE 100 on track for its best month in half a year, have also taken it into overbought territory on the 7-day relative strength index (RSI), raising the risk of a correction or at least consolidation. If you look at stochastics and RSI, they are massively overbought so I am envisaging a correction in the fairly near future, said Jack Pollard, of Sucden Financial. If we saw a correction to around the 5,977 area, it wouldnt be a massive concern. If we then managed to hold that, I think people will start loading up on longs and we could move higher again into the end of the first quarter. Traditional risk-on sectors led the way on Monday with miners up 1.3 per cent. Financials added their weight to gains too, with insurers bolstered by a 4.9 per cent rally to 1211p in Admiral Group after Goldman Sachs upgraded the firm to
buy and added it to its conviction list. Goldman Sachs analysts, led by Ravi Tanna, said the stock has the potential to return 30 per cent over the next year. Analysts believe shares will be helped by proposals for legislative change in Britain, such as capping whiplash claims and limiting fees paid to no win no fee lawyers, and holding down costs and premiums. We believe there is potential for claims inflation to decline faster than the market expects, Tanna wrote in the note. As a result of renegotiated reinsurance terms, the group has significant gearing towards lower claims inflation. The outlook for earnings, however, remained a key concern, with Pearson the top faller among the blue chips after the education and media group reported a weak finish to 2012 and said it expects tough market conditions to continue. Its share price fell 2.9 per cent to 1202p. The Financial Times publisher now expects adjusted earnings per share of around 84p, down from the 84.9p it stated in October, with full-year operating profit of around 935m. Pearson said cuts in government spending would continue to hold back its school publishing business in the UK and US, but its international division would report double digit sales growth due to the strong demand in emerging markets. Given the lack of earnings momentum and the current valuation 14 times consensus 2013 earnings, which we believe will see downgrades as we go through the year we would continue to take profits, analysts at Killick said in a note.
ADMIRAL GROUP
Goldman Sachs yesterday upgraded Cardiff-based insurer Admiral from neutral to buy, sending the companys share price up five per cent. The banking giant said the stock had underperformed over the last six months due to softening premium rates and regulatory intervention but it now presents an investment opportunity, as there is potential for claims inflation to decline faster than the market anticipates.
158.70
21 Jan
15 Jan
16 Jan
17 Jan
18 Jan
21 Jan
HENDERSON GROUP
Shore Capital have upgraded money manager Henderson Group to a buy from hold with a target price of 151p, following the settlement of legal claims against the fund manager last week. A group of investors sued the firm in 2009 for misrepresentation of mandate after poor performance. Last week the claim was withdrawn, leading Shore to rerate the group citing its attractive fund positioning
FTSE
6,200 6,175 6,150 6,125 6,100
6180.98
21 Jan
2,440.00
21 Jan
15 Jan
16 Jan
17 Jan
18 Jan
21 Jan
UNILEVER
Investec analysts have upgraded Unliver from hold to buy ahead of the consumer giants fourth quarter results tomorrow and raised its target price from 2400p to 2800p. Investec said the principle catalysts for choosing to upgrade the stock are the potential for margins to surprise on the upside in 2013 and a belief that Unilevers developing market business is still being undervalued.
UROPEAN shares rose yesterday, climbing back towards near two-year highs, as investors bought back into relatively undervalued sectors such as utilities and steel as they bet Europes economy will improve. A sell-off in luxury stocks capped gains, however, sparked by comments from Swiss watch maker Richemont about weak sales growth in China. Its shares lost 5.6 per cent, while Burberry dropped 1.4 per cent and Louis Vuitton owner LVMH fell one per cent. The FTSEurofirst 300 index of top European shares ended 0.3 per cent higher at 1,166.53 points, just a few points shy of a near-two-year high of 1,170.29 hit on 10 January. The Eurozones blue chip Euro STOXX 50 index added 0.6 per cent to 2,726.63 points, moving back towards an 18-month high hit a week ago. Trading volume was low in Europe on Monday as Wall Street was closed for Martin Luther King Jr. Day. Shares of utilities and basic resources companies which were among the worst performers in Europe in 2012 led the gainers yesterday, with ArcelorMittal up four per cent, GDF Suez adding 1.8 per cent and E.ON climbing 1.6 per cent. Investors are switching to the value stocks, theyre looking for the cheapest valuations. If things finally improve on the macro side in Europe, these are the stocks that could outperform, after years of underperformance, a Paris-based trader said. The STOXX Europe 600 utility sector index lost 1 per cent last year and the STOXX Europe 600 basic resources sector index gained 3.9 per cent, both underperforming the STOXX Europe 600 benchmark, which gained 14 per cent on the year. Investors have been scooping up European shares in the past two months with the Euro STOXX 50 surging 13 per cent since midNovember as fears about a potential break up of the Eurozone abated and global macroeconomic data improved. The stress is coming down in Europe, Barclays France director Franklin Pichard said. Bond yields are falling in Southern Europe, while theres a bit of tension on German and French 10year bond yields. Could this finally be the start of reallocation out of bonds from Northern Europe countries and into equities? According to EPFR Global data, flows going into equity funds outpaced flows going into bond funds for a fifth straight week in the week ending 16 January, with equity funds attracting money from retail investors for a second week running. Despite the brisk two-month rally, European equities remain relatively cheap, with about a third of the stocks listed on the Euro STOXX 50 still trading below their book value.
Economic perfect storm: The four trends that killed Western growth
T
HE West lies at the confluence of four extremely dangerous long-term developments. Individually or collectively, they have already begun to reverse more than two centuries of economic expansion. The first is well-known: the creation of the worst financial bubble in history the great credit super-cycle. Since the 1980s, a relentless shift to immediate consumption resulted in the accumulation of debt on an unprecedented scale. The financial crisis was not entirely the result of a short period of malfeasance by a tiny minority. What began in 2008 was the denouement of a broad-based process that lasted for 30 years. The problem is shown in the relationship between GDP and aggregate credit market debt in the US. Between 1945 and 1981, the ratio barely changed reaching 168 per cent of GDP. But then a relentless upwards shift began. Between 1981 and 2009, debt grew by 390 per cent in real terms, far outpacing US economic growth (of 120 per cent). By 2009, the debt ratio reached 381 per cent of GDP.
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TIM MORGAN
Most remarkable was that this lasted for so long, in defiance of logic. And a spendthrift public had nothing on policymakers. Gordon Brown declared the end of boom and bust and gloried in growth, despite expansion being nothing more than the spending of borrowed money. Between 2001-02 and 2009-10, Britain added 5.40 of private and public debt for each 1 of GDP growth. Between 1998 and 2012, real GDP increased by 338bn, while debt soared by 1.1 trillion. No other country got it so wrong, but the same was happening across the West. The compounding mistake was a belief that globalisation would make everyone richer. The problem was that the West reduced production without corresponding reductions in consump-
tion. At constant 2011 values, US consumer consumption rose by $6.5 trillion (4.1 trillion) between 1981 and 2011, while government consumption rose by $1.7 trillion. But the combined output of manufacturing, construction, agriculture and the extractive industries grew by $600bn. At less than $200bn in 2011, net services exports did little to bridge the gap. This left domestically-consumed services and debt. Talk of Western economies moving into services was waffle consumers sold each other greater numbers of hair cuts and fast food, while increasingly depending on imported goods. The debts used to buy them also soared. Between 1981 and 2011, US indebtedness rose from $11 trillion to $54 trillion. The third trend the massaging of economic statistics may serve as explanation for why this happened. In the US, the benchmark inflation measure has been modified by substitution, hedonics and geometric weighting to the point that reported numbers seem six percentage points lower than under the calculation used until the
1980s. US unemployment excludes so many categories (like discouraged workers) that it hides higher levels of inactivity. The critical distortion is inflation. It feeds into calculations showing growth, when evidence from other benchmarks is that Western economies have stagnated for a decade. Distorted inflation also tells earners that they are
360 to 490 hours of human labour. The critical equation is the difference between energy extracted and energy consumed in extraction energy return on energy invested (EROEI). Since the Industrial Revolution, EROEI has been high. Oil discovered in the 1930s provided 100 units of energy for every unit consumed. But EROEI has fallen, as discoveries have become smaller and more costly to extract. The killer factor is the non-linear nature of EROEIs. Once returns ratios fall below 15:1, there is a dramatic cliff-edge slump in surplus energy, combined with a sharp escalation in cost. And the global average EROEI may fall to 11:1 by 2020. Energy will be 50 per cent more expensive, in real terms, than today. And this will carry through into the cost of almost everything including food. We are nearing the end of a period of 250 years in which growth has been the assumed normal. And, without action, this will have stark implications for the economies of the West. Dr Tim Morgan is global head of research at Tullet Prebon. Perfect storm can be read in full at www.tulletprebon.com
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Twitter: @cityamforum
ECD secretary-general Angel Gurra summarised succinctly, last week, the extent to which globalisation has led to the interconnectedness of countries through trade. In a speech in Paris, he said: A good produced in the EU and exported to the US includes components from China and Japan, using raw materials and services from Australia, Russia or India. Indeed, today we have to think about goods and services as made in the world. This, he suggested, offers stark lessons for trade policy. Not only is protectionism self-defeating in todays global economy (where imports are required for exports),
FRONTLINE ECONOMICS
RYAN BOURNE
but administrative costs at borders can deter firms from locating key parts of value chains in particular areas. This all has a particular resonance for the current domestic debate about our future with the European Union. Eurosceptics (of which I am one) wish to repatriate significant powers from the EU while
maintaining what would loosely be described as free trade with it. But wonderful as this sounds, only a few people have given thought to what this would mean in practice. Leaving the customs union and single market, and coming to a bilateral free trade agreement with the EU, would eliminate duties on our EU exports. But this is not the same as having the completely free movement of goods we currently enjoy. The Trade Policy Research Centre has shown that our exports would then be subject to so-called rules of origin tests rules designed to ensure duty-free trade would only apply to goods largely manufactured in the UK-EU free-trade area.
The practical implications would be that UK exports of, say, cars to the EU containing Chinese parts would have to comply with these regulations or else face a 10 per cent tariff. For many manufacturing firms, in particular, this would undeniably be time-consuming and disruptive, and would probably mean they were less likely, all else given, to locate here. Eurosceptics who want a looser relationship based on trade therefore face a choice in what sort of relationship we can hope for. Either we push for a bilateral customs union agreement, which keeps us in the single market and continues to enable the free movement of goods without tariffs
or rules of origin tests (the price of which would be the inability to run an independent external trade policy). Or we can instead work towards a bilateral free trade agreement, which enables us to run an independent trade policy, but also means we are bound by the rules of origin requirements. On balance, some might settle that rules of origin tests are a price worth paying for the sort of free trade agreement that Norway or Switzerland already enjoy. But they should not pretend that firms would not face disruptive difficulties, or that the make-up of firms locating here would not be likely to change. Ryan Bourne is head of economic research at the Centre for Policy Studies.
GREAT R
One of the best investments youll make. Our new return fares to Europe
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The Forum is open for you to take part. Got a sharp comment on one of todays columns? Do you have another subject you want to share your opinion on? We want to hear your views. Email theforum@cityam.com or comment at cityam.com/forum
[Re: The protectionist beast is back in a subtly fresh form, yesterday] As Stephane Garelli points out, protectionism is nothing new and will never disappear. Worryingly, it just evolves. Our key concern should be developing a strategy to prevent our companies competitiveness disappearing beneath huge state-guided companies, with the full weight of emerging market superpowers behind them. We cant, as Garelli points out, retrench into protectionism. We must, therefore, open up much more than just our borders. Flexible labour, efficient capital markets, high quality education, and a simple low rate tax system are the answer. We cant erect barriers to unfair competition. We must undercut it.
Oliver Michael
Its highly likely that the government will use heavy snowfall as its latest excuse for slow growth.
@JohnLehal
I wonder if more people lost a days work because the snow made roads impassable, or because their kids schools were closed.
@IanAustinMP
HMRCs crackdown on tax avoidance will be counterproductive if it just drives business out of the UK.
@RichardWellings
After recent heavy snow, is the UK uniquely poor at dealing with bad weather conditions?
Adam Marshall
All businesses are impacted by severe weather. This weeks heavy snowfall, and the slow response, are no exception. The closure of schools comes first. When parents have to take time off, productivity falls, affecting local and national economies. Theres also the impact on international trade. Many businesses are inconvenienced by flight disruptions. Further, many also move their products globally as part of complex supply chains. Delays at airports, ports, on the roads and railways costs them time and money. The UK needs to be better prepared for extreme weather; experts call it resilience, but businesspeople call it common sense. A mixture of public and private investment, as well as company-specific plans for badweather, are increasingly critical as weather becomes more unpredictable. Dr Adam Marshall is the director of policy at the British Chambers of Commerce.
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YES
Stephen Glaister
To many, Germany is a byword for efficiency. But a check of the news reports reveals it and much of northern Europe is mired in the same travel chaos as us. It is true that, in places like Scandinavia and North America, where the snow appears each year as regular as clockwork, they have the equipment and the skill to deal with it. But in other countries which share our latitude not just Germany but also the Netherlands, France and Poland the picture is mixed. One advantage these nations have over us is that their road networks are less heavily congested, meaning weather disruption does not have quite the same impact. But UK councils are now better prepared than ever, with plentiful supplies of salt and whole fleets of gritting lorries and snow ploughs. But what we all lack, authorities and drivers alike, is regular experience in dealing with extreme conditions, which remain rare events. Professor Stephen Glaister is director of the RAC Foundation.
NO
TS that time of year again. High streets are full of bargainhungry shoppers, Christmas decorations are back in their boxes, New Years resolutions are still holding, and a ski resort in Switzerland is preparing itself for an influx of global economic powerbrokers. The World Economic Forum is about to descend on Davos. The Eurozones enduring sovereign debt crisis has dominated Davos for the past few years, with the currencys very survival the most recent hot topic. As Greece looked to be heading for the exit door, and some delegates wondered if it was all a big German conspiracy to control Europe, eyes turned to China as the global economys potential saviour. The debate became increasingly extreme and nonsensical, going round and round in circles. This years bte noire is easy to predict: the parlous state of the budgetary process and political machinations in the US will dominate proceedings. America avoided the abyss beyond the fiscal cliff (in spite of Congress, rather than thanks to it), but any one of the deadlines created by the last minute deal could unsettle global markets this year. To begin with, despite recent moves by Republicans to potentially extend the deadlines, we will soon see the postponed $100bn (63.1bn) in budget cuts back at the top of the agenda, when the US Treasury exhausts the legal cap on its total borrowing as set by Congress. Its ability to juggle the monetary balls under the debt ceiling will be curtailed. But that is not the only fiscal contortion the US is currently facing: the expiration of another resolution will soon see Congress unable to spend money, potentially plunging the economy into its biggest crisis yet. America is gearing up for another
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WEALTHMANAGEMENTTRADING
Chief Market Strategist, Cantor Index
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DAVID BUIK Japan hopes to stimulate VIEW FROM THE CITY itself back to prosperity BANK RECOVERY IS
UNLIKELY BUT TRUE S W
HO would have thought that the banking sector would make such a spectacular recovery in 2012? And who expected it would do so in the wake of a breathtakingly toxic European sovereign debt crisis, which came to a crescendo when the European Central Bank president Mario Draghi made that immortal statement last summer We will do everything that needs to be done. This calmed the troubled waters of an exasperated and fragile bond market, when Europe was staring recession in the face, and growth was falling all around the world. Markets have been sucked in by Draghis reassuring rhetoric. Consequently, nothing meaningful is ever solved. Those in charge of the decisions that matter have no incentive to actually do anything beneficial for their countries economies. Look at Greece. Its economy has completely imploded to the point that children are being admitted to hospitals every week for malnutrition. And it will still have a projected debt to GDP ratio of 133 per cent in 2022. No one seems to care, as we are told it will be alright on the night. To cap it off, huge fines have been meted out to banks by regulators. Libor manipulation, money laundering and the missselling of payment protection insurance have led to 13bn in costs for UK banks. And you have to respectfully ask the question whether banks have been downplaying the true, long-term implications of losses, impairment charges and provisions in recent years. The Bank of England and other central banks have made it abundantly clear that significant amounts of fresh capital will need to be raised in the ensuing years. Fortunately, the central banks and Basel III have ordained that the banks be given an extra four years until 2019 to meet their liquidity requirements, which is extremely accommodative. Against a background of such dark cumuli nimbus clouds of financial concern, banks have made huge gains in the last year much to my personal chagrin, as I did not have the vision to get involved. Compared to this time last year, Goldman Sachs shares have risen by about 34 per cent, JP Morgan Chase by 25 per cent, Societe Generale by 61 per cent, BNP Paribas by 31 per cent, RBS by 33 per cent, Lloyds by 62 per cent, and HSBC by 28 per cent. Barclays has risen by almost 100 per cent since last July. There are still analysts who believe there are more gains to be made, particularly with French and German banks. But its a big ask. INCE taking office in December, the Japanese Prime Minister Shinzo Abe has been determined to throw everything he can at his economy to try to get it moving again. As well as a massive 10.3 trillion (72bn) government stimulus package, the newly-installed Japanese government has fixed the strong yen in its sights, and has made it a major policy objective to weaken the currency in order to try and give struggling Japanese exporters a helping hand. Many have rightly questioned these interventionist policies. Whether or not you agree ideologically with the concept of currency controls, the Bank of Japan is notoriously bad at executing them. And so, if you want to take a bullish position on Japanese exporters, you have to ask yourself whether things will be different this time.
But the Japanese central bank has poor form, writes Craig Drake
Nikkei Vs dollar-yen
Nikkei Dollar-yen
2012 2013
YEN TROUBLES
For the last couple of years, the Japanese domestic economy has had a woeful time of things. The likes of Honda, Panasonic, Sony, Nissan have all taken an absolute hammering. Beyond the story of a Chinese slowdown, alongside European and US uncertainty weighing on demand a common factor in all bear markets these companies also suffer from deeper problems that have sandbagged Japans recovery. The first is cultural. The Japanese have a higher propensity to save than in the West. And while this may be all good and prudent, it is bad news for an economy dependent on the velocity of the money supply and on consumer spending. Every yen stored in the bank is a yen not being spent in the shops on electrical goods, on cars and other goods that Japan produces domestically. The Bank of Japan has tried everything to make Japanese consumers spend savings. They have slashed inter-
THE TIPSTER
HE glass is half-full for Fuller Smith Turner. Backed by steady growing turnover and profit, the brewers shares have risen by nearly 9 per cent over the last year. Like-for-like sales over Christmas and the New Year are also expected to be up, giving traders something to toast when it issues an interim management statement on Thursday. GFT Markets quotes a price of 761.23p-764.77p.
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WEALTHMANAGEMENT TRADING
21
NOUGH is enough. No more snow please. As an Englishman, I know deep down we are atrocious at handling Alpine conditions in this country. Britains recent heavy snowfall is threatening to send the country flying into a triple dip (or whatever number we are up to now) recession, as the UK economy grinds to a halt under three inches of the white stuff. But there are no such problems for the World Economic Forum (WEF) in Davos. It positively welcomes more downpours. Poor weather rarely stops the great and the good from getting up the valley from Zurich, and makes the whole place look extremely pretty. Heavy Swiss snowfall has the added attraction of making it almost impossible for protestors to get anywhere near the annual C-suite love in without freezing their placardcarrying arms off. But there are larger challenges than the weather for anyone following the Forum. The biggest will be to discover from the multitude of VIP attendees exactly why they are there and what they aim to
CNBC COMMENT
STEVE SEDGWICK
achieve. This years line-up is certainly very impressive. Mark Carney, the next governor of the Bank of England, will jostle for place alongside Christine Lagarde of the International Monetary Fund. But beyond the schmoozing, great parties, business card swapping and grandstanding, just what are they really doing there? Dont get me wrong, I think it is essential for everyone to pay attention. These are some of the most important decision makers in the world. I just have a feeling that, when you look back at the major issues discussed under the big thematic headline topics each year, the Forum gets it wrong as often as not. Let me give you a couple of examples to back up my concerns. In 2007, the major theme of Davos
was The Shifting Power Equation, which in the WEFs own words was focusing in particular on political and socio-economic issues. Now call me an old cynic, but did they not miss the tiny little global financial meltdown that was building up nicely at about that time? Wouldnt How we dont fall into the abyss in the global financial markets? have been a slightly more relevant title? And, dont laugh, back in 2009 WEFs meeting was labelled Shaping The Post-Crisis World. So, if 2009 was post-crisis territory, then what have the last three years been about? OK, enough of the cynicism. This years theme is Resilient Dynamism. According to the blurb, that means the world needs resilience to adapt to changing political and economic contexts, and dynamism to overcome the ongoing economic malaise. I dont think too many of us will disagree with those lofty aims. Lets just hope that, this time, the WEF grandees can deliver something along those lines before they toddle off back down the slopes to the day jobs. Steve Sedgwick is anchor for SquawkBox Europe at CNBC.
ANALYST PICKS
CURRENCY STRATEGIST
CHRIS VECCHIO
STRATEGIST
DAVID RODRIQUEZ
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Short Aussie dollar-yen, euro-yen and dollar-yen Expertise: Fundamental and technical analysis Average time frame of trades: A few hours to a few days The Bank of Japans policy meeting on 22 January should formally usher in new ultra dovish monetary policies. The yen remains oversold we recently saw the highest weekly relative strength index reading in dollar-yen since December 2005, and net non-commercial futures positioning are the most short since July 2007. Therefore, seeing a top in the Aussie dollaryen, euro-yen and dollar-yen after the Bank of Japans meeting would not be surprising. The conditions are ripe for a reversal.
My pick: Short dollar-yen Expertise: System trading Average time frame of trades: 2 days to 10 weeks I have been long on dollar-yen since September, since I believe the currency pair made an important long-term bottom. Yet the incredible rally has left the pair exposed to market corrections. More recently, it appears that a sentiment and positioning extreme may have been set. With that in mind, I have moved into a short dollar-yen position. I have a price target of 87, and will hold this trade open as long as we dont see a daily close above 90.
My pick: Short sterling-yen, long euro-sterling Expertise: Fundamental and technical analysis Average time frame of trades: 1 day to 1 week Yen crosses have soared, equities are at five-year highs, but risk isnt fully engaged. In the absence of clear market sentiment, my short positions in euro-dollar and sterling-Aussie dollar from last week failed to gain traction. This week, Im keeping an eye on Aussie dollar-New Zealand dollar, as the wedge chart pattern may break down. The euro-sterling long position from 0.8165 still looks good. And with the Bank of Japan meeting this week, sterling-yen may reverse below 140.50.
22
cityam.com
AMUSE BOUCHE
BRUCE WILSON
Despite branching out from being just a bakery, bread still dominates the menu at Gails Kitchen to the detriment of the other dishes
punchy flavours of the seafood. It was followed by pizza bianca with violet artichokes, parma ham and burrata (not, in fact, another type of bread but a special creamy cheese). I topped it all off with a delicious steak sandwich, served with fresh horseradish. As youll have gathered, on this menu, bread is not what you get while you wait for your meal bread is your meal, with plenty of bread served on the side. Now theres no denying that Gails has mastered the art of a good loaf and you cant blame the restaurant for trying to show that off. The downside is that you quickly feel bloated and uninspired to explore the menu in more depth. It also detracts from the other high quality ingredients, a great shame. Aside from being too heavy, the small plates were good. My pudding, however, proved to be a crime against flour. Somehow I managed to find space for the rum baba, served with a winter fruit compote and cream. I was expecting it to be rich but not sickeningly sweet, so much so that my guest and I had to drain its syrup against the bowl to be able to eat it. Theres an old Chinese proverb that says if you have two loaves of bread, sell one and buy a lily. Gails Kitchen should meditate on that. One calamitous dessert aside, if the restaurant is going to be half as successful as the bakery, it is going to have to allow its dishes to move beyond a thousandand-one elaborations on the humble slice of bread that is, if they know what side their toast is buttered on.
Naomi Mdudu
The split personality grape that will get you through the winter
T IS January. It is bitterly cold, Christmas has cost a fortune, the chap next to you on the train is hacking viruses all over you, its dark outside and you know it is going to get dark again at 4pm. Happy times. In these circumstances there is only one wine I turn to, the real winter warmer: Syrah, or (to give it its New World name) Shiraz. Wines made from Syrah grapes are the cheerful wines of the world, guaranteed to banish winter misery, at least for a while. They may differ hugely in style and taste, but they are all big, powerful wines with an amazing depth of colour and personality. But there is more to this brash grape than you might think. Spend a little while getting to know it and you realise it has quite the most fascinating history and diversity of any grape in the winemakers armoury. Syrah started off in the
Hermitage and Cte-Rtie. The wonderful, purplish glow and spicy aromas of either would help you through a winters evening. These are austere wines, that dont let you forget their northern roots. Then something wonderful happened. Like many 19th-century European peasants, Syrah left for the New World, changed its name and become famous. Syrah vines were imported into Australia, and the name, never easy to pronounce by an Anglo-Saxon tongue, became Shiraz. When you put the wines into warmer soil, it completely changes its personality, says Mark Pardoe, a wine buying director and lecturer from Berry Bros. You get a wine with a much rounder personality, with more fruit and a taste of figs and raisins. Now liberated, Shiraz became a New World superstar, providing the raw material for some of the most
famous and expensive wines in the world, most famously Penfolds Grange, at 300 a bottle and more. This is well deserved, since these wines have everything great structure, length, fruit and power. And they can last in a bottle for 20 or 30 years and more. The amazing thing about Syrah is that it can do and be almost all things, from a jug wine all the way to some of the great and long lived wines of the world. It has a split personality, says Pardoe. Now the migr wine has come full circle and has returned to France and Spain, where it is being grown in the sunnier climes, turning out the powerful, fruit-filled wines redolent of Australia and South Africa. Dont get me wrong, there are some shockers out there. Ive been poured some near-black glasses of Shiraz that would have been better used as fertiliser. But next time you feel the winter blues, try some of these.
THREE TO FOLLOW
One for the weekend
BVS Shiraz Peter Lehmann, Barossa Valley (9.99 on offer, Majestic). Everything a Shiraz is supposed to be when theres snow on the ground
Crozes Hermitage Les Trois Chnes, 2010, Emmanuel Darnaud (19.95, Berry Bros). This is a regular in the Bennett cellar and, when deployed, never fails to excite the neighbours
Mollydooker Carnival of Love, 2010 (370 case of six, winedirect.co.uk). Once tried, never forgotten. Mollydooker means lefthanded punch in Australia and this one blows you away. A star that will last for decades.
cityam.com
TV & GAMES
23
TERRESTRIAL TERRESTRIAL
BBC1 BBC1
6pm BBC News 6.30pm BBC London News 7pm The One Show 7.30pm EastEnders: BBC News 8pm Holby City 9pm CHOICE Death in Paradise 10pm BBC News 10.25pm Regional News; National Lottery Update 10.35pm Allotment Wars 11.30pm FILM Greenfingers: Fact-based comedy drama, starring Helen Mirren and Clive Owen. 2000. 12.55am Weatherview
1am-6am BBC News
6pm Eggheads 6.30pm Great British Railway Journeys 7pm Heir Hunters 8pm The Great Comic Relief Bake Off 9pm CHOICE Locomotion: Dan Snows History of Railways 10pm The Sarah Millican Television Programme 10.30pm Newsnight: Weather
11.20pm Why the Industrial Revolution Happened Here 12.20am Bowls 1.20am Sign Zone: The Battle for Malta 2.20am Sign Zone: Natures Weirdest Events 3.20am Close 4am-6am BBC Learning Zone
BBC2 BBC2
ITV1 ITV
6pm London Tonight 6.30pm ITV News 7pm Emmerdale: Hour-long episode. Debbie strikes a deal with Dom. 8pm Celebrity Who Wants to Be a Millionaire? Pantomime Special 9pm CHOICE Great Houses with Julian Fellowes 10pm ITV News at Ten 10.30pm London News 10.35pm River Monsters 11.35pm The Cube 12.30am Jackpot247
3am Loose Women 3.50am-6am ITV Nightscreen
6pm Home and Away 6.30pm 5 News at 6.30 7pm Monkey Life: 5 News Update 7.30pm Highland Emergency 8pm New Benidorm ER: 5 News at 9 9pm Body of Proof 10pm Celebrity Big Brother 11pm Celebrity Big Brothers Bit on the Side 12am Botched Up Bodies
DEATH IN PARADISE
1am SuperCasino 3.55am House Doctor 4.20am House Doctor 4.45am Michaelas Wild Challenge 5.10am Wildlife SOS 5.35am-6am Wildlife SOS
BBC1, 9PM British DI Richard Poole and his team of Caribbean cops investigate when a body is discovered in the pool of a cosmetic surgery clinic.
6.30pm Revista De La Liga 7.30pm Live Capital One Cup 10pm Britains Best: The Gloves Are Off 11pm Revista De La Liga 12am Capital One Cup 1.30am Live Cycling 3.30am Sporting Greats 4am Capital One Cup 5.30am-6am Football Asia
SKY SPORTS 1
BRITISH EUROSPORT
5.30pm Live Africa Cup of Nations 8pm Tennis: Australian Open 11.15pm GT Academy: Race to Dubai 11.30pm Game, Set and Mats 12am-6am Live Tennis: Australian Open
11pm Jerry Bruckheimers Chase 12am Bones 1am Supernatural 2.40am CSI: Crime Scene Investigation 3.30am Bones 4.20am Nothing to Declare UK 5.10am-6am Motorway Patrol
ESPN
BBC THREE
Theory 1am Happy Endings 1.30am The Ricky Gervais Show 2.05am The Cleveland Show 2.25am Rude Tube: Ultimate Stunts 3.20am Dont Blame Facebook 4.10am Happy Endings 4.30am-6am Made in Chelsea
2am Battle Castle with Dan Snow 3am Gold Divers: Under the Ice 3.50am Swamp Loggers 4.40am Raging Planet 5.30am-6am Meerkat Manor
SKY SPORTS 2
12.30pm Live International OneDay Cricket 9pm Golf 10pm Sailing 11pm Cycling 11.30pm Badminton 12.30am Golf 1.30am Football Asia 2am Britains Best: The Gloves Are Off 3am-4am Premier League Review
SKY SPORTS 3
7pm Sailing 8pm British Basketball 10pm Golfing World 10.30pm European Tour 11pm Pool 12am Sports Unlimited 1am Sailing 2am Ironman Lanzarote 70.3 3am-6am Live International One-Day Cricket
7pm ESPN Kicks: Bundesliga 7.15pm FA Cup Preview Show 7.45pm Live Coppa Italia 9.45pm ESPN Kicks: Premier League 10pm Eredivisie Review Show 11pm ESPN FC Press Pass 11.30pm Copa Libertadores Preview 12am FIS Alpine Ski World Cup Report 12.30am Planet Speed 1am UFC: The Ultimate Fighter 2.45am UFC 5.45am-6am ESPN Kicks: Premier League
7pm Total Wipeout 8pm Growing Up Poor 9pm Sun, Sex and Suspicious Parents 10pm Pramface 10.30pm EastEnders 11pm Family Guy 11.45pm American Dad! 12.30am Sun, Sex and Suspicious Parents 1.25am Pramface 1.55am Crazy for Party Drugs 2.55am-3.55am Sun, Sex and Suspicious Parents
HISTORY
7pm Storage Wars 7.30pm Pawn Stars 9pm Storage Wars 10pm Grave Trade 11pm Storage Wars 11.30pm Pawn Stars 12am Storage Wars 1am Grave Trade 2am American Pickers 3am Ice Road Truckers 4am Swamp People 5am-6am American Restoration
7pm Dr Oz 8pm Jon and Kate Plus 8 9pm True Life 10pm Emergency: Life in the ER 11pm A&E 12am True Life 1am Emergency: Life in the ER 2am A&E 3am Dr Oz 4am Myleene Klass Bumps, Babies and Beyond 5am-6am Student Midwives
BBC2, 9PM The historian examines the impact of the arrival of the railway to London in the late 1830s.
E4
SKY LIVING
7pm Criminal Minds 8pm Bones 9pm Criminal Minds 10pm CSI: Crime Scene Investigation
7pm Hollyoaks 7.30pm How I Met Your Mother 8.30pm The Big Bang Theory 9pm Rude Tube: Ultimate Stunts 10pm The Cleveland Show 10.30pm The Inbetweeners 11pm Dont Blame Facebook 12.05am The Big Bang
DISCOVERY
SKY1
7pm Bear Grylls: Born Survivor 8pm Ice Pilots 9pm Gold Divers: Under the Ice 10pm Swamp Loggers 11pm Auction Hunters 11.30pm Auction Kings 12am Gold Divers: Under the Ice 1am Swamp Loggers
8pm Last Resort 9pm Stella 10pm FILM Switchback 1997. 12.15am Brit Cops: Law & Disorder 1.15am Road Wars 2.05am NCIS: Los Angeles 2.55am Road Wars 3.45am Crash Test Dummies 4.10am-6am Stargate SG-1
Part one of two. The history of stately homes Burghley House and Goodwood House through the lives of those who owned them and their servants.
@cityam_sport cityam.com/sport
ROBSHAW RETAINS ENGLAND CAPTAINCY
GOLF COMMENT
SAM TORRANCE
TOP SIX
Man City
HARLEQUINS skipper Chris Robshaw has been re-appointed England captain for the Six Nations, which begins next month. The flankers decision making was called into question during a mixed autumn internationals campaign, but head coach Stuart Lancaster said: Hes grown as a leader on and off the field. He showed those qualities this autumn, especially against New Zealand when the whole squad got behind him.
Murray ruthless in Australia but Armstrong set wont turn his back on US Open for Hollywood
BY FRANK DALLERES
BRITAINS Andy Murray distanced himself from talk of boycotting this years US Open yesterday, after breezing into the Australian Open quarter-finals for the fourth successive campaign. Players are said to be ready to abandon the Major in New York because they disagree with the mens final being moved to Monday and believe the increase in prize money is too small. But Murray, the reigning US Open champion, insisted he had not discussed the unrest with his ATP Tour peers since a players meeting earlier this month. I know the ATP are not particularly happy with the Monday final, because however much revenue they make from having an extra day on their tournament hasnt reflected in the increase in prize money, he said. That was what players wanted, better prize money, but not with an extra day. But I personally havent spoken with anyone about boycotting the event. Third seed Murray is still to drop a set in Melbourne this year after despatching an exhausted Gilles Simon 6-3, 6-1, 6-3 yesterday and will meet another Frenchman, the unseeded Jeremy Chardy, in the last eight late tonight.
IN BRIEF
Fergie faces rap for officials rant
n FOOTBALL: Manchester United boss Sir Alex Ferguson has been asked by the Football Association to explain his criticism of assistant referee Simon Beck following Sundays 1-1 draw at Tottenham. Ferguson, who blamed the linesman for failing to award a penalty, faces a fine or touchline ban if found guilty of misconduct.
Results
BY FRANK DALLERES
DISGRACED former cyclist Lance Armstrong, who last week admitted cheating his way to seven Tour de France titles, is set to be the subject of a Hollywood blockbuster by Star Trek director JJ Abrams. Abrams, the man behind TV series Lost and box office hits Cloverfield, Super 8 and Mission Impossible 3, has bought the rights to produce the film verison of new book Cycle of Lies: The Fall of Lance Armstrong. The Texan ended years of denials last week by confessing to using a cocktail of banned substances during the most successful years of his glittering and lucrative career.
Steven Shingler is set to be reunited with brother Aaron after agreeing to rejoin the Scarlets in the summer. Steven, the subject of an eligibility row between Scotland and Wales last year, has signed a three-year deal, while Aaron has also committed to the Llanelli side until 2016.