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Wednesday, 18 October 2017

On Italian spreads, French twists and Murdoch's Rosebud moment

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This will be, in everybody’s memory, the week when the Italian rubber hit the road. But in fact, at this morning’s open, Italian 10-year yields are not much more than 30bp wider than they were on Monday and at the same time German Bund yields are perhaps 8bps lower. Yes, Italian yields are now at 5.60% which is 288bp above Germany and only 22bp tighter than Spain but having heard all the shrill denunciation of Italy as a busted flush, it is a long way from Portugal at 11.61%, Ireland at 13.44% and Greece at 16.11%.

 

Anthony Peters, SwissInvest Strategist

Anthony Peters, SwissInvest Strategist

Perhaps the spreads to get really excited about are that of France which now stands at 68bp over Germany and Holland at 41bp. That might tell us as much about how much Bunds are overvalued as they do about the respective countries themselves. If the Eurozone is to survive intact, then equalisation funds in some shape will need to be created and wealth transfer will become axiomatic – and we all know where that cash will be coming from….etc, etc.

I’ll stop right here with the thought that if every commentator were obliged to pay €100 into a pot for expressing his or her view on what has to happen next in Europe, what the politicians should be doing, how the ECB should be behaving or what the German taxpayer has awaiting him around the next corner, we’d probably already have collected enough to be able to pay off half of Greece’s national debt.

Minor Mistakes

Rupert Murdoch has had himself interviewed by his very own Wall Street Journal and has confessed to News Corp having made only “minor mistakes”. I guess the Titanic only had a small hole and the Sarajevo assassination resulted in a bit of local trouble.Chuck Prince, erstwhile CEO of Citicorp, was going to go on dancing because the music was still playing. Let’s have a quick look:

The first act in response to the allegations was to sacrifice the News of the World. Big mistake – Murdoch massively underestimated the severity of the problems in his UK unit. Who gets paid to do that? Mrs Rebekah Brooks (my spell checker still can’t handle the name) of course. She should have done that. She, the CEO of the largest media company in the UK, however, couldn’t smell the coffee. There used to be this piece of graffiti in the gents at the students union at my alma mater which read: “Power corrupts, absolute power corrupts absolutely”. Mind you, there was also one which read: “Beam me up, Scotty, there’s no intelligent life down here”. Both of them seem to have a new and reinvigorated relevance.

So, the culling of the jewel in the News International crown was not enough to pacify the natives. By the time the week was out, the NoTW was gone, Murdoch’s bid for the 60% of BSkyB he doesn’t own was gone – but Rebekah Brooks wasn’t.

Meanwhile, Prince Alwaleed bin Talal, Newscorp’s second largest shareholder, has called for her Medusa-like head on a plate and he also, so I gather, suggested that they might be back in six months or so to have another pop at BSkyB. Whether or not News Corp’s operators were hacking in the US or not is beyond my ken. However, the fact that the FBI is looking into the allegations should have Murdoch, now a loyal US citizen, fairly worried. He is a shrewd and seasoned operator and anything less than the sphinx-like performance which he is giving would be a severe disappointment. Nevertheless, I can’t get “Rosebud” out of my head and I do wonder whether he can either.

My local Chippy

Come this evening I will back home at my country home which is in, of all places, Chipping Norton, home of the now notorious Chipping Norton Set which supposedly includes the Rt.Hon. David “Call me Dave” Cameron, Rebekah Brooks, Matthew Freud (son in law of Rupert Murdoch) and Jeremy Clarkson who all live within a few miles of Chippy but which, now the cat is out of the bag, seems to also include any “celebrity” who owns a house anywhere within the huge Cotswold District. Surely some mistake.

I too am a member of a Chipping Norton set which includes none of these people, which wields no power whatsoever but which is quite happy to go to the Red Lion for a pint and a bag of pork scratchings after buying cheese and honey at the farmers’ market on Saturday morning. Maybe there are two Chipping Norton sets; such a shame that they all appear to be in the wrong one.

Alas, it is that time of the week again. All that remains is for me to wish you and yours a happy and peaceful weekend. May you settle down if there is no sun on Sunday and also no Sun on Sunday and may you nibble an open sandwich while watching the Open from Sandwich – corr, how bad was that?        

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