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Saturday, 21 October 2017

On James, saviour of Maison Murdoch; and the euro drumlin

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Reading comments this morning has me wondering whether I was listening to the same testimony that they were. I watched parts of both the Murdoch and the Brooks performances and, personally, I was less impressed by the former than I was by the latter. Through the midst of the Murdoch stint (and since Monday morning) I had been trying to find a bid for a block of News Corp bonds in New York where I was met by roaring disinterest. Then, all of a sudden, I got lifted just as both the company’s bonds and stock started rallying.

According to most commentators this morning, that had been due to the cracking performance by James, son of Rupert, who had showed firm leadership and who had assured that there was no smoking gun in Maison Murdoch.

Anthony Peters, SwissInvest Strategist

Anthony Peters, SwissInvest Strategist

The reason I was given yesterday afternoon for the rally was that Rupert had looked so old, doddery and out of sorts that he would likely get relieved of his powers by the board and a younger man could take over. The Street liked that. Anyhow, was anybody expecting either the Murdochs or Rebekah Brooks to put their hand up and confirm to the committee that they had known of, authorised or sanctioned phone hacking? Dream on. However, I must reluctantly admit that I thought that Brooks had made a far better case for herself than her bosses did; the story is not over but it looks likely that, in the UK at least, it will move on to being a predominantly political bun-fight.

The short attention, headline grabbing tabloid journalism which Murdoch has done much to foster will come to his rescue as Joe Soap gets bored for nobody is either naked, sleeping with the wrong partner or signing for a new club at £200,000 a week. Phone hacking is for the hacks and will soon be Westminster village politics. The long term outcome will probably be that having been a senior News International editor will no longer guarantee a later high-flying career in Westminster and hopefully also that the press returns to being the fourth estate and ceases to be invited to paddle in the waters of the other three.

Putting cash to work

While News Corp stock was rallying 5%, the rest of Wall Street was also on fire. Both the Dow and S&P closed 1.63% better with the VIX 1.74 points lower at 19.21. IBM’s post-close reporting of really strong results on Monday night had equities on the front foot from the bell and for once enthusiasm for dividends swept the sovereign issues into the corner.

Markets are fed up with bad news, investors are sitting on cash which is returning nothing and it all just felt like it might be high time to put some money to work. Goldman’s less than exciting results (which were only overshadowed by Bank of America’s even worse ones) seemed to be overlooked. Can you remember when was the last time that Goldies’ figures weren’t the dominant event of the reporting season or more to the point, when was the last time IBM’s results were more important than those of Goldman Sachs? But that is America….

Digging a euro drumlin

Europe is looking forward, or not, as the case may be, to yet another make or break summit dealing with the debt crisis. What Mutti Merkel and Sarko will be meeting in Berlin today to talk about something of a mystery as there is nothing new to talk about unless they are prepared to take a quantum leap into unified fiscal policy or rewrite the remit for the EFSF. However, Merkel has already warned not to expect anything radical from the upcoming summit. Try to work that one out. Once again, Steve Beck at Citi knocked the cover off the ball in writing: “Interesting that this Thursday is described as a Eurozone ’summit’ meeting . The dictionary describes a summit as an apex, the highest point of a hill amongst other things. Whilst it would be nice if this Thursday produced a defining moment in one continent’s crisis, it seems highly unlikely that this will happen; I prefer the term ’drumlin’, “a long low hill of drift formed by glacial action”. That brought back memories of school geography but actually seems superbly fitting for modern Eurozone politics. Buy that man a drink!

So we head into the second half of the week none the wiser than we were in the first half but with a bounce in our step…..unless you own a Greek two-year bond which just cracked 40% in yield this morning. The 50% haircut now looks to be chiselled in finest Greek marble; had they taken it on the nose this time last year, that number would likely have been 30%. Hmmmm.           

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