FT Alphaville " Markets Live transcript 17 Apr 2012 Markets Live chat transcript for the chat ending at 10:52 on 17 Apr 2012. Participants in this chat were: Paul Murphy tony tassell very glad to be here...could not let you do the monologue again..entertaining as it was sorry interuptted the public service announcement Rabble almost felt sorry for me yesterday I've got to leave the office today at 11.45 for a meeting in the west end. So this is going to be a slightly short session. It will end at 11.45 so we have to be quick Unless of course, my colleague today decided to take over the controls Tony - can you be trusted? Btw Bryce still on some pacific island or something. is that a new bar in soho No, he's Perfecting his tan. so we are up this morning Its an up day for sure you would think people would be scared off by the tech sell off last night Footsie is currently 41 points ahead at 5707 Not fazed by Apple and Google Apple falling for five days in a row is not a great bullish sign, particularly in the absence of strong news i know we dont have a lot of tech stocks but we still follow the US coat-tails so why are in a better mood Yes, but there are more important things to focus on this morning Tony ah..the influential Zew index... ZEW index from Germany - things rosier than expected in the Fatherland Sentiment put at 23.4 in April against 22.3 in March People were expecting a fall to 20. Aspparently recession risk seen at 15% now, down from 30% why would that be a surprise..given how well germany still seems to be doing But those are the numbers i guess it is a good enough hook to retrace some of the trades on Monday The other "up" news concerns Spain Not Spanish not out of crisis But 10 yr bonds back below 6% who is buying? Spanish banks doubling up on their bets What's spanish for "phew" what have they got to lose Fatdaz..sometimes of this parish on the right passed on an interesting piece on spain this morning Tears for Tier 1 let me have a look now Data Explorers data showing cost to borrow Spanish Government bonds at record high On the day when the cost of insuring Spanish government bonds against default reached an all time high with a Credit Default Swap spread of 510 bps according to Markit, we look at Spanish government bond trading in the securities lending market. As a reaction to these recent moves in the derivatives market, we see Spanish government bonds reaching their highest historical securities lending fees. They are amongst the most expensive European sovereign bonds to borrow. We also see falling institutional ownership of this country's debt so i assume someone is still bearish...want ing to borrow to short Tears for Tier 1 - you should now be able to comment away... the other bearish point this morning is surely Repsol..not a good sign when governments start nationalising thing.. Looking for 18bn in compensation from the Argies astonishing pic of Ms Cristina this morning on our front page..not entirely inspiring confidence i thought the lex note this morning was really on the money No hoodlum, Ms Cristina Wot Rabble? Not all of you are premium subscribers to FT.com? Can't access Lex notes? Actually, let's give Lex some readers. Treat this as a free sample - might help you to decide to sign up. Readers can decide for themselves whether Argentina is run by a populist seemingly determined that her people do not participate in an economic golden age for Latin America. What is certain is that the renationalisation of YPF by the government of President Cristina Fernández will guarantee that it is not only the share prices of YPF and 57 per cent-owner Repsol that are heading south. Repsol off almost 6% this morning we have a lot of sellside notes around this monring but sums it up really Do share if you want Tony what is spanish for sure Event: Argentina is to propose a bill to Congress that would nationalise YPF by expropriating 51% in YPF from Repsol (Repsol has ~57.4% in YPF) and this would give the government full control of YPF. This is likely to come with the risk of litigation and reputational damage with Spain, Mexico, the US and the G20. A nationalisation is also likely to make YPF a less efficient company and its neighbours (eg Venezuela) show that the state is often a poor sponsor. The volatility of Argentina's regulatory environment makes it a risky opportunity for IOCs that could provide the needed capital/technological investments, without which the development of the vast resources could be at risk. The saga can be protracted - Under Argentina's expropriation law, a state tribunal (eg the National Appraisal Tribunal) will define the company's value for the purpose of compensation. According to the expropriation law 21499, Article 10 states that the compensation will only include the objective value, not the hypothetical value of the company. YPF's book value is ~Eu4.1bn or $13.6/ADR. It is unclear what the end valuation will be in the case of expropriation and when it will be paid. In view of historical precedence, this would likely go into international arbitration and this path can take many years. For example, XOM's assets in Venezuela were seized in 2007 and a full settlement is still pending. undamentals - Repsol shares already price in "zero" for YPF. Our risked NAV ex-YPF (and ex-vendor loan of ~Eu1.5bn or ~Eu1.3/share to the Petersen Group) is ~Eu21.5/share or ~Eu17.5/share at a conservative 20% discount. We estimate YPF would have contributed 25% to EBIT (or ~17% net) in a more normalised 2012E. At a normalised ~5% DY (avg since 2008), the current shares price in an unreasonable ~25% dividend cut. Its profitability is set to improve with the return of Libya, new upstream projects and capex is expected to be ~Eu500m lower ex-YPF y/y. Importantly, Repsol has a solid strategy in place ex-YPF with an admirable exploration portfolio and superior upstream growth. A sizeable portion of its clean net debt includes YPF's consolidated net debt of Eu1.6bn. Valuation: Our TP of Eu25/share is based on a discount to our risked NAV. So this is going to run on for years, potentially it will and argentina will lag the rest of latin america... mind you there were some other eye-popping news out of latam yesterday BTG absolutely incredible story biggest IPO in emerging markets for a long while hype bu8ilding massively.. BTG the new goldman sachs apparently... he chief executive of BTG Pactual has been fined for insider trading by Italian regulators in a move that has forced the rapidly growing Brazilian investment bank to amend the prospectus for its high-profile listing next week. Consob, the Italian financial watchdog, imposed a €350,000 fine and a six-month ban from senior positions at Italian companies on André Esteves for a purchase of shares worth €3.4m in beef producer Cremonini five years ago. Think he had previous form as well you would think you would provide a few details on the investigation in your prospectus i have done prospectuses and you sit around thinking up evfery possible risk factolr they did mention vaguely an investigation but not the details...and not this one taly's Consob, which in February ordered the seizure of €4.2m of Mr Esteves" assets, said the 43-year-old Latin American banker bought the shares in November 2007 knowing that the group was planning to enter a joint venture with Brazilian rival JBS. you think a order to seize 4.2m euros of the ceo's assets would be material a very good breaking views note out this morning on it..just to balance the lex coverage earlier remember breakingviews? blame it on rio it is called breaking wind has featured here already this week Pactual shrugged off the case and said Esteves was determined to appeal. Even so, a similar situation in Britain is quite revealing about the attitudes in Brazil. Ian Hannam, one of London's most prominent bankers, resigned his role as chairman of capital markets at JPMorgan to fight a UK Financial Services Authority fine for alleged market abuse. Esteves" lieutenants come with their own reputational baggage, too. Huw Jenkins was in charge of the investment bank at UBS when it blew up in 2007. Roger Jenkins, another member of Pactual's management team, spent years arranging aggressive tax structures for clients of Barclays, a business facing scrutiny in court in a case brought by the U.S. Internal Revenue Service. But Pactual's growth is tantalizing. In the five years to the end of 2011, its return on equity has averaged an eye-watering 41.5 percent, according to the IPO prospectus. That puts would-be investors in the position of deciding whether greed is enough to overwhelm any fears about putting their fortunes in the hands of a controlling shareholder embroiled in a trading scandal. Pactual may prove too hard to resist. the Limey - well it could say something about his approach to corporate governance I'm not quite sure how they got Hannam's name in there... Mr Esteves will appeal and he might be proved innocent.. but the disclosure issues are not great Anyway, will stop defending Hannam. he can look after himself or at least you can Paul thought you made a very good defence of him the other day in your blog..a must read Yeah, well commenters didn't agree. no matter Anyway, what's holding up the marekt? Merrill Lynch being cited widely for this. We've got the Q1s coming up So lots of analysis out ah that buy note..i saw that Credit Suisse - Carla Antunes da Silva and team Q1 2012 Results - What to look for UK banks will kick off Q1 earnings season on the 26th April with Barclays reporting first (please see table below). In this note we preview all of the UK banks, where we think the main area of focus for the market will be the outlook commentary, especially surrounding the revenue environment, as well as further development of cost savings/restructuring plans. We believe capital and funding will take slightly second stage at this time. Having given back some performance recently UK banks have seen a relatively strong performance YTD up 14% relative to the European banking sector +4%. We would expect this relative out performance to be maintained within the sector, but with the sector being largely impacted by Eurozone developments. ■ Barclays (OP) - With a constructive revenue environment in Q1, especially in fixed income, we expect BarCap to have been a major beneficiary. Having said that, we are more cautious for the rest of the year and believe all focus will be on the outlook comment. Barclays remains our top pick in the UK. ■ RBS (N) - Having seen a strong performance YTD we were disappointed by the scale of the announcement of GBM restructuring. Since then the debate has moved on to discussion surrounding government exit strategies, which will likely support the stock in the short term despite sub-sector return profile. ■ Lloyds Banking Group (N) - Focus will be on the pace of NIM compression and whether there has been any change to guidance at FY results for 2012 FY NIM of 192bps. As important will be any updates on the Verde disposal and progress on deleveraging. We remain Neutral. ■ HSBC (N) - With a strategy day on 8th May we think Q1 IMS will not be about outlook. We will look for a continued improvement in US provisions and focus on CI which has been tracking well above group target of 48-52%. ■ Standard Chartered (UP) - We expect a strong start to the year, especially for wholesale activity. Longer term, we see profitability headwinds with capital consumption (credit RWAs) running at a multiple of loan growth. That's the sort of note it would be handy to have in the Long Room Don't say we don't spoil you, Rabble there was also some positive note out fro Investec on Barclays this morning too... Although Barclays enjoyed an 8% 2-day bounce prior to Friday's broad sell-off, we continue to believe that the current entry level offers value ahead of the Q1 IMS on 26 April. Specifically, we are looking for £3.5bn of Barcap revenues (Q1 "11: £3.4bn, Q4 "11: £1.8bn) to drive modest consensus upgrades, and a printed tNAV of 400p (31 Dec: 391p) to visualise the cheapness of 0.5x tNAV per share for a profitable, defensively positioned bank. The outlook is more problematic, but we're buyers ahead of 26 April. · Notwithstanding popular (and largely sensible) adjustments to the printed tNAV metric, it remains an important valuation anchor. Barclays printed 391p at 31 December. Subsequent Q1 Blackrock share price appreciation of 15% adds 5p. The final dividend takes away 3p, while our estimate for retained earnings after a partial FVOOD reversal adds another 7p. All-in, we expect Barclays to print 400p on 26 April. 0.5x current tNAV per share is optically too cheap for such a defensive play. · We forecast a robust Q1 2012E adjusted PBT of £2,045m, against which we assume c.£700m of FVOOD unwind, so a reported PBT £1,345m. No meaningful consensus is yet available, though we believe that we are slightly ahead, based on the expectation of a "pleasing" Barcap performance. Our Q1 divisional forcasts are dominated by the anticipated Barcap rebound, and by comparison, our expectation of a small (£30m) loss in Barclays Corporate (due to Spain) is not material. Elsewhere, we see broadly flat Q1/Q1 trends. P Morgan posted an 11% Q1/Q1 decline in IB revenues on Friday with some softening seen in the early days of April. Such softening is in line with our forecasts and is also reflected in existing consensus expectations. However, we believe that Barclays has already de facto confirmed Q1/Q1 growth, which has yet to be reflected in market consensus. For FY2012 we are looking for £11.1bn of Barcap revenues vs a consensus of £10.9bn which, based on our Q1 forecast, implies less than £2.5bn per quarter for the remainder of the year. · We retain our more sceptical medium-term outlook, with a 2013 RoE of 7.6% vs a tacitly deferred Company target of 13%. Unlike peers, "defensive" Barclays isn't enjoying falling impairments in 2012/13E, so with flat rates and some sharecount creep, Management's targetted £2bn cost saves may not be sufficient to deliver 13% RoE, but the weak RoE outlook looks currently over-discounted. btw what happened to milky...he does not lurk around any more... Royal Bank of Scotland Group PLC (RBS:LSE): Last: 24.84, up 0.57 (+2.35%), High: 25.06, Low: 24.29, Volume: 28.76m bullish notes on banks and suddenly milky appears Lloyds Banking Group plc (LLOY:LSE): Last: 30.21, up 0.498 (+1.68%), High: 30.49, Low: 29.14, Volume: 36.09m Standard Chartered PLC (STAN:LSE): Last: 1,529, up 30 (+2.00%), High: 1,538, Low: 1,502, Volume: 1.77m So now i know you cant do series of autoquotes especially with the FT IT infrastructure How about a bit of shopping spelt it right first time... Harold Tilman given up on that under a bit of stress i imagine.. Tilman - one man who managed to shrug off his previous reputation... anyway it was very good scoop by Andrea Felsted Aquascutum will be placed into administration as early as Tuesday, say two people familiar with the company's plans, putting about 250 jobs at risk and threatening the possible demise of a classic British clothing brand. Harold Tillman, the fashion entrepreneur, has been battling to save the luxury raincoat maker he acquired in September 2009. such a tenacious reporter Andrea BBB - sounds like panto How we do have some other news out of the retailing sector this morning apparently they had a shortage of pumps to sell shoes i think..not diesel yes, market seems to have been a tad hard on Marks this morning well it was not a great trading statment M&S stock off 2.8% currently he stock shortages contributed to a 2.8 per cent year-on-year decline in like-for-like sales at its UK clothing and homeware arms in the three months to March 31, the fourth quarter of M&S's financial year. Let me share some upbeat sellside on this. M&S (HOLD) - Q4 trading update (price target upgraded) MKS.L (368p, Target price 330p to 340p) Market cap: £5,900m The Q4 trading statement is for once disappointing. The UK LFLs and International figures came in below market expectations. Group sales were reported to have increased by 0.8% with LFLs on Food +1.0% vs. SP forecast 2.5% (consensus +2.0%) but -2.8% on General Merchandise vs. SP forecast -1.0% (consensus flat). International sales were -2.0% vs. SP forecast of +9.0% affected by poor results in Republic of Ireland, Greece and Central Europe. Management expects FY12 pre-tax profits to be in line with market consensus (currently £694m), which implies there has been more marked cost cutting over the period. The pilot stores are apparently performing well and there are no surprises with guidance for FY13 (gross margins up by 0 - 0.25% points and operating costs up by 3% to 5%). Following this update, we are retaining our Hold recommendation but marginally upgrading our price target from 330p to 340p to reflect the re-rating of the sector over the last quarter. We are for the time being maintaining our FY12E pre-tax profit of £705m (EPS: 33.8p) and our FY13E pre-tax profit of £750m (EPS: 35.7p). Although, in our view, there is limited downside to the share price as the stock is supported with a c.5% dividend yield, we believe there are better investment opportunities elsewhere and consider that earnings growth will be pedestrian over the next two years while management concentrates on refurbishing its outlets and aligning its marketing effort to the brands. The real prize longer term remains the development of the internet and overseas activities. On the basis of our forecasts, the stock, is rated at 10.9x FY12 earnings declining to 10.3x in the following year. And here's Matthew McEachran at Singer Although there is a sales shortfall in Q4 this is mainly due to availability issues in Womenswear (fixable) and the withdrawal from Technology. Cost savings more than offset the sales miss and guidance for FY13 is better than we had factored in. With pilot stores performing well and now costing less to refit, we are comfortable with our buy recommendation and have moved our target price to 415p after the sector re-rating. Q4 Trading Update - 13 Weeks to 31 March Group sales increased 0.8% in Q4 (Q3, +2.4%), including an overseas decline of 2.0% (Q3, +8.1%) due to pressure in the EU (especially Greece/Eire), although Paris has traded ahead of expectations, and an increase in the UK of 1.2% (Q3, +1.8%), equivalent to a LFL fall of 0.7% (Q3, +0.5% LFL). Within the UK, General Merchandise sales fell 2.8% LFL mainly reflecting the Technology withdrawal and a mixed performance in Womenswear due mainly to stock shortages, with some key areas performing well. We estimate the availability issues and Technology withdrawal cost LFLs c2%. This compared to our - 1.9% LFL forecast/flat consensus (Q3, -1.8% LFL including c3% benefit vs LY's snow). Menswear, Lingerie and Kids all performed strongly though and they were pleased with Home sales. Direct sales rose 22.8% (vs +22% in Q3) helped by the launch of the online Outlet store. They say that the pilot UK stores are performing well and customers have responded favourably to the improved departments and VM. Around 80 have been done, with the rest of the estate ear-marked for the next 12 months. Food sales were ahead 1.0% LFL against tough comps but this compared to our +1.5% LFL forecast/+1.6% consensus (Q3, +3.0% LFL including c1% benefit vs LY's snow). Market share is said to have been particularly strong in "healthy eating" driven by Simply Fuller Longer. Implications and Prospects Although there is a sales shortfall in the Q4 period both in the UK (c1%, £20m) and International (c14%, £35m), which we estimate to be worth about £15m at the bottom line, cost efficiencies have come through quicker than expected so management is confident of delivering FY PBT (cons £693m, SCMe £685m or £660m IAS19 adjusted). We would therefore expect to nudge our numbers up today. Guidance for next year suggests a margin rise of 0-25bps (SCMe +50bps) but that costs should only rise 3-5% (SCMe +6.4%) aided by efficiencies which, even off a lower sales base, should see the upgrade ripple through. More importantly capex is being guided down by c£100m as the pilot capex has been engineered down by c15% - positive news. Sory, lot of grey there no worries grey matter is good for the brain Valuation and Recommendation Prior to any changes today, which are likely to be slightly positive, M&S is on a cal"12 PER of 11.7x, dropping to 10.1x cal"13 or 5.3x EV/EBITDA with a 4.8% yield. Despite the self-help being brought to bear, and the increasing potency of cost efficiencies, this equates to a discount to Next on 11.8x cal"12, dropping to 10.8x cal"13 or 7.2x EV/EBITDA. On balance this statement gives us the confidence to upgrade our target price to 415p (+18%), and maintain a positive stance after the set-back over the last 4 weeks, pending more details of the investment programme at May's prelims. This is based upon a 12x cal"12 PER (10.5x cal"13, 5.5x EV/EBITDA) and therefore in line with Next on a PER basis. is there an inflation read through to marks and the retail sector? any economists in the house fair enough..lets move swiftly on oh hang on..there was aslo burberry in retail Major faller this morning Currently off almsot 5% who unlike Acquascutum managed to hang on to its asian franchise threatening to fall back thru 15 quid any particularly trigger for the fall Paul Stock is priced at one hundred of a Burberry flasher mac I learnt that from a Elder tweet Here's some Seymour Pierce on Burberry They remain supporters Burberry (BUY) - Q4 Trading update (price target upgraded) BRBY.L (1586p, Target price 1650p to 1700p) Market cap: £6,958m The Q4 figures are broadly in line with market expectations. Sales increased by 18% to £1,027m with Retail +23%, including comparable store growth of +12% (SP forecast 11.0%) to £743m. Wholesale revenues increased by 7% to £230m vs. SP forecast +5%. In Retail, the UK, France and Greater China continued to perform strongly. However, as with Q3, the US looks a little light of expectations. In the statement, the company gives some guidance for FY13 (Retail - an increase in selling space of 12% to 14%, mid single digit growth in Wholesale and broadly unchanged revenues in License income). Following this update, we are retaining our FY12E PBT forecast of £375m (EPS: 62.4p). Burberry" has excellent strategic growth opportunities in a luxury market with strong long term growth credentials. There are significant geographical and product mix opportunities plus operational leverage still to come from infrastructure investment over recent years. The balance sheet is very strong and despite increased capex in FY12E, we are forecasting year end (March 2012) net cash of over £300m. The shares are trading on 25.4x FY12E forecast earnings declining to 21.4x in the following year. We believe this undervalues its long term growth potential and reiterate our BUY recommendation. We are upgrading our price target from 1650p to 1700p to reflect recent momentum although the stock might bide time after its recent out-performance, over 25% against the FT All Share since the beginning of the year. Freddie George Flashers seem to have gone out of fashion..you dont hear about them much now t least in Hackney...maybe they are scared of the muggers there is probably a guardian G2 feature in that..the decline of the flashing subculture Why is it? Too many CCTV cameras ? maybe we are all a little less repressed? Don't they all go on the web now i think that whimpered out Anyway, not a subject to linger on here - what with ROTR... another sad fallout of the internet revolution - the flashing culture user 89890890890 - well actually i do have have a note on china from Andrew Garthwaite at Credit Suisse..the strategist with the brain the size of a planet..as i refer to him on here China and China plays We forecast c8% Chinese GDP growth for 2012: PMIs are consistent with this and falling inflation is allowing policy to be eased slightly (inter-bank rates are down 1.5% from peak, new loans are rising and the NDRC has approved the resumption of infrastructure projects). Each 1% off Chinese growth takes c0.25% off global GDP, on our estimates - but a small slowdown is good news (as it takes the heat out of commodities). We think mining could bounce, but stay underweight strategically: mining looks oversold relative to other China plays and industrial commodity prices (CS forecasts for IP growth imply rising commodity prices) and there are signs that capex is being scaled back. Yet, we think this is just a bounce, with the China investment share of GDP set to fall. Shanghai A tends to lead mining by six months at major turns, mining capex is still up 80% year-on-year. Relative earnings momentum is the worst of any sector and FCF is poor. We take luxury goods from overweight to benchmark. This is the most expensive sub-sector on our scorecard; valuations are driven by relative earnings momentum which shows signs of peaking. There is evidence of slowing momentum (HK jewellery sales, Macau casino revenues) and net longs are high. We stay overweight luxury cars (BMW) and other BRIC consumer plays (Diageo, Yum, SAB Miller) and underweight NJA exposed capital goods (ticker CSERENJA; Volvo, Kone, SKF are Underperform): the latter look expensive, margins are at all-time highs, the investment share of GDP in China must fall and there is the threat of Chinese competition. China remains close to the top of our emerging market scorecard. So they are very much in the soft landing camp yes..is hard not to take that view really Ive got to go in five mins or so do you have anything you need to unload before you depart yes, wanted to share this... Welcome to the 14th year of this annual study where we use Moody's default database back to 1920 to assess where current spreads are relative to default risk for each rating band. We have certainly been to both extremes in this report over the last five years of this crisis. In 2007, large parts of the HY market failed to compensate investors for average (or worst-case) default risk, whilst in 2009 we moved full circle to a point where we were pricing in the Great Depression II (and more). In 2011, it felt to us that in a world of shorter business cycles that we were "Entering late cycle," a stage where the more medium- to long-term investors would start to upgrade their credit portfolios away from the lower-rated end of the HY market. 12 months on and spreads are now better value for the buy and hold investor especially if you examine the work in the main body of the report looking at defaults through this 5 year financial crisis. Indeed we now have 5 years of default data covering the worst financial crisis since the 1930s. While we also take comfort from wider spreads and a so far proven track record of consistent intervention, the bad news is that the crisis is unlikely to be over and it is not guaranteed that the worst is behind us. If these implied defaults come vaguely close to being realised then the next 5 years of corporate/financial defaults could easily be worse than the last 5 relatively calm years. Much may eventually depend on how much money printing can be tolerated as we are very close to being "maxed out" fiscally. So investors should take great solace from the last 5 years of benign defaults and current wider than average credit spreads but not be complacent. Much of the hard work may still be ahead of us. Here's Lisa's post on all this... you are in a very sharing mood Paul WASHINGTON, DC (April 17, 2012) - In light of the intense criticism leveled against credit rating agencies for their perceived failure to analyze adequately sovereign creditworthiness, the Bertelsmann Foundation has developed a blueprint for an international non-profit credit rating agency (INCRA), whose rating criteria are designed to increase credibility and international acceptance. "Faulty sovereign credit ratings contributed to the most recent financial crisis that threatened a global cataclysm," said Bertelsmann Foundation President and CEO Gunter Thielen. We need an additional, independent institution for sovereign-risk assessment, and we need to raise the quality of sovereign ratings. The INCRA proposal is the Foundation's contribution to providing a credible, practical and internationally inclusive method for increasing confidence in the financial sector and to preventing another crisis. INCRA's governance structure and operating procedures provide needed transparency and legitimacy.A supranational "Stakeholder Council" ensures independence by serving as a buffer between funders and the operational business.A "Credit Policy Committee" functions as a quality-control body, ensuring that ratings are grounded in a competent and comprehensive methodology. So the Bertelsmann Foundation is going to save us all from S&P etc is Bertelsmann actually putting any money into it just wishful thinking really... Actually, there is stuff on the money needed... d there was a story yesterday about Roland Berger struggling to raise 300m for a new ratings agency INCRA's financial framework is based on an endowment that provides for sustainability and security. Funding comes from a broad coalition of entities including governments, corporations, NGOs, foundations and private donors. An endowment of US$400 million is the estimated amount needed to establish and maintain INCRA, safeguard its independence, and generate sufficient annual revenue for maintaining operations. Clearly the race is on yes but i just thought it wa s bit of grandstanding without any commitment to stump up cash itself There;s a request for Kurdish oil on the right... tk...i thought Australia was rated XXXX London, 17 April 2012 - Afren plc ("Afren" or the "Company") announces that the high impact Simrit-2 exploration well, located on the Ain Sifni PSC in the Kurdistan region of Iraq, has discovered a significant oil accumulation based on the results of drilling, wireline logs and sidewall core sampling. The objective of the Simrit-2 exploration well is to test the western extent of the Simrit anticline. The well has reached the prognosed total measured depth of 3,700 m (3,697 m true vertical depth). Preliminary analysis of data collected during and following drilling indicates that the well has encountered an estimated 409 m of net oil pay in Cretaceous, Jurassic and Triassic age reservoirs (an estimated 312 m of this pay is interpreted as containing light oil). No oil water contact has been established in the target reservoirs. As there are continuing strong hydrocarbon shows to the current depth of 3700 m, Afren and operator Hunt Oil Middle East plan to run casing at the current depth and continue drilling to a new total depth of circa 3,800 m to test additional zones of prospectivity. Once drilling operations have concluded a comprehensive well testing programme will be undertaken across multiple reservoir intervals, after which the drilling rig will be mobilised to the East Simrit prospect to drill the Simrit-3 exploration well. Afren has a 20 per cent. interest in the Ain Sifni PSC and is partnered by Hunt Oil Middle East (60 per cent. and operator) and the Kurdistan Regional Government (20 per cent.). Obviously Kurdistan is basically made of oil And Gulf Keystone will be soaring on this Gulf Keystone Petroleum Ltd (GKP:LSE): Last: 241.75, up 2.75 (+1.15%), High: 245.50, Low: 239.45, Volume: 1.78m large yacht owner..fair point..we are hurried typers here though..forive the literals Right - ive got to run! Am going to leave in your hands Tony remember to close the comments when you are done! i can talk football without restraints.. anyway have a good lunch i will follow suit but thyought i would pass on a good note on the us earnings cycle traditionally in the bear camp of course US corporate profits have grown significantly in the nearly three years since the end of the last recession. Admittedly, there are structural reasons why the share of profits in corporate output may rise even further over time. But from a purely cyclical standpoint, the profit share is probably now close to peaking. If so, the prognosis for the stock market is poor. • Profits tend to grow rapidly during the early stages of economic upswings. This recovery has been no different. As a share of value added, the domestic profits of the US non-financial corporate sector have risen from a cyclical trough of 8.7% in Q2 2009 to 15.1% at the end of last year - the highest level in more than four decades. See Chart 1. This narrow measure of the profit share could climb even further if firms" non-labour costs (such as depreciation) continued to fall as a share of value added. But while this is conceivable, a further rise in the profit share would be more likely to come about as a result of a continued drop in labour's share of value added from its lowest level in more than half a century. There are structural reasons why labour's share may fall even further over time. These include workers" reduced bargaining power and the effects of globalisation. However, we suspect that cyclical forces will push labour's share back up (and the profit share back down) over our forecast horizon. This expectation is corroborated by the historical evidence of the last sixty years or so. There were nine official US recessions since the early 1950s prior to the latest downturn, which spanned December 2007 through June 2009. On average, the cyclical peak in the narrow profit share occurred about eleven quarters after the end of the recession and the trough-to-peak increase in the narrow profit share was 4.7 percentage points (pp). The latest downturn ended eleven quarters ago. Since then, the narrow profit share has already risen by 6.4pp. If the profit share does fall back over our forecast horizon, earnings will grow more slowly than output. This is the reason why we think domestic profits from current production may shrink next year even as the economy grows by around 2.5%. there is more too it..but the conclusion is The upshot is that we are sticking with our year-end forecast for the S&P 500 of 1,350, with the risks skewed to the downside. on that note..i should depart... always good to join you all..many thanks for the comments on the right