Philip O'Sullivan's Market Musings

Financial analysis from Dublin, Ireland

Market Musings 15/11/11

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This has been a quiet day (by the current standards!) in terms of corporate newsflow. Despite the lack of activity on that front, we’ve also seen the good and bad side of politics, along with the first of a number of my side-projects coming to fruition.

 

I got the latest UBS strategy report emailed across to me (I cannot stress enough how grateful I am to those of my readers who send me things like that!) this morning. I note that the investment bank has cut its 2012 FTSE earnings growth forecast from 3% to 0%, adding that it believes that investors are unlikely to pay-up for profits in the near term. On their numbers the FTSE’s 2012 dividend yield is a healthy 4.2%. This downward earnings revision surely can’t come as a surprise to anyone, given the general tone of trading updates in recent times, but with the FTSE PE ratio at undemanding levels (even when taking the downward risk to earnings estimates into account) I see no reason to reduce my UK exposure here, especially given the attractive yields on offer.

 

(Disclaimer: I am a shareholder in Trinity Mirror plc). Regional newspaper publisher Johnston Press reported improving UK advertising & circulation trends, helped by easier comparatives. This follows on from the recent positive update by Trinity Mirror and suggests that things are looking a little brighter for the sector, but as ever the fragile UK consumer backdrop cannot be ignored.

 

Now here’s something interesting – speculators have lifted bullish raw-material bets to a 7 week high.

 

I’ve provided the commentary for the latest report on the rental market by Ireland’s largest property website, Daft.ie

 

Some encouraging political news – Ron Paul, whose strong economic credentials I’ve noted before, looks like he could win the Iowa caucus, which would give a huge lift to his campaign. If you’re unfamiliar with his views, make yourself a coffee and watch this video.

 

Sadly, this was also a day in which we saw the worst in politics, with Irish Minister of State Willie Penrose resigning over the closure of a barracks in his hometown. His move is a deeply cynical one, and reflective of a narrow-minded, parochial and short-termist mindset that has played a key role in getting Ireland into the trouble it’s in. The Exchequer deficit for the first 10 months of 2011 was €22bn. We simply can’t afford to base troops in Mullingar to defend County Westmeath from non-existent threats.

 

Finally, to end on an uplifting note. Those of you who are into sport will no doubt have heard of Munster’s incredible last-ditch victory over the weekend. The commentary on this video really captures the “who dares wins” nature of the win, while Gerry Thornley in the Irish Times, as ever, sketches a perfect picture of how the entire game played out.

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Written by Philip O'Sullivan

November 15, 2011 at 7:58 pm

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