cityam 2012-07-10

7/31/2019 Cityam 2012-07-10

1/23

Paul Tucker told the Treasury select committee that the Bank was concerned about Barclays health during the financial crisis

PAUL Tucker, the deputy governor ofthe Bank of England, yesterday deniedclaims that members of the Labourgovernment pressured him to encour-age Barclays to lower its Libor interestrate submissions in 2008.

Absolutely not, he said when askedto say whether government officialshad asked him to lean on Barclays atthe height of the financial crisis, adevelopment that will be acutelyembarrassing to chancellor GeorgeOsborne, who had implied otherwise.

Giving evidence to the Treasuryselect committee, Tucker also calledfor the governments inquiry into theadministration of the Libor rate sys-tem to be extended into other self-cer-tified indices.

Even if these other markets havebeen completely clean and we haveno information on that one way orthe other self-certification is plainlyopen to abuse and could occur else-where.

Asked to confirm Libor rate submis-sions were now cleaned up Tuckerreplied: I cant be confident of any-thing after learning about thiscesspit.

But Tucker backed up the view ofBob Diamond, the former Barclayschief executive, that the bank hadbeen next in line for a government

bailout at the height of the financialcrisis and that the Bank of Englandsmain concern was that the firm

might go bust.Tucker had been considered thefavourite to succeed Sir Mervyn Kingas governor of the Bank of England

but his reputation has been batteredafter he was dragged into the Liborscandal.

In a memo released by Barclays lastweek he was reported to have toldDiamond that senior Whitehall fig-ures were concerned about the

banks high Libor submissions.In response Tucker requested an

opportunity to explain his side of the

story to the committee. He said thememo gave the wrong impressionbut that he did not have his ownrecord of the conversation.

These were completely extraordi-nary times and we were making anenormous number of calls, he said.Sitting here, I greatly wish I hadtaken a note of it.

Emails released yesterday showJeremy Heywood, then GordonBrowns chief of staff, was communi-cating with Barclays and Bank ofEngland officials about the banksLibor submissions in October 2008.

MPs also raised questions about aNovember 2007 Bank of Englandmeeting, chaired by Tucker, whereconcerns were raised about unusualpatterns in Libor submissions. Wewere not aware of allegations of dis-honesty. I think that what was beingsaid we understood to mean thesemoney markets are not working, theyare dysfunctional, Tucker claimed.

This does not look good, Mr.Tucker, replied committee chairmanAndrew Tyrie.

Labour officials last night claimedthat Tuckers evidence exoneratedthem following last weeks brutalHouse of Commons debate betweenOsborne and Ed Balls. The chancellormust have known all this but stillmade false allegations in the hope ofnarrow political advantage and to

divert attention from his refusal tohold a proper independent inquiry,said Labour MP Chris Leslie.

FTSE 1005627.33 -35.30 DOW 12736.29 -36.18 NASDAQ2931.77 -5.56 /$ 1.55 unc / 1.26 unc /$ 1.231 unc

BUSINESS WITH PERSONALITY

LONDON2012

days to go

OUR WRITERS CLASH ON PLANS FOR LORDS REFORMSee the Debate, Page 17

JOHN TERRY PLEADS SARCASM AT RACISM TRIAL See Page 22 17www.cityam.com FREEISSUE 1,670 TUESDAY 10 JULY 2012

A HOUSE DIVIDED

BY JAMES WATERSON

TUCKER: I DID NOT TELLBARCLAYS TO RIG RATE

Certified Distribution

30/04/12 till 27/05/12 is 132,076

Deputy Bank governor denies Labour party involvement in scandal as he calls for inquiry into other key markets

7/31/2019 Cityam 2012-07-10

2/23

WHO ELSE DID TUCKERTALK TO IN WHITEHALL?

Tom ScholarGordon Browns formerchief of staff has been thesecond permanentsecretary to the Treasurysince January 2009. Hewas Paul Tuckers mainWhitehall contact in2008, when he wasmanaging director ofinternational and financeat the Treasury.

[email protected]

Follow me on Twitter: @allisterheath

CABINET secretary Sir JeremyHeywood was in frequent contactwith the Bank of England over theLibor rate during the height of thefinancial crisis, according to emailsrevealed yesterday.

Correspondence from 2008between Sir Jeremy, then principalprivate secretary to chancellorGordon Brown; Bank of Englanddeputy governor Paul Tucker, thenthe central banks director for mar-kets; and former Barclays chief exec-utive Bob Diamond shows the extentto which the interbank lending ratewas a topic of significant concern forthe government.

In a series of emails sent to PaulTucker in October 2008, Sir Jeremyquestioned why Barclays continuedto bid above the asking price evenafter Libor had been set for the day,keeping the rate high and causing alot of speculation in the market overwhat they are up to.

Tucker replied, I dont think thatcan be all of it.

Earlier the same day, Tucker hademailed Diamond asking to speakabout Libor, calling it a slightly sen-sitive point.Three days later, Tucker titled an

email to Diamond: Struck that your[government guaranteed] bond wasissued at around 140 over gilts,

Morgan Stanley sheds staff astransactions fallMorgan Stanley will this week complete around of job cuts that will ultimately see thecompany shed 100 sales and trading staff,underscoring what is expected to prove adismal second quarter for Wall Street banks.The cuts are across Europe, the Middle Eastand Asia, according to people familiar withthe New York-based banks plans.

WellPoint to buy AmerigroupWellPoint, the US health insurer, has agreed

to buy rival Amerigroup Corp in a $4.9bncash acquisition that analysts say could bethe start of a wave of consolidation in thesector following the US Supreme Courtsdecision to uphold the Obamaadministrations healthcare law. WellPointwill pay $92 a share for Amerigroup, a 43per cent premium above the companysclosing share price last Friday.

Globaltrans seeks to raise $450mGlobaltrans is targeting $450m in a newLondon capital raising, placing the rail caroperator in a good position for consolidationin Russias transport sector.

Investors warned over auditorsconflict of interestsBritish Land has been criticised over itsdecision to reappoint Deloitte as auditoramid questions over the accountantsindependence.

Cables promise to take the initiativeA new accord to get banks lending to Britishaerospace companies is among a number ofinitiatives to be revealed today at theFarnborough International Airshow.

Thomson Reuters buys FX AllianceThomson Reuters, the news and financialinformation group, plans to buy tradingplatform FX Alliance for around $625m(400m) to gain access to the companiesclients.

Essar oil pays part of tax billEssar oil, the 87 per cent-owned Indiansubsidiary of Essar Energy, said it would pay$179m (115m) to the Gujurat government inpart settlement of a tax dispute.

Campbell to buy fresh-foods makerCampbell Soup is placing a $1.55bn bet thatBolthouse Farms, which already providesCampbell with carrots for its soups andconcentrate for its V8 juices, can also supplythe soup maker with some badly neededgrowth by giving it a stronger foothold inrefrigerated foods.

Chinese firm negotiating with HawkerA Chinese bidder is in advanced talks tobuy the bulk of aerospace companyHawker Beechcraft businesses for$1.79bn.

TWO traders in London have beensuspended by Japanese bankMitsubishi UFJ as regulatorsextend their investigations intothe alleged fixing of benchmarkinterest rates.

Both traders previously workedat Rabobank, one of several banks

being probed. They wereconfirmed as having been struckoff last week, Bloomberg reportedlate last night.

A spokesperson for MitsubishiUFJ declined to comment.

Meanwhile, Libor manipulationcould become a crime across the

whole EU under planned newproposals, it was announced

yesterday.The outrageous behaviour

revealed in the Barclays scandalshows that current regulation isinsufficient or ineffective,commissioner Michel Barnier said.

One way to do this would be toadd the manipulation into draftlegislation which is set to clampdown on other market abuse likeinsider trading, he said.

It is thought that Barclays is notthe only bank to have entered falsedata when submitting its interestrates for Libor calculations investigations are also underwayinto other UK banks, as well asthose in the US, Japan and Canada.

Mitsubishi UFJ

sacks traders asprobe hots up

Sir Jeremy Heywood was private secretary to Gordon Brown in 2008

2 NEWS

BY JULIAN HARRIS AND TIM

WALLACE

BY LAUREN DAVIDSON

To contact the newsdesk email [email protected]

THERE will be two immediateconsequences from PaulTuckers grilling by MPsyesterday. The first is that

George Osborne has just beenplunged into a political crisis of hisown making; his strategy to implicatesenior Labour party figures such as

Ed Balls and Shriti Vadera hasbackfired spectacularly. Tucker, theBank of Englands deputy governor,claimed that he didnt talk to themabout Libor and that his discussionswere restricted to civil servants. Thisis a disaster for Osborne, even thoughhis actual words to the Spectatormagazine, where he accused peopleclose to Gordon Brown, werecarefully couched. The chancellor hasagain shown himself to be a hopelesstactician and strategist. Of course,Labour bears huge responsibility forthe bubble and bust but Osbornes

EDITORSLETTER

ALLISTER HEATH

Osborne and Tucker have both been damaged by Libor row

TUESDAY 10 JULY 2012

decision to focus his attacks on anarrow claim he couldnt prove wasan amateurish error.The paradox is that Osborne has

built his entire response to the reces-sion around the nonsensical assump-tion that the Bank of England wasntto blame for anything. He never criti-cises it for having kept rates too low,allowing the money supply to surgeand house prices to soar, perhapsbecause he craves its support for hisfiscal policy. He also loves its quantita-

tive easing, which allows him tofinance his budget deficit whilewrongly taking the credit for low giltyields. Yet Osborne has now beendealt a terrible blow by Tucker, whodramatically reasserted his and theBanks independence yesterday. Thereis a very British establishment power

struggle underpinning this scandal.The second major development isthat the City may face a fresh set ofscandals: Tucker, who described theLibor market as a cesspit, wants otherself-certified markets to be investigat-ed. He lobbed a few other headline-seeking bombshells into theproceedings, calling for changes tothe way junior bankers at desk levelare paid, and stating that it has beentoo easy to get rich quick. If othermarkets are found to have beenmanipulated, there will be rightly behell to pay for those involved but it

that he wasnt aware of allegations oflowballing until recently and that hisinterpretation of the previous evi-dence was that he thought Libor wasa malfunctioning market, not a dis-honest one. But that still suggeststhat the Bank failed miserably.The question now is what Osborne

will do will he seek to exert revengeon Tucker for not backing him up onany of his allegations? Or is the chan-cellor now so weakened that he willbe forced to appoint Tucker when SirMervyn King retires, for fear of beingseen as vindictive? Will Osborne evenbe chancellor next year, after this lat-est blunder, the Budget omnisham-bles and the continuing recession?What a frightful, unedifying anddeeply depressing mess.

would also deal another massive rep-utational blow to the City, one fromwhich it may never recover. Manyinnocent bystanders could lose theirjobs as a result. Even if they turn outsqueaky-clean, Tucker wants theseother markets to be redesigned.

Until the scandal broke, and Bob

Diamond released a note of a key con-versation where the deputy governorseemed to give Barclays the greenlight to cut its Libor submission,Tucker was the front-runner tobecome the next governor. His futureremains in doubt. He denied ever giv-ing anybody any instructions tomanipulate rates and produced analternative, benign interpretation ofDiamonds email. But Tucker was leftbruised, especially when confrontedwith evidence from 2007 that heknew that there was something verywrong with Libor. Tucker claimed

merely adding, Thats a lot. Diamondreplied offering to meet Tucker.The correspondence was revealed

after Labour MP John Mann filed aFreedom of Information request, ask-ing for a response in advance ofDiamonds appearance before theTreasury select committee last week.

But the emails were not publisheduntil yesterday, prompting Mann tocriticise the Bank of England for theirfailure to release the critical infor-mation with a sense of urgency aclear display [of the Banks] contemptof the parliamentary process.

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

Could I talk to you about Libor? Its a slightly sensitive point.TUCKER TO DIAMOND, 22 Oct 2008, 10:56am

Struck that your [government guaranteed] bond was issuedat around 140 over gilts. Thats a lot.

TUCKER TO DIAMOND, 25 Oct 2008, 11:32am

Sterling Libor is high because Barclays are bidding it.They are bidding ABOVE Libor. A lot of speculation in

the market over what they are up to.

SIR JEREMY TO TUCKER, 22 Oct 2008, 2:47pm

Jon CunliffeJoined the civil service in 1980 and held anumber of senior positions in the treasurybefore joining the Prime Ministers office ashead of the European and global issues

secretariat, where he was a keyadviser to Gordon Brown oneconomic affairs. He is now theUKs permanent representativeto theEU.

Nicholas MacphersonPermanent secretary to thetreasury from 2005,Macpherson was the mostsenior civil servant at thedepartment during theBoEs concern overBarclays. Last week he saidthe way banks conducttheir business reallyhave to be cleared up.

Heywood emails reveal arising panic on key rates

PA

7/31/2019 Cityam 2012-07-10

3/23

Andy Love MP

PARLIAMENT witnessed the job inter-view from hell yesterday. Well call themost hellish aspect TuckersDilemma, named after the deputygovernor of the Bank of England whowas considered a shoe-in for the topjob on Threadneedle Street beforebeing dragged into the Libor scandal.

The dilemma was simple: to stay inthe running for promotion, PaulTucker had to be transparent abouthis conversations with Labour politi-cians during the 2008 financial crisis.Unfortunately he knew this wouldmake George Osborne look like a fool.

But he also knew that to win the jobof governor he must charm the per-son who makes the decision thatman being George Osborne.Tucker lost the struggle early on, fol-

lowing a quick-fire round with ques-tionmaster Pat McFadden.Asked by the Labour MP if politi-

cians such as Ed Balls or Shriti Vaderahad leaned on him to pressureBarclays, Tucker shook his head.Absolutely not, he barked.

BY JAMES WATERSON

Ed Balls had been accused of

involvement in the Libor scandal

TUESDAY 10 JULY 20123NEWScityam.com

Labour cries victory as outcomeclears Balls of backing rate scamASTOUNDED MPs expressed shocklast night at Paul Tuckers evidence,

struggling to accept the Bank ofEngland deputy governors claimsthat Libor manipulation is not aproblem for the Bank to deal with.

Meanwhile Labour politiciansclaimed vindication, arguing Tuckerhas cleared ex-ministers of anywrongdoing.

Tucker repeatedly stressed that nopressure was put on him byministers to tell banks to falselyenter low Libor submissions.

BY TIM WALLACEThat runs counter to chancellor

George Osbornes claims last weekthat top Labour f igures were clearlyinvolved.

It is now absolutely clear that thechancellors allegationslast week were totallyfalse and completelywithout foundation,said shadowchancellor Ed Balls.

George Osborneshould now publiclyapologise.

MeanwhileTreasury select

committee (TSC) member AndreaLeadsom MP expressed shock atTuckers claims that the Bank ofEngland has no responsibilities

around the setting of Libor.I am astonished Paul Tucker saidthat Libor does not really matter,and that if submissions werefalsified, it was not the Banksproblem, she told City A.M. Nobodyappears willing to say they knewwhat was going on, or to take any

responsibility.

MARCUS Agius, the chairman ofBarclays, will today facequestioning from MPs over hisknowledge of the extent of the

Libor scandal, following theappearance of former chiefexecutive Bob Diamond and

yesterdays questioning of thedeputy governor of the Bank ofEngland, Paul Tucker.

Agius, who stepped down aschairman last week but remains inthe job while a new chairman andCEO are found, will appear in frontof the Treasury select committee at10am this morning.

Focus back on Barclays as Agiusfaces committees questioning

BY JAMES TITCOMB He is likely to be asked about theextent of senior Barclays bankersinvolvement in the rate fixingscandal, as well as answeringquestions on executive pay and hisplans for a root and branch

review of Barclays past practices.MPs could also question Agius onwhat correspondence he receivedfrom the Bank of England and

Whitehall after Mr Tuckers denialthat he leant on Barclays toreduce their Libor submissions.

As chairman, I am the ultimateguardian of the banks reputation.Accordingly the buck stops withme, Agius said on stepping downafter five years as chairman.

Tucker is a realist. Tucker unlikeBob Diamond would never counte-nance calling MPs by their first names.Tucker is the sort of man who worksin a dusty office and uses a well-wornleather briefcase for his papers.

Unfortunately those papers did notinclude a record of that crucialOctober 2008 conversation withDiamond regarding Barclays Liborsubmissions. Tucker regrets this. A lot.

Having started strongly lecturingthe MPs on complex financial con-cepts he clearly thought above them he soon began to struggle.

His confidence seeped away as MPsattacked his note-taking ability, hisinability to predict how Barclays staffmay misinterpret him, his decision tofocus on the nationalisation of finan-cial institutions rather than inconsis-tencies in an interbank interest rate.

It was too much. By the end it lookedas though Tucker may not make thesecond interview. The man the Banktrusted to keep an eye on markets isnow 9/4 for the top job, out from theprevious 6/4 price meaning that he isno longer the bookies favourite.

Andrea Leadsom MP

Tucker suffers

interview woes

You have procedures but you seemtoo busy to follow them

"I find your evidence so far to be quitecontradictory"

If it hadnt been for the persistence ofthe American authorities this reportmight never have come out.

We didn't see ourselves as beingresponsible for its effectivenesswhatsoever. We used it as an indicatorof the things that I have described. Wedidn't take any responsibility for Libor,we were not a regulatory body.

It was not remotely in my mind duringthis conversation that I could bemisinterpreted by Bob Diamond onanybody else.We cant be confident of anythingafter learning about this cesspit.

Paul Tucker

7/31/2019 Cityam 2012-07-10

4/23

SAMSUNG Electronics defeatedApple in the latest spat in the rivalspatent wars yesterday as a Britishjudge ruled Samsungs Galaxytablets did not infringe the U.S com-panys designs for the iPad becausethey were not as cool.

In the High Court judgment JudgeColin Birss said that SamsungsGalaxy tablets belonged to the samefamily as the Apple design whenviewed from the front, but theSamsung products were very thin,almost insubstantial members ofthat family with unusual details onthe back.

They do not have the same under-stated and extreme simplicity whichis possessed by the Apple design.They are not as cool. The overallimpression produced is different.The victory for Samsung comes

days after a US appeals court lifted afreeze on sales of its Galaxy Nexussmartphones, although it upheld alower court's decision to temporarilyhalt sales of its Galaxy 10.1 tablet.

BY HARRY BANKS The two companies are waging legalbattles in about 10 countries, accus-ing each other of patent infringe-ment as they vie for supremacy in themobile device market. Samsung wel-comed the High Court judgement,which it said affirmed its own intel-lectual property rights while respect-ing those of other companies.

Should Apple continue to makeexcessive legal claims in other coun-tries based on such generic designs,innovation in the industry could beharmed and consumer choice undulylimited, Samsung said.Apple said it had no comment on

the judgement, but reiterated its viewon the South Korean company'sdesigns.

Its no coincidence that Samsungslatest products look a lot like theiPhone and iPad, from the shape ofthe hardware to the user interfaceand even the packaging, the compa-ny said. This kind of blatant copyingis wrong and, as weve said manytimes before, we need to protectApples intellectual properties whencompanies steal our ideas.

Lenders pay to lend to Germanyas Spain back above key barrierSPANISH bond yields broke throughthe psychologically significantseven per cent barrier yesterday, on

renewed doubts surrounding theEuro crisis.Ten-year yields rose nine basis

points to 7.07 per cent, while inItaly yields rose eight basis points to6.11 per cent. Analysts put theincline down to fears that EUpoliticians would fail to agree onmeasures to solve the euro crisis, orthat national institutions wouldblock their implementation.

The expectations are quite low,

BY BEN SOUTHWOOD you can see that by the pressure youare seeing on peripheral debt, saidRichard McGuire at Rabobank.

Two-year yields were up 20 basispoints for Spain and 30 basis points

for Italy analysts see thisflattening of the yield curve astypical of stressful periods.

This comes as two-year Germanyields went below zero, at -0.03 percent, and shorter French and Dutchbonds also had negative yields.

High Spanish and Italian yieldsare believed to come primarily fromworries about the implementationand effectiveness of crisis aversionmeasures.

The German constitutional courtwill today consider the EuropeanStability Mechanism (ESM) whichmay recapitalise ailing Spanishbanks directly.

Even if the ESM gets past thecourt, the rebellion of the smallerparty in Angela Merkels rulingUnion Faction, the Christian SocialUnion of Bavaria, makes aparliamentary rebellion possible.

Dutch and Finnish leaders havedemanded that even if ESM directlyintervenes in Spanish banking,Spains government must be tosome extent liable for the loansmade.

THE CITY could take a major hitif planned EU derivatives rules areforced through, an influentialHouse of Lords committee

warned today, as internationalinvestors could be driven out ofthe UK and EU.

The markets in financialinstruments directive (Mifid 2)could lock third country firmsout of the EU markets, which

would have an extremely

damaging effect on Europeanfinancial markets, including the

US and Chinese firms could fleeCity if EU rules are not changed

BY TIM WALLACE City of London, said the EUCommittees report, accusing theEuropean Commission of rushingthe proposals.

Companies from outside the EUwill be required to set up abranch in the EU to provideinvestment services or activitiesto certain clients in the EU, andthe Commission will only allowthis if the f irms home countrieshave rules which are very similarto Mifid a tough requirement

which the committee warns could

drive away firms from China andthe US.

TUESDAY 10 JULY 20124 NEWS

cityam.com

A RIVAL oligarch has accused billionaire Oleg Deripaska of "telling lies on a grand scale" tosidestep a 2001 contract over a stake in RUSAL, the world's top aluminium producer, the HighCourt heard yesterday at the start of a multi-billion-dollar legal battle. Businessman MichaelCherney accuses Deripaska of re-writing history" to erase their partnership, according tocourt documents. Deripaska denies a partnership with Cherney.

OLIGARCHS TRADE BLOWS IN COURT BATTLE

Samsung winsApple battle bynot being cool

7/31/2019 Cityam 2012-07-10

5/23

7/31/2019 Cityam 2012-07-10

6/23

SPORTSWEAR RETAILER JJB blamedpoor summer weather and disap-pointing sales of football shirts dur-ing the European Championship for aprofit warning yesterday, which sentshares tumbling more than 24 percent.The company warned sales have

fallen materially short of expecta-tions, after consumer demand forreplica football kit during Euro 2012did not materialise to the extentanticipated.

Shares in other sports retailers suchas JD Sports and Sports Direct also fellyesterday on fears that they will alsohave failed to shift sales of kit.A JJB spokesperson put this down to

a general ambivalence towards theEngland team and how it would per-form during the championship.

Like-for-like sales declined eight percent in the 22 weeks to 1 July, a sharpslowdown compared to a 5.7 per centfall in the first nine weeks of the yearto 1 April.JJB, which recently secured a 30m

lifeline from US sportswear giantDicks Sporting Goods and share-holders to revamp its stores, said net

JJB Sports fails

to score as Euro2012 sales drag

BY KASMIRA JEFFORD debt stood at 15.4m.Philip Dorgan, an analyst at

Panmure Gordon, downgraded hispre-tax profit forecasts for the yearfrom a 37m to a 48m loss. But hedoes not expect yesterdays announce-ment to dampen JJBs long termprospects.

After the most recent fundraising,JJB now has the funds to achieve amuch higher level of profitability, butit will take time to move into theblack, said Dorgan.

JJB also revealed that its chairmanMike McTighe will step down after 20intense months in the job. He willbe replaced on 1 September by USretail veteran Robert Corliss, presidentof menswear retailer Robert Talbott.

YOU can buy plenty of all-weathergear from the JJB Sports website,but that didnt help the retailersperformance in May and June,

which yesterday it partly put down to thedismal summer weather. With its sharesfalling off a cliff on the news, downalmost 25 per cent over the day, markets

clearly arent holding out much hope of abreak in the clouds soon. And no wonder.The company forecasts a pre-tax loss of32m in 2013 and it doesnt expect tobreak even before 2015, at the earliest.

But the years a game of two halves, andfans of JJB Sports wont have long to waitfor a full update at the annual generalmeeting on 19 July. In the meantime, yes-terday also brought the announcement ofa new chairman, Robert J Corliss. Due tostep into the role at the start of September,

he brings the age-old hope of sides down ontheir luck everywhere that a new managerwill make all the difference.

JJBs results also say something prettyalarming about the wider prospects forbranded sporting goods this summer.Making money selling replica football kitsduring Euro 2012 might sound like themost of open of goals, but not for JJB,whose sales of kits and associated products

IN BRIEFBoeing wins Air Lease order

n US planemaker Boeing landed the firstblow at the Farnborough Airshowyesterday, winning an order worth up to$7.2bn from US lessor Air Lease, as amarket share battle with its European rivalAirbus plays out. The order is for 75 of itsfuel-efficient 737 Max jets.

Betfair takes on Cyprus

n Betfair is considering legal actionagainst Cyprus after the country unveiledregulations to restrict online gamblingthat could adversely affect the gamingoperator. Shares in Betfair, which relieson Cyprus for four per cent of itsrevenues, lost five per cent in earlytrading yesterday before regaining by

the close of play.

Mind Candy snaps up Origami Blue

n Mind Candy, the company behind chil-drens game Moshi Monsters, yesterdayannounced its first acquisition, Brighton-based games studio Origami Blue. Set upby ex-Disney Blackrock studio creatives, theOrigami team will work on Mind Candysnew project Candy Labs, an innovation stu-dio. The financials were not disclosed.

Competition regulators look at LSE

n The Office of Fair Trading (OFT) saidyesterday it is looking at the acquisition ofLCH.Clearnet by the London StockExchange. The LSE won approval to take amajority stake in the Anglo-French clear-ing house in April, after offering 20 ashare. The OFT will decide if the deal will

affect competition in any market.

JJB Sports PLC

7 Jul3 Jul 4 Jul 5 Jul 6 Jul

7.50

8.00

7.00

8.50

9.00

9.50

10.00

7.257 Julp


cityam.com

Lines open 7 days a week, 8am-8pm, except bank holidays. Call us free on your landline; standard network charges apply to all calls made from a mobile phone.

Subject to credit check.

36 a month plan

includes:

600 mins to all UK mobiles

and landlines (starting 01, 02, 03)

Unlimited standard UK texts

1GB UK mobile internet

Offer extended

until 31 July

Phone cost normally 59 now 29

on a 24-month contract

Search online for Vodafone press or go in store today

Call 08080 00 00 52today and ask about next day delivery

Now just 29 on a 36 a month plan

iPhone 4S

BOTTOMLINE

MARC SIDWELL

hit the bar and bounced far wide ofexpectations.

Thats not just worrying for JJB, butpossibly for the Euro 2012 profits of itscompetitors as well. Sports Direct may havekept up decent sales figures as a result ofthe deep discounts it offered at the time,but that will have eaten into its margins. It

and fellow rival JD Sports did see theirshare prices fall a few percentage points,although neither saw anything like JJBsprecipitous tumble.

With the Olympic Games just weeksaway, its not just prize profits from thefootball championship that are in question.Londons organising committee planned tosell 1bn in merchandise by the end of theyear to raise 80m toward its budget. Letshope its figures are looking sunnier.

Marc Sidwell is City A.M.s managing editor.

Consumers cool on buying replica kit

7/31/2019 Cityam 2012-07-10

7/23

7/31/2019 Cityam 2012-07-10

8/23

IN BRIEFBovis enjoys robust tradingn Homebuilder Bovis Homesyesterday reported robust tradingduring the first half of the year andsaid housing market conditions in theUK remained stable. The Kent-basedgroup completed 944 homes in the sixmonths to 30 June compared with 801homes a year ago. Average sales priceduring the period increased one per

cent to 164,400 while net privatereservations rose 24 per cent to 993.Nevertheless, Bovis said reservationshad slowed due to the quieter summertrading period, particularly around thetime of the Queen's Diamond Jubilee.The firm added that homebuyers weretaking longer to make their purchasedecision and continued to face achallenging mortgage process amidtough economic conditions.

BUSINESSES yesterday welcomedLabour leader Ed Milibands call formore competition in the banking sec-tor though the Conservatives insist-ed the coalition is already addressingkey problems in the industry.

Miliband wants to break open themarket, forcing the biggest banks tosell off more branches, allowing atleast two more challenger banksinto the top end of the market, andmaking it easier for customers toswitch their current accounts.

Firms praised the suggestions, argu-ing that renewed competition will bebeneficial to customers, and offers

the best chance of raising lending.The Federation of Small Businesses

has long called for more competitionin the banking sector as 85 per cent ofthe market is controlled by just five

Firms back Edsplan to break

open bankingBY TIM WALLACE

banks, said a spokeswoman from thegroup. With four in 10 firms refusedcredit in the second quarter, we feelincreasing the choice for business isthe only way they are going to start toget a better deal.The Institute of Directors agreed,

arguing the problem with the bank-ing system is not too much capitalismbut too little.

New entrants to the market wouldbring more competition, and there-fore drive up the quality of serviceavailable, said Graeme Leach.

But the Conservative party argued itis already taking the appropriate steps.

Ed Miliband and Ed Balls had 13years to reform the banks when they

were at Gordon Browns side, butfailed, said Matthew Hancock MP.

This government set up the VickersCommission and is implementing itsrecommendations to competition.

These views are those of the individuals above and not necessarily those of their company

GARY COOKATKINS

RICHARDSHEATHIAL

RODNEYBALLARDMIZHUO BANK

IF SWITCHING TO A NEW BANK WASEASIER, WOULD YOU CONSIDER IT?Interviews by Jamie Sutherland and Polly Young


cityam.com

Business

Terms apply. Subject to credit check. Lines open Mon-Fri 8am-8pm, Sat 9am-5pm.Calls from landlines are free. Standard network charges apply to calls made from

a mobile phone.

With VodafoneOne Net Express:

Your mobile isyour landline

No call divert charges

3000 UK landline mins(starting 01, 02, 03)

Travelling to Europe?Vodafone EuroTraveller lets you use your UK priceplans minutes, text and mobile internet bundle inour Europe Zone for just 2.50 (Exc VAT.) a day.

Now includesOne Net Expressfor just 35 a monthThe amazing Samsung GALAXY S IIIfor business

Call 08080 996 808Visit vodafone.co.uk/businessdeals orgo to your local Vodafone store today

Get this offer with Vodafone One Net Express

300 minsBundled mins to UK mobiles or landlines(starting 01, 02, 03)

Standard UK bundled texts250 texts

3000 mins Mins to other Vodafone UK mobiles

UK mobile internet & email bundled usageon your phone500MB

BT Openzone Wi-Fi2GB

35a month

24-month contract. Price excludes VAT

The newjobs websitefor London

professionals

C

ITYAMCAREE

RS.c

om

CITYVIEWS

I would if it were easier.I think I've switched

banks twice in about 30 years

and it was difficult. I switchedafter I found a better deal Ithink it was the mortgageincentive that persuaded me. Iwould consider switching outof the big five high streetchains, if they had the rightinterest rates and services. Fornow, it just seems too stressful.

I think it's quite easynow, actually. It would-

n't make any difference to my

decision whether to switch ornot. I have switched before,and I've found it very quick. Ithink people don't know howeasy it actually is. Possibly I'mmore aware than most people,but if they simply asked orrequested it, they'd find it'sactually very easy anyway.

I would possibly, I dothink it's a hassle. I

haven't switched, but I have

instead opened up anotherbank account with a differentbank. Any reform will be effec-tive, but it's never going to bea simple process and the banksdon't have any intention ofmaking it simple even ifthey have to make it easy Idon't think they will.

7/31/2019 Cityam 2012-07-10

9/23

IN BRIEFBritish Airways launches bondn British Airways said yesterday it islooking to raise up to 250m by sellingan innovative bond secured against 31of its Heathrow landing slots. Investorsin the bond, the final terms of which willbe determined by market demand, willbe given access to the assets of a BAsubsidiary shell including the airportgates as collateral against the debt.

Lord Browne invests in North Sean Riverstone Holdings, the privateequity firm run by former BP boss LordBrowne, has made a $150m investmentin private North Sea oil and gascompany Fairfield Energy. Fairfield saidyesterday Riverstone also had theoption of an additional $200m inconjunction with any futurecontributions from current investors ledby Warburg Pincus.

Rolls-Royce wins helicopter dealn Engineer Rolls-Royce said yesterdayit had sealed a $183m (118m) helicop-ter contract with the US army. The con-tract will support 500 M250 engines onmore than 300 OH-58D Kiowa Warriorscout helicopters. The company alsorevealed it has agreed a deal withMalaysia Airlines to service the Trent

900 engines.

BMW pumps 250m into Mini

n BMW yesterday announced that itwould pump 250m into Mini produc-tion in the UK. The money will be madeavailable for Mini production at its fac-tories in Oxford, Birmingham andSwindon. It comes on top of a previous500m investment.

US BELLWETHER Alcoa posted a sec-ond-quarter loss yesterday as a slumpin aluminium prices to near two-yearlows last night offset growingdemand in the aerospace and auto-mobile markets.

Excluding items, however, Alcoaearned $61m from continuing opera-tions, or six cents per share, whichbeat Wall Street estimates of five centsper share. The companys shares roseslightly in after-hours trade.The loss from continuing operations

Alcoa just beatsforecasts as US

earnings beginBY HARRY BANKS

was $2m, or nil cents per share, com-pared with a profit of $322m, or 28cents per share, in the same quarterlast year.

Revenue fell nine per cent to $6bn, asaluminium prices dropped 18 per centfrom last year, Pittsburgh-based Alcoasaid. Analysts had lowered their expec-tations for Alcoa because of low alu-minium prices.Alcoa is the first of the US bellwether

companies to release its quarterlyearnings, giving a key overall indicatorof industrial activity in country andkicking off the results season.

JONATHAN Rowley, managing directormergers & acquisitions, is one of the UBSteam advising PTT on its pursuit of CoveEnergy.Rowley has also advised Altimo, the tele-coms arm of Russia's Alfa group, on thesale of its 25.1 per cent indirect equitystake in Russias MegaFon for $5.2bn,and Vodafone on its 1bn cash offer forCWW.

Oxford-educated Rowley worked at PriceWaterhouse between 1993 and 1996.The executive is part of a team whichalso includes Philip Wolfe, head of ener-gy for EMEA. He was formerly globalhead of oil & gas at HSBC Bank.Before that he was a director at DeutscheBank.Gerhard Riegler, executive director, oil &gas at UBS is also on the team.He was previously associate director oil &gas at HSBC.Riegler was educated at the University ofIllinois, Chicago and has been at UBS foralmost two years. The PTT pursuit ofCove Energy pitches it against RoyalDutch Shell. Geraldine Murphy heads theoil & gas advisory team at StandardChartered Bank and is leading the teamadvising Cove.

ADVISERS UBS

JONATHANROWLEY

MANAGING DIRECTORM&A, UBS

PTT Exploration and Productionyesterday extended for a second timethe deadline for investors to acceptits $1.9bn (1.2bn) offer for gasexplorer Cove Energy, as it waits for

rival suitor Shell to make its nextmove.The Thai company has been

fighting with oil major Shell to buyCove since February.

Cove has huge gas field interestsoff the coast of Mozambique anarea poised to be a major energysupplier to Asia. PTT said thatinvestors would now have until 13July to accept its offer, after it wonacceptances from only 0.25 per cent

PTT extends Cove bid deadlinein race against oil major Shell

BY JOHN DUNNEof Cove shares by last Fridaysdeadline. Shares in Cove have for thelast three weeks consistently tradedaround 10 per cent above PTTs offeras the market bets that Shell willreturn with a higher offer and thelevel of acceptances for PTTs 240

pence per share offer has not risensince a first deadline on 25 June.Under UK takeover rules, Shell has

until 17 July to launch a higher offer,with 11 July the next deadline forCove shareholders to accept its$1.8bn bid.

PTT also said yesterday that itsproposed takeover of Cove wonapproval from the CompetitionAuthority of Kenya, where Cove alsohas interests.

TUESDAY 10 JULY 20129NEWS

cityam.com

US firms price listings as market shows lifeSOFTWARE security company Palo

Alto Networks, online travel serviceKayak Software and legendary

guitar maker Fender yesterday setthe expected price ranges for theirinitial public offerings, prodded bya successful debut by IT softwarecompany ServiceNow.

Palo Alto Networks expects to

BY HARRY BANKS sell 6.2m shares between $34-$37each. At the high end of the pricerange, that would value it at$2.4bn. Kayak expects to sell 3.5mshares from $22-$25 each. At thehigh end of its range, Kayak isexpected to be valued at $964m.

Fender expects to raise as muchas $160.5m, valuing it at about$395m.

7/31/2019 Cityam 2012-07-10

10/23

7/31/2019 Cityam 2012-07-10

11/23

NICK Clegg may have beenexaggerating when he said bank

bonuses are from another planet, butone former Goldman trader is taking a bigstep towards making that come true.

Anton Kreil (pictured) is planning on

making the first ever financial trade inspace, on a 60-minute trip with the SpaceExpedition Corporation, which will take

him over 100,000 kilometres up.Kreil is still looking for a

sponsor for the 2014 trip andpromises to spend his fewminutes of weightlessnesstrading the firms stocks,

in return for theirfinancial backing.

TheNOW economy is

buy2letcars

The Old economy was buy to let property

Guaranteed Income Opportunity - Join the p2p revolution!Own an investment car with payment technology for just

13,500.00 and get 33% Guaranteed Return.Introductory offer turn 14k into 34k Guaranteed Income.No selling, no hassle. Complete peace of mind.

We do ALL the work.

Find out more today or register for our next meeting at

www.buy2letcars.com or call 0844 409 7603 NOW!

DOES Virgin Atlantics promiseto treat its passengers likerock stars extend to its ownstaff? It certainly looked that

way on the carriers inaugural flightto Cancun, where a plane-load ofemployees and hangers-on managedto drink the onboard bar dry beforea beach party that could not bestopped even by hurricane-strengthwinds and tropical storms.

A fragile Sir Richard Branson andVirgin Atlantic chief exec SteveRidgway dressed up in sombrerosand ponchos the following morningto compete in a waterfront Mexicanstand-off (though The Capitalist wasdisappointed to learn that thetequila shots downed by the pairduring the 7am competition werejust water). The head honchos werealso seen frolicking with X Factorwinner Alexandra Burke and illu-

Branson enjoys

a wild time onmaiden flight

Got A Story? Email

[email protected]

11cityam.com

cityam.com/thecapitalistTHECAPITALIST


5-12 NovemberThe O2

CONGRATULATIONS ROGER ONYOUR 7TH WIMBLEDON TITLE!

NOW CAN YOU MAKE IT 7 AT

THE O2 THIS NOVEMBER?

FOR CORPORATE HOSPITALITY, PLEASE CONTACT IMG ON 020 8233 5888 OR [email protected] The players shown are for illustrative purposes only. Qualification and

participation subject to ATP rules. Getty Images - Harold Cunningham, Mark Dadswell, Kiyoshi Ota, Matthew Stockman. MEDIA PARTNERS

www.BarclaysATPWorldTourFinals.com

DONT MISS THE ACTION

BOOK YOUR SEATS TODAY

Champion

03 04 06

07 10 11

THEFORUMcityam.com/forum

JOIN THE DEBATE PAGES 16-17

sionist Derren Brown during the fes-tivities, while Sir Richard wrestledwith ITV presenter Keith Lemon onthe wing of a Boeing 747 to make thegroups arrival in Mexico. So far, soraucous.

But 61-year-old Sir Richard delayedsome of his press engagements for amore civilised reason than tequilaburn-out: the Wimbledon mensfinal, which Virgin workers watched

in the hotel bar alongside thetycoons octogenarian mum, Eve.Madre Branson, incidentally, has

written a biography named Mumsthe Word, currently being poredover by publishers including VirginBooks.

Her proud son tells The Capitalist itdetails her life as a woman who hassaid yes rather than no to a lot ofthings. Which sounds quite rockstar in itself.

Sir Richard Branson gives an inkling of what his mums book is about

GRADUALLY the taboos are being broken. First, an unemotional tennisplayer breaks down in tears after losing the Wimbledon final. Next the

workforce at Pimlico Plumbers takes part in a challenge where they reveal theirpay to each other for the sake of an experiment and a television programmeentitled Show Me Your Money to be aired tomorrow. MD Charlie Mullins said: Iam sure the programme will generate a fair bit of debate among business owners

and employees alike. Talking about pay is one of the last taboos in society.

Pimlico Plumbers employees reveal all

Tycoons mother travels to Mexico withson as she looks for deal on her memoirs

7/31/2019 Cityam 2012-07-10

12/23

7/31/2019 Cityam 2012-07-10

13/23

TOUGH financial job market condi-tions have continued to impactgrowth at white-collar recruiterMichael Page, which reported a slidein quarterly profits yesterday.The British group, which places

people in accounting, financial andlegal jobs across 35 countries, is bat-tling a slowdown in markets asclients hold off on hiring or movingjobs in light of unstable economicconditions.

Chief executive Steve Ingham saidwhile the group was seeing goodactivity at the front of the business,the issue is down to the caution[clients] are showing when it comesto making a decisionit becomesvery difficult to predict.

Ingham said the banking sector hasbeen particularly shaken, withrecent events such as the Libor scan-dal rekindling public anger over theindustry. Banking now accounts foreight per cent of group profits com-pared to 11 per cent last year.

Overall, the company reported asecond-quarter gross profit of

Michael Page

feels pain frombanking sector

BY KASMIRA JEFFORD 138m, 6.6 per cent below its second-highest quarter on record in the sameperiod in 2011, but 1.6 per cent up onthe quieter first quarter of 2012.

In its UK arm, which makes upmore than a quarter of revenues,gross profit fell 9.2 per cent to31.1m.While full-year operating profit is

expected to be broadly in line withmarket estimates, the group said itsthird quarter was likely to be chal-lenging, as Eurozone issues, austeritymeasures and high unemploymentfigures hit customer confidence com-bined with a quieter holiday period.

Shares fell 3.46 per cent to 351p.

Michael Page International PLC

7 Jul3 Jul 4 Jul 5 Jul 6 Jul

3.50

3.60

370

380

p

350.907 Jul

The results were slightly below expectations, but management expectsprofits for 2012 to be broadly in line...But the outlook remains highly uncertain,and we note that key regions such as France and Brazil have got tougher. Weare leaving 2012 forecasts unchanged, but downgrade 2013 by 25 per cent.

ANALYST VIEWS

The update does little to indicate whether pressure on recruitment marketswill alleviate in the short term. While the result for the second quarter is ahead of thefirst and admirable given the macro backdrop, the lack of visibility...leavesus still negative regarding short-term trading for Page...

We think the 6.6 per cent year-on-year decline in net fee income (NFI) rep-

resents a disappointing outcome relative to both our and consensus expectations

(145.5m and 145.0m, respectively)...With no immediate signs of positiveearnings momentum we continue to believe the share rating is exposed.

WHAT WAS YOUR INITIALREACTION TO MICHAEL

PAGES TRADING UPDATE?Interviews by Kasmira Jefford

HENRY CARVER PEEL HUNT

PAUL JONES PANMURE GORDON

DAVID OBRIEN SHORE CAPITAL

TUESDAY 10 JULY 201213NEWS

cityam.com

Spread betting and CFD trading can result in losses thatexceed your initial deposit.

Spread Co Limited is authorised and regulated by the Financial Services Authority. Register no 446677

Make your opinion count

TRADE WITH OUR MORE ADVANCED AND MORE INTUITIVE PLATFORM

AND STILL BENEFIT FROM 0.8 SPREADS ON EURUSD, UK100 & US30.

Enhanced Trade Ticket Improved Order Management

New Charting Package Improved Hedging Functionality

Apply today at www.spreadco.com

OUR NEW SPREAD BETTINGPLATFORM HAS ARRIVED

Recently it occurred to me thatif I were to come back inanother life I might train tobe a Qualified Executive.

I had never heard the termbefore the last few days but peoplein the City have been telling methat Qualified Executives (or QEs

as they are known within thesquare mile and not to be mixedup with the other QE, whichmeans Quantitative Easingobviously) have recently seen apretty significant rise in theirworth.

Thats because City advisoryfirms that wish to become orremain nominated advisers tocompanies on the AIM or juniorstock market need to have at least

four QEs on board. And in order tobecome or remain a QE corporateadvisers need to have acted in a leadcorporate finance role on at leastthree relevant transactions in athree-year period.

The problem in the currentmarket, of course, is that given theshortage of deals many evenestablished financiers are finding itdifficult to keep chalking up deals

of a relevant size to be able to hangon to their QE status. And there is ashortage of advisers comingthrough that can quickly establish asufficiently good track record.

So those who have managed toretain their QE status are in hotdemand. One adviser told me that

somebody he used to employ hadnearly doubled his remunerationpackage through virtue of keepinghis QE status. He worked at a firmthat barely had the fullcomplement of four QEs and wastherefore in danger of losing itsnominated adviser status and wasdesperate to hire him as a result.

All good news then for the QEsbut not so easy for the City advisoryfirms struggling not only with

lower volumes of business but inthis case the threat of higher costs.

The AIM markets team at theLondon Stock Exchange says that itis taking a sensible approach to thenew circumstances and takes intoaccount all sorts of work that QEsare undertaking, including work on

floats that do not quite come off.It is promising to be flexible onthe issue and it needs to be.

And thinking of deals that mightnot come off, I can not helpwondering what ManchesterUniteds owners, the Glazer family,think they are doing trawling theirfloat plans from continent tocontinent in search of investorinterest.

The current plan is to raise

money in the US, after plans to dothe same failed in Singapore.

Now theres nothing wrong withManchester United as a world brandbut the football business has beendifficult to fund in the publicmarkets, with earnings volatile andcosts forever rising upwards.

Jefferies is lead bank on the issue,prompting one rival to quip thatthis was the equivalent ofappointing the Scunthorpe Unitedof the banking world to a PremierLeague float.

I asked Jefferies to put its case forthe float but it declined. No wonderit looks to be going horribly wrongso far.

INSIDETRACK

DAVID HELLIER

Why qualified financiers are in terrific demand

[email protected] me on Twitter: @hellierd

7/31/2019 Cityam 2012-07-10

14/23

Retail sales held up well in June

Jan10 Jan11 Jan12

8

7

6

5

4

3

2

1

0

-1

-2

%monthlychange

THE HOUSING market remained depressed in June,as demand stayed low and supply shrunk,according to data published yesterday by the RoyalInstitute of Chartered Surveyors (RICS).

House prices slumped further, with 22 per centmore respondents reporting drops than upturn.Though London was an exception, prices in thecapital still grew at a slower rate than earlier this

year. Newly agreed sales across the UK slowed, with12 per cent more respondents reporting falls thanreported rises, and the average number ofcomplete sales per surveyor inched down to 15.5.

Surveyors: housingwoe is here to stay

BY BEN SOUTHWOOD

TUESDAY 10 JULY 201214 NEWS cityam.com

The Color Company are here when you really need us. We are

Londons leading digital print company with locations throughout

central London with the added advantage of a 24/7 branch in the

heart of Mayfair.

Our range of services include onsite and offsite print rooms, bid

production, presentations, large format and exhibition graphics,

all produced throughout the day and night.

Drop in when you need us, even if it is 3am and you need

something printed and dispatched to New York for next day*

CALL US TO DISCUSS 0800 93 94 93or FIND YOUR NEAREST STORE on www.color.co.uk

*Authorised Fedex ShipCentre provided issubject to standard terms and conditions

THE PRINT COMPANYTHAT NEVER SLEEPS

e when you re herThe Color Company ar

Londons leading digital print company with locations thr


.t of Mayfairhear

vices include onsite and ofOur range of ser

esentations, laroduction, prpr

oughout the day and night.oduced thrall pr

e areally need us. We when you r

oughoutLondons leading digital print company with locations thr


ooms, bidfsite print rvices include onsite and of

mat and exhibition graphics,ge foresentations, lar

oughout the day and night.

ee ar

oughout


ooms, bid

mat and exhibition graphics,

op in when you need us, even if it is 3am and you needDr

something printed and dispatched to New Y

CALL US TO DISCUSS

or FIND YOUR NEAREST STORE

ovided ise pr*Authorised Fedex ShipCentrms and conditionsd tersubject to standar

op in when you need us, even if it is 3am and you need

rk for next day*ched to New Y

CALL US TO DISCUSS 0800 93 94 93FIND YOUR NEAREST STORE .co.uk.coloron www

ovided isms and conditions

op in when you need us, even if it is 3am and you need

MAJOR economies across the globeare set to slow down further over thenext six months, according to aninfluential leading index publishedyesterday, raising fears of a prolongedrecession in the UK and Eurozone.The downturn is focused on the

Eurozone, according to the figuresfrom the Organisation of EconomicCooperation and Development(OECD), where Mays data show a con-tinued slump.

Italys index fell most sharply, drop-ping 0.19 per cent in the month toMay and 2.71 per cent in the year tohit 98.9 firmly below the 100 levelwhich indicates the countrys long-

term trend rate of growth.Frances index also dropped 1.25 per

cent on the year to 99.6 whileGermanys slumped 2.47 per cent to99.4, and the Eurozone as a whole slid1.7 per cent to 99.6.The OECD uses forward looking

data including business sentiment,consumer confidence and job expec-tations to estimate economic growthin six months time, showing agloomy outlook for the rest of 2012.The slowdown has also spread to the

UK its index fell 1.54 per cent in theyear to 99.7.

We believe it is more likely thannot that the UK economy contractedmodestly in the second quarter, there-by suffering a third successivedecline, said economist HowardArcher from IHS Global Insight,

OECD: Slowdown is going global

BY TIM WALLACE

although he expects some growth inthe third and fourth quarters.

Tight fiscal policy and still signifi-cant problems for consumers (includ-ing ongoing muted earnings growth,high unemployment and a need for

many to deleverage) are expected tocontinue to limit UK economic activi-ty. Furthermore, ongoing Eurozonesovereign debt problems and weak-ened economic activity are expected tocontinue to weigh down on UK recov-

ery prospects.Further afield, the US growth spurt

is showing signs of running out ofsteam its index fell to 100.9, from101.1 in April and 101.2 in February.

India and Chinas fell to 97.8 and 99.2

respectively, while Russias growth isset to remain just above its trend rate,with an index of 100.3.

Brazil was the only nation to buckthe trend, with a reading of 99.2 up0.16 per cent on the month.

THE DIAMOND Jubilee andwarm spell at the start of Junegave retailers a great start tothe month, according toindustry data out today butthat rapidly disappeared as badweather took over.

Total retail sales were up 3.5per cent compared with June2011, while like-for-like sales those covering the same retailunits in 2011 and 2012 rose1.4 per cent, according to thefigures from the British RetailConsortium (BRC) and KPMG.

Food sales drove the total

increase, rising three per centin the three months to June,

BY TIM WALLACE with clothing and footwearalso particularly strong.

However, homeware,furniture and floor coveringsall fell in the month, withgardening taking a particularhit thanks to the bad weathertowards the end of June afactor that is expected to weighon sales in the coming months.

Sadly the soggy celebrationsover the Jubilee weekend itself,which heralded the start of thewettest June on record, werefollowed by far weaker businessfor the rest of the month, saidBRC chief executive StephenRobertson.

With the first half of theyear complete, we can see total

sales growth between this Januaryand June was no better than in2011. Its clear a permanentupturn in confidence andspending has yet to happen,Robertson added.

ECONOMIC estimates used to determine monetarypolicy have become less accurate, a working paperreleased by the Bank of England revealed yesterday.

Absolute output gap revisions have gone up, evenas revisions due to delayed inclusion of previouslyavailable data have declined.

The output gap is the difference between actualGDP and potential GDP at constant inflation, and itplays closely into policymakers decisions. Someanalysts have argued that the loose monetary policyfollowing the 2008 financial crisis was based on anestimate of the output gap.

Estimates of outputgap getting worse

BY BEN SOUTHWOOD

Rain washes away Junes retail gains

Gloomy outlookfor the wholeworld for 2012

Above trend rate of growth

Below trend rate of growth

CANADA0.06% to99.6

BRAZIL0.16% to99.2

EUROZONE0.16% to99.2

INDIA0.19% to97.8

CHINA0.15% to99.2

UK0.02% to99.7

USA0.17% to

100.9

RUSSIA0.71% to100.3

JAPAN

0.10% to100.7

Almost every major economy is slowing downOECD indices predict if states are set for growth above (100+) or below trend

7/31/2019 Cityam 2012-07-10

15/23

15TUESDAY 10 JULY 2012cityam.com

LONDON REPORT

Debretts

Joanne Milner has been

appointed chief executive atDebretts, the etiquetteauthority and provider of luxuryproducts and insurance. Shejoins from leading LDC, the mid-market private equity house.Milner will use her experience ofbusiness in China and HongKong to drive forward Debrettsfuture plans in the region.

Camco

The clean energy products developer has appointedJonathan Marren as its chief financial officer. He was mostrecently head of corporate finance at Singer CapitalMarkets, and also served as director in the corporatedepartment at Peel Hunt between 2000 and 2010.

Brookfield Asset Management

David Brush has been appointed managing partner at the

alternative asset manager. He previously spent 18 years asa managing director at RREEF, the real estate investmentdivision of Deutsche Bank. Brush has also worked forBankers Trusts real estate investment banking group.

Aurum Holdings

The luxury jewellery firm has appointed Elizabeth Galtonas director of design creative and product developmentfor jewellery. She was previously creative director at Linksof London. Aurum Holdings includes Goldsmiths, Mappin& Webb, and Watches of Switzerland among its brandportfolio.

NorthgateArinson

Alistair Blaxill has been appointed regional vice presidentfor the UK at the human resources software provider. Hemost recently spent five years at Communisis as executive

director, and he has previously held senior positions atSynstar and Hewlett Packard, where he delivered ITservices to the firms corporate and enterprise clients.

Rate Validation Services

The financial markets service company has appointedAlistair Sykes to its London office as senior manager,client solutions for UK and Europe. He previously workedfor 10 years at Markit-Totem as director of OTC interestrate valuations, and also spent two years as a risk analystat Refco, the former New York-based financial servicescompany.

Shelley Sandzer

Henry Wilson has joined the leasing team at the leisureproperty agency. He arrived at the firms professionalservices team in 2008, and will work on Shelley Sandzersdestination projects, including the Bluewater shoppingcentre in Kent.

WHOS SWITCHING JOBS Edited by Tom Welsh

+44 (0)20 7092 0053morganmckinley.comSPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

Global worrieshit as Wall Stawaits earnings

STOCKS in the US slipped in lighttrading yesterday, weigheddown by weak economic datafrom Asia and signs of

economic trouble in Europe,underscored by higher Spanish andItalian bond yields.Yesterdays decline, the third in a row

for the S&P 500 index, comes as quar-terly earnings reports get under way.

Investors are anxious to see whatimpact weak demand in Europe andslowing growth in Asia have had oncorporate America.

We think 2Q earnings for the S&P500 will be OK this quarter ... were call-ing for a small two per cent beat. Thatsaid, we expect the tone of earningsseason to be quite negative, saidJonathan Golub, chief strategist at UBSin New York.

Stocks pared losses late in the ses-sion, leaving indexes with just slightlosses.Alcoa stock fluctuated throughout

the day, ending up 0.3 per cent at $8.76in the regular session. Alcoas sharesrose two per cent in extended tradingafter the largest US aluminum compa-ny and Dow component released itsresults, marking the start of the earn-ings season.

Corporate outlooks are at their mostnegative in nearly four years, and com-panies that have already reported haveshown lackluster growth. Nearly twodozen S&P firms have already citedEuropes woes which seem to beworsening as a concern.

While a majority of corporationsmay beat lowered analyst expecta-tions, investors will be focused on howwell companies are handling weaknessoverseas.

Based on where we are today, wemay see muted to a slightly downwardreaction to earnings, said NatalieTrunow, chief investment officer ofequities at Calvert InvestmentManagement in Bethesda, Maryland,whose firm manages about $13bn inassets.The Dow Jones industrial average

ended down 36.18 points, or 0.28 percent, at 12,736.29. The Standard &

Poors 500 Index was down 2.22 points,or 0.16 per cent, at 1,352.46. TheNasdaq Composite Index was down5.56 points, or 0.19 per cent, at2,931.77.Volume was among the lightest of

the year. About 5.1bn shares changedhands on the New York StockExchange, the Nasdaq and Amex, com-pared with the year-to-date daily aver-age of 6.85bn shares.Among the days decliners, Visa

shares fell 1.3 per cent to $123.65 andMasterCard shares lost 2.3 per cent to$431.27.

On a positive note, Amerigroupjumped 38 per cent to $88.80 after thecompany agreed to be acquired byrival WellPoint for about $4.46bn.WellPoint shares advanced 3.4 per centto $61.95.

Health insurer Wellcare HealthPlans surged 18.4 per cent to $62.56

and the Morgan Stanley healthcarepayor index climbed 10.1 per cent.

COMMODITY stocks led Britains topshare index lower yesterday asequities bright start to the third-quarter continued to fade against a

backdrop of waning global growth andas investors geared themselves up for theearnings season.

Londons blue chip index closed down35.30 points, or 0.6 per cent at 5,627.33 andis now 1.8 per cent lower than the second-half intraday high hit last Thursday as theearly third-quarter rally showed signs offlagging.

Integrated oil stocks and mining shares,which had gained more than seven percent over the seven trading days since 27June, fell as the markets focus shifted tocompany earnings. US aluminium makerAlcoa was set to kick things off afterChinese, European and British policymak-ers took steps last Thursday to boostgrowth.

But hopes that a cut to zero in theEuropean Central Banks deposit ratemight encourage commercial banks tostart lending to each other again look mis-placed, a Reuters poll found.

(Policymakers) continue to focus on

maintaining the perception of the balancesheet rather than focusing on the profitand loss of the economies ... The more theymaintain the current policies, the morethey are pretty much guaranteed morestagnation, Tim Rees, fund manager atInsight Investment, said.

ECB policymaker Peter Praet said yester-day the Eurozone debt crisis is more acutethan the 2008 financial crisis that broughtdown US investment bank LehmanBrothers but that a recent EU summit hadbrought important steps towards tacklingthe crisis.

Fridays weak jobs data in the US illumi-nated the difficulty facing policymakers,with the latest growth outlook from theOECD yesterday also painting a rathergloomy picture.

What we saw in the two or threedecades which led up to the financial crashwas a credit-induced growth spurt. Takeaway the credit aspect and it is entirely

rational to accept lower growth and lowernominal GDP, Insights Rees said.

With doubts lingering over the economicoutlook the recent FTSE 100 rally haspetered out around 5,700, the technicallysignificant 61.8 retracement of the fallwhich began in March, when euro sover-eign debt worries resurfaced, and bot-tomed out at the beginning of June, asexpectations of central bank interventiongrew.The focus is now switching to how far

companies have been able withstand theeconomic slowdown.JPMorgan analysts said the second-quar-

ter earnings season looks challenging,with the hurdle rate higher than for thefirst quarter in both Europe and the USeven though business activity has weak-ened.

Blended (reported and estimated) quar-terly earnings growth for US companies asat 9 July was 5.9 per cent, compared with14.3 per cent in October and 9.2 per cent in9.2 per cent in April, according toThomson Reuters data.

JPMorgan said sectors most at riskinclude capital goods, chemicals and dis-cretionary.

Capital goods firm IMIwas the top FTSE

100 faller, down 3.3 per cent. Mid caprecruiter Michael Page fell 3.8 per centafter the firm reported a fall in second-quarter profit, hit by a pull-back in discre-tionary spending, and predicted a toughthird quarter.

Luxury goods firm Burberry, which isliked for its exposure to Asia and trades on12-month forward PE of 15 times, com-pared with 9.8 times for the FTSE 100, wasdown 2.6 per cent.

Oil and mining shares weigh downon FTSE as third quarter rally fades

BESTof the BROKERSMoneysupermarket Com Group PLC

3 Jul 4 Jul 5 Jul 6 Jul 9 Jul

p133

128

127

126

129

130

131

132

130.809 Jul

MONEYSUPERMARKET.COM

Numis has downgraded the price comparison website from reduce tosell on the back of an intensifying threat from Google. The broker,which predicted in May that Googles experiment with financial pricecomparison would divert traffic away from sites like Moneysupermarket,says the threat has been stepped up a notch and Moneysupermarketsvaluation is too much to pay when taking this into account.

FTSE

5,700

5,720

5,740

5,620

5,660

5,640

5,680


5,627.339 Jul

DASHBOARDCITYCITY MOVES

To appear in CITYMOVES please email your career updates and pictures to [email protected]

NEW YORKREPORT

YOUR ONE-STOP SHOP FOR JOB MOVES,BROKER VIEWS AND MARKET REPORTS

in association with

Deutsche Lufthansa AG


9.60

9.10

9.20

9.30

9.40

9.50

9.449 Jul

DEUTSCHE LUFTHANSALiberum Capital has upgraded its earnings estimates on the Germanairline by 30 per cent to reflect the recent fall in the fuel price. Issuing

the stock with a buy rating, the broker said the second quarter thisyear has been good for European flag carriers, and given the recent dropin the oil price, shares ought to perform well through to Lufthansasresults later this month.

NK Rosneft OAO


$6.70

6.20

6.30

6.40

6.50

6.60

6.279 Jul

ROSNEFTUBS has upgraded the Russian state-owned oil company from neutralto buy following an expected increase in dividend payouts requestedby president Vladimir Putin, and investments in a number of verypromising new ventures. The Swiss bank added that Rosnefts stock

has fallen 18 per cent from its peak earlier this year, and estimates it willtrade at a much lower price to earnings ratio in the future.

7/31/2019 Cityam 2012-07-10

16/23

IT HAS recently emerged that aUK bank has beenmanipulating a key interestrate. The only disappointment Ihave is that people are wasting

so much energy on the wrong bankand the wrong interest rate. TheBank of England has far moreinfluence over the banking systemthan Barclays it is, after all, thecentral bank. And the Bank rate,the interest rate that the Bank ofEngland sets each month, is inmany ways a hugely moreimportant benchmark than Libor.

One might even argue that Barclayswas doing us a favour. If it emergesthat it was keeping interest rateshigher than they otherwise would

have been, this would have reduced

ITS only 240 miles from Burnleyto the City of London, butsometimes it feels like its acompletely different world.Unlike the skyscrapers of the City,

my bank is based on a high street inBurnley. And it used to be a floristsshop. Thats just one of the thingsthat makes my little bank a bitdifferent from anyone else. Forstarters, Im not even allowed to callit a bank without those quotationmarks.

I never had any desire to be a banker.My company sells minibuses and Ihave a lot of very good customers whoIve known for a long time. As soon asthe credit crunch happened in 2008,these people couldnt get a loan fromthe banks they had been with foryears, and so they couldnt afford toget a new minibus. If nobody couldbuy minibuses, that would be a verybig problem for my business.

I had to do something drastic to keepgoing through the recession, so Ibegan lending my own money to mycustomers. Unlike the banks, I knewthey were good and honest people

in association with category sponsorsvenue sponsorchampagne reception sponsor

Are you one of the citystop businesses of the year?Enter the City A.M. Awards. Deadline:Thursday 12 July

Visit: www.cityamawards.com

cityam.com/forum

No new bank, apart

from Metro Bank, hasgot a high street banklicense in over a century

THEFORUM

Twitter: @cityamforum on the web: cityam.com/forum or by email: [email protected]? Disagree? Got a sharp comment?

The Forum wants you to join the debate. Top responses will be reprinted in The Forum.

16TUESDAY 10 JULY 2012

DAVID FISHWICK

The Bank of Dave: How one man ischallenging the high street giants

who could be trusted. I was provenright, and it made me see just howwrong the banks had gone.

I knew things really werent right inthe financial system when one of mybank managers came to visit me oneday to offer me a loan I hadnt askedfor and didnt need. He told me thathis bank, a big one that I wont namehere, had been given money by thegovernment and they had to lend itout. The problem was that he didntwant to lend it to anyone who had theslightest chance they wouldnt pay itback.

Basically, he wasnt going to lend toanyone that really needed it.After I gave him a piece of my mind

and sent him on his way, I realised

that someone needed to find a newway of banking one that cares aboutpeople.Then I realised that we didnt need a

new way of banking, we just neededto go back to the old-fashioned ways.We needed bank managers who got toknow their customers and who basedtheir decisions on people, not comput-ers.

I thought, Theyre just taking inmoney and giving it to other people.How hard can it be?

I quickly discovered that setting up abank is actually very difficult.

I tried to go to the Financial ServicesAuthority (FSA) to get a bankinglicence, but that didnt go very well.They wouldnt even meet with meunless I put millions of pounds inescrow for them. Given the size ofwhat I was trying to do, I thought thatwas ridiculous.

I was beginning to understand whyno new bank apart from Metro Bankhas got a high street banking licencefrom the FSA in over a century. This iswhy I have to use the quotation markswhenever I talk about my bank.

Luckily, Ive never been someonewho takes no for an answer, so Iworked with some top-notch lawyersin Manchester and found a way to usevarious other licences to create some-thing that does all the important bitsof what a bank does.

Finally, with the help of a lot of peo-ple who shared my dream from the

builders who helped me to refurbishour only branch to gaining supportfrom MPs like Vince Cable, SteveBaker, Michael Meacher and manyothers I declared my bank open.

Channel 4 has filmed the wholeproject, but that doesnt mean its justa publicity stunt. You can take a trip to

Burnley and see it for yourself. Youmight even get a loan we lend anaverage of 25,000 every week. Thatsmoney thats going to small business-es and people in Burnley, where itmakes a real difference.

Many of our customers have beenrejected by the high street banks, butamong hundreds of them weve bare-ly had a missed payment. This isbecause I meet them face-to-face, andtake time to get to know their busi-nesses and, more importantly,

whether theyre a person I can trust.In short, I judge them as people, notas credit scores.We dont just offer a better way for

borrowers. We help our customersachieve 5 per cent on their savings.And, instead of paying ourselvesbonuses, we are donating every pennyof operating profit to charity.As I said, sometimes Burnley can feel

like a different world to the City.David Fishwick is a Burnley-based busi-

nessman. Bank of Dave starts on Thursday12 July at 9pm on Channel 4. A book toaccompany the series is available now(Virgin, 12.99).

the scale of the asset bubble that theBank of Englands artificially lowrates were creating. If only otherfinancial institutions had been off-setting the main cause of the finan-cial crisis.

And if it was keeping rates lower,it was merely adopting governmentpolicy and keeping mortgage costs

low. My recollection of 2008 was

that a spiking Libor was beingactively dampened by policy-makers, although exactly whathappened hasnt been revealed yet.One thing we do know is that Liborneeds to be calculated properly,without relying on a sample ofindividual firms reported data.This always made it prone to abuse.

Of course, the main differencebetween what Barclays is accusedof doing and what the Bank ofEngland routinely does isdemocratic legitimacy. In short, theBank is allowed to manipulateinterest rates. But a vital issueremains unresolved.

There is a severe knowledgeproblem. Manipulating interest

rates like manipulating any

market price deprives us of truth.On Twitter recently, Danny

Blanchflower, former member ofthe Monetary Policy Committeeand Andrew Lilico, the chairman ofEurope Economics, debated whatthe natural interest ratecurrently is. This is the interest ratethat would generate sustainableeconomic growth with a balancebetween peoples desire for savingsand investment. It is the referencepoint around which loose or tightmonetary policy can be defined.

Blanchflower thought it was -3per cent, while Lilico thought itwas around +3 per cent. Theproblem is that none of us reallyknow. Whether its the Bank of

England manipulating the Bank

rate, or Barclays manipulatingLibor, we arent even attempting touse markets to learn about reality.Its almost like weve forgotten thatinterest rates can tell us somethingnew, rather t han simply reflectwhat we wish them to be.

In reality Barclays is a minorplayer because the whole monetarysystem is built on the desire ofcentral banks to impose theirwishes on the market. But to kill anoctopus you dont trim itstentacles. You need to cut off itshead.

Anthony J. Evans is associate professorof economics at ESCP Europe BusinessSchool.

www.anthonyjevans.com

Twitter: @anthonyjevans

FRONTLINEECONOMICS

ANTHONY J. EVANS

Barclays isnt the only one engaged in the manipulation of interest rates

7/31/2019 Cityam 2012-07-10

17/23

General enquires: 020 8267 4043 | [email protected] | Awards night: Wednesday 17 October.

17

Banking on choice[Re: Why it must be made much easier toswitch bank accounts, yesterday]It should certainly be made easier forcustomers to change bank accounts. Butsuch a policy will only be worthwhile if itscombined with measures that encouragebanks to differentiate their offering.Transparent pricing structures would be agood start perhaps accompanied by aclear proviso that free banking services arelargely a myth. Ultimately banks need tofeel that, if they dont stand out amongcompetitors, they will fail. Theres really nosense in encouraging consumer movementif those consumers are just shifting assetsfrom one state-backed, or state guaranteed,institution to another.

David Walker

New entrantsI dont think the supermarket sector is reallythat competitive. Its certainly difficult fornew entrants to get established, and thereare plenty of stories about the lower rungs ofthe supply chain being bullied.Graham Spicer

[Re: Why QE is not the answer to Britainseconomic problems, Friday]The financial policies of Labour and thecoalition are barely different from eachother. The only major difference, accordingto the Centre for Policy Studies, is thatLabour would spend an extra 26bn tryingto find work for another 70,000 people, at acost of 370,000 per job. With a choice likethis, its no wonder politics is so unpopular.

Derek Emery

THE ONGOING conflict inSyria is an acutecounterweight to theoptimism unleashed by theArab Spring. Gloomy

forecasts of this protracted conflict,not to mention all too frequentpictures of brutally massacredcivilians, are creating an ever-growing scrapbook of the chaoticdescent of the Syrian nation intoendless civil war.

Syrias President Bashar al Assadcontinues to stand firm in the face ofgrowing international anger. Onlytwo days ago, in an interview withthe German Tagesschau TV channel,he stuck to the now tired line thathis forces were standing firm againstterrorists and Al Qaeda, seeming-ly testing Goebbels dictum that ifyou repeat a lie often enough, itbecomes the truth.

But the time for such games haspassed, as it has for Assads numer-ous promises for reform. On threeseparate occasions these have notamounted to remotely serious struc-tural political change. Accordingly,the Syrian opposition will no longerenter into dialogue with a man theydo not trust.The Syrian conflict exists on two

spheres. The first is on the macro-diplomatic level, where a coalition ofArab and Western nations (includingTurkey), nominally led by the US, hassought to place increasing pressureon the Assad regime. These effortshave been critically undercut andofficially rebuffed by an obstinateRussia and a silent but complicitChina. There is very little chancethat much can be done internation-ally, given that Russia will not let anally fall that it has expended somuch energy to support.

But it is on the second, micro levelthat the conflict will find its end.The recent high-profile defection of

TOP TWEETSBlaming the financial crisis on the Big Bangin the 1980s is a way of blaming MargaretThatcher rather than New Labour.@FaridAnvari

Its a doddle to switch accounts. The realtrouble is theres not a hair of differencebetween them.@yesFletcher

Theres no case for the undemocratic Houseof Lords. But dont replace it with party listsand 15 year terms.@jeremycorbyn

Nick Clegg has promised a new kind ofpolitician in the Lords. Yes, partisansunprepared to face the electorate twice.@SteveBakerMP

Should MPs vote in favour of the proposedreforms to the House of Lords later today?

YESThe House of Lords Reform Bill is a major step forward for

democracy, but its clear the government needs to be moreflexible if it is going to get it through the Commons. UnlockDemocracy has proposed several changes. In our view thegovernment needs to review its policy of 15-year non-renewableterms with a view to introducing shorter terms and moreaccountability. With a smaller chamber, the case for retainingbishops is unsustainable. There needs to be more clarity abouthow the two chambers will work together in practice simplyaffirming the Parliament Act is not enough. Its clear theCommons is determined to give this legislation close scrutiny. Thisis good so long as the usual suspects arent allowed to wreckdebate. We hope MPs on both sides will work constructively toprevent that.Peter Facey is director of Unlock Democracy.

Peter Facey

NOJulian Harris

Screeching U-turns, botched proposals and a frantic rush towards

messy compromise it seems like there is no area of governmentthat this coalition cannot turn into a dogs dinner, and constitutionalreform is no exception. The Lords remains in desperate need of boldchange. We should have strong, democratically elected peerscapable of restraining our MPs often harmful impulses. Kick out thecronies, hereditaries peers and crackpot bishops yes, Im all forthat. But they need to be replaced sensibly. This proposal strangelyallows some unelected bishops to remain (why?) along with manyappointed Lords, who were supposed to believe will not be chosenaccording to cronyism. And now Nick Clegg is back-tracking,promising a possible brake on the reforms after the first tranche ofelected Lords arrive in 2015. MPs must go back to the drawingboard, start again, and only return when they have better solutions.Julian Harris is senior economics reporter at City A.M.

RAPIDresponses Regime defectors

are the best hopefor peace in Syria

brigadier general Manaf Tlass, theson of a former defence minister,and a number of senior colonels,

armoured brigades and even a fight-er pilot complete with his jet, pointto the best hope of change. While thecore security and intelligence pillarsof the regime (dominated by Assadloyalists) remain intact, the ability ofAssads conventional forces to main-tain control across broad swathes ofthe country is diminishing daily.The hope has been for some time

that loyalist defections will reach acritical mass, forcing the Assadregime to realise that it cannot sup-press the Syrian uprising by force. Itis at this point that a negotiated set-tlement can be taken seriously. Thesigns that this process is taking placeare encouraging and, in the comingmonths, the fulcrum of Assad mili-tary dominance will tip in the rebelsfavour, as long as they continue tohold on and not suffer total defeat.Then begins the really hard work;

reconciling the different oppositionfactions, ensuring the constructionof more egalitarian governmentinstitutions, balancing parts of theold order with newly-enfranchisedsegments of Syrian society and, cru-cially, preventing a wave of revengeattacks against Assad loyalists. Howsuccessful this will be, no one yetknows. But for this to happen, Assadmust first be made to relinquish hisgrip on power.Michael Stephens is a researcher at the

Royal United Services Institute for Defenceand Security Studies (RUSI) Qatar.


MICHAEL STEPHENS

Printed by Newsfax International, Beam Reach 5 Business Park, Marsh Way, Rainham, Essex, RM13 8RS

Distribution helplineIf you have any comments about the

distribution of City A.M.please ring 0207 015 1230, or email

[email protected]

EditorialEditorAllister Heath |Deputy EditorDavid Hellier |Managing EditorMarc SidwellNews EditorElizabeth Fournier |Business Features EditorPhilip Salter |Lifestyle EditorZoe Strimpel |Sports EditorFrank Dalleres

Art DirectorGavin BillennessCommercial Sales DirectorJeremy Slattery | Commercial DirectorHarry Owen |Head of DistributionNick Owen

4th Floor, 33 Queen Street,London, EC4R 1BRTel: 020 3201 8900Fax: 020 7248 2711Email: [email protected]

Editorial Statement: This newspaper adheres to the system of self-regulation overseen by the Press Complaints Commission. The PCC takes complaints about the editorial content of publications under the Editors Code of Practice, a copy of which can be found at www.pcc.org.uk

The Forum is open for you to take part. Got a sharp comment onone of todays columns? Do you have another subject you wantto share your opinion on? We want to hear your views.Email [email protected] or comment at cityam.com/forum

7/31/2019 Cityam 2012-07-10

18/23

G E T T Y

Obamas jobs gap his predictions versus reality

Q1/2007Q3/2007 Q1/2008 Q3/2008Q1/2009 Q3/2009 Q1/2010 Q3/2010 Q1/2011 Q3/2011 Q1/2012 Q3/2012 Q1/2013 Q3/2013 Q1/2014

7

6

3

5

4

9

8

10 %

PREDICTION: With recovery plan

PREDICTION:5.6%UnemploymentrateObamapredictedorJune2012ihis2009stimulusplanwasenacted

REALITY:8.2%OfcialU-3unemploymentrateinJune2012

THE JOBS GAP

REALITY:10.9%unemploymentrateilabourorceparticipationratewasthesameaswhenObamatookofce

PREDICTION:Without recoveryplan

REALITY:10%unemploymentrateinOctober2009


cityam.com

WITH the US continuing toproduce lackluster macrodata and the presidentialelections now less than

four months away, eyes are onAmericas two most powerfulpoliticians President Barack

Obama and Federal ReserveChairman Ben Bernanke forsigns of any moves to give theeconomy a boost.

POOR QUALITY LABOURObama will today sign an exten-sion of the Bush-era tax cuts, butjobs will continue to take centrestage until the 4 November elec-tion.The US non-farm payroll print on

Friday was the latest US number todisappoint, with only 80,000 newjobs added to the private sector inJune. As the chart (below) from theAmerican Enterprise Institute(AEI) demonstrates, over thecourse of the current administra-tion, the US has consistently man-aged to undershoot expectations,failing to produce long-term jobgrowth. The chart shows unem-ployment predictions published tosupport the $800bn TroubledAsset Relief Program (Tarp) along-side real-life employment out-comes.According to the St Louis Fed,

total non-farm payrolls havedecreased by 1.3m from December2008 to the latest print. And itsnot just quantity, but quality ofemployment that is in decline.Full-time jobs have decreased by2.5m over this period, with someof this slack being taken up by anincrease of 1.6m part-time jobs meaning that the US is not justfacing a problem of unemploy-ment, but also of underemploy-ment.

MANUFACTURING SLUMPUS manufacturing data also shows

signs of slowing. The ISM manu-

Profit from the race toget America working

President Obama will today sign an extension of Bush-era tax cuts

As elections loom,intervention is likely,writes Craig Drake

TRADINGMANAGEMENTWEALTH

THETIPSTER Female fashion fails on attractiveness

HIGH street retailer Marks andSpencersis today expected toannounce i

cityam 2012-07-10

Documents