The Global Scramble for Energy
The Global Scramble for Energy - at www.moneyweek.com - the best of the international financial media
*** Are Egg investors jumping the gun?
*** M&S falls victim to price war
*** The larger population in Dubai...make the most of liquefied natural gas...why the US is following the UK's housing market lead...and more
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--------------------- With US financial giant Citigroup said to be making subtle passes at Egg, the internet bank's share price surged some 8% on Monday. Citigroup is alleged to be willing to pay £1bn for Egg pushing its shares to the top of the FTSE 350 gainers list.
Insurer Prudential, which is the majority-owner of Egg, gained 3% yesterday on the news. But are both the Pru and Egg investors jumping the gun? Egg's share price is expensive compared with other banks. Moreover, as consumers suffer increasingly under mounting debt, Citigroup will undoubtedly be after proof that the internet bank will not be plagued by the bad debts that are haunting both Barclays and HSBC...with any formal bid held back accordingly.
At least the Egg-Prudential share price gain helped lift the indices on Monday. The FTSE 100 traded 10 points higher, to close at 5,242. The mid-cap 250 index traded 48 points in the black, to close at 7,567 another new all-time record for the index. So another strong day for the indices...but can they continue their current upswing?
"At the moment I wouldn't see it going too much further," Hargreaves Lansdown's Richard Hunter said yesterday. "There is this definite chance for consolidation".
The index-slowdown could also be assisted by the retail sector, which continues to struggle as consumer confidence weakens. According to retail metrics group SPSL, the number of shoppers has fallen every month in the past year compared to 2004, except in June.
And as retailers battle with lack of consumers, private equity groups, which have made highly leveraged bids for retailers over the past couple of years thereby boosting the indices could just be put off the habit. Which could in turn impact on the indices.
In the meantime Marks & Spencer is likely to show its seventh straight quarter of falling sales when it reports its core sales tomorrow. And it's not just the consumers to blame: M&S has lost out to the supermarket giants who are currently embroiled in a price war in order to tempt shoppers into their stores. Marks is expected to report like-for-like general merchandise sales to fall some 5%. Its share price traded 1% up yesterday.
And Vodafone also added over 1% on Monday as Lehman Brothers told investors to dump BT shares in exchange for the mobile phone group. Vodafone has already completed nearly £2bn of its £4.5bn share buy-back target for the year which is well ahead of expectations, while BT could be knocked if deregulation of the broadband markets are achieved.
--------------------The Fat Kids of Dubai Similar to the USA and Europe, Dubai's population is becoming increasingly obese, says Beat Erni in The Profit Hunter Files. Nearly one third of all children in the Gulf region are now said to be above the weight that a kid of their age should be. So what does this mean for investors? For one, with the risk of diabetes "sky-rocketing" in Dubai, there are a number of well- established companies that should benefit. But the eating habits will also benefit a number of Western countries looking to make the most of the "relatively untapped markets of Arabia"...
The Global Scramble for Energy Natural gas is predicted to overtake coal and is likely to rival oil as the leading fossil fuel on the globe in just 20 years, says Dan Denning in The Fleet Street Letter. And as a result, gas-rich countries could be sitting on a serious amount of capital. Yet the increasing reliance on gas is taking its toll: the political ties between Britain and America for one could become strained in their bid to secure natural gas supplies. India too has just signed a $20bn with Iran to purchase LNG...a country that's not too popular with the Western governments at the moment... More on LNG?
UK/US Housing and the Upcoming Liquidity Trap UK house builders fear that higher unemployment levels could destabilise the housing market. And now America could be facing the same problem. It's no secret that in the US the current alleged recovery' is "amazingly weak", says Mike Shedlock in Whiskey & Gunpowder. And there's little sign of a job pick-up in the USA with the jobs added barely keeping up with immigration and population growth. The result? The struggling jobs growth will eventually spill over into the last strong sector left in America: housing.
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