Issue 124: 2017 10 12: Contents

12 October 2017: Issue 124

The week’s news –

your chance to catch up:

Image of elliptical decal with £$€ and Financial News caption


Mrs May’s Speech by John Watson

A look at the substance.

Spanish Customs by J R Thomas

The trouble in Catalonia.

Does Macron Need To Mind His Argot? by Richard Pooley

Why does his vocabulary matter?

A Timely Nudge For Economics by Richard Pooley

Richard Thaler’s Nobel Prize signals a new direction.

Show Yourself by Neil Tidmarsh

Face on for a face off.


Essay Shopping by Chin Chin

Room for diversification.

A Sense Of Belonging by Lynda Goetz

A primal need.


The Anatomy Of A Moment (by Javier Cercas, translated by Anne Mclean)

published by Bloomsbury

reviewed by J R Thomas

Knives In Hens (by David Harrower)

The Donmar Warehouse

reviewed by Adam McCormack

Puzzles, Cartoons and Calendar

Cartoons by AGGro.

Crossword by Boffles: “Plain Vanilla 25”.

Solution to the last crossword “Fashion Week”.

Quiz by Boffles.

Answers to Quiz.

What’s on in October 2017 by AGGro.

Earlier EditionsLarge 600x271 stamp prompting the reader to join the subscription list

Issue 119: 07 September 2017

Issue 120: 14 September 2017

Issue 121: 21 September 2017

Issue 122: 28 September 2017

Issue 123: 05 October 2017

Issue 123: 2017 10 05: Contents

05 October 2017: Issue 123

The week’s news –

your chance to catch up:

Image of elliptical decal with £$€ and Financial News caption


The Referendum In Catalonia by John Watson

How does the upsurge in separatism affect the EU?

The Tale Of Mrs M by J R Thomas

 Muti – the next chapter.

All Right? by Neil Tidmarsh

Not quite.

Student Loan Groan – There Must Be A Better Way by Frank O’Nomics

Forthcoming changes highlight a flawed system.


Top Facts by Chin Chin

Their use and the Zulu principle.

Are you very satisfied? by Lynda Goetz

Really we don’t want to know.


Victoria And Abdul (dir. Stephen Frears)

reviewed by J R Thomas

Soul Of A Nation

Tate Modern, 12 July – 22 October

reviewed by William Morton

What Shadows (by Chris Hannan)

The Park Theatre

reviewed by Adam McCormack

Puzzles, Cartoons and Calendar

Cartoons by AGGro.

Crossword by Boffles: “Fashion Week”.

Solution to the last crossword “Up In The Air”.

What’s on in October 2017 by AGGro.

Earlier EditionsLarge 600x271 stamp prompting the reader to join the subscription list

Issue 118: 17 August 2017

Issue 119: 07 September 2017

Issue 120: 14 September 2017

Issue 121: 21 September 2017

Issue 122: 28 September 2017

Issue124:2017 10 12 :Week in Brief Financial

12 October 2017


NEWS, the word in pink on a grey background

PLUMB TO RIGHTS:  For many years one of the darlings of the Stock Exchange, and latterly of the FTSE100, was Wolseley, the retail and wholesale supplier of bits and bobs to the plumbing industry in Britain in the UK.  For more than 25 years it had an enviable record of managing to increase profits every year, but then came trouble; overpaying for a similar business in the USA,  and the recession, put an end to this progession and at one stage the business looked to be seriously floundering.  A change of senior management and a change of branding and name – ironically to the name of that US business, Ferguson – began the return to health which was confirmed last week.  Profits were up 75% for the year ended July 2017, to £1.2bn on revenues up nearly 9%.  The star performer is the US operation, now in good health, where revenues were up 10% in the year, and weak sterling also helped push things along – the company estimated £122m of that profit was due to the level of sterling, so may well not be repeatable.  Ferguson confirmed an investment of £200m in the UK business to help that perform better.  Nevertheless it was a good performance, and the shareholders were happy, the share price being up £5 on the day – to over £50 a share.  This was reinforced by confirmation of a £500m share buyback this autumn, further boosting assets per share.

BOWLED OVER: The latest stats on economic productivity, published recently, showed that output per employee has fallen for two consecutive quarters.  On the same day Hollywood Bowl, Britain’s largest ten pin bowling operator and a major force in the urban leisure business, published its preliminary annual results (to the year end 30th September 2017) which showed turnover up almost 9%.  Perhaps that is effect and cause?  Hollywood, which listed on the LSE just a year ago, has had a very busy year, and, even stripping out new sites from its continuing expansion programme, sales were up 3.5%.  That should take profits for the year to around £33m, up on forecast, and sent the share price to 186p on the day.  They were floated at 160p, so it has certainly been a good game for investors.  In fact it could get better yet.  Bowling is a strongly cash generative business, and, even allowing for opening new sites over the next year or two, the company has more cash reserves than it needs, so is likely to return around £5m to shareholders via a special dividend.

BOWLED UNDER: Hedge Funds do not always present the easy pickings for their managers that the not-so-informed investor in the street may think.  Winton, which manages £30bn of assets and is celebrating its twentieth year in business, saw its profits for 2016 (to 31st December) halved, to £107m.  That was another low point in its recent history – it made profits of £487m in 2014.  The reason is simple – Winton management and owners only make good returns if their investors do, and they have recently been missing the target minimum returns which will bring in the extra profit sharing for the owners.  The business is largely run on computer predictive trading – maybe time to renew the techie stuff and rewrite the programmes.

EVERY LITTLE EXTRA…:  Recent results have shown very mixed trading in the retail sectors, even for companies in the same line of business.  The one that that the market has been waiting for, is Tesco, the UK’s leading food retailer, with 22% of the food and related goods market.  Tesco is clearly back on form, indeed with a flourish, and those investors who have stood by their shareholdings for so long must be delighted.  Profits for the six months to 26th August this year were £562m, a remarkable increase from £71m in the comparable period last year.  This is back in line with Tesco’s results before the series of recent disasters and change of management, culminating in the accounting scandal which is also now reaching its conclusion with the trial for fraud of three senior Tesco employees.  The food retail giant has now had seven successive quarters of growth in both profits and turnover – in the last two quarters sales were up 3.7% (2.2% on adjusted like for like).  In fact profits were even better than the trading results showed – there were gains from property sales (£175m), currency movements (£22m), and the sale of the Tesco business in south-east Asia (£196m).  Also good news for existing and future pensioners – the deficiency in the pension fund was cut by £3bn to £2.4bn – a truly remarkable result in current difficult market conditioners for prudent pension investment.  The company announced that it would be paying a 1p dividend now and the market is expecting another 2p per share on the full results when published next year.  The market initially reacted unexpectedly – the share price dropped 6p, around 3.5%, but it has since recognised the achievements of chief executive Dave Lewis and his team by rising 20p to 186p – with analysts saying that 200p is probably a better short-term target.  There’s always something extra though – and this time it is Tesco’s attempts to acquire Booker to give it a major wholesale business; this looks as though it may face much more difficulty than expected, with the leaders of every other major UK food wholesaler – nine of them – writing to the Competition and Markets Authority to protest that the acquisition will give Tesco “incontestable power” over the wholesale food market.  Mr Lewis will have his work cut out there.

LOW FLYING:  BAE Systems, the aircraft and defence manufacturer has finally formally confirmed that they do not expect to win the follow up order they have long been hoping for to build a further fleet of Typhoon fighter jets for the Kingdom of Saudi Arabia.  BAE have recently delivered the last four of 72 jets it has supplied to the Saudi’s, now all in service with the Saudi Airforce, and it was intimated that a follow up order would come for a further 48.  But that intimation has never turned into a firm order and the possibilities looked less and less likely – and with King Salman’s recent state visit to Russia it seems that the Kingdom may have an alternative supplier in the wings.  BAE has also built a fleet of Typhoon’s for the British RAF, but delivery of those are nearly complete, and that will leave the manufacturer with no orders – nor indeed is any other contractor building military jets in the UK.  That is likely to mean that a large number of redundancies across the BAE business is inevitable but they are likely to fall principally on the company’s assembly plants in Lancashire, where 2,000 or more skilled jobs  could go.


(as at 10th October 2017; comments refer to net changes on last 7 days; $ is US$)

Interest Rates:

UK£ Base rate: 0.25%, (unchanged): 3 month 0.34% (steady); 5 yr 1.00% (fall).

Euro€: 1 mth -0.37% (steady); 3 mth -0.33% (steady); 5 year 0.14% (fall)

US$: 1 mth 1.24% (rise); 3 mth 1.35% (rise); 5 year 2.01% (rise) 

Currency Exchanges:

£/Euro: 1.12, £ falling

£/$: 1.31, £ falling

Euro/$: 1.17 € steady. 


Gold, oz: $1,291, rise

Aluminium, tonne: $2,134, rise

Copper, tonne:  $6,607, rise

Iron Ore, tonne:   $60.18, fall

Oil, Brent Crude barrel: $56.81, rise

Wheat, tonne: £140, fall

London Stock Exchange: FTSE 100: 7,538 (rise).  FTSE Allshare: 4,134 (rise)


Nothing too dramatic this week, iron ore and wheat both falling back.  Sterling continues in a pattern of weakness, not helped by dollar interest rates edging up.  It is interesting to look at the performance of the markets in the previous quarter, with aluminium and copper both showing considerable strengthening by about 12% and 16% respectively.  The real action has been in oil, up from $48 in early July to almost $56 now – with $50 always regarded as the magic figure which makes deep sea oil and shale oil both economically feasible to extract.  Wheat and the FTSE are almost net unmoved, albeit with some variation during the quarter.


If you enjoyed this article please share it using the buttons above.

Please click here if you would like a weekly email on publication of the ShawSheet



Issue 115:2017 07 27:Week in Brief Financial

27 July 2017


NEWS, the word in pink on a grey background

BANKING THE CASH: As had been widely predicted, Metro Bank, one of the leading and certainly most visible of the so-called challenger banks – the regiment of small banks that sprang up after the big bank failures and retrenchments following the 2008 recession – has announced a rights issue, to raise to £278m.  Metro has been opening a network of high street branches in a bid to capture a dominant position among middle income middle wealth customers – not the nil cost minimal service mass market, nor the high net worth private banking market which has become intensely competitive.  That strategy appears to be working – the bank has well located branches and has created high levels of service and low levels of bureaucracy (by banking standards anyway).  It has also been fairly aggressive in its lending approach, building a personal loan business, a small business unit, and going into the mortgage market.  But all this takes time and the costs of running a full services banking business are high, even though the bank has bought-in business – the latest and largest being a £600m mortgage portfolio which it acquired last month from Cerebus.  That gives Metro a mortgage book of around £4bn, making it a fairly significant player in the mortgage market, and providing a useful base for selling other banking services.  Results for the first six months of this year show a profit of £4.4m against a loss of £18m for 2015 and a loss of £13m for 2016.  The chairman and founder, Vernon Hill, says things are going well; over 130,000 new accounts were opened in the first half of 2017 and he expects to achieve a return on equity of 14% by 2020.  But that, although perfectly respectable for a retail bank, is below his target of 18%, which he now expects not to hit before 2022. One of Metro’s problems is that faced by all banks – customers continue to expect more service for lower or even no cost, and at the same time lending margins remain low, and currently falling rather than rising.  And banking costs continue to rise, with bankers seeing more and more regulation and reporting which squeezes both income and capital, as the regulators keep capital ratios high.   At least Mr Hill is happy with his business model – he says he will be putting £10m of his own money into the rights issue.

EXPERIENCE TELLS?: But if Mr Hill is confidently building his residential mortgage business, one of his competitors is not so sure.  Jayne-Anne Gadhia is chief executive of one of Metro’s bigger rivals, Virgin Money who also reported their first half results this week.  They were impressive, with profits up to £124m, a rise of over 30%, from (mainly) a mortgage book of £32bn which was up 7%.  The bank’s other main source of profit is its credit card business which has footings of about £3bn.  But it was Ms Gadhia’s comments which caused some alarm – she expressed concern about the state of the London residential market, and that of several other large cities, where house price rises have more or less ceased and prices may even be falling.  This especially applies to London, and is backed by recent statistics which show that the number of people permanently relocating from London to other parts of the UK is rising rapidly; although the population of London continues to rise overall the incomers are mostly on short term contracts or here for study, so the number of houses to sell is increasing.  Ms Gadhia says that Virgin will be taking an increasingly cautious approach to its residential lending, looking at affordability and leverage issues to be sure borrowers can cope even if prices come down.

FLYING LOW:  Both EasyJet and RyanAir have reported on trading in the past few days; they may be great rivals and often do not agree on much, but this time they certainly agreed on one thing – air fares will fall later in the year.  There is an ever increasing amount of capacity in the short haul (European) market – perhaps not surprisingly as both airlines are busy increasing their fleet sizes with orders for new jets now being delivered.  Both have had a good run recently, with turnover up over 2%, most of which should go through to the bottom line, but that continuing strong performance has alerted rivals to opportunities; the available capacity at a number of regional and tourist focussed airports makes it relatively easy to set up or expand to such locations. The number of travellers is going up, but they are price conscious and they are willing to try new airline brands; on the cost side the price of jet fuel has increased sharply recently and airline chiefs think that that is a trend which is likely to continue.  So both airlines’ shareholders were pleased by the past performance but nervous about future expectations – and both fell to reflect that rather depressing outlook.  Better a passenger than a shareholder for now.

READY MADE INVESTMENT: In an age where many peoples’ weekly cooking is limited to putting a ready made meal in the microwave, few give a thought to where it was made. Often the answer is in Lincolnshire, especially for those more up-market feeds from Waitrose or Marks and Spencer.  Bakkavor, a business founded to process fish, has been through various vicissitudes but is still owned partly by its founders, Agust and Lydur Gudmundsson, who have built it up to be one of the largest makers of ready meals in the UK.  Not only does it do that, but it also makes many other things you eat when in a hurry – sandwiches, pizza, and ready prepared vegetables.  The Gudmundsson’s got into a spot of difficulty in 2009 and now have Baupost, an American hedge fund, as their majority shareholder.  It wants to cash in some of its investment, which suits the founders who also would like to take some money out – though they want to keep running the business.  So floatation is likely to be coming soon – and it could be pretty big, turnover is around £1.7bn and the valuation of the business is likely to be around £1.4/1.5bn.

KEEP IT SHORT: But not sweet.  Mike Ashley, this column’s tycoon of choice, does not waste time on platitudes.  It was his principal business interest, Sports Direct, shareholder presentation last week and Mr Ashley had bad news – profits were down 59% on the previous year.  The company is suffering from the impact of the weak pound on the largely imported stock which it sells; and also the cost of the new strategy to mitigate that of repositioning slightly more up-market.   It intends to expand its direct property ownership, especially of key retail units.  Mr Ashley used 17 words to deal with that, saying the strategy was working – and then shut-up.  His shareholders are used to the style and applauded enthusiastically. To be fair to Mr A, he later spent an hour in a question and answer session with his shareholders.


(as at25th July 2017; comments refer to changes on last 7 days; $ is US$)

Interest Rates:

UK£ Base rate: 0.25%, (unchanged): 3 month 0.29% (unchanged); 5 yr 0.77% (fall).

Euro€: 1 mth -0.37% (steady); 3 mth -0.33% (steady); 5 year 0.14% (fall)

US$: 1 mth 1.23% (steady); 3 mth 1.31% (rising); 5 year 1.87% (steady) 

Currency Exchanges:

£/Euro: 1.12, £ weakening

£/$: 1.30, £ steady

Euro/$: 1.16 € steady


Gold, oz: $1,252, slight rise

Aluminium, tonne: $1,890 slight fall

Copper, tonne:  $5,999, rising

Iron Ore, tonne:   $65.59, slight fall

Oil, Brent Crude barrel: $49.53 rise

Wheat, tonne: £1443, rise

London Stock Exchange: FTSE 100: 7,446 (rise).  FTSE Allshare: 4,074 (rise)


Copper gets ever close to the 6,000 mark; in fact it could not much closer.  Wheat too is moving up a little which reflects not the UK harvest which looks good, but very mixed reports from the rest of the wheat world.  Other than that, a pretty steady week; even iron ore is now marking time again after its recent fast recovery.


If you enjoyed this article please share it using the buttons above.

Please click here if you would like a weekly email on publication of the ShawSheet


Issue 106: 2017 05 25: Contents

25 May 2017: Issue 106


The week’s news –

your chance to catch up:

Image of elliptical decal with £$€ and Financial News caption


The Care Blunder by John Watson

The need for Jekyll and Hyde.

It’s Behind You by J R Thomas

Politicians should watch their back.

“I Don’t Understand Anything Anymore” by Richard Pooley

Where do French voters now stand; to the Right or to the Left?

The Only Way Is Ethics by Frank O’Nomics

Investors with a conscience can reap additional rewards.

It’s My Party by Neil Tidmarsh

I’m the leader, I’m the leader…

Propaganda and Lies by R D Shackleton

How can we combat “Fake News”?


Bath Brouhaha Prompts A Look At Rubbish And Recycling by Lynda Goetz

Global recycling day scheduled for 18 March 2018.

My Nobel Prize by Chin Chin

Thank goodness for the ban on cultural appropriation.


The Magic Flute

The Kings Head, Islington.

reviewed by John Watson

Puzzles Cartoons and Calendar

Cartoons by AGGro.

Crossword by Boffles: “Leisure Activities”.

Solution to the last crossword “Opera Festival”.

What’s on in June 2017 by AGGro

Earlier EditionsLarge 600x271 stamp prompting the reader to join the subscription list

Issue 101: 20 April 2017

Issue 102: 27 April 2017

Issue 103: 04 May 2017

Issue 104: 11 May 2017

Issue 105: 18 May 2017

Issue 105:2017 05 18:Tree planting, topography, timber and toxins(Lynda Goetz)

18 May 2017

Tree Planting, Topography, Timber And Toxins

Do we need to plant more trees? How to get one planted.

by Lynda Goetz

It is believed that around 3,000 BC some 50-60% of the UK was forested.   But, that being said, any belief that forest cover has been in continual decline since then is totally erroneous.  A fascinating resource here is the Forestry Commission timeline, which evidences clearly how events, and in particular wars, have influenced the way we have used our timber supply throughout the centuries.  Today’s cover at around 10% in England (13% in the UK owing to greater cover in Wales and Scotland) may not be as much as the Government had hoped, but it is double the percentage in 1300, when war and massive clearances for animal grazing had taken their toll; far higher than at the end of the 16thC after the increase in housebuilding, shipbuilding and use of charcoal in various processes (including gunpowder production);  more than twice that in 1815 when timber usage in the Napoleonic wars had reduced woodland cover to an all-time low and 1900 when cover once again down at  5%, shortly to be made worse by the advent of the First World War, led to the founding of the Forestry Commission in 1919.

In the light of this, are headlines referring to ‘an all-time low’,  words like ‘appalling’ and ‘shocking’, and expressions such as ‘drastic decline‘ and ‘prospect of deforestation’, really appropriate or necessary?  This is the sort of reporting which greeted the release of figures last June by the Forestry Commission and also this year’s quarterly report.  It is true that these comments mostly refer to tree planting rather than forest cover and also that between 2011 and 2014 there was a great deal more creation of woodland than there has been over the last two years.  Is this a problem and if so, why, and what can be done about it?

It is a fact that the Government’s aim was to achieve some 12% cover in England by 2060.  This is of course still possible, but it will require planting at a much higher rate than the current one.  This is partly because we are also using more wood.  As our population increases, so the demands for timber increase with it.  Over 80% of our timber is imported.  Use of wood has changed through the centuries.  Wood is currently being used again for heating our homes and hot water (wood burners and wood-pellet boilers); it is being used for furniture, as a clothes fibre and for medicines (e.g. yew for docetaxol and paclitaxel chemotherapy drugs) inter alia.  Not only is there actual usage to consider, but the environmental value of woodland is now much more understood and appreciated.  Many people derive pleasure from being able to access woodland, but as most now know, trees have an important environmental role as well.

Only this week, the academic scientific journal Atmospheric Environment has, according to the BBC environment correspondent, produced an article suggesting that not only should we be planting trees, but that hedges are also essential for absorbing harmful pollutants from the atmosphere.  Lead author Professor Prashant Kumar suggests that where possible in towns and cities, councils should plant low hedges between pavements and roads to help trap harmful toxins from vehicle exhaust pipes.  He is not suggesting that they should stop planting trees, indeed he feels that many more should be planted, simply that hedges could provide a further defence against our increasingly polluted air.

Woodland is also important in reducing flooding; increasing water absorption into the ground, preventing soil erosion and reducing sediment going into rivers, as well as creating a physical barrier to floodwater.  Studies into these ‘soft engineering’ aspects of managing flood risk have shown ‘significant scope for using woodland to reduce flood risk’, although it needs to be part of a ‘whole-catchment approach to flood-risk management’ (Woodland flood control: a landscape perspective)

Part of the problem, it would seem, is that the current regulation of forest in this country is shared between four separate Government departments; Department for Environment Food and Rural Affairs Agency (DEFRA), the Forestry Commission, Natural England and the Rural Payments Agency, all administering the Countryside Stewardship Scheme.  In addition, last November the Government opened the Woodland Carbon Fund to encourage more large-scale planting.  The grant scheme for landowners wishing to plant forest changed in 2015 and there have been delays in processing contracts and payments.  Negotiating the complex bureaucratic procedure appears to be something of a nightmare and this, combined with the uncertainty around what correlation, if any, exists between tree planting and EU agricultural subsidies, may have led many farmers and landowners to avoid new tree-planting altogether.

Austin Braby, a spokesman for the The Woodland Trust, the UK’s largest woodland conservations charity, said last June that “there have been lots of really interesting and well-informed conversations… but the system… is not matching up with the fine words.  It is not fit for purpose.”  It may be that the system has needed time to bed down, but as Countryside Stewardship is funded by the European Agricultural Fund for Rural Development, which of course will not be available after Brexit, it may take some time before it really does and we can get back to the planting rates needed to meet the Government-declared targets.

In the meantime, some of you may be interested to know that as an individual who is not a farmer or a landowner, you can still ‘do your bit’ and get a tree planted, although of course there is no EU grant attached.   You do not however need a spade or a garden.  All you have to do is to sign the Tree Charter.   As 2017 is the 800th anniversary of The Charter of the Forest ( a separate dedicated charter of all the rules contained in the 1215 Magna Carter relating to forests), some 50 organisations led by the Woodland Trust have got together to promote the importance of trees.  Just by signing the charter you ensure a tree is planted on your behalf.  If only everything were so simple!


If you enjoyed this article please share it using the buttons above.

Please click here if you would like a weekly email on publication of the ShawSheet


Issue 104: 2017 05 11: Quiz – Answers

11 May 2017

Quiz – Answers

by Boffles

  1. Arthur Wellesley, the Duke of Wellington.
  2. PayPal.
  3. Nikola Tesla, the Serbian-American engineer and scientist (1856-1943) who invented the alternating current (AC) induction motor.
  4. The Ottoman sultan, Mehmed II.
  5. Bosphorus comes from classical Greek and means cow passage (or ox-ford) and the name refers to the myth of Io who was condemned, after she had the misfortune to attract the attention of Zeus, to wander the earth as a cow until she crossed it.


If you enjoyed this article please share it using the buttons above.

Please click here if you would like a weekly email on publication of the ShawSheet

It's FREE!

Already get the weekly email?  Please tell your friends what you like best. Just click the X at the top right and use the social media buttons found on every page.

New to our News?

Click to help keep Shaw Sheet free by signing up.Large 600x271 stamp prompting the reader to join the subscription list