The Cowell Rhetoric: Burning Issue

by | Sep 26, 2014

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Alex Salmond’s talk of making Scotland the big cheese of Europe’s oil industry (“just like Norway”) may have bitten the dust in this month’s referendum, says David Cowell of Myddleton Croft Investment Managers. But he’ll be glad to know that the Norwegians still have that unmistakeable nose for the headlines. 

The BBC’s website chose this historic moment to remind us of how 27 tonnes of caramelised brown goat cheese – a delicacy known as Brunost – had caught light as it was being driven through the Brattli Tunnel at Tysfjord, northern Norway.

The fire had raged for five days, apparently, with toxic gases slowing the recovery. If only the independence row could burn out so quickly.


myddleton croftThe outgoing head of the UK civil service has predicted another five years of UK government spending cuts. He said making the cuts would be “even harder”. What cuts? UK plc is borrowing more now than it was 4 years ago. The UK Office for National Statistics said public sector net borrowing, excluding state-controlled banks, totalled 11.6 billion pounds in August, up 6.1 percent from a year earlier. Public borrowing for the tax year to date, excluding banks, was 45.4 billion pounds, 6.2 percent higher than between April and August 2013. The government said in March that it would aim to reduce borrowing by 10 percent in the 2014/15 tax year to take the budget deficit down to 5.5 percent of GDP from around 6.5 percent in 2013/14 but so far this year total borrowing has run ahead of 2013 levels.

The Pendulum Swings… Aviva is preparing a return to direct sales of protection  with plans to launch its own network of advisers. Just last year Aviva scrapped its direct advice arm but retained some advisers to continue servicing existing customers.  Who’s next? Old Mutual? Sanlam? Aegon? L&G?

Moving against tax avoidance by corporations, the Obama administration took action on Monday to curb “inversion” deals that allow companies to escape high U.S. taxes by reincorporating abroad. It isn’t yet clear if they will apply the rules retrospectively but some UK shares lost ground because of it.


Thursday was National Waiters’ Day. They do say that everything comes to he who waits. It was also Jewish New Year, but I don’t think the two are linked.

Warren Buffett has lost $750m (£460m) on Tesco. Berkshire Hathaway is its third largest shareholder. It only bought into Tesco this time last year and it’s down 46% since then. Tesco’s biggest shareholder, Black Rock, has sold out roughly 10% of its stake. Once the new men get their feet under the table we can expect another cleansing of the Augean Stable, then Tesco could be a good buy.

Private equity house Isis Equity Partners is changing its name to distance itself from any association with the terrorist organisation sweeping Syria and parts of Iraq. Al Qaida or Black September LLC sound quite catchy.


The Republic of Ireland’s economy grew 1.5% in the second quarter of the year and up 7.7% on the same period in 2013. Property in Dublin is now rising at rates not seen since 2007.

The CBOE VIX, the so-called fear gauge, spiked 18% to a 15.64, the highest level since early August. In 2009 it was double that. Bring it on, I say. It’s about time traders had a break.

In the US, m-o-m housing starts for August were down 14.4%, the largest 1-month drop since April 2013. It looks like the crowd is catching up with us in thinking that US equities are more than fair value. The chart below is from Barclays:


US historic stock valuations

Have you heard about the Swiss gold referendum? It is to take place in November. Like all Swiss referenda, if it is passed it becomes law no matter what.

Its terms prohibit the central bank from selling any gold and it requires the bank to buy gold up to the level of 20% of Swiss reserves. It also demands that all Swiss gold held at the Federal Reserve bank of New York be returned to Switzerland. In 2012, the Bundesbank requested that all of its gold held in New York be sent to Berlin. The Fed agreed to send it but said it would take seven years!! Two years later, after receiving only 5 of the 1,500 tonnes, the Bundesbank cancelled the repatriation. In the Swiss case, this would not be allowed so what would it do to both the supply and price of gold?


Barclays is being fined £38m by the FCA for failing to separate client money from the bank’s own funds. Barclays has been found to have mixed billions of pounds of client and its own money in its investment banking division between 2007 and 2012. Barclays’s fine, a record for this type of misconduct, follows a £33m fine paid by JPMorgan Chase in 2010 after it failed to segregate $23bn of client money.

I went to the library and asked the lady on the desk,  “Where’s the self- help section?” she said if she told me, it would defeat the purpose.

Have a good weekend.


David Cowell

For and on behalf of Myddleton Croft Investment Managers

1 Woodside Mews

Clayton Wood Close


LS16 6QE

Tel:        0113 274 7700

Fax:       0113 274 7711



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