Monday Newspaper round Up. (Christmas Eve 2012) Bah Humbug!

President Barack Obama has been accused by a senior Republican of being eager to take the US over the fiscal cliff for political gain, as Washington edges closer to a year-end deadline with no deal in sight. Speaking on Fox News Sunday, Senator John Barrasso, the third-highest ranking senator in the GOP, suggested that the president “sensed victory at the bottom of the cliff”.
Earlier, Obama called on Congress to “cool off” over the holiday break, amid rising rhetoric on both sides. On Friday, the White House raised the prospect of settling for a stopgap measure to avert the punitive tax rises and swingeing spending cuts which are due to come in effect on 1 January. The president had previously pushed for a grand compromise to avoid the so-called fiscal cliff. But with just eight days to go until the year-end deadline, Democrats and Republicans are seemingly still some way off from any agreement, be it to a comprehensive deal or short-term measures. Asked if he believed that the US was heading towards missing the deadline, and thus falling off the fiscal cliff, Barrasso said: “I believe we are. I believe the president is eager to go over the cliff for political purposes. He senses a victory at the bottom of the cliff. I think it hurts our county and it hurts our economy.” The Guardian

Fears are growing that investors could be missing out on thousands of pounds in lost returns because their financial advisers are too worried about regulation to recommend riskier investment options. Despite painfully low rates on “inappropriate”, cash-based choices including savings and bonds, huge numbers of advisers are afraid to suggest equities that could be far better suited to long-term investors, according to a new study. Research from business consultant BDO warns that more than a quarter of the UK’s independent financial advisers are increasingly recommending investments that are completely wrong for many clients. And the problem is set to get much worse in the new year. Almost 90 per cent of advisers said equity-based products such as equity individual savings accounts (ISAs) were appropriate for investors looking for long-term growth. But despite this, 26 per cent would be pushed to recommending cash-based products regardless of that fact because of a raft of recent regulatory developments. The Independent.

Is any company safe from the agitators? Even Institutional Shareholder Services, an influential adviser on corporate governance matters, which is often an ally of activist investors, now has one of them in its own shareholder register. ValueAct Capital, an activist hedge fund, last month disclosed a 5% stake in MSCI, which owns ISS. The move was only one element in a late flurry of activism that caps a year in which activists have ousted boards, forced corporate break-ups and challenged sleepy management teams. Though the number of 13D filings, which announce when activists have acquired more than 5 per cent of a stock, is down from previous years, boards of directors and bankers still see 2012 as a banner year for activism. Many activists succeeded in pressing companies to return cash or do a deal, and some of the biggest brand names in the US, including Netflix and Procter & Gamble, came under siege. And with several activist funds producing investor returns of more than 20 per cent for the year, cash has flooded into the sector. “More money means a need to find more targets, and larger ones,” says Henry Gosebruch, managing director in JPMorgan’s mergers and acquisitions team. There was $57bn dedicated to activist strategies at the end of the third quarter, according to HFR, the research house, up from $51bn at the start of the year and $32bn at the end of 2008. The pressure on boardrooms seems likely to increase. Chris Young, head of contested situations for Credit Suisse, says: “There is a tremendous amount of interest from executive suites about vulnerability to activism and shareholder pressure, particularly in the US but also outside the US.” The FT

One of the UK’s top equity traders is leaving Soros Fund Management, the hedge fund founded by billionaire George Soros. Robert Donald, who headed up investments in European equities as a portfolio manager from SFM’s London office, is to leave at the end of the year. A spokesperson for Soros declined to comment on the move. Mr Donald, who specialises in trading industrial companies and basic materials, is widely regarded as one of the leading equity traders in the UK. He joined Soros in 2009, when his departure from GLG Partners prompted concerns that the firm might suffer outflows as it did when its head of emerging markets, Greg Coffey, left in a high-profile move to rival Moore Capital in 2008. Mr Donald managed part of GLG’s $1.5bn flagship European equity fund, headed by firm founder Pierre Lagrange. At Soros, Mr Donald was hired to launch a new European equities team. Since he joined, however, SFM has undergone a significant shift in direction. In July last year, the firm returned all remaining outside capital in order to sidestep sweeping new regulations for hedge fund managers in the US. The firm still manages assets of $24bn made up of Mr Soros’ personal family wealth, money from his charitable foundation and small amounts from family and close friends. At such a size, SFM is comfortably larger than many of the world’s leading hedge funds. The BMD Site.

43% of households believe their finances will worsen in 2013, compared with 24% who expect it to improve. Consumers are braced for another year of austerity after the chancellor’s autumn statement failed to lift the gloom that has descended on the UK economy. According to a survey this month of attitudes to family finances, 43% of households believe their finances will worsen in 2013, compared with 24% who expect their income to improve. George Osborne was forced to admit in his autumn statement that growth would be lower than expected, but said he planned to boost investment and the long-term prospects for the economy.The Guardian

Major delays at Cross-Country, East Midlands Trains, First Great Western and First TransPennine Express. More misery awaits Christmas commuters as flooding continues to hamper parts of the road and rail network. People trying to get home to friends and family for the festive period are facing a series of challenges on the railways. A number of routes remain affected by flooding, while services are widely expected to groan under passenger numbers as those unable to travel over the weekend rescheduled their journeys on Monday. The Guardian

OUSTED Conservative chief whip Andrew Mitchell yesterday launched his most detailed attack yet on police over the plebgate affair, saying they deliberately smeared him to “toxify” the Tories and destroy his career. Evidence last week appeared to back up his version of the row which broke out when he was made to use a side gate to leave Downing Street on his bicycle. The MP has now spoken of his horror, stress and depression at being accused of insulting Downing Street police. He admits swearing under his breath but has always denied calling officers “plebs” or swearing directly at them. Mr Mitchell described how the fall-out when the “pleb” allegation became public cost him his job. He blamed “police elements for not following the proper complaints procedure…but instead leaking a confidential and inaccurate alleged log and for launching a smear campaign against me in pursuit of their own particular agenda”.
He added: “These awful toxic phrases which were hung round my neck for weeks and weeks in a sustained attempt to toxify the Conservative Party and destroy my career were completely and totally untrue.” Reports The Daily Express

SCORES of British retailers may face possible collapse in 2013 as the troubled high street braces itself for a New Year hangover. Almost 140 retailers are facing “critical” financial issues after a tough final three months of the year, according to a study by business recovery firm Begbies Traynor. Shoppers are increasingly trying out goods in stores before finding Internet discounts, hitting retailers such as book and stationery shops. The Daily Express

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