Zak Mir’s weekend missive – Leahy’s legacy, cow-towing journalism & Rupert Murdoch’s machinations

Despite the insistence of financial commentator Louise Cooper whom I interviewed in the latest edition of Spreadbet Magazine, that the authorities did the right thing in saving the UK 5 years ago, I will never be convinced that the Treasury / Bank of England were doing anything other than bailing out their friends in The City!

At the same time, the secret of the longevity of the man at the heart of the crisis – outgoing Bank of England Governor Mervyn King remaining at the helm until recent weeks, can be attributed to first the fact that no one in their right mind would want the job, and the second – less important perhaps, that giving him the boot would be an admission that mistakes had been made. That, of course, would never do.

Luckily, the  taxpayer has very deep pockets (or more likely we had no choice) and therefore the can kicking of deficit and dumb moves continues. That said, even the spin doctor abilities of Alistair Campbell would struggle to make the prospect of buying into the forthcoming re-privatisation offensive on RBS (RBS) and Lloyds Banking (LLOY) an attractive one. The re-privatisation of Pandora’s Banks has more appeal to me, and it will be fascinating to see how the process which was kicked off this week progresses…

Even for those who are not obsessed by the financial markets on a day in day out basis, the Financial Times remains something of the benchmark as far as reporting / journalism in this area is concerned. If nothing else, “No FT , No Comment” was quite a marketing slogan. Indeed, the only quibble with the editorial line that I would have, is that it can be a little predictable in relation to the issues of the moment – somewhat conservative with both a big and small c. I presume this is because those who write for the publication are mindful of their career path…  

That said, this is all the more fortunate for me in that it provides plenty of scope for publications such as Spreadbet Magazine to cut through the hubris in terms of what the conventional  (usually incorrect) view may be in the market on a particular issue and how to use this to your advantage.

In fact, there is a sense of irony this week in that the FT owner Pearson (PSON) has been forced to deny that Rupert Murdoch is in league with the Abu Dhabi state media group and may be about to make a play for one of the UK’s most venerable publications. In the wake of the phone hacking scandal it could be argued that even Mr Murdoch making a bid for the Financial Times, together  with the Archangel Gabriel, would have difficulty in getting shareholder approval, especially given the way Pearson has been polishing up its star brand for so many years.

From a daily chart perspective, it can be seen that we have a rising trend channel, in place since March of last year and with the floor of the channel being hit this week at 1,126p. While this does not look like the type of chart you see in the run up to serious M&A moves, it is not one that rules out such a prospect either. This month’s higher low versus April’s is significant and should provide momentum towards 1,250p resistance over the summer with or without Mr Murdoch and his Middle East friends.

Another brand in focus this week among FTSE 100 companies has been Tesco (TSCO) where, although this is a company that has do or die loyalty amongst both shareholders and in the City, the wheels came off the  trolley both fundamentally and chart wise some time ago. Indeed, the profits warning in January last year was really the beginning of the end of the good times.

What has happened since is effectively a state of denial masquerading as consolidation and refocusing.  First there was the £1bn store refurbishment, then the horsemeat debacle, and now the end of the “space race” as the grocer teams up with Sports Direct within its stores. The latest philosophy is that big is no longer beautiful in terms of store capacity and that online is the future.

Unfortunately, in the wake of the latest AGM attack on former CEOs Terry Leahy’s legacy by ex Chairman Lord MacLaurin, it might be possible to suggest things could get no worse. However, without the  hope value of international expansion, and having lost its “mojo” after Leahy left, we have in Tesco an emperor that has been without clothes for at least 18 months and is forced to fight naked in the UK supermarket cartel just like anyone else.

While there is chart support at and just below 330p via a trendline from May last year, and although I am sure there has been plenty of  retail investors bargain hunting here on recent weakness, it still seems unlikely that a lasting floor here will be found before the sub 300p level of early 2012.