Archive for Property

16 May, 2008 | No comments

Outlook uncertain for interest vote

Heres hoping they can kiss and make up. The nine men and women on the Bank of Englands Monetary Policy Committee (MPC) will meet this morning to begin their interest rate deliberations still bearing the bruises from their meeting last month.

Januarys vote broke all the rules. Paul Tucker, the MPCs arch hawk, voted against raising rates, concerned that the market might get ahead of itself. More external members voted for tighter policy than Bank officials did. For the first time, Mervyn King, the Governor, used a deciding vote to push through higher rates.

Today, it all kicks off again, as the MPC meets to review data from the past four weeks in preparation for next Thursdays decision. Here, we analyse whats on their agenda.

Growth: strengthening
GDP in the fourth quarter was reported as growing 0.8 per cent by the Office for National Statistics last month. The 3 per cent year-on-year rate was the strongest in two years.

Part of the strength came from retailing, which turned out to have had a healthy Christmas. Sales volumes rose by 1.1 per cent in December. The CBI said that sales were even stronger in January, much to the surprise of retailers.

Manufacturing picked up in November by 0.3 per cent, almost reversing Octobers dip.

Prices: will the shock fade?
This months big shock was inflation hitting 3 per cent on the consumer price index, and reaching a 15-year-high of 4.4 per cent on the retail price index. Any higher, and the Governor would have had to write an explanatory letter to the Chancellor. Although the Bank expects inflation to fall back this year as lower oil prices feed into the annual figures, the psychological effect of a spike in inflation risks boosting expectations of higher prices, a major headache.

The Banks other chief concern is wage settlements. The official data, a few months out of date, show that average earnings including bonuses rose by a benign 4.1 per cent in November, unchanged from October. However, unofficial data point to higher settlements in the crucial January pay-bargaining period.

However, January brought the first signs that the housing market may be softening in response to higher interest rates. Nationwide said that prices rose by a modest 0.3 per cent in January, the lowest rise since May. Mortgage approvals sank sharply in December to 113,000, from 129,000 in November.

The international economy
Trade-weighted sterling has risen by more than 1.5 per cent since the increase in interest rates in January, and at one point sterling rose above the $1.99 mark. Later in the month, US growth came in at an annualised 3.5 per cent in the fourth quarter, higher than expected and the best rate since the start of 2006.

Rate verdict: uncertain
Last months rate rise, the third in six months, was passed by the slimmest of margins on the MPC, and so most economists now expect the committee to sit on its hands this time. However, rates will rise again if data stay hawkish, and five out of 62 economists polled by Reuters forecast higher rates next week.

Bank thinking

In the past month, Mervyn King has struck a balanced tone. Despite voting to raise rates in January, he said the MPCs central view was still that inflation is likely to fall back in the second half of the year, possibly quite sharply. However, he also gave warning against inflationary pay rises. Andrew Sentance, an external MPC member, has spoken of the need to keep demand constrained and inflation expectations well-anchored. Tim Besley, who has voted three times in five months to raise rates, has said he is concerned that inflation will not fall as fast as the Bank is hoping. David Blanchflower denied being a dove, saying: I am as hawkish as anyone about keeping inflation on target.

16 May, 2008 | No comments

Don’t move, improve: It’s a matter of taste ? and design

The kitchen is a tremendously important part of the home. Increasingly, it has become the hub of family life and, as a result, more and more of us are creating kitchens that also function as breakfast and family rooms. It acknowledges that the kitchen is the place where the action takes place.

But when it comes to creating a kitchen, how do you choose the one for you? There are so many alternatives, and all seem so persuasive. There is also a huge variation in prices between the different options. So how much should you spend?

Of course, like so many other aspects of home improvement, there are no definitive right and wrong answers. To help clear some of the confusion I will try to outline the common options and the pros and cons of each. At the budget end of the market are the mass-produced cabinets available at DIY superstores; Ikea and the like. In many instances these are very good value. Mass production and warehouse selling mean that prices are keen and there are a number of well-designed options.

Typically these kitchens are constructed as melamine-faced chipboard boxes with laminate worktops and you will need to find your own builder or fitter to install them. And herein lies the downside. Given that the materials used can be rather flimsy, these kitchens have a tendency to start to fall apart after a couple of years or so – drawer-fronts come off, water gets into the chipboard, and so on. A lot depends upon the quality and care taken by the fitter during installation.

The other drawback with these mass-produced budget systems is that you generally have to work with a standard set of cabinet sizes. Given that rooms are rarely sized conveniently, you will often end up wasting precious space with filler panels to make up the width.

The second category covers specialist kitchen manufacturers. Within this group there is huge variety, from those a few notches up from the DIY systems, through to the ultra-chic Chelsea showroom type.

In general terms – and up to a point – you get what you pay for. Specialist kitchen manufacturers are able to put a great deal of research and development into the design, durability and quality of their product.

As you move up the cost scale, you tend to see better quality materials and a greater variety of options. You will also probably get a “free” design service (it is, of course, all factored into the final cost) and a list of approved fitters. However, prices can be daunting and this is why I use the phrase “up to a point”. It is possible to spend a huge amount on a kitchen, and still be fleeced; there are some very smart brands who need to pay for their expensive showrooms and advertising.

The third main category is the bespoke kitchen. Given that labour is by far the most significant cost in most building projects, having a kitchen made from scratch will usually be the most expensive option.

By going this way, however, you can get exactly what you want and have it made to fit.

A great deal depends upon the maker. A project that we completed earlier this year included a beautiful kitchen made in a little workshop by a craftsman in Cornwall.

The customer was involved from the start, and even went with the craftsman to choose the timber from which he was to cut the veneers for the doors.

He did an absolutely beautiful job, and in that instance the cost was very competitive when compared to system kitchens of a comparable quality.

Examples of the sort of detail that the Cornish workshop tailored can be seen in the worktops and the cabinets beneath, which were designed to be extra deep so that the Aga would line up with the front of the units rather than stick forward. A special little section was even made for the cat to access his cat flap.

Hugo Tugman runs the design service Architect Your Home – www.architectyourhome.com

Project: installing a kitchen

How much will it cost?

Kitchens are one of the most variable cost items within a building project. An adequate job can be achieved for only a few thousand pounds using a budget DIY store kitchen, while at the other end of the spectrum kitchens can run into six figures – which is extraordinary, of course. A pet rule of mine is that everything within a kitchen is truly variable by a factor of 10. A cheap and flimsy mixer tap can be bought for 40, a really gorgeous, brushed pewter-finish ceramic disc mixer tap can be as much as 400. Tiles can be 30 or 300 per metre, and on it goes.

How much hassle is it?

If you are simply ripping out one kitchen to replace it with another (and if the project is well organised) the process can be extremely quick and painless – sometimes within a single week. When things are being all changed around, walls moved, services redirected, it can need significantly more time and be a great deal more hassle. You will probably be living on takeaways while this is going on.

What’s the first step?

Try not to be sucked in by sales people. Often, so-called “free” design services are just elaborate sales techniques. My advice would be to get an independent interior designer or architect to help you plan how you want the kitchen to be laid out, and be armed with a scale drawing of what you want before you start looking around. If you want to find that elusive craftsman, talk to your designer who may well have some contacts.

h.tugman@independent.co.uk

16 May, 2008 | No comments

Our Outlook for the Media Sector

http://news.morningstar.com/article/article.asp?id=189385

The stock for the average media company currently looks slightly overvalued. The only industry that is trading below our estimate of its fair value as of March 15 is the media-conglomerates industry. Here, http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&Symbol=DIS http://quote.morningstar.com/Switch.html?ticker=DIS and http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&Symbol=TWX http://quote.morningstar.com/Switch.html?ticker=TWX , whose economic moat ratings we’ve http://news.morningstar.com/article/article.asp?id=186531, look particularly cheap. But some of the more interesting developments in the media sector, both good and bad, are from the newspaper-publishing industry.

Times have been tough lately for newspaper publishers, to say the least. In fact, according to figures published by the Newspaper Association of America (NAA) in mid-March, total industry advertising revenue slipped 0.3% in 2006. To put this in perspective, the downturn in 2006 marks the first year-over-year decline in industry ad revenue since 2002, which was the end of the last economic recession in the United States. We don’t see much improvement this year; rather, we see another annual decline of 0.3% in 2007, largely from lower print classified ads.

One bright spot among the group has been the strong growth of newspaper publishers’ online-ad revenue. According to NAA, online revenue from newspapers’ core sites grew 31.5% in 2006 for the second year in a row, and we expect continued robust online growth of about 25% in 2007. Currently, online advertising is still dwarfed by print advertising, making up only 5.4% of the industry’s total. But this is up from about 4.1% in 2005, and as newspapers’ online efforts continue to flourish, online revenue should account for a double-digit percentage of industry revenue by 2009.

Valuations
We don’t see a whole lot of compelling value in the market for newspaper stocks right now, despite some recent stock-price declines. (Newspaper stocks fall into the Media Conglomerates and Publishing industries in the table below.)
Media Industry Valuations

Segment

Average
Star Rating Average
Price/Fair Value Stocks Covered

Broadcast TV 2.20 1.08 5

Cable TV 2.56 1.11 9

Film and TV Production 2.00 1.20 2

Media Conglomerates 3.32 0.98 22

Publishing 2.73 1.08 15

Radio 2.57 1.16 14

Data as of 03-15-07.

In our opinion, print ads, which make up the lion’s share of newspapers’ ad revenue, will continue to be at risk, particularly in the first half of 2007. We anticipate ad revenue from print ads will be down another few percentage points for the year. In particular, print national and classified ads should continue to face challenges, as ad spending in these categoriesis particularly susceptible to the threat of the Internet.

Meanwhile, we think margins will continue to be pressured at newspaper publishers. Newspaper companies should see some benefit in 2007 from lower newsprint prices and usage. But newsprint and supplements make up only about 15% of publishers’ total operating costs. Because the bulk of newspaper publishers’ costs are fixed, anticipated top-line challenges should cause negative operating leverage to continue. We wouldn’t be surprised to see yet another round of layoffs in the near future as publishers attempt to combat this.

Internet Leaders among Newspaper Companies
Despite facing some tough newspaper-industry headwinds, you may want to keep an eye on the companies listed below. Each one has newspaper-related Web sites that are generating impressive online-ad revenue growth. Each one also has a unique play on the Internet that could provide an interesting investment opportunity if the market becomesoverly pessimistic about their core newspaper operations.
Stocks to Watch–Media

Company Star Rating Fair Value Estimate Economic
Moat Risk

Price/FV

Gannett $65 Narrow Average 0.86

Tribune $35 Narrow Average 0.84

Dow Jones $38 Wide Average 0.90

The New York Times $22 Narrow Average 1.06

E.W. Scripps $52 Narrow Average 0.86

Data as of 03-22-07.

http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&Symbol=GCI http://quote.morningstar.com/Switch.html?ticker=GCI , http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&Symbol=TRB http://quote.morningstar.com/Switch.html?ticker=TRB , and http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&Symbol=MNI http://quote.morningstar.com/Switch.html?ticker=MNI collectively own online-recruiter CareerBuilder. CareerBuilder recently overtook rival http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&Symbol=MNST http://quote.morningstar.com/Switch.html?ticker=MNST in revenue, unique traffic, and job postings in North America. CareerBuilder is still in investment mode, so it hasn’t achieved the profitability that Monster enjoys. But online recruiting is a very scalable business; we expect CareerBuilder’s profitability to grow rapidly, adding to the bottom lines of Gannett, Tribune, and McClatchy. We also see great opportunity for CareerBuilder as it begins expansion into markets overseas.

Wide-moat http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&Symbol=DJ http://quote.morningstar.com/Switch.html?ticker=DJ remains one of our favorite media companies. Because of Dow Jones’ focus on unique, valuable business content, it is one of the few newspaper companiesthat can charge readers for access to its content online. As the demand for real-time business information continues to grow, we expect that Dow Jones will continue to build upon its online Wall Street Journal “circulation” of about 800,000. We remain impressed with Dow Jones’ efforts to reduce its reliance on its printed products. With the help of its Factiva acquisition, about 40% of revenue will come from non-newspaper sources, by our estimates.

http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&Symbol=NYT http://quote.morningstar.com/Switch.html?ticker=NYT is another newspaper company that can charge consumers for its content online. TimesSelect and new offering Times Reader won’t likely add a whole lot to the company’s revenue, but incremental costs should be minimal, allowing a healthy portion of the associated revenue to flow to the bottom line. The New York Times should also be virtually done building its new headquarters this year, freeing up a significant amount of cash that had been used for construction. We wouldn’t be surprised if the company used some of its freed-up cash to make Internet-related acquisitions unrelated to newspapers, similar to its purchases of About.com and Calorie-count.com. Assuming management doesn’t pay too much, any such acquisition could provide a nice boost for the company and increase the amount of its online revenue from 8% of total revenue in 2006.

Like The New York Times, http://quicktake.morningstar.com/stocknet/MorningstarAnalysis.aspx?Country=USA&Symbol=SSP http://quote.morningstar.com/Switch.html?ticker=SSP has invested in non-newspaper Internet properties. We expect that Scripps’ interactive-media segment, consisting of Shopzilla and uSwitch, will see about 30% revenue growth in 2007 as online-comparison shopping continues to gather steam. As a result, we expect the company’s interactive-media segment (which excludes the results of the online operations of its newspapers, TV stations, and cable networks) to account for about 13% of the Scripps’ total revenue this year, up from 11% last year.

If you’d like to track and analyze the stocks mentioned above, to create a watch list. Then simply click “continue,” name your watch list, and click “done.” (If this link does not work, please http://members.morningstar.com/prism/registrationFree.html?referid=A1151–registration is free–or sign in if you’re already a member, and try again.) This will allow you to save and monitor these holdings within our http://portfolio.morningstar.com/NewPort/Reg/AllView.aspx. And you can get Morningstar’s complete take and regular updates on these and more than 1,900 other stocks, as well as our complete list of 5-star stocks, by taking a https://members.morningstar.com/memberstpages/pm_stocks.html?referid=ONEWSTOANA.

Other Sector Outlook Articles

- http://news.morningstar.com/article/article.asp?id=188946
- http://news.morningstar.com/article/article.asp?id=189230
- http://news.morningstar.com/article/article.asp?id=189094
- http://news.morningstar.com/article/article.asp?id=189120
- http://news.morningstar.com/article/article.asp?id=189087
- http://news.morningstar.com/article/article.asp?id=188817
- http://news.morningstar.com/article/article.asp?id=188942
- http://news.morningstar.com/article/article.asp?id=188822
- http://news.morningstar.com/article/article.asp?id=188968
- http://news.morningstar.com/article/article.asp?id=189152

http://news.morningstar.com/article/article.asp?id=189385

16 May, 2008 | No comments

American heartland drives home the losses at Ford

Ford plunged to its worst loss last year with a $12.7 billion (6.45 billion) deficit and gave warning that this years outlook was grim, amid more restructuring and struggles in its key North American market.

The losses, which represented a $4,380 loss on each vehicle sold last year, were higher than analysts had expected. The worst performance came in its North American heartland, where the automotive sector lost $6.1 billion compared with a $1.5 billion loss in 2005.

The carmaker blamed adverse volumes and mix and incentives in its domestic market as it faced increased competition from Japanese producers and other rivals.

Ford does not expect to make a profit until 2009. Its full-year losses were exacerbated by a sharp downturn in the third quarter. In the past three months it lost $5.8 billion compared with a loss of $2.9 billion in the same period in 2005.

Alan Mulally, the chief executive brought in from Boeing last October, said: We know where we are. We are dealing with it and were on plan. Last years losses amounted to $1.50 a share compared with expectations on Wall Street of about $1.35. The group is pushing through cuts announced last year of 45,000 jobs and 16 factories in North America.

In Europe, where restructuring began several years ago, Ford fared better with a $469 million profit, up from a profit of $73 million in 2005. But the Premier Automotive Group, which includes the British-based Jaguar, Land Rover and Aston Martin, turned in a loss of $327 million, against a loss of $89 million in 2005.

Ford blamed warranty charges and unfavourable exchange rates. The carmaker is selling Aston Martin, but it is believed that it has had to cut the price and try to persuade potential buyers that savings can be made by splitting off the luxury brand from the Ford stable.

Mr Mulally appeared to back Jaguar amid recurrent speculation that it could also sell that brand. He has previously said that Jaguars progress was being monitored and nothing was certain. Ford also disclosed yesterday that it would pay executives bonuses for their work in the process of restructuring the business.

Mr Mulally said: It is part of our overall compensation plan to make sure we are paying competitive wages and benefits, but we have not made any final decisions yet.

16 May, 2008 | No comments

Victoria Summerley: Town Life

This has been a time of plagues and infestations in the Summerley household. But I wouldn’t go as far as saying they were of Biblical proportions; not only would this be a dreadful clichй, but we do not possess any cattle and are therefore not susceptible to what the book of Exodus describes as a “grievous murrain”.

Neither have I seen any sign of anyone “smiting my borders” with frogs. I’d rather like to see a frog in my borders but, despite the presence of the pond, which we built last year, I haven’t seen so much as a dollop of frogspawn.

However, the warm spell brought with it a cloud of midges beneath the cherry tree, the cold spell brought violent hailstorms, and we have also had what seems to be a population explosion of mice, closely followed by, and not entirely unrelated to, a plague of bluebottles.

For the past month, hardly an evening has gone past without the cat appearing in the living room with some small creature clamped between his teeth, its tail dangling elegantly from his jaws. This is the signal for a misguided person to leap up and “rescue” the mouse.

If you’ve ever seen a cat with a mouse, you’ll know that they go completely hyper, bouncing around the room in search of their prey like a demented furry pinball. (I’ve often wondered whether mice exude some sort of natural amphetamine that would account for this, but, sadly, I’ve never been able to bring myself to eat one in order to find out.)

While the cat is charging around, being lectured by the “rescuer” about animal rights, the mouse takes advantage of the commotion and slips away. Very often I’ll find a small, stiff, body on the lawn the next morning, but sometimes they die a grisly death, unseen and unmourned, beneath a kitchen cabinet or behind a skirting board. Which is where the flies come in. Dozens of them.

My son, who is allegedly studying AS-level biology, explained the life-cycle of the bluebottle to me. “You see, Mum, they lay their eggs on dead animals or rotting meat, and these eggs hatch out about two days later. The maggots feed on the decomposing flesh and about two weeks later you’ve got loads of flies.” Mmm, lovely, darling. Even the pesticide people agree that fly-spray is only a short-term solution, assuming that you want to use it in the first place. Eliminate the source and you’ll eliminate the problem, they say, airily, though how you eliminate the source if it’s behind a wall or under a floor is beyond me.

Very often the distinctive aroma of dead mouse will give the burial site away, but I couldn’t smell anything in our house; well, not deceased rodent anyway. The only evidence I had that a corpse might be present was the flies.

The most useful piece of advice I found while looking for information about getting rid of bluebottles was to vacuum up the colonies of flies as they appear - they tend to cluster near a window or a source of light. A cylinder vacuum cleaner with a long hose is ideal. Empty it outside immediately so they can buzz off: bluebottles are tough customers and may well crawl out of the bag if you put it in a bin.

While my son was confident about the source and life-cycle of the flies, opinion was divided over the invasion of mice. To me it seems clear that the habit of leaving crisp packets, sweet wrappers, bits of chocolate and half-eaten bowls of cereal in teenage bedrooms is likely to attract rodents. (It’s likely to attract parental ire as well, but that doesn’t seem to worry anyone.)

The children, however, retorted that I was to blame (according to them I am usually to blame for everything, from lost PE kit and lack of AS biology revision to global warming and the destruction of the rainforest) because I put out bird food. “Yeah, Mum,” they say, “all that stuff is far more likely to attract mice and rats. Look how many squirrels come and eat it - they’re really rats with fluffy tails.”

Anyway, as I write this, the mouse infestation and the bluebottle plague seem to have passed, leaving me wondering what to expect next. Locusts? Water turning to blood? Three days of darkness? Now that would be restful. Bring it on.

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