Morning Mumble: Severn Trent (SVT), over-egg-ski (Russia) & Dixons Carphone (DC.) + Sweetener (TATE).

Good morning, its been a manic week with the market being very demanding on all fronts. 

With SVT's average pricing suggesting it's the lowest cost provider of water in the UK it's no wonder an offer is on its way for 2015. SVT's higher net debt weakened SVT's position of demanding a premium at various price tags up to 2530 (circa 2350 being the money) that have been suggested. In contrast the 14% profit margin will be appealing in light of the risks now being subscribed to the emerging markets. 

More significance should be placed upon SVT's CAPEX and costs with supplier margins under pressure (P+ve for SVT) and that the area of supply is more favourable in capex than Thames Water (higher costs etc..). This is since Liz Garfield's arrival from BT (will need to double check), but a SVT's area of supply shows the population is growing with more resilience economically than other parts of the country (agricultural bias). 

There's area for improvement in terms of SVT's bad debts for all water companies, whom appear to have the collection ability of the lottery commission. SVT's bad debt is running circa 2.2% of customers, compared to Thames Water whose problem caused an application to increase the bad debt levy in 2013. What more does a consortium of investors want? Over to Canada. 

The BRIC forecasts are being amended in light of the massive changes in oil impacting all, with positive implications for China and India although Brazil and Russia being left out in the cold (add Venezuela on to that list as well). 

Russia have kindly had another kick from America FT (further sanctions). One hopes that Russia doesn't knowingly find themselves in a corner. Russia is not one to tolerate being placed in the corner and if history is an indicator of the future will lead to an escalation. Had America waited the psychology of a dire economy, foreign exchange and capital flight would have pressured the Russian administration (read as Putin) to yield without too much egg on his face. As it stands the US sanctions have given a perfect headwind for propaganda. Over to Putin for the next shot, one has to wonder whether he's asked someone to turn the taps off, as American sanctions against Russia appear to be just a tad "over-egg-ski."

Dixons Carphone (DC.)  have come out with the obvious interim results and benefaction from Phones 4 U (P4U) , with expansion aided obviously by the acquisition of P4U stores. Any of the long only contingent that did not have this in their portfolio should be asking why. A sure fire long, but there's a risk growing as a result of BT.A firing the first shot. 

One hopes DC.'s model is able to survive not only the quad play offerings (BT.A) but those of the networks putting pressure on the market. DC. have a unique position where the networks (and change) may put significant pressure on the DC. With events unfolding with BT.A be prepared for some change in the Mobile Virtual Network Operators, something EE has a monopoly on. 

All networks are intent or gaining customers directly dropping the middle man (improved margins), but with the main alternative being DC. they have plenty of dry powder in the event of strong-arming. If all networks decide to go direct only or limited offerings outside of their own subsidaries...EE were known to be considering this in July (2014), but under BT.A with their brand power, it would be wise to price in some risks to DC. .

Commodities unsurprisingly dropped again overnight with the speculation still categorically absent. The knife-catchers need more enticement, what say you $2.75/lb to bring out the post Christmas temptation across the board but using copper as the indicator. Gold had a lovely rally with the rouble yesterday only for the market to realise the cost of gold and uncertainties in Russia making any speculation short-lived. 

Limited time for TATE (Tate & Lyle) but on reading could the tide be turning? Expect a change in tone from the sell side, but its not something to be rushing in to buy in the coming market. Perhaps one for later if I have time. 

Atb Fraser