TheChek News Flow

Mario Draghi’s “big bazooka” could prove to be little more than a peashooter unless institutions such as pension funds and insurance companies can be persuaded to sell sovereign debt.

The European Central Bank president last week unveiled a much-heralded plan to buy €60bn a month of eurozone sovereign debt and other assets until September 2016.

John Greenwood, chief economist at Invesco, the fund manager, said this would raise the rate of eurozone “broad” money supply growth to 9.6 per cent a year — a similar level to that achieved by quantitative easing in the US — but only if sovereign bonds were bought from non-banks.

“Expansion of the ECB’s balance sheet is not an end in itself. What is needed is an increase in the balance sheet of the commercial banks. That is a crucial part of any QE programme,” said Mr Greenwood. He feared that if banks sell bonds to the ECB they will simply lodge the proceeds with their national central bank, an asset swap that would negate the effect of the ECB’s printing press.

Pension funds and insurers may be unwilling to sell “risk-free” government debt and buy higher-risk assets such as equities and corporate debt. A swath of regulations, such as Solvency II and FRS17, has pushed them in the opposite direction.

“The regulatory environment in Europe is pretty unfriendly to the second-round effects of this QE programme,” Mr Greenwood said.

While banks could sell bonds and use the proceeds to expand their lending operations, Yoram Lustig, head of UK multi-asset investments at Axa Investment Managers, pointed out that the banks took up just €130bn of the €317bn of cheap funding they were offered by the ECB late last year, suggesting there is little appetite to expand their balance sheets.

However, Andrew Balls, chief investment officer for global fixed income at Pimco, the world’s largest bond manager, said “if there are banks that are sitting on eurozone sovereign debt, we would hope that we get a rotation towards some greater lending”.

Mr Balls also believed that non-eurozone entities might be tempted to sell eurozone bonds as QE pushes yields lower, a process that would have the added advantage of weakening the euro. Mr Greenwood also saw some scope for fund managers to sell bonds.

The ECB’s move was broadly welcomed by fund managers. Threadneedle said it had raised its weighting to European equities in its multi-asset portfolios.

Tom Becket, chief investment officer at PSigma Investment Management, said Italian banks, some of which are trading at half their book value, could be a “great trading buy” if the ECB manages to stem the worst fears over Europe.

With net eurozone sovereign bond issuance running at €22bn a month, the QE programme “is large relative to supply”, added Mr Balls, suggesting it could have a significant impact on yields.

“For now we are happy with our positions, but we keep a very close eye on price,” he said.

Cover story: The second installment of Barrons 2015 Roundtable includes picks from Felix Zulauf (TLT, U.S. Dollar Index Future, Buy USD/SGD, GDX, RTH), Abby Joseph Cohen (CRI, FDX, DGX, QYI, Siemens, PANW), Brian Rogers (BA, GE, HES, L, MAT, VMC), and Scott Black (VIAB, MSCC, CUBI, ARCC). 

Tech Trader: Cautious on TWTR: Micro-bloggers core problem may be that users tweets dont ultimately hold much value for advertisers; the poor performance of the stock has prompted rumors of a takeover, possibly by GOOG. 

Trader: AMTDs chief strategist, J.J. Kinahan, says investors might hesitate and do some profit-taking ahead of the Federal Open Market Committee this week; Cautious on LH: Shares are up 20% since November following deal for Covance, but execution risk should be a concern for investors, and while not overpriced, shares are near historical highs; Cautious on URBN: Though its Anthropologie and Free People brands are thriving, retailer's namesake Urban Outfitters stores continue to struggle, though there is evidence efforts to stabilize them are working.

Features: 1) Positive on AMP: Following firms spin-off from AXP, chief James Cracchiolo has improved profitability by focusing on growing fee-based wealth and asset management businesses and placing less emphasis on life insurance and annuities, ashares could rise 15% if investors valued it like a money manager; 2) Positive on DAL, DFS, F, JPM, LRCX, MU: Though overall earnings growth in the market could slow down this year, these six companies could buck the trend; 3) Positive on ORCL: Tech giant is in the middle of a tough transition to the cloud, presenting risks but also opportunities to thrive, and shares could rise 20% or more if it succeeds. 

Small Caps: Positive on REMY: As a wholly independent operation, company is poised to take advantage of its market-leading positions in engine starters and alternators, while its spinoff from Fidelity National Financing has boosted the stocks liquidity; Profile: Richard Mashaal and Brian Gonick of Canadian hedge fund Senvest Partners only buy stocks they think can double in two or three years (picks: ANW, Fiat Chrysler, Bank of Cyprus, DMRC; pan: MCD). 

Follow Up: Positive on PEP: Companys resistance to splitting up under pressure from Trian Fund Management seems to have been well-founded, but investors are pleased with the election of Trian advisor William Johnson to the board; Cautious on LFL: Q4 results should show a return to profitability, but while earnings look poised to improve, turbulence ahead means other airline stocks are a better play. 

European Trader: Despite Germanys worry about quantitative easing, some of the countrys exports stand to gain (Positive on BMW, Daimler, Continental, Linde). 

Asian Trader: Beijings energy policies, created to help the country move away from coal, should start to give solar companies a boost, especially if oil prices remain low (Positive on China Singyes Solar, JKS; Cautious on JASO, TSL). 

Emerging Markets: Cautious on Gazprom, Petrobras: Oil companies are poorly run and mired in debt, but they are unlikely to default, creating an opportunity for fixed-income investors willing to ignore their governance issues.

Alexis Tsipras speaking at Friday's press conference.

SYRIZA leader Alexis Tsipras will aim to conclude an agreement with Greece’s international lenders by the summer if his party is able to form a government after Sunday’s elections.

In a televised news conference Friday, Tsipras sketched out his plans for government and revealed that he had no specific plans for meeting German Chancellor Angela Merkel if he becomes prime minister.

The SYRIZA chief suggested that his government would enter negotiations with Greece’s eurozone partners after being elected and would aim to wrap up talks on the way forward in the relationship between the two sides by July or August, when Greece has a series of debt obligations to meet.

Tsipras said that he is aiming to achieve a “sustainable, mutually acceptable solution for Greece and for Europe.” However, he suggested that he would negotiate with representatives of European Union institutions, rather than troika officials.

“Austerity is not enshrined in European treaties,” said Tsipras, adding that his government would recognize Greece’s “institutional obligations” toward the EU but not the “political commitments”» made by the outgoing government.

When asked where he would make his first official trip to if elected prime minister, Tsipras said it would be Cyprus. He added that he would not seek direct talks with Merkel.

“I do not recognize Mrs Merkel as being any different from the other leaders,” he said. “She is one of 28 so I will not rush to meet her.”

Greece’s inclusion in the European Central Bank’s bond-buying plan this year doesn’t just depend on its new government sticking to a bailout program. It also relies on some debt-market arithmetic.

When ECB President Mario Draghi presented his quantitative- easing program on Jan. 22 in Frankfurt, he offered Greece the prospect of eligibility as existing securities roll off in the middle of the year. Those redemptions, he said, would bring the Mediterranean nation back below the ECB’s cap at 33 percent of an issuer’s debt, which the central bank imposed as Draghi presented initial guidelines.

Even after debt matures in July and August, the institution’s share of Greek bonds won’t drop below 33 percent for the whole of 2015, assuming no new securities are issued, according to calculations based on data compiled by Bloomberg.

It takes the inclusion of treasury bills to bring the ECB’s holdings below the cap. It currently owns just under 33 percent of the entire Greek debt market, and that would fall further, creating room for QE purchases, once the 2015 bonds owned by the ECB mature. That calculation is based on the supply of bills, or short-term money-market securities, remaining constant.

The ECB has yet to say precisely what will be included in its calculations on the allowance for its purchases and an ECB spokesman declined to comment on the calculations.

The ECB and euro-area central banks currently own about 27 billion euros ($30.4 billion) of Greek bonds, according to data compiled by Bloomberg, comprising 40 percent of the total outstanding market of about 67.5 billion euros.

General election

At the end of this year, by which time 6.6 billion euros of bonds held by the ECB and in euro-area central banks’ investment portfolios under the Securities Markets Program are due to have been repaid, it would own 20.4 billion euros out of a total 60.5 billion euros. That equates to about 34 percent, still exceeding the limit set by Draghi. If the stock of bills remain the same and are included in the calculation, the ECB’s holdings would drop to 30 percent by the end of July and 27 percent by the end of the year.

Greek voters go to the polls on Jan. 25 in a general election that may shift power from Prime Minister Antonis Samaras to his anti-austerity opponent. Alexis Tsipras, who leads the opposition Syriza group, has vowed to abandon the budget constraints that underpin the ECB’s support, while keeping Greece in the currency union. Both Syriza and Samaras’s New Democracy party welcomed the QE decision.

Within limits

Greece’s three-year note yield was at 10.08 percent at the 5 p.m. London close on Friday. It was issued via banks in July at an average yield of 3.5 percent. The 10-year yield was at 8.41 percent.

“There are obviously some conditions before we can buy Greek bonds,” Draghi said Jan. 22 in Frankfurt. “There is a waiver that has to remain in place, has to be a program. And then there is this 33 percent issuer limit, which means that, if all the other conditions are in place, we could buy bonds in, I believe, July, because by then there will be some large redemptions of SMP bonds and therefore we would be within the limit.”

The ECB will buy 60 billion euros of public and private securities a month, starting in March, Draghi said, adding that the central bank will buy bonds due between two- and 30-years. About 45 billion euros probably would be sovereign debt, according to a central bank official.

ECB buying will be carried out in proportion to each euro- area country’s contribution to the central bank’s capital, Draghi said. Adjusted for non-euro-region central banks, that works out as a 2.9 percent share for Greece, according to calculations based on data on the ECB’s website, equating to a pace of about 1.3 billion euros a month, if all other conditions are met.

Private equity giant TPG Capital seriously considered buying Herbalife last year — as part of an ongoing interest in the multi-level marketing industry, The Post has learned.

“They took a long look at Herbalife” one year ago, a source with direct knowledge of the situation said.

TPG also considered buying Nu Skin, the source said.

It is not known why TPG’s interest in Herbalife and Nu Skin ended without any investment.

Both companies have issues with regulators.

Presently, TPG is reportedly looking at acquiring Avon — a third multi-level marketer.

A Wells Fargo analyst Friday was skeptical of the prospect — and said as much in a report to clients — sending Avon shares down 7.9 percent, to $7.98.

A day earlier, a report concerning talks between TPG and Avon sent shares up 15 percent.

If TPG does not buy Avon, it “might take a new look” at Herbalife with its stock falling in half over the last 12 months, the source said.

Avon is trading at a 7.65 times EBITDA multiple, and the arguably more challenged Herbalife at six times the 2015 EBITDA projections of Barclays analyst Meredith Adler.

While it is not known why the TPG-Herbalife effort ended a year ago, Sen. Ed Markey (D-Mass.) on Jan. 23, 2014, called for an investigation into the maker of protein shakes. Soon thereafter, its shares began a descent that has cut its value by more than 50 percent.

In early February 2013 Herbalife borrowed money to buy $1.5 billion of its shares at $65.

Three weeks later, on March 12, the Federal Trade Commission announced a probe of the company — followed by reports of a Justice Dept. investigation in April.

State attorneys general and the Securities and Exchange Commission are looking into the Los Angeles company as well.

Herbalife has operated under a cloud for the past 25 months, following accusations by activist investor Bill Ackman that it is a pyramid scheme.

The accusations, which the company denies, sparked the probes.

Modal Trigger

For the past two quarters, Herbalife missed Street profit forecasts, and its earnings and cash flow have declined.

Plus, Herbalife needs to refinance $875 million of debt by March 2016 and recently said it has been unsuccessful in doing that.

TPG, in the offering memorandum for the $10 billion private equity fund it is presently raising, describes what it looks for in consumer companies.

We “invest behind unique brands, products and services, defensible and specialized distribution models.”

“We have focused our sourcing on businesses that skew either to the higher-end or lower-end consumer, consistent with our thematic focus on differentiation in an increasingly crowded retail landscape.”

TPG and Herbalife declined comment.

A billionaires’ brawl in the Bahamas has become a high-dollar court battle.

New York hedge-fund tycoon Louis Bacon has slapped Canadian fashion magnate Peter Nygard with a $50 million defamation suit, charging that Nygard has orchestrated a smear campaign that has falsely accused Bacon of being a racist, drug-trafficker and murderer.

According to Bacon, Nygard has been the next-door neighbor from hell on the exclusive beach strip they share in the Clifton Bay area of the Bahamas, spreading vicious gossip about him online and in local newspapers.

The decade-long battle started as a property-line dispute between Bacon and Nygard, who has an adjoining estate in the luxurious Lyford Cay community.

In one instance, Bacon accuses Nygard of doctoring an October 2011 CBS News report about the arrest of Wall Street titan Rajat Gupta for insider trading. The doctored video superimposed Bacon’s name and face over Gupta’s, falsely alleging that Bacon was at the center of a “billion-dollar scam,” according to the suit.

Elsewhere, the suit cites a flurry of speculation in local Bahamian media after Bacon’s house manager, Dan Tuckfield, died in the billionaire’s pool in May 2010. While official reports cited a heart attack, Nygard used local media to spread rumors about a murder and cover-up by Bacon, the suit claims.

“Louis Bacon filed this lawsuit to hold Peter Nygard and his companies responsible for their unlawful and reprehensible smear campaign,” Bacon’s attorney, Orin Snyder, said in a statement. “We look forward to our day in court.”

Nygard’s representatives denied Bacon’s allegations, calling them a move to distract attention from Bacon’s own agenda.

That includes, according to Nygard, a high-level conspiracy by Bacon to “unseat the ruling political party in the Bahamas” — all for the purpose of installing cronies in local government to block the reconstruction of Nygard’s estate after it was destroyed in a “suspicious fire” in 2009.

“Mr. Bacon has falsely and maliciously accused Mr. Nygard and [Bahamas] Prime Minister Perry Christie of government corruption,” according to Nygard reps. “In fact, Mr. Bacon has falsified evidence of corruption.”

Bacon’s suit, which was unsealed in New York state court late Thursday, charges that Nygard’s smear campaign has “continued to this day.” Last July, the suit charges, Nygard organized a march in Nassau, with demonstrators carrying placards that read “Louis KKK Bacon” and “Moore Capital Management,” the hedge fund Bacon owns.

In a statement, Nygard said some of Bacon’s ancestors were members of the Ku Klux Klan and that in a speech last year, Bacon made “a galling reference to the racist novel ‘Gone with the Wind” as his ‘holy book’ and guide.”

With Oil Prices at a Six-Year Low, Here Are the Options for Investors—and the Risks

As oil prices continue to sink on concerns about weak global economic growth, investors might be tempted to pick up some energy stocks on the cheap. Dan Strumpf joins the News Hub. Photo: Getty.

The sharp fall in oil prices has wreaked havoc on shares of energy companies, leaving investors to decide whether now is the time to go bargain hunting.

U.S. crude prices have fallen by more than half since June, trading at a six-year low of around $45 a barrel. For motorists filling up their tanks with sub-$2 gasoline, that has been a cause for celebration. But for investors in the energy sector, it has been a calamity.

The S&P 500 Energy index, comprising the industry’s largest companies, lost more than a fifth of its value over the six months through Thursday, the biggest decline of any of the 10 major sectors, according to FactSet. The broader S&P 500, by contrast, rose 4%.

The pain has been worse for shares of smaller producers, many of which took on loads of debt to finance new drilling. A barometer of small energy companies, the S&P SmallCap 600 Energy index, has swooned 47% in the past six months.

Experts warn that the wild swings in energy stocks could continue for some time. While blue-chip names like Exxon Mobil have offered energy investors some insulation from volatile oil prices, producers and service companies are more vulnerable to the tumult—but have more to gain should oil prices stage a rebound.

Investors essentially have two ways to play the energy market: for stability and income, assuming the oil price stays at current levels or even dips more, and for growth, assuming a price rebound will come sooner rather than later.

Here’s what you need to know.

Income and Stability

Investors thinking about getting into the sector should have a stomach for volatility and an eye for the long run.

Experts agree that oil prices will rise out of their doldrums eventually, but how long until a rebound takes place is a matter of fierce debate. This month, analysts at Bank of America said they expect U.S. oil prices to fall to $32 a barrel by the end of March before climbing to $57 by the end of the year.

“You can’t look at the sector and think you’re going to be lucky enough to time the bottom,” says Russ Koesterich, chief investment strategist at BlackRock , which manages $4.65 trillion. “You have to be thinking about it for the longer term, realizing you may see the stocks down 10% or 15% before they bottom.”

The upheaval has sent many pros seeking shelter in integrated oil companies—blue-chip energy firms that control the wells that draw crude from the ground and the refineries that turn it into fuel. They owe their stability to their diverse business mix and rock-solid balance sheets.

Oil production is likely to keep growing, despite the decline in prices, thanks to advances such as hydraulic fracturing, or fracking. Earlier this month, the International Energy Agency said it expects nearly one million barrels a day of extra oil to be pumped around the world in 2015. Global economic growth, meanwhile, remains sluggish, damping growth in demand.

Shares of Exxon Mobil are down just 10% in the past six months. Fellow Dow Jones Industrial Average component Chevron is off 18%—no picnic, but better than many rivals.

“They are less of a pure play on oil,” Mr. Koesterich says. “Relative to the rest of the sector, the correlation between the integrated [companies] and the oil price is much less.”

Steady dividends are an added benefit. The oil industry has seen downturns in the past, but neither Exxon nor Chevron, for example, has cut its dividend in decades. In a cash pinch, both would have plenty of room to curb share buybacks first, says Lysle Brinker, director of equity research at consultancy IHS Energy.

The dividend is “the only reason, for some investors, why they own these stocks,” Mr. Brinker says.

Investors with an appetite for energy stocks, but not for stock-picking, have plenty of options among exchange-traded funds and actively managed mutual funds.

The biggest energy-focused ETF is the $11 billion Energy Select Sector SPDR Fund, which tracks energy companies in the S&P 500. The fund charges annual fees of 0.16%, or $16 per $10,000 invested.

Among mutual funds, the $10.1 billion Vanguard Energy Fund has weathered the downturn in oil prices better than its competitors, according to investment researcher Morningstar.

It has lost 25% in the past six months, compared with a 29% drop among all energy funds. The fund charges annual fees of 0.38%.

The Vanguard fund’s relatively heavy tilt toward integrated energy companies and its lighter weighting of more beaten-down corners of the sector has helped its performance, Morningstar analyst Kevin McDevitt says.

“You’re getting the commodity exposure, you’re getting the energy exposure, but you’re not getting all the volatility that comes with it,” he says.

Another option: the $3.6 billion T. Rowe Price New Era Fund, which invests in the energy industry as well as miners and other resource producers. It weathered the crude downturn by boosting its holdings of integrated oil companies beginning last summer, Mr. McDevitt says.

Over the past six months, the fund has lost 19%, compared with a 22% slide for the broader category of natural-resources funds. It charges an annual fee of 0.66%.

Master Limited Partnerships

Another popular energy bet for income-hungry investors has been master limited partnerships, the pipeline and storage firms that earn their keep transporting and storing oil and natural gas.

MLPs pay most of their earnings to shareholders, a draw for income-starved buyers. And since they focus on storing and moving products, MLPs are seen as more insulated from turbulent prices.

The Alerian MLP index, a barometer of the industry, yields 6.16%, compared with less than 2% on 10-year government debt. But the index has lost 14% of its value over the past six months, making MLPs far from immune to oil’s tumble.

“A lot of people have gone out and said [MLPs] are uncorrelated to oil prices, but that’s simply not true,” says Richard Bernstein, head of the $3.4 billion firm Richard Bernstein Advisors in New York.

As long as U.S. energy demand holds up, oil will continue to flow through the pipes and MLPs will remain a good investment, says Simon Lack, founder of investment-advisory SL Advisors in Westfield, N.J. Indeed, fuel demand is on the rise over the past year, according to the Energy Information Administration.

“The biggest fear for MLP investors is demand destruction, and we’re in the complete antithesis of that,” Mr. Lack says. “If anything, lower energy prices are going to result in more demand, not less.”

But MLPs could see more pain if their oil-company customers start demanding lower prices, Mr. Bernstein says.

Investors have an array of options when it comes to MLP funds, including the $9.1 billion Alerian MLP ETF. Another popular option: the $5.6 billion JPMorgan Alerian MLP Index exchange-traded note. Both charge annual fees of 0.85%.

Investing for a Rebound

If giant oil companies and MLPs are partly insulated from oil’s tumble, they also are less likely to climb as quickly should crude stage a big rebound, experts say.

With U.S. output still rising and the global economy in low gear, that rally still could be a long way off.

But that doesn’t mean prices will stay under $50 forever. When and if they rebound, exploration-and-production, or E&P, companies will likely be among the first to benefit.

“Nobody is making money at the $45-a-barrel level,” says Norman MacDonald, portfolio manager of the $991 million Invesco Energy Fund.

But that means supply has to decline and prices will rebound eventually. “It’s a very self-correcting mechanism,” he says.

The cost of producing oil varies widely from place to place, even in North America, where wells are newer and production costs typically higher. Among Mr. MacDonald’s biggest holdings are Devon Energy , Canadian Natural Resources and Ultra Petroleum . All are producers concentrated in North America but with relatively lower costs of production.

“If oil stays at $55, $60 a barrel, they will survive,” he says.

John Dowd, who runs the $2 billion Fidelity Select Energy Portfolio, says he is paying closer attention to the quality of the underlying company assets when deciding when to buy, instead of focusing on traditional valuation metrics such as price/earnings ratios—in large part because both prices and earnings are in such upheaval, he says.

“You want to buy an energy stock when the outlook is dark and dreary, and right now it’s pouring,” he says.

One temptation investors should avoid, experts say, is betting on the price of oil directly, which can be done via oil futures contracts or ETFs that invest in them, such as the $1.4 billion United States Oil Fund, which charges annual expenses of 0.76%.

The concern: Oil-futures contracts expire monthly, requiring investors to roll into the subsequent month’s contract on a regular basis. This process can take a big bite out of returns when the longer-term contract is more expensive than the expiring contract, as is the case now.

At current prices, that penalty amounts to a 12% erosion of annual returns, according to John Gabriel, a strategist at Morningstar.

“For an individual investor, I would never really recommend getting involved with the commodity itself, because it’s kind of the Wild West,” says David Kelly, chief global strategist at J.P. Morgan Asset Management.

Playing the Field

An E&P-heavy bet can be played with the $1.4 billion SPDR S&P Oil & Gas Exploration & Production ETF, which charges an annual fee of 0.35%. Another option is the $445 million iShares U.S. Oil & Gas Exploration & Production ETF, which levies a 0.43% annual charge.

When oil producers are feeling the pinch of cheaper crude, one of the first things they do is cut their spending. That translates to lean times for oil-field service providers such as Schlumberger , Baker Hughes and Halliburton —the firms that lease the drills, blast open the wells and service the equipment that makes the oil flow.

The S&P 500 Oil & Gas Equipment & Services index has plunged 32% over the past six months. Analysts at Barclays say capital expenditures by energy companies are set to fall 9% this year, the first spending drop in six years.

But like exploration-and-production firms, service companies stand to gain from a rally in oil.

“A more aggressive investor that thinks there’s going to be a rebound would probably go with the service providers and the equipment providers, because those guys have been hit the hardest but stand to rebound the most,” Morningstar’s Mr. Gabriel says.

Mark Dawson, chief investment officer at Seattle-based Rainier Investment Management, says he cut his holdings of energy stocks as they rose and fell last year. Today, the percentage of investments the $6.7 billion firm allocates to energy is in the mid- to low-single digits, he says.

But one stock the firm has held on to is Schlumberger, because of the service giant’s global footprint and strong assets. “Any stabilization in the energy market, this would be at the top of the list to either add to or build back up,” he says.

Fund investors can make a concentrated bet on oil services with the $1 billion Market Vectors Oil Services ETF, which charges an annual fee of 0.35%.

QE and equities: easy come, easy go

Buying European equities may make sense, but they are hardly good value

Woohoo! We’re off to the races. QE is supposed to be good for equities — as central banks buy bonds, money moves elsewhere and up go share prices. And so on Thursday, when Mario Draghi got out his €60bn per month cheque book, up went the Euro Stoxx 50 (eurozone blue-chips) by 2.3 per cent. That was followed by another 1 per cent on Friday. The index is up over 7.5 per cent in 2015 — almost 3 times last year’s return. That’s no surprise — the US, UK and Japanese indices all did well in the months after QE announcements.

Hold on though. European stocks do not look particularity cheap. QE may drive up share prices but the US version (and anticipation of the ECB’s generosity) has already helped eurozone equities. The Euro Stoxx 50 has a price to forward earnings ratio of 17, well above its long-run average of 14. The index, like the S&P 500, passed its 10 year average p/e in 2013.

Still if you must join Mr Draghi’s bandwagon, it pays to be selective. According to UBS, cyclical sectors such as mining, autos and chemicals consistently outperformed the national benchmark indices in the six months after QE announcements. Construction materials and mining stocks did the best, beating the market by 10 per cent on average (although just now there are reasons to be wary of the miners). Defensive sectors such as transport, utilities and food products consistently underperformed. Whatever you choose, though, bear in mind that valuations already look stretched. Keep the Dom Pérignon in the bucket for now.

Puig, the Spanish fashion and fragrance business, has announced the acquisition of Penhaligon's and L’Artisan Parfumeur from Fox Paine & Company with effect as of 23 January 2015.

Penhaligon’s is one of the most prestigious British fragrance houses with its own retail network and a global presence.

L;Artisan Parfumeur operates retail boutiques in France and has a global presence.

Citing people with knowledge of the situation, Spanish daily La Vanguardia said Puig was thought to have paid EUR 100m to acquire both companies.

Source La Vanguardia