Say what you mean, and mean what you say. Investors are invariably disappointed in their ceaseless demands of US Federal Reserve chairmen.
This week's episode was a classic. First, Ben Bernanke suggested on Wednesday that the time was not right to withdraw "accommodative" monetary policy. Then he said the Fed committee could make a decision to reduce its $85bn-a-month quantitative easing programme at the "next few meetings" if the economic data warranted such a move.
The former remark was good for a 1% gain on the US stock market. The latter comment sent prices into reverse and contributed to the 7% slump in the Nikkei 225 index on Thursday. The fallout continued on Friday as the Japanese stock market fell sharply before recovering.
So which is it? Is the Fed getting ready to turn off the taps or was Bernanke teasing? Ambiguity will be always be a weapon in central bankers' arsenal but you had to look extremely hard (probably too hard) to conclude that the Fed's script had changed meaningfully. There is a world of difference between talking in theoretical terms about withdrawing the punch bowl and actually doing so. The strong suspicion here is that the US economic data would have to be excellent before the Fed moves.
Why? Well, investors' mini-flap illustrates what an uncertain gamble an exit from QE would be at this time. QE is designed to lift asset prices and thereby prod investors into taking more risk, which in turn is meant to encourage economic growth. But how do you tell when growth is sufficiently robust to withstand a withdrawal of monetary medicine?
There is no easy answer. If stock markets were to slump, say, 20% in the absence of QE the Fed might find itself back where it started in terms of stirring risk-taking behaviour and confidence. The temptation for Bernanke will surely be to err on the side of overkill when dishing out cheap money. In doing so, he would only be following the Fed form book, as established by Alan Greenspan.
So where do stock markets go from here? The general mood, at least in the City, is that a breather was overdue. A serious short-term fall in share prices looks unlikely. The long term is another matter. Stand-offs don't last forever and an entirely plausible plot is that investors conclude that the Fed's bowl is still spiced with vodka and push share prices much higher. After all, what else is there to buy these days?
That's when the danger of a bubble, and a damaging pop, would become real. It is probably not this year's stock market story, but it is a developing story. The eurozone, or some other crisis, could supply the pin. Actually, it's the old story of market rise and fall, as the W-shaped graph of the FTSE 100 index since 2000 illustrates. This time could be different, but probably won't be.
The line that jarred in Martin Gilbert's farewell statement after 27 years as chairman was the one about FirstGroup being "one of the world's great transport groups".
OK, it's true that a quarter of a century of deals and activity has made FirstGroup very big. When Gilbert climbed aboard there were a few buses in Dundee. Now FirstGroup has annual revenues of £7bn from road and rail, has a substantial presence in the US and carries 2.5m passengers a year.
It's just that great companies are also meant to be great investments. On that score, FirstGroup is almost back where it started as a public company. The share price on 16 June 1995, soon after flotation, was 141p. Now it's 128p, after peaking above 700p in 2007 – an exciting ride, but not terribly profitable for those who bought at float and held. There have been dividends, of course, but even that consolation is over for the time being. The dividend was cut to zero alongside this week's bumper 3-for-2 rights issue to raise £615m.
The mistake, as everybody now recognises, was the purchase of US group Laidlaw for $3.5bn (£2.3bn) in cash at the top of the market in 2007. Borrowings still stand at £1.9bn today – thus the cash call.
But, actually, the mistakes kept coming. Having failed to flip Laidlaw's Greyhound bus business, FirstGroup didn't tap shareholders when it had the chance. There were at least two opportunities. First, around 2008, when colder economic winds were blowing but the share price was still near 500p. And, second, in 2011, soon after long-serving chief executive Sir Moir Lockhead retired and was replaced by Tim O'Toole.
Instead, the struggle against debt turned into an obsession. Potential buyers of surplus assets saw a distressed seller and FirstGroup couldn't afford to invigorate its UK bus business.
The debacle over the west coast mainline franchise (FirstGroup won, and then didn't after Virgin successfully challenged the Department for Transport) was the final straw. The rights issue had to happen – but should have been launched earlier.
In time, a recapitalised FirstGroup may yet reward loyal shareholders. It operates critical assets, and gentler breezes can do wonders for fixed-cost businesses. As a potential recovery stock, it's one to watch.
And comebacks do happen. Gilbert is the proof. Wearing his other hat, he is chief executive of Aberdeen Asset Management. The survival of the fund manager was in doubt in 2002 but Aberdeen is now a FTSE 100 company with £200bn under management. If you caught the bottom of Aberdeen's share price, congratulations, you've made a 25-fold return. That's what great looks like.
Blimey, that's a lot of shares to sell. Ian Gordon of Investec has been totting up the disposals by directors and senior executives at Standard Chartered this week and comes to a tally of 1.4m shares.
His calculations are correct, and at £16-ish a pop, the nine individuals, led by chief executive Peter Sands, shared £22m between them.
The sudden rush is caused by the annual flowering of various deferred bonus schemes. Tax has to be paid, so the nine are not £22m richer. But they are quite a bit richer and the interesting point is that the overwhelming majority of the shares were sold outright for cash; the proportions retained were tiny.
Standard Chartered says its executives are all above the quotas the bank demands as a personal holding and thus alignment is intact. OK, but the lack of appetite for adding to those holdings is still notable. Gordon, incidentally, thinks Standard Chartered is a buy and thinks the bosses were selling at "distressed prices". Do they?
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