Craig Erlam, Senior Market Analyst at OANDA talks to Matt Brown about M&A.
SSE released some disappointing numbers, and are looking to merge. This feels like to Matt that these type of companies are needing to team up in order to get value. This is due to the government price cap.
Matt warns that we might see some more M&A in the next few years.
There is so much demand on boards to deliver results for shareholders currently. We are certainly seeing more M&A and share buy backs as a means of achieving. “When debt is so cheap who can blame them?” Craig asks.
As Craig then points out, this wont help the general economy, it will not not help productivity growth nor produce high quality jobs, if that’s where the money is being spent. This is just a short cut route to an end goal.
The potential SEE merger is an example that government price caps is not an easy solution for the UK government, and this a clear example of the difficulties. When the big 6 are becoming 5 there is a problem for the government. This is extent the companies are having to go to to continue to be profitable.
In other news, we were spoilt last week with amount of macro data. So on the back of that huge list of events last week, the markets are quiet at the moment.
There are a lot of stories happening in the press, but none of them are very market moving. So from a market perspective, we are looking at a more domestic stories with the likes of Snapchat.
Craig and Matt are asking whether M&S are another company in need of a merger and acquisitions.
As the UK retail has been struggling lately, as online retailers are “killing it”.
However, with the festive period coming up. we may see a spike high street shopping. M&S have had a long had problem with their clothing range although their food is strong.
As Craig puts it “It seems the M&S board have bee putting out fires for last few years, and just as they start to see a light at the end of the tunnel, its not a light, it’s just another fire!”
Also discussed in this segment is a GBPUSD & EURGBP outlook. You can see Craig discuss the pound in more detail on our website.
Today’s core number today is 1 year. This is the length of time since the US presidential election, where of course, Donald Trump was elected.
Craig believes if they were to have the election again, he would still win. He came with a lot of promises. People will be thinking that is trying to solve issues that he got elected on, even though process may be slower than he would have liked.