Sky’s the limit?
The long-running saga over the ownership of Sky (SKY) has taken a not wholly unexpected turn after Comcast threatened to gatecrash the Murdoch family get-together by offering north of £22bn for Sky. The bid, which outguns the offer that has been on the table for months from Rupert Murdoch’s 21st Century Fox, is an all-cash affair which came in 16 per cent above 21st Century Fox’s offer, but sent speculators into the stock on the hope that a bidding war would push the final value of any deal higher still. The offer puts pressure on 21st Century Fox and Disney, which have contrived a deal whereby 21st Century will buy the 61 per cent of Sky it does not own then sell its entertainment division, including Sky, to Disney for $66bn. Click here to read more.
Union man
Corbyn’s plan
The Brexit dividing line has finally become a little bit clearer. After months of prevarication, opposition leader Jeremy Corbyn this week laid out Labour’s line on Brexit, saying he would seek a new customs union agreement with the EU were he to become prime minister. This aligns his party with a small, but statistically significant, number of rebel Conservative MPs and would allow a combination of their votes in parliament to potentially defeat the government on Brexit-related issues. The move came in the wake of the cabinet meeting last week aimed at framing the government’s line on Brexit, which concluded with an agreement to pursue a “managed divergence” as part of a future trade deal with the EU.
Xi whizz
Premier plans
China’s governing party has made a dramatic change to rules created to stop a repeat of a Chairman Mao-style leadership situation. A clause restricting the rule of any president or vice-president of China to two terms of office was officially removed from the country’s constitution last weekend, opening up the prospect of president Xi Jinping extending his rule over the country beyond 2020 and well into the next decade.
PE surge
Back in vogue?
The past year has seen some notable stock market howlers by companies that were previously private equity owned before being spun out on to the public markets. The latest such example was AA (AA.), which is struggling under a hefty debt pile accumulated while in the hands of private equity investors. Before that Saga (SAGA), which emanated from the same Acromas private equity house, warned on profits in December. But despite such disappointments, private equity activity boomed last year, with Bain & Co reporting that private equity buying of public companies doubled to $180bn (£130.54bn) across 152 deals.
Mortgage boost
But economy “sluggish”
The signals from the UK economy remain frustratingly ambiguous. The latest mortgage lending data saw a boost of9.7 per cent in January to £21.9bn against the same month a year earlier. But the total lending figure from UK banks was the third lowest since September 2016 as business lending shrank by 1.4 per cent in an environment UK Finance, the body that represents the major banks, described as “sluggish”.There was further concern over spending on credit cards, which rose by 5.8 per cent, with consumers appearing to prefer spending on cards to taking out unsecured loans, which declined by 15 per cent.
Cap coming
Energy savings
The UK government has put the wheels in motion on legislation aimed at capping energy prices for UK consumers. Legislation began its journey through parliament this week, which will give energy regulator Ofgem new powers to cap tariffs, with the government claiming it could save many energy users around £100 a year. Ofgem will be given the power to enforce maximum tariffs through to 2020 initially, with the potential to extend the cap out to 2023.
Safestyle cracks
Another profit warning
Shares in PVCu replacement windows specialist Safestyle (SFE) cracked this week as another profit warning hit investor confidence. Since its last update in mid December, Safestyle has seen ‘continued deterioration’ in its market, which it pins on declining consumer confidence. This issue has been exacerbated by the entry of new competition into the market which has resulted in order intake falling below expectations, meaning expectations for the year to 31 December are now “materially below” market forecasts. The shares fell more than 20 per cent to 119p in reaction, which makes the sale of 1.4m shares at 160p in December by chief executive Steve Birmingham look well timed.
US durable goods orders have been volatile over the past 12 months but the dip into negative territory in January was steeper than expected. Most analysts had forecast a negative figure for this longer-term indicator but the slide to -3.7 was worse than expected (see chart).
It adds to a somewhat mixed set of data from the US economy, where inflation is returning to the mix, while job creation remains strong and consumer confidence is ticking upwards – fuelling expectations for a number of interest rate rises in the months to come, that’s something equity markets appear increasingly nervous about, especially with other indicators such as the latest Chicago Federal Reserve’s indicator of national economic activity being dragged down by slower factory activity in January.
