Takeaway: Of course Greece isn’t out of the woods. We remain convinced that the only sustainable way forward is through debt reconstruction. It’s not off the table, but it’s not on it either. So, whilst this debate remains parked on a hostess trolley in Brussels, we’re going to ask a few questions to help take stock of the broader picture. Altogether, it looks like a continued rebound with that clichéd phase: “challenges ahead”. This is why we’re really focused on capital allocation as a key differentiator. And – as recent transactions show – many companies are too.
Takeaways: A deal at last for Greece! After marathon talks which lasted over 17 hours, an agreement was announced on Sunday night to keep the Greeks in the Euro. ‘Deal’ in this case being an agreement to enter talks on a new bailout linked to a range of new pre-conditions. This effectively leaves Greece borrowing another €86bn on a debt to GDP that’s already around 175% without an explicit promise of debt restructuring.
Takeaways: With an unexpectedly strong victory for the ‘No’ campaign in the Greek referendum we are sailing ever deeper into uncharted waters – and that brings a level of uncertainty that could rein-in the confidence shown by companies and investors alike in the first half of the year.
Takeaways: Efforts to limit direct exposure means Greece is increasingly morphing into a political, rather than a financial crisis; but that can quickly change if companies and markets freeze or the political crisis extends elsewhere. The ECB’s move today to extend QE asset eligibility was necessary in any case…and possibly pre-emptive.
Takeaways: With Greece on the edge, markets have maintained remarkable poise. Meanwhile, there’s a warning that UK interest rates might rise this summer. Another Maradona moment? Labour markets might be ‘fizzing’, but a rate rise this summer feels premature, with echoes of the ECB’s move in 2008. Continue reading
Takeways: In some areas of the market it might feel a bit, well 2006-7. The rise in M&A ‘mega deals’, for instance, which could drive overall deal values to record highs in 2015. However, this M&A cycle differs in one vital respect: financial discipline. It’s a somewhat notable trait given the highly tempting yields on offer from lenders. Indeed, arguably the imbalance between limited supply and veracious demand is the foundation for recent debt market volatility.
The next stage of recovery is adjusting to normality – and it’s often a bumpy ride. Watch for more volatility and growing pains – most obviously in emerging markets, hitting areas like luxury and capital goods suppliers. Slower emergers might keep a lid on commodity prices and inflation – but El Niño is back the great unknown in everyone’s 2015-6 equations.
Takeaways: Greece is taking this to the 11th hour, so we turn our attention to buying and lending. Global M&A is still going great guns despite the slowdown in Q1…or is that because of? Meanwhile, more data on shadow banking pushes it out into the light and further to the notice of regulators. But there’s also pressure to open up the market as it increasingly becomes a vital source of funding