Takeaway: The IMF’s warning about global debt levels comes at a time when it looks like investors can’t seem to get enough of corporate loans and bonds– even if yields dip below zero. But there are increasing signs that central banks might be calling time – at least on further QE – and may even tighten policy as the pendulum moves back to fiscal stimulus. Sluggish growth will require central banks to keep their foot on the pedal to some extent, but what happens if they decelerate? Are last night’s events a sign of things to come?
Three months on and BREXIT still doesn’t appear to mean much yet on the surface. But these are very early days and perhaps we’re looking at more of a drag than a blow to the UK economy following this summer’s developments? This week we’re thinking about how the M&A landscape is shaping up – via these early indications – and our latest thinking in real estate. In summary: initial uncertainties are fewer than expected, but we can’t count our chickens and BREXIT isn’t the only show in town.
One of the most significant challenges for business today is how and where to allocate capital to meet their digital ambitions. Companies are faced with a number of questions, the most pressing of which is whether to buy or build or seek another path – technological and behavioural change has changed the deal space too, including an increasing interest from private equity.
Our recent survey of 600 company executives shows that M&A remains the most popular route for companies, but that has its own challenges. History is littered with examples of a failed scatter gun approach and it’s clear that companies need to take a holistic view to deals. A smart digital future requires smart capital allocation.
Ostensibly it looks like we’ve returned to our desks picking up pretty much where we left off. Or have we? It was by no means as dramatic a summer as those of Eurozone crises and taper-tantrums past or even last year’s oil & China worries. But arguably the summer has been a pivotal period that has established the terms of debate for the autumn and beyond. This week we go back to school talking about eight of the biggest summer themes.
Sometimes you need time away to really see how much has changed. What’s really grabbing my attention now is the low growth, low inflation, low interest rate world in which we find ourselves. It’s partly a hangover from the global financial crisis; but it’s also a product of secular forces – i.e. it’s not going away any time soon – and the resulting low-yield environment is throwing up significant challenges.
When was the last quiet summer? Perhaps it was the same year as the last hot one? The pace of events might slacken in August –but let’s not bet on it. Still, it feels like a good time to take stock. So much is up in the air, but we’re starting to get a better idea not only of BREXIT’s initial impact but also the official reaction and implications for M&A.
In this blog, I want to pull all this together, pulling out five broad themes that are shaping the capital agenda. A BREXIT thread runs through this tapestry, but it’s not the only strand – and it’s not where we start.
UK profit warnings have hit their highest second quarter level since the financial crisis. Our analysis shows more companies warning – and more companies warning more than once. Why is this happening? More to the point, how can companies avoid profit warnings when the future is so becoming more unpredictable?