UK Rallies Behind Carney’s Decision
Theresa May has voiced her support of Mark Carney as the governor of the Bank of England chose to extend his role to 2019.
Editor’s Remarks: The week before the BoE will announce its next steps regarding its stimulus and rate decision, intense debate surfaced around Mark Carney’s future with the BoE. Mark Carney has been somewhat vocal about his opinions regarding the UK economy after the Brexit referendum, which has annoyed some pro-Brexit MPs. However, it seems the majority of British support the governor after encouraging numbers from the UK economy and seemingly strong leadership. Carney has informed parliament that his decision to stay until Britain has left the EU in 2019 was a personal one rather than political. However the timing appears to be too close not to be based on the politics. If England hopes to survive the Brexit storm, they will need strong consistent leadership for its investors and financial sector, and it looks like Mark Carney may be exactly that.
What to watch: GBP/USD, EUR/GBP, BoE Monetary Policy Meeting, UK Inflation
GE Joins Baker Hughes
General Electric looks set to combine its petroleum business with Baker Hughes to create a giant with combined sales of approximately $32bn.
Editor’s Remarks: The oilfield services industry got the next big consolidation that it was looking for with the downturn in oil prices after the Baker Hughes-Halliburton deal was stopped by regulators. Halliburton looks set to fall from second to third if the deal goes through as 11th ranked GE had been acquiring smaller firms to beef up its oilfield services offerings over the past year. GE has watched that division fall by around 25% in just the past quarter. As giants from pipeline manufacturing to drilling rigs continue to combine, the length of the oil downturn is now reaching the critical point where companies must consolidate to keep up, and the overall number of deals should begin to heat up.
What to watch: GE, Baker Hughes, Schlumberger, Halliburton, Brent Crude, WTI
AUM Of Top 500 Falls
For the first time in 5 years, the total funds under management by the top 500 asset managers have fallen by approximately $1.4tn.
Editor’s Remarks: Investment firms have suffered one of their worst years. This was primarily due to sovereign funds of oil-reliant nations having to pull assets to assist with handling the oil crisis. Other independent funds becoming increasingly disenchanted with active asset managers. Sovereign funds have accounted for half of that value, but most worryingly, this is significantly higher than that of 2008 as wealth funds begin to create internal branches that handle their own investments.
What to watch: Fund Manager’s AUM, Brent Crude, WTI, Sovereign Wealth Funds
CenturyLink Buys Level 3
Two US telecommunications giants, CenturyLink and Level 3, have announced a merger valued at approximately $25bn.
Editor’s Remarks: CenturyLink, the third largest telecommunications company in America, will buy Level 3, the third largest fiber-optic internet provider in America. The deal will give CenturyLink, primarily a phone company, entry into the massive fiber-optic network of Level 3 and therefore a stronger foothold in the Internet access industry. The merger comes right after AT&T agreed to acquire Time Warner, a deal that would allow AT&T to directly compete with companies combining telecommunications with content creation, such as Netflix and Amazon. The entire industry of telecommunications is seeing a revolution and giants are hoping to respond quickly, before their dated systems begin to be replaced by innovation in mobile and internet video streaming. It will be interesting to see how regulators view the industry each company is trying to compete in but no doubt the overall level of competition is surely rising.
What to watch: CenturyLink, Level 3, AT&T, Time Warner, Verizon, Netflix, Amazon
Another Activist Target Bought
TeamHealth, a US hospital staffing company, was agree to be bought by Blackstone for around $6.1bn.
Editor’s Remarks: Activists investors appear to be at the heart of many deals this year. TeamHealth was the target of several activist firms, including Jana Partners, after much consolidation within the industry. Obamacare has pushed up costs for physician services and forced major physician serivce company, Amsurg, to attempt to buy TeamHealth for $5bn previously. Amsurg instead purchased Envision Healthcare, and TeamHealth had since accumulated more debt while it also tried to acquire competitors. Obamacare will be under heavy scrutiny after the coming election and will be a major test for the prospective candidate. Regardless, health care should continue to see further consolidation after the election as uncertainty will begin to clear.
What to watch: TeamHealth, Blackstone, Amsurg, US Elections, Obamacare