Philip O'Sullivan's Market Musings

Financial analysis from Dublin, Ireland

Market Musings 12/9/11

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Blogging has been light due to a combination of light newsflow, a ‘choke-point’ in terms of readings to do for my MBA and, most importantly, my having to go to Cork over the weekend to attend the wedding of some dear friends!

 

So, what has been grabbing my attention since Friday?

 

From a corporate perspective, this week is all about builders and consumer facing stocks in the UK, with results due from Next, Kingfisher, Dunelm, Barratt Developments and Galliford Try. For a more complete overview of the week ahead, click here. In Ireland, watch out for results from CPL Resources on Wednesday. CPL is Ireland’s biggest recruitment company, hence its comments on the state of the labour market here will be particularly instructive.

 

There was a woeful article in the weekend press which speculated that Easyjet “may” bid for Aer Lingus. There are a number of glaring errors with this argument. For starters, Easyjet’s biggest shareholder, Stelios Haji-Ioannou, has repeatedly called for the carrier to curb expansion and focus on growing cash generation to fuel dividends. With himself and connected parties controlling at least 37% of Easyjet, it would be hard (if not impossible, as a takeover would presumably require a 75% “special resolution” majority) to get sufficient support for a takeover of Aer Lingus. Leaving that aside, from a strategic perspective, what would Easyjet want with a transatlantic business, Ryanair’s home turf (it has no presence in Ireland) and a big Heathrow (it has no presence at LHR) operation?

 

We’re nearing the endgame for Greece. This will have negative short-term implications for Ireland, but as I’ve argued before, if the Irish government were to cut spending deeper, and faster, this would remove a lot of the challenges we face.

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Written by Philip O'Sullivan

September 12, 2011 at 6:42 am

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