nflation is \u201clikely to exceed 3% for a temporary period\u201d, says the Bank of England\u2019s monetary policy committee, which would prefer the emphasis to be put on the word \u201ctemporary\u201d. The rate-setters, or most of them, are sticking to their script: once the inevitable strong period for growth and inflation is out of the way, both readings will fall back, so there\u2019s no need to be alarmed.<\/span><\/p>\nThe benign view has a lot going for it, of course. Inflation plunged last year during lockdowns and the reopening phase was bound to produce a spike of some size. May\u2019s inflation reading was 2.1%, a relative surge from just 0.7% in March. But if the peak proves to be 3%-ish, the \u201ctransitory\u201d narrative \u2013 central bankers\u2019 favourite word these days \u2013 would still be intact.<\/p>\n<\/p>\n
There is a point, though, at which being relaxed about short-term inflationary pressures starts to look like complacency. In the guts of the MPC minutes, it was possible to spot a few worries about how a temporary spike could turn into something more persistent. \u201cOn one view, forthcoming data had the potential to provide an early indication of sustained economy-wide inflationary pressures,\u201d said one passage. But that was about it.<\/p>\n
Only a month ago the Bank was expecting inflation to peak at 2.5% and now it is talking about 3%. Meanwhile, oil is as high as $75 a barrel and inflation in the US stands at 5% as the administration\u2019s big spending programme gets going. You\u2019d expect Threadneedle Street to be slightly more worried by now that its relaxed view could be wrong.<\/p>\n
Private equity raiders should be pushed a lot harder<\/h2>\n
When the board of St Modwen Properties last month recommended that shareholders accept private equity firm Blackstone\u2019s bid at 542p a share, or \u00a31.24bn, it said it had reached its decision after receiving \u201cmultiple proposals\u201d and had \u201cnegotiated over an approximately 10-week period\u201d. Give us a round of applause, please, the directors seemed to be saying, for being tough negotiators.<\/p>\n
What they got instead was a raspberry from two of their major shareholders, JO Hambro and Janus Henderson, who went public with their view that 542p wasn\u2019t enough. The pressure from the revolting shareholders has now succeeded in prompting Blackstone to up its offer to 560p.<\/p>\n
Examples of bidders bidding against themselves when they already have a board recommendation are extremely rare. The increase in the bid \u2013 3.3% \u2013 may not sound much but it\u2019s still a meaningful slug to have left on the table in the original negotiation.<\/p>\n
Yes, if the deal now happens, the owner of retail parks and warehouses, with a sideline in housebuilding, will change hands at a premium of 21% to the estimated value of its assets, rather better than the discount to asset value at which the shares have traditionally traded. On other hand, warehouses are hot items in today\u2019s property sector and you only get to sell the company once. St Modwen\u2019s board ought to be embarrassed.<\/p>\n
Let us hope other boards (looking at you Morrisons) are watching. The private equity raiders, currently flush with enormous pots of capital, can often be pushed further than you might expect.<\/p>\n
EE\u2019s bad call on roaming charges<\/h2>\n
If UK travellers to the European Union are prepared to pay through the nose for Covid testing kits, they\u2019ll probably swallow \u00a32 a day in roaming charges to use their mobile phones. That, of course, was definitely not EE\u2019s explanation for reintroducing a daily charge for new customers to use their data, voice or text allowances in the EU. But the official version was no less cheeky.<\/p>\n
The move, apparently, \u201cwill support investment into our UK based customer service and leading UK network.\u201d Come on, BT, owner of EE, has just had an enormous handout from the chancellor in the form of \u201csuper deductions\u201d on corporation tax to encourage infrastructure spending in the UK. The timing looks terrible.<\/p>\n
A fixed daily charge is not the same as the old-style roaming tariffs that could hit a user with \u201cbill shock\u201d on return home. But the mobile networks all said they had no immediate post-Brexit plans to reintroduce the roaming charges, which Brussels banned within member states in 2017. Six months must count as a long time in the fast-moving world of mobile telephony. Very poor.<\/p>\n
Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"With inflationary pressures all too visible, Threadneedle<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"\n
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