From Deutsche Bank reporting a higher than expected Q3 profit to AT&T striking a deal with Time Warner and Europe showing signs of growth, news this week proved to be filled with h headlines. Read more in this edition of Steady Investor’s Week…
Deutsche Bank Posts a Profit! – so much for Deutsche Bank becoming the next Lehman Brothers. After many reports that the Department of Justice fine (the amount of which is still unknown) on Deutsche Bank could send it into bankruptcy, the bank has answered by reporting a third-quarter profit of €256M. DB has been bracing for impact, so to speak, and raising cash to anticipate litigation costs and selling off assets. The tightening of the belt may ultimately help the bank emerge from this obstacle stronger than they were before.
Is the AT&T – Time Warner Deal Possible? Last weekend it was revealed that AT&T struck a deal to buy Time Warner for $85.4 billion. Investors should take care not to hear these types of announcements and assume it is a done deal – far from it. The Comcast deal to buy NBC Universal back in 2011 took a full 13 months to complete, and the deal was tagged with several conditions and stipulations from regulators to go through. AT&T could have a similar battle ahead in proving that the acquisition of Time Warner does not create a media monopoly or violate antitrust laws. There is also likely to be a lot of backlash from media and telecom rivals like Verizon and Comcast over the deal, so we would not expect any closure to be reached by the end of the year. We could be revisiting this story this time next year, in fact. The CEO of AT&T, Randall Stephenson, seems to be very confident about the deal’s chances of being approved. He stated on a conference call over the weekend that the acquisition would not be over-concentration in an industry or segment, since one company focuses on content distribution and the other focuses on providing content.
Europe on the Verge of a Turnaround? – “Euroskeptics” were dealt a blow this week as data from the manufacturing segment of the eurozone showed signs of strength and expansion. For the region, the manufacturing PMI rose to a 30-month high of 53.3, which exceeded estimates of 52.6. Germany’s reading was a standout (as usual) amongst the countries in the bloc, having posted at 55.1 and marking a 33-month high. France also showed encouraging signs, with their strongest reading in 10 months of 51.3.
Meanwhile, in Britain – Britain also silenced critics as it posted positive GDP growth in Q3. The country grew by a much better-than-expected 0.5% in the third quarter, which is the first quarter of data available since the Brexit vote. Investors should recall, however, that Brexit was merely a referendum, and Britain’s relationship with the European Union was not affected by the vote. They may still operate freely within the trading bloc. The implications won’t be known or felt until Britain invokes Article 50, which is the formal request to leave the European Union. That may not take place until March of next year, at the earliest. In the meantime, Britain has not felt much sentiment drag from the vote, and continues to expand. Britain’s services industry accounts for 80% of its total economy, and it grow by 0.8% in Q3. Britain’s only concern so far in the aftermath of the vote has been the rapidly declining pound, but it hasn’t been so dramatic as to be alarming.
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