BHP's increased bid is not without risk

BHP Billiton has increased its offer for Potash to USD 40B. BHP Billiton could pay up to USD 45 B. The deal should still be accretive for EPS, but is not without risk.

1. Gearing would increase by 55% making cash management impossible,
2. Potash is heavily unionized and has a dated infrastructure.

So above USD 45B we would recommend growing their own potash project organically.

Leading indicators in the US are likely to be roughly flat; building permits declined while weekly hours for manufacturing and initial jobless claims improved in July.

UK retail sales are due out and we are looking for a flat July number here following the surge in June, which was driven by electrical goods. Hopefully the improving labour market can drive other parts of the economy - including consumer spending.