Article / 23 May 2016 at 8:07 GMT

From the Floor: The $62 billion takeover that might fail

• Garnry does not believe in $62 billion Bayer-Monsanto deal
• Ryanair foresees pressure on air fares 
• Profit taking in USD
• Petrobas back in the bond market is a positive sign for Brazil
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By Clemens Bomsdorf

A big US-Eurozone deal could be getting one step closer to realisation Monday, but Saxo’s head of equity strategy Peter Garnry doubts this goal will eventually be reached. 

German chemistry giant Bayer has come with an official $62 billion cash offering for a take-over of US seed-supplier Monsanto, which is often the target of environmentalists. Garnry judges this as“a pretty crazy deal”, which as it calls for a “massive dilutive deal for shareholders” will probably not get through. Expect, nevertheless, some share-price volatility as this story develops.

Also budget-carrier Ryanair reported for the 12 months ending March 31 said it foresees fare prices falling 7% in fiscal year 2017. Garnry says the Ryanair stock is a buy if it slides into the  €12-12.50 zone.

For the trading day to come, Asian markets did not really lay a marker, reports Saxo’s global macro strategist Kay Van-Petersen from Singapore. Indices fell in Japan and Australia while China was a little up and Taiwan was the outperformer. 

Eurozone and US with PMI data will set the tone for Europe's session.

Source: Saxo Bank. Create your own charts with Saxo Trader click here to learn more 

When it comes to forex, Asia showed some profit-taking in USD, which is not a surprise after the recent strong development of the USD Index. US officials were tough on JPY intervention at the G7 finance minister meeting but that should not be taken too seriously given the requirement to satisfy domestic requirements.

Japan reported the largest trade surplus in five years, but the manufacturing PMI was at just 47.6.

 Source: Saxo Bank / Bloomberg

In US bond markets, the focus is still on Fed speakers as Treasuries moved a bit higher from last week. Worth mentioning in emerging markets is that Brazilian Petrobras returned to the bond market after a one-year absence. The rise of the oil price is a factor, but it is also “evidence of optimism returning in Brazil”, says Saxo's fixed income trader Michael Boye

He points at the Petrobras 5.375 2021 USD bond being attractive with its 8.5% yield for less than five years. However, the Fed rate hike is also a risk factor.

Bayer Aspirin
 German chemistry giant Bayer is most well known for having invented Aspirin,
the pain killer. Now it wants to swallow Monsanto. Photo: iStock

Clemens Bomsdorf is consulting editor at

Editor’s note: From the Floor takes advantage of's unique real-time access to Saxo Bank’s various trading desks around the globe to put our community in touch with the developments that matter to their portfolios 


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