News & Insight • Weekly Newsletters

03 May 2024 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• Friday’s US Non-farm payrolls data revealed the economy added 175,000 jobs and unemployment rose to 3.9% v 235,000 and 3.8% expected. Market reacted to the data by suggesting rate cuts would now come in September rather than December that had been muted recently
• This came after a strong improvement in US wage data on Tuesday leading to the Dollar to rise strongly
• The UK votes in local elections, with a shift from Conservatives and large gains for Labour, Liberal Democrats, and independent candidates. Sadiq Khan becomes the first London Mayor to serve three terms

COMPANY NEWS

Reporting season continues in earnest:

• Amazon didn’t announce a dividend but had very good results beating the Street on pretty much every metric as the cash flow really starts to come through after recent spending on the distribution network
• AMD had a disappointing print leading the semiconductor sector lower and data centre infrastructure company, Super Micro Computer – which has been one of the best performing US stocks this year – also missed expectations and admitted their liquid cooling technology (rather than air cooled) wouldn’t be as profitable as analysts had been expecting
• Apple announced the largest stock buyback in corporate history – $110bn – as they try to balance the falling revenue in hardware with the cash generative growth of their services division
• No surprises from Cameco, the uranium specialists, on their results who then received some positive macro news as the US banned Russian imports of the metal
• Philips shares rallied strongly as they came to an agreement to settle lawsuits related to their sleep apnea product
• GLP-1s or obesity drug companies have been the place to invest in the pharmaceutical sector with both Eli Lilly and Novo Nordisk seeing their revenues grow substantially. They both had good results and pointed to decent future guidance. Amgen also announced results and then suggested on the earnings call that their drug – in the same space but can be taken monthly (rather than daily) – is showing good signs in trials
• It has to be admired the way in which Elon Musk gets things done. On the back of Tesla’s recent results the CEO was in China receiving an agreement in principle so that it can deploy its self-driving systems in the country (in collaboration with Chinese company Baidu)
• Ashtead had a capital market meeting where they released a new business plan codenamed ‘Sunbelt 4.0’
• Next sales grew ahead of previous guidance but management left outlook unchanged
• GSK reported strong first quarter results with growth in sales and earnings
• BHP’s approach of Anglo American rumbles on
• Having recently exited the competition for DS Smith, Mondi had decent results and gave positive guidance

‘WOODSTOCK FOR CAPITALISTS’

Readers will have probably picked up by now that we are big fans of Warren Buffett and respect the long-term track record he has had through the investment vehicle Berkshire Hathaway. The company had its latest AGM in Omaha, Nebraska, inviting holders of the equity and tens of thousands turn up – hence the title. He spoke about his late long time sparring partner, Charlie Munger, but also why he had trimmed Apple and now has $189bn in cash. That aside, the company had decent results particularly with good gains in its insurance businesses leading to a net profit of $12.7bn – earning $1.9bn of interest on its cash pile!

THIS WEEK IN HISTORY

1493:  Spanish Pope Alexander VI divides America between Spain and Portugal

2008: Seth MacFarlane reaches an agreement worth $100 million with Fox to keep "Family Guy" and "American Dad" on television until 2012, making MacFarlane the world's highest paid television writer

MARKET DATA

As at 3^rd May 2024. Source: InFront

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