Weekly Newsletters

30 October 2020 | William Buckhurst

That Was The Week That Was

MACRO

  • UK Prime Minister, Boris Johnson, announces a second nationwide lockdown starting on November 5th
  • UK Chancellor, Rishi Sunak, extends the furlough scheme and the Bank of England is expected to unleash a further £100bn of quantitative easing
  • Meanwhile, the US economy grew by 33.1% on an annualized basis in the third quarter, its fastest pace in post-war history as activity bounced back from coronavirus lockdowns

STATISTIC OF THE WEEK

A third of large US and European companies have now reported for the three months to 30th September.  In the US, 90% have beaten analysts’ expectations.  The number of “beats” in Europe have been lower but still a majority have exceeded expectations. The market reaction has been muted showing that optimism was mostly priced in. Morgan Stanley research shows that shares of European companies beating expectations outperformed by just 1.2% on the day

COMPANY NEWS

  • Microsoft announced third quarter revenue of $37.2bn, an increase of 12%
  • Alphabet’s shares rose sharply as it beat expectations for both earnings and revenue in its third-quarter earnings results, showing strong growth in advertising revenue across the board
  • Amazon reported its third-quarter results beating analysts’ expectations for both profit and sales, which grew 37% year on year. But they forecast operating income to fall between $1bn and $4.5bn, assuming about $4bn of costs associated with Covid-19.
  • Lloyds Banking Group and other UK banks all reported better than expected quarterly profits as expected impairments fell and capital ratios rose

SMALL-CAP NEWS

Agronomics, which invests in cellular agriculture with a focus on cultivated meats and alternative proteins, raised an additional £10m this week. This technology enables the extraction of cells samples (similar to a biopsy) from animals and then the use of science to multiply and proliferate them. The companies have expertise in different areas, for example Mosa Meats in pork, Meatable in Beef and Blue Nalu in Tuna. Also, interestingly, Vitrolabs grows lab-based leather to be used in the fashion industry which is particularly exciting as many luxury goods companies are becoming aware of shifts in demand towards more sustainable products

THIS WEEK IN HISTORY

1976: Ronald Wayne sold his 10% stake in Apple for $800. Today it would be worth $58,065,210,000

2012: the New York Stock Exchange shuts down for Hurricane Sandy. The market would remain closed the next day as well, making it the first time in 124 years that weather had led to a two-day shutdown of the New York Stock Exchange

LOCKDOWN II

The launch of Amazon’s Swedish website has proven uncharacteristically error prone for the internet giant mainly due to the result of a poorly designed computer translation programme.  They mixed up the Argentine and Swedish flags, labelled frying pans as items for women and bizarrely listed an Adidas 'child sexual assault' football shirt

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return GBP)

-4.87

-5.06

-23.04

3.82

World Equities (% return GBP)

-4.82

-3.06

4.27

81.55

10 Year US Treasury Yield (%)

0.88

0.69

1.78

2.16

GBP / USD (fx rate)

1.29

1.29

1.29

1.54

As at 30th October 2020. Source: Financial Express

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