Weekly Newsletters

05 February 2021 | William Buckhurst

That Was The Week That Was

MACRO

  • In the UK, the Bank of England said that it had given financial institutions six months to get ready for negative rates but that the economy would need to get much worse before it became a reality
  • Official GDP figures for the fourth quarter in the Eurozone: over the course of last year GDP fell 5% in Germany, 8.3% in France, 8.8% in Italy and 11% in Spain — all post-war records
  • Mario Draghi accepted a request from Italy’s president to attempt to form a national unity government as the country battles its most severe economic crisis in a generation

COMPANY NEWS

Another very busy week for company results:

  • BP reported its first annual loss in a decade while Royal Dutch Shell reported full-year profits at the lowest level since 2005
  • Unilever shares ended the week lower as operating profits came in lower than expected and margins fell in response to Covid related costs
  • Amazon continues to power ahead with net sales for the fourth quarter up 44% to $125.6bn
  • Alphabet revenues were up 23% as its core advertising business was very strong
  • Compass issued a trading statement showing that while quarterly revenues continue to be weak, operating margins have improved
  • Novo Nordisk profits beat expectations and raised its dividend

SMALL-CAP NEWS

One company to come out stronger the other side of Covid-19 will clearly be Venture Life, the self-care specialists. Revenue rose by 49% to £30.1m last year and (adj) EBITDA doubled to £6m. With a substantial equity raise in December, we look forward to further bolt on acquisitions that management can look to improve under the company’s umbrella

THIS WEEK IN HISTORY

1637: The Holland tulip market suddenly crashes. Within a day there are no buyers for tulips at any price, after reaching prices as high as 6,000 Guilders for a single bulb. This week represented the peak of the now infamous tulip bubble

1971: Rolls Royce declares bankruptcy triggered by huge losses incurred in developing engines for Lockheed’s new Tri-Star Airbus. The aero-engines side of the business was nationalised, while ownership of the cars division was retained by the receiver and, by 1990, the Rolls-Royce empire had returned to the private sector

 LOCKDOWN LOWDOWN

An entertaining finale to the Reddit / Robinhood short squeeze drama as Elon Musk takes to the social-networking, invitation only based app, Clubhouse, only for retail investors to furiously bid up the price of the wrong stock. Clubhouse Media Group Inc. saw its shares surge 250% in a week before retail punters realised they had targeted the wrong company

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return GBP)

1.07

-1.97

-12.10

31.30

World Equities (% return GBP)

4.27

2.44

11.41

116.88

10 Year US Treasury Yield (%)

1.17

0.96

1.66

1.86

GBP / USD (fx rate)

1.37

1.36

1.30

1.45

 As at 5th February 2021. Source: Financial Express

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