News & Insight • Weekly Newsletters

23 July 2021 | William Buckhurst

That Was The Week That Was

MACRO

• In the UK, better borrowing figures for June, certainly compared to last June, but still a very large number and a record jump in debt interest payments to £8.7bn
• In the US, it is starting to become clear how slowly the vaccination rates are moving up, particularly in Republican voter states
• Russia’s central bank raised rates by 1%, its largest increase for more than six years and the fourth consecutive tightening of policy in a bid to curb rising inflation

STATISTIC OF THE WEEK

Under Citi’s latest forecasts, the post-COVID global recovery is faster but does not end up being more complete due to permanent economic damage triggered by the pandemic. By the mid-2020’s they expect the cash size of the economy to be 3% smaller than under official pre-Covid forecasts

COMPANY NEWS

• Netflix showed that subscriber growth has continued to slow but dropped intriguing hints about getting into the video games market
• Unilever shares were weaker after saying that margins were now expected to be “around flat” compared to its prior forecast for a slight increase, following further cost inflation emerging through the quarter
• AT&T increased full year guidance, now seeing revenue growth of 2-3% with adj. EPS growth to be in the low to mid-single digits whilst HBOMax subscriber guidance was also increased
• Coca Cola increased guidance, now seeing FY organic revenue growth of 12-14% and EPS growth of 13-15% with management citing a strong rebound in “away from home channels”

FUNDS

After mentioning the Urban Logistics raise recently and the great work the management team are doing in a sector that has the wind behind it, this week an honourable mention to Stephen Inglis and his colleagues at Regional REIT who are still sailing into a head wind in their particular sector (regional offices). Last week they announced they have turned a site in Leeds around very profitably, selling off two plots and disposing of Arena Point for £10.65m, a 15.8% uplift vs 31/12 valuation. This week they reported they had sold more of their industrial exposure at a good uplift to book cost and would be reinvesting more of their focus to regional office buildings for a further increase in yield.

THIS WEEK IN HISTORY

1914: European stock markets start to fall in anticipation of the outbreak of war. Austria sends an ultimatum to Serbia –punish and suppress those responsible for Archduke Franz Ferdinand’s murder, or be invaded

1952: The 53 day strike by US steel workers comes to an end as both sides agree on pay increases and set prices for steel

RE-OPENING TIMES

The IHS Markit’s “flash” purchasing manager’s index showed a sharp fall from 62.2 to 57.7 in July as around 1.1m people in the UK were asked to self-isolate by the NHS Covid app in the week to July 14.  Tim Martin of JD Wetherspoon said 5,000 of his 40,000 staff were pinged by the app last week alone, causing labour shortages at some of the chain’s 925 venues

MARKET DATA

 As at 23^rd July 2021. Source: Financial Express

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