Weekly Newsletters

24 June 2022 | William Buckhurst

That Was The Week That Was

MACRO

  • A disappointing US Manufacturing PMI led to a fall in bond yields which triggered an end of week rally in equity markets
  • Federal Reserve Chairman, Jay Powell, said for the first time that a US recession is “certainly a possibility”
  • In the UK, retail sales contracted in May while research company GFK showed consumer confidence fell in June to the lowest level since records began in 1974
  • UK inflation edged up to 9.1% in the 12 months to May, from 9% in April

COMPANY NEWS

  • Volkswagen confirmed IPO plans for its Porsche unit whilst CEO Herbert Diess stated that he believed the company could close the gap with Tesla on electric vehicles via efforts on battery production, charging infrastructure and software
  • DS Smith issued strong full year results while management stated that continued price recovery and cost management was offsetting inflationary costs and that they expected further substantial improvement in business performance
  • Volex, the UK manufacturer of power cords and connectivity products for electric vehicles, continues to grow turnover at 20% underlying and more from acquisitions while showing high levels of customer demand

SMALL CAP NEWS

In what can only be described as a horrendous announcement on Friday morning for equity holders, Lamprell suggested they have about two months’ worth of cash left and conversations regarding cash raises in the debt and equity markets had failed to bear any fruit. The result of which was an opportunistic takeover attempt by the largest stakeholder materially below the closing price on Thursday and the shares falling 75%. A reminder of the dangers of an unbalanced balance sheet

A WEEK IN POLITICS

Washington has ramped up its efforts to enforce new laws banning the import of goods from the Xinjiang region of China which have used forced labour in their production. Over $15m has been allocated to staff the enforcement teams this year, and the White House will increase this to $70m for 2023 to create an additional 300 positions.

THIS WEEK IN HISTORY

1988: Dell Computers has its IPO at $8.50 per share, valuing the company at $85m. Dell’s stock would be one of the best performing stocks through the 90’s tech bubble, averaging an annual gain of 97% from 1990-2000

1998: Larry Page and Sergey Brin founded Google in Menlo Park, California.  By mid-1999, when Google received a $25m round of venture capital funding, it was processing 500,000 queries per day. Activity began to explode in 2000, when Google became the client search engine for Yahoo

IN OTHER NEWS

Netflix have told staff that advertising could start on their service from October onwards. Whilst some are predicting this could bring in $1bn, Wells Fargo have suggested that 85% of the estimated 100m subscribers to this new service would actually be existing users looking for a cheaper subscription model. In addition, there is little indication of how Netflix will reward producers with advertising revenue-based deals as an incentive to retain highly rated shows.

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return)

2.40

-4.82

-2.26

-2.42

World Equities (% return)

5.12

-2.34

-10.12

38.92

10 Year US Treasury Yield (%)

3.13

2.76

1.49

2.14

GBP / USD (fx rate)

1.23

1.25

1.39

1.27

 As at 24th June 2022. Source: Financial Express

 

 

 

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