News & Insight Weekly Newsletters

19 August 2022 | William Buckhurst

That Was The Week That Was

MACRO

  • UK annual inflation hit double figures (10.1%) in July with food costs pushing prices up by their fastest rate for more than 40 years. It is expected to reach 13% by October
  • The UK two-year gilt yield hit its highest level since 2008 and continues to offer a higher yield than the ten-year
  • A slightly more dovish tone from the Federal Reserve’s FOMC minutes for its July meeting as they concede that “it likely would become appropriate at some point to slow the pace of policy rate increases”

 

COMPANY NEWS

  • Walt Disney shares closed the week higher after it was reported that activist investor Dan Loeb’s Third Point had taken a stake in the company
  • Persimmon results were broadly in line as rising house prices offset build cost inflation and lower completions
  • Power products and manufacturing services provider Volex said in a trading update that its first-quarter performance was “strong”, in line with management expectations and re-iterated its new, five-year growth plan

 

SMALL CAP NEWS

One element investors have focused on post-pandemic is the “reopening trade” whether that be consumers heading out or other elements of life heading back to a new-normal. Cinemas were supposed to benefit from the likes of No Time To Die but sadly one firm, Cineworld is heading in exactly that direction. After buying US giant, Regal for $3.6bn and then Canada’s Cineplex two years later in 2020 for $2.1bn things were looking promising but now the equity is valued at £55m and with $5bn of debt a restructuring is in order

 

THIS WEEK IN HISTORY

1945: Global stock markets close to mark the end of the Second World War

1971: In response to annual inflation of nearly 6%, President Nixon announces a 90-day freeze on wages, prices, and rents. But by 1975 inflation is running at over 11%

 

IN OTHER NEWS

Although consumer sentiment surveys (which can be fickle) show extreme pessimism, the results this week from leading US retailers would suggest otherwise. Walmart beat (admittedly lowered) guidance as about three quarters of its market share gain in the grocery segment came from customers with annual household incomes of $100,000 or more. Meanwhile Home Depot enjoyed its best quarterly sales and earnings on record, saying that consumers were spending on home improvements despite high inflation and mortgage rates

 

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return)

0.42

3.09

1.56

3.21

World Equities (% return)

0.06

5.96

-4.90

52.17

10 Year US Treasury Yield (%)

2.96

2.93

1.31

2.27

GBP / USD (fx rate)

1.18

1.19

1.39

1.29

 

As at 19th August 2022. Source: Financial Express

 

 

 

 

This publication has been produced by Vermeer Investment Management Limited (VIM) trading as Vermeer Partners. It is provided for information purposes only. VIM makes no express or implied warranties and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use with respect to any data included in this publication. VIM will not treat unauthorised recipients of this publication as its clients. Prices shown are indicative and VIM is not offering to buy or sell or soliciting offers to buy or sell any financial instrument. Without limiting any of the foregoing and to the extent permitted by law, in no event shall VIM, nor any of its officers, directors, partners, or employees, have any liability for (a) any special, punitive, indirect, or consequential damages; or (b) any lost profits, lost revenue, loss of anticipated savings or loss of opportunity or other financial loss, even if notified of the possibility of such damages, arising from any use of this publication or its contents. Other than disclosures relating to VIM, the information contained in this publication has been obtained from sources that VIM believes to be reliable, but VIM does not represent or warrant that it is accurate or complete. VIM is not responsible for, and makes no warranties whatsoever as to, the content of any third-party website referred to herein or accessed via a hyperlink in this publication and such information is not incorporated by reference. The views in this publication are those of the author(s) and are subject to change. VIM has no obligation to update its opinions or the information in this publication. This publication does not constitute personal investment advice or take into account the individual financial circumstances or objectives of the client who receives it. Any securities discussed herein may not be suitable for all investors. VIM recommends that investors independently evaluate each issuer, security or instrument discussed herein and consult any independent advisors they believe necessary. The value of and income from any investment may fluctuate from day to day as a result of changes in relevant economic markets (including changes in market liquidity). The information herein is not intended to predict actual results, which may differ substantially from those reflected. Past performance is not necessarily indicative of future results. This material has been issued and approved for distribution in the UK by VIM.©2022 Vermeer Investment Management Limited. All rights reserved. No part of this publication may be reproduced or redistributed in any manner without the prior written permission of VIM.VIM is authorised and regulated by the Financial Conduct Authority (FRN: 710280) and is incorporated in England and Wales (company number: 09081916).

Back to News & Insights