Weekly Newsletters

02 September 2022 | William Buckhurst

That Was The Week That Was

MACRO

  • Global bond yields continued to move higher over the past week, as markets discounted a progressively more hawkish path for monetary policy in the months ahead
  • In the US, money markets now project rates peaking around 4% at the end of Q1 2023
  • Another poor week for sterling as it falls to 1.15 against the US dollar
  • The US non-farm payrolls showed the jobless rate rose to 3.7% from 3.5% but is still near a 50-year low

COMPANY NEWS

  • Nvidia shares were weak after the US announced that it was implementing limits to exports of AI chips to China
  • The Wall Street Journal reported that Disney was looking at potentially introducing a membership programme that could offer discounts or perks to encourage customers to spend more on its streaming services, theme parks, resorts and merchandise with the potential programme similar to Amazon Prime

SMALL CAP NEWS

The hot weather this summer may have triggered hose pipe bans as well as a bumper UK wine crop but sadly it has also impacted the sales of cakes. Cake Box plc announced it expects FY23 profitability to be lower than expectations and the trading environment had become significantly more challenging since its FY results in June. Inflationary cost pressures across the Group have increased above levels previously anticipated and the Board does not see these easing before the end of the financial year. Due to the worsening outlook and increasing cost of living pressures on the consumer, the management announced it expected full year profitability to be significantly below current market forecasts and this pushed the shares 40% lower

FUND NEWS

Chrysalis Investments, the high profile UK private equity fund, saw its value fall by 22.8% over Q2 2022 following significant mark-downs in wefox, Klarna (announced a net loss of $581m in 1H22 last week), Starling, Brandtech and Wise

THIS WEEK IN HISTORY

  • 1986: The Hunt Brother’s Oil Company, Placid Oil, declares bankruptcy. Today the Hunt family is still one of the world’s wealthiest – with a total net worth over $16bn, mostly from Hunt Oil
  • 1998: Long Term Capital Management continues to rack up losses. The fund finishes down 45% for the month. The fund’s leverage stood at 55 to 1 and would be bankrupt in just over 3 weeks

IN OTHER NEWS

Happy 92nd birthday to Warren Buffet. To celebrate, we list some of our favourite Buffet quotes:

“Time is the friend of the wonderful company, the enemy of the mediocre.”

“It’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”

“It is a terrible mistake for investors with long-term horizons — among them pension funds, college endowments, and savings-minded individuals — to measure their investment ‘risk’ by their portfolio’s ratio of bonds to stocks.”

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return)

-1.91

-2.27

-3.27

-1.90

World Equities (% return)

-2.66

-3.24

-13.37

39.34

10 Year US Treasury Yield (%)

3.20

2.75

1.29

2.17

GBP / USD (fx rate)

1.15

1.22

1.38

1.30

 As at 2nd September 2022. Source: Financial Express

 

 

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