News & Insight • Weekly Newsletters

16 December 2022 | William Buckhurst

That Was The Week That Was

MACRO

• US consumer price inflation eased more than expected in November to its lowest level in almost a year. The Federal Reserve raised interest rates by 0.5% rather than 0.75%
• The Bank of England MPC also only raised rates by 0.5% as the committee was split three ways and ranged from 0.0% to 0.75%.
• UK private sector wage growth rose to 6.9% year on year, while public sector wage growth is only 2.7%

COMPANY NEWS

• Shares in Eli Lilly finished the week lower after guiding to lower earnings than expected but with revenue of $30.3-$30.8bn above consensus estimates. The company stated that revenue growth was expected to be partially offset by lower revenue for Alimta due to loss of patent exclusivity, no anticipated COVID antibody revenue and negative FX impacts
• Microsoft took a 4% stake in London Stock Exchange, acquired from the Blackstone and Thomson Reuters consortium, and the LSE stated that the deal was expected to increase its revenue growth “meaningfully” over time as new products come on stream
• Amgen has announced its purchase of the autoimmune disease specialist, Horizon Therapeutics, for $27.8bn – the highest priced pharma deal of the year at a 20% premium to its market price
• Games Workshop, the British manufacturer of miniature wargames such as Warhammer, reached an agreement with Amazon Content Service for Amazon to develop Games Workshop IP into film and television

SMALL CAP

A positive update from Hunting, the energy services company, as their CEO, Jim Johnson indicated. “2022 has been a year of rebuilding for the industry with 2023 now likely to be a strong year of growth for the Group. All of our operating segments are reporting good levels of enquiries, and with our order book now approaching $500m, our earnings visibility for the year ahead is robust, despite recessionary fears,” as they announced in-line trading but upped guidance by 10%. There was also good news for shareholders of Kistos as all resolutions proposed at the Court Meeting and the General Meeting were passed which will enable them to create a holding company which will provide capital and enable separation of debt to allow distributions

INTERESTING ELSEWHERE

The Winter of Discontent – Part 2: As driving examiners, baggage handlers and highways workers join teachers, rail, and tube strikers – nurses and ambulance drivers are also set to strike over the Christmas period to secure 8%-9% inflation related pay rises. With a potential loss of 1m working days in December alone, the country could yet again become reliant on its armed forces, recipients of a 3.75% pay award in 2022, to maintain essential services

MONEYWEEK

The simple yacht is over, and the submarine is king, hedge fund supremo Ray Dalio told the Financial Times this week as he joined James Cameron in making an investment into Triton Submarines. “If you’re just going on a yacht in some fancy place, that’s one thing,” he said. “If instead you’re on a yacht and you can go down and explore, first of all the trip is going to be better and also it encourages exploration.” Triton’s various luxury models can hold up to 66 people, reach 11,000 meters under the sea, and cost up to $40m

IN OTHER NEWS

It’s coming home! Sadly, not the World Cup but GSK’s HQ with management having decided to ditch their base in Brentford and return to central London, from where the company can trace its origins to the Plough Court Pharmacy, which was established in the City of London in 1715. Following President Xi Jinping’s move last week to relax his zero-Covid strategy, we are seeing China’s largest uncontrolled wave of Covid cases since the pandemic started.  One beneficiary is the funeral sector: Shanghai-based Fu Shou Yuan International, China’s biggest funeral services provider and seller of burial plots, is up 60% since late October. A good Urn’er?

THIS WEEK IN HISTORY

1957: railroad shares, once highly fashionable in the US, hit a 55-year low

1980: Apple IPOs at $22 a share. Apple was the biggest new issue to be sold to the public since the $200m offering by Comsat in 1964

MARKET DATA

As at 16^th December 2022. Source: Financial Express

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