News & Insight Weekly Newsletters

06 January 2023 | William Buckhurst

That Was The Week That Was

MACRO

  • Headline inflation numbers from Germany and Spain, released over the Christmas period, were lower than expected, aided by lower energy costs
  • The Fed minutes, released on Wednesday, showed full agreement that they should slow the pace of aggressive interest rate rises, but still keen to emphasise their focus on combating inflation
  • The US ISM Manufacturing survey came in at 48.40 down from 49.00 last month whereas the Services survey came in at 49.60 contracting for the first time in two and a half years
  • The US economy added 223,000 jobs, lower than 256,000 in November but more than economists were expecting. Unemployment fell to 3.5%, a historic low.

COMPANY NEWS

  • Tesla orders missed expectations due to inventories building up and as a result lost c.$47bn in value (interestingly $47bn is the current market cap for Ford)
  • A year to the day after hitting a $3trn market cap, Apple lost this accolade as their market cap fell below $2trn this week largely due to slowing sales of phones, MacBook’s, watches and AirPods. Apple had been the last firm to maintain this level after Microsoft last year
  • Shell released a trading statement for Q4 with a strong performance from its trading division and quantified the Q4 hit from windfall taxes at around $2.4bn
  • UK retailers and airlines that reported on Christmas trading this week released generally better than expected results as consumer spending held up
  • US home retailer, Bed Bath & Beyond said it was exploring financing options including a bankruptcy
  • A consortium spearheaded by Direct Line founder Sir Peter Wood has approached the funeral services company Dignity – the first UK takeover attempt of 2023

SMALL CAP

HeiQ Plc, the international textile technology company, issued a bleak trading update sending their shares 50% lower blaming weakening macroeconomic conditions leading to a deterioration in consumer demand. These conditions impacted new sales, which has been compounded by customers’ elevated inventory levels. As a result, management now expects revenues to be 20% below expectations. In response, Carlo Centonze, CEO, then purchased 561,171 shares in the company clearly telling the market he felt the selloff was over-done

INTERESTING ELSEWHERE

Congratulations to those who were named in the maiden Honours list by the King. A special mention to the Dames and Knights in the UK equity world. Anita Frew (Chair of Rolls-Royce), Alison Rose (CEO of Natwest), Ivan Menezes (CEO of Diageo) and Dr Martin Read (Chair of Wincanton).

THIS WEEK IN HISTORY

1879: The USA returns to the gold standard. Throughout the period under the gold standard, paper money was still extensively used. A variety of bank notes circulated, even without being legal tender

2000: Yahoo shares reached their all-time high of $500.13, by September the following year they were down to $8

TECH WEEK

Unfortunately, the cull of the workforce in this sector continues as Amazon revealed a 18,000-headcount cut and Vimeo and Salesforce announcing 11% and 10% reductions. Salesforce CEO, Marc Benioff wrote. “As our revenue accelerated through the pandemic, we hired too many people…”

There was, however, one bright point this week with ChatCPT developer OpenIA in talks to raise capital at $30bn – a rare increase from the last round. According to PitchBook, venture capital investment into generative AI – artificial intelligence that provides original content – increased by 425% from 2020 to 2022

IN OTHER NEWS

In a bid to show up companies that try to bury bad news over Christmas, this year’s slot goes to Harland & Wolff, the Belfast shipbuilder famous for the Titanic, whose shares hit an iceberg as they revealed supply chain delays and order cuts worth at least £34m

 

MARKET DATA

% returns

1 Week

1 Month

1 Year

5 Years

UK Equities (% return)

3.32

2.86

-0.91

-0.84

World Equities (% return)

1.89

-0.48

-14.49

27.46

10 Year US Treasury Yield (%)

3.56

3.60

1.73

2.42

GBP / USD (fx rate)

1.21

1.21

1.36

1.23

As at 6th January 2023. Source: Financial Express

 

 

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