News & Insight • Weekly Newsletters

10 February 2023 | William Buckhurst

That Was The Week That Was

MACRO

• In his post-meeting news conference at the Economic club of Washington, Federal Reserve chairman, Jerome Powell, pointed to recent softening in goods and housing inflation, commenting that “the disinflationary process has started.” 
• At his State of the Union address, Joe Biden's speech included the usual laundry list of proposals, most of which have little chance of becoming law. But he took aim at tech companies throwing his support behind tougher rules regulating Silicon Valley
• German inflation numbers showed the headline year-on-year number still at 9.2% (compared to 9.6% last month)
• The Chinese annual inflation rate came in at 2.1%
• The UK just misses a technical recession with Q4 GDP growth coming in at 0%

COMPANY NEWS

• Unilever announced solid results, in Q4 their average price rise was 14%, which they said they think will be the peak
• Compass Group reported that quarterly organic revenues were up 24% year-on-year and reiterated their strong full year guidance
• BP announced a doubling of profits to £23bn but also a delay to its climate goals as it also upped its dividend and buy back
• Disney reported higher than expected earnings helped by the better-than-expected performance of Avatar 2. And they are going to re-install the dividend
• Toyota operating income was well ahead of expectations, and they have managed cost input pressures well, but there was another small downgrade to output targets
• Siemens enjoyed stellar results, driven by its digital industries business, and raised its sales and profits outlook. Management commented that they would further leverage the exceptional order backlog despite a volatile environment
• Adidas announced another profit warning primarily due to the fall out with Kanye and the Yeezy collaboration

FUND NEWS

LXI REIT, which owns Alton Towers plus a large number of Travelodge Hotels in its portfolio, reported it “continues to deliver excellent operational results that help underpin our growing income” despite the challenging wider macroeconomic backdrop. Rent collection remains 100% and it has made progress with its “3R” priorities - Refinancing, Recycling capital and Re-gearing. The REIT sector was hard hit last year but there are still signs of life

LAND OF THE RISING SHARES?

Three bits of news flow caught our eye in Japan – a geography that some investors have thought was good value for some time. Firstly, a report that Kazuo Ueda, former member of the central bank’s policy board, will be next governor of the central bank led to the Yen trading higher. Toshiba, the conglomerate, was approached for a $15bn takeover – Japan’s largest take-private deal ever – by a Japanese consortium.  Lastly, some early signs that companies are starting to listen to Western activists with Dai Nippon Printing rising by 18% as they bowed to pressure from US-based Elliott Management and announced a large buy-back

SMALL CAP

Another positive deal from driving safety specialists, Seeing Machines, as they entered a distribution agreement with Mobileye – a leader in Driver Assistance Systems. Launched in 2000 as a spin-out from the Australian National University, in conjunction with Volvo Technological Development, their AI technology monitors drivers of any mode of transport

THIS WEEK IN HISTORY

1935: The Parker Brothers launch Monopoly. Now part of the Hasbro portfolio, the property investing board game is licensed in more than 103 countries, runs in more than 37 languages and exists in dozens of editions

1992: The signing of the Maastricht Treaty of European Union, paving the way for the arrival of the Euro in 2002

TECH WEEK

Paypal’s CEO offered some encouraging commentary about spending and inflation this week – “we are seeing signs that inflation is beginning to cool, and it's logical to expect that discretionary spending versus non-discretionary spending will begin to increase. Our Q1 is off to a much stronger start than we anticipated, with check out volumes accelerating nicely from Q4”

IN OTHER NEWS

Was this the most expensive question ever posed? "What new discoveries from the James Webb Space Telescope (JWST) can I tell my 9-year-old about?" Bard, Google’s competitor to Microsoft’s OpenAI, failed to answer the question correctly resulting in investors knocking $100bn of Alphabet’s share price this week. The AI tool responded with three bullet points. The last one incorrectly states that the JWST, which launched in December 2021, took the "very first pictures" of an exoplanet outside our solar system. The first image pf am exoplanet was taken by the European Southern Observatory's Very Large Telescope in 2004, according to NASA

MARKET DATA

 As at 10^th February 2023. Source: FactSet

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