News & Insight • Weekly Newsletters

14 April 2023 | William Buckhurst

That Was The Week That Was

MACRO

• US CPI came down to 5% year on year which led the dollar weaker but core inflation still rose
• UK GDP flatlined in February primarily due to the public sector strikes – consumer spending was still positive
• ECB Governing Council member Robert Holzmann stated that stubbornly high inflation still warranted another 50bps rate hike in the Eurozone
• Chinese export data for the month were forecast to be minus 7% but came in at +14%

COMPANY NEWS

• LVMH showed stellar results again as organic revenue was up 17% against 9% expected. Price mix was the driver of growth. And they said they were “extremely optimistic” on a recover in China. This was in contrast to the chairman of Patek Philippe who suggested his market is “slowing down”
• Although cost pressures resulted in operating profits lower than last year, Tesco still beat expectations and announced another £750m share buyback
• The big get bigger. US large cap banks look to have benefitted from the Silicon Valley Bank fall out with Citigroup, Wells Fargo and JP Morgan all announcing solid inflows at their results
• Warren Buffett, who co-runs Berkshire Hathaway, was on a trip to Japan explaining why he was ‘confounded’ by the opportunity to buy the five Japanese trading houses known as “sogo shosha” – Mitsubishi Corp, Mitsui & Co, Itochu Corp, Marubeni and Sumitomo
• The FT was reporting that Softbank are to sell the majority of their stake in Alibaba
• Newmont Mining increased its takeover bid for Newcrest Mining to $19.5bn – if successful this would create the world’s largest gold miner

FUND NEWS

One area that has been under pressure ever since Liz and Kwasi “tested” the bond market has been the UK Real Estate Investment Trust (REIT) sector. At a recent meeting, one manager suggested he hadn’t ever seen valuers be so proactively negative in his whole career but there were green spring shoots this week. Industrials REIT was approached by Blackstone with their final takeover offer; Regional REIT management (London & Scottish) confirmed that ARA Asset Management (Singapore-based) has acquired a majority shareholding; and LXI REIT (who took over Secure Income REIT not that long ago) undertook a debt refinance with company borrowings now £1.3bn with average maturity 6-years, average cost 4.69% allowing the dividend to be increased by 4.8% to 6.6p a share

SMALL CAP NEWS

The Orlando-based company, Tupperware, which was created in the 1940s by Earl Tupper warned that it could be passed its sell-by date. It warned that it might be heading for a default if its lenders demand payment for maintaining access to the company's main line of credit. While it still produces over $4bn in sales it lost nearly $30m in the recent quarter due to inflationary pressures

THIS WEEK IN HISTORY

• 1865: Confederate general Robert E. Lee surrenders to Union general Ulysses Grant, ending the US civil war. The New York Times writes that US stocks were up 2%, railroads were up 10%, and gold was down 6% on “the rise of public feeling” after an end to the war
• 2000: The bursting of the dot-com bubble really gains momentum as the Nasdaq drops 9.67% in a day, the biggest single-day decline in the index’s history up to that point

IN OTHER NEWS

A Texas judge has decided to overturn FDA approval for an abortion pill. This decision relating to a drug that was approved over 20 years ago could have significant consequences beyond women’s health. As such 400 heads of pharma and biotech firms as well as medical organizations, have signed an open letter calling for the “decision to disregard science” to be reversed

MARKET DATA

 As at 14^th April 2023. Source: FactSet

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