News & Insight • Weekly Newsletters

02 June 2023 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• The US debt ceiling deal narrowly passes the Senate averting a catastrophic federal default
• The non-farm payrolls data released on Friday showed that the US economy continues to defy expectations of a slowdown to add 339,000 jobs in May
• A bigger than forecast drop in eurozone inflation in May pushed European yields lower over the week

COMPANY NEWS

• Intel closed up on the week after updating its guidance. The company stated that it now expects Q2 revenue to come in at the upper end of its prior guidance and was now forecasting revenue of $12-$12.5bn, up from its prior guide of $11.5-$12.5bn
• LuluLemon shares jumped as quarterly results showed that revenue rose 24% year-over-year to $2bn, reflecting growth driven by China, new categories and a new loyalty programme
• In contrast, Dollar General, a retailer at the cheaper end of discretionary spend has a profit warning sending shares materially lower
• UK veterinary pharmaceuticals company Dechra agreed to a £4.5bn buyout by Sweden’s EQT in one of the biggest UK private equity deals this year
• Bloomsbury Publishing appears to be on a bit of a roll as it reported a rise in sales and profits and upgraded expectations for next year. “A paperback is much cheaper than even a one-month subscription to Netflix...”, said CEO Nigel Newton

SMALL CAP NEWS

A trading update from ITM Power. The shares clearly got ahead of themselves two years ago but with cash burn lower and higher revenue expected we wonder whether new CEO, Dennis Schulz is sculpting a special recovery.  They confirmed earnings guidance and reiterated that their 12-month plan is on track. Results are due in July

AI WATCH

“Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks, such as pandemics and nuclear war”.  Thus spoke 350 signatories to a one sentence manifesto published by the NFP Centre for AI Safety.  These included Bill Gates, Geoffrey Hinton, Sam Altman - CEO of OpenAI, Dustin Moskovitz - Co-Founder of Facebook, Shane Legg - founder of Google’s deepmind, Eric Horvitz - Chief Scientific Officer at Microsoft, Jaan Tallinn - co-founder of Skype, Michael Osborne - Professor of Machine Learning, University of Oxford and James Phillips - former Special Adviser to the UK Prime Minister for Science and Technology

The advertising giant WPP announced it has joined with Nvidia to use AI in the creation of bespoke visual advertising content. Able to create in minutes what has previously taken weeks to produce and tailor adverts to specific regions in seconds, the deal also addresses broader commercial concerns about AI ‘scraping’ the internet for information and images. Getty Images will partner with WPP to ensure that copyright is not infringed. We wonder whether S4 Capital (Sir Martin Sorrell’s new company) whose biggest client is Alphabet will come up with something similar? In further Nvidia news, the company’s market cap passed $1trn

THIS WEEK IN HISTORY

1933: The Securities Act was passed into law to protect investors after the stock market crash of 1929. The legislation had two main goals: to ensure more transparency in financial statements so investors could make informed decisions about investments; and to establish laws against misrepresentation and fraudulent activities in the securities markets

2009:  General Motors files for bankruptcy. After years of struggling to stay afloat, the 2008 recession was the final nail in GM’s coffin, as out-of-control costs and pension liabilities had plagued the company for years

IN OTHER NEWS

Following recent visits to Shanghai by both Elon Musk of Tesla and Tim Cook of Apple, last week saw JP Morgan’s Jamie Dimon hosting a high profile conference in Shanghai (attendees included Albert Bourla, CEO of Pfizer and Laxman Narasimhan, CEO of Starbucks) aiming to reinforce US commercial commitment to the country, despite his government’s best efforts to continue to reduce their dependency on China

MARKET DATA

 As at 2^nd June 2023. Source: FactSet

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