News & Insight • Weekly Newsletters

01 September 2023 | William Buckhurst | Charlie Todd

That Was the Week That Was

MACRO

• Job openings in the US fell to their lowest level in more than two years – there were 8.8m job vacancies in July, down from 9.2m in June according to influential JOLTS data released on Tuesday. Meanwhile the non-farm payrolls number on Friday came in slightly better than expected but the unemployment rate rose as more people came back into the workforce
• The annual Core PCE Price Index, the Federal Reserve's preferred gauge of inflation, rose 4.2%, a slightly stronger pace than the 4.1% increase recorded in June
• Eurozone money supply shrunk for the first time since 2010 as private sector lending stalled and deposits declined. The ECB’s measure of overall money in the system — the M3 figure that includes deposits, loans, cash in circulation and various financial instruments — decreased 0.4% in the year to July
• Spain’s annual inflation number ticked up a bit to 2.4%, while German regional inflation also rose. Eurozone inflation was slightly up, having come down over the last few months
• UK house prices are now down 5% on a year-on-year basis, but are still up over an eighteen-month view
• European natural gas prices have continued to be volatile due to Australian contract negotiations at the LNG export facilities. Most markets are suffering from a lack of liquidity, but this particular commodity is pretty fragile at the moment

COMPANY NEWS

• The Biden administration released a list of the first 10 drugs – which accounted for $50.5bn of spend last year – that will be up for negotiation over their Medicare prices. The drugs are purchased through Part D, a prescription program for Americans over 65. The list includes blood thinners and treatments for diabetes, kidney disease, heart failure and arthritis and affects companies such as Bristol Myers Squibb, Johnson & Johnson, and Amgen amongst others
• Prudential released their first set of figures under the new CEO, the numbers were good and new business volumes were well ahead of forecasts
• Lululemon announced very good numbers as it seems to be one of the few retailers than continue to beat and raise guidance
• Lego (sadly a private company) saw increased revenue but margins fell due to increased costs in plastic and investments in factories and software engineers
• UBS reported for the first time since they took over Credit Suisse. A net profit of $28.9bn was slightly below expectations but the shares still headed higher
• Have we passed peak pets? Since the lockdowns this has come into question but the shares of Chewy seem to think so as the management team warned of a change in consumer behaviour
• Offshore wind is in a pickle. Orsted, the turbine manufacturer, lost a quarter of its value this week as it took a $2.3bn impairment write down on some of its US “assets” and the CEO warned they could walk away from other contracts
• Shares in both VISA and Mastercard headed higher as there were reports on them upping their fees
• The biggest IPO of the year is just around the corner with ARM targeting a valuation of $50-55bn, below the $64bn given a month ago by Softbank in a trade deal

SMALL CAP NEWS

We have mentioned the goings-on at M&C Saatchi a couple of times particularly due to the Vin Murria/AdvancedADVT stake in the company. The well-respected Zillah Byng-Thorne took over as exec Chair this week while a new CEO search is being undertaken as Moray MacLennan steps down. However, the plot thickens… Sky News ran a story stating that three previous executive directors (David Kershaw, Bill Muirhead, and Jeremy Sinclair) have bought c. £1m worth of additional shares to take their collective stake to c. 6%.

In the retail sector, Frasers Group – previously known as Sports Direct – upped their holding in Boohoo to 10.4% (7.8% 26^th July, disclosure) and ASOS to 19.8% (from 10.6%)

INTERESTING ELSEWHERE

With no sign of a nod to the cost-of-living crisis, the English Premier League paid out a record £2.36bn in fees during this summer’s transfer window, according to figures by Deloitte. With these records the average price paid for a male player rose £5.2m year on year to £24m. It wasn’t all headless spending as fees generated from sales hit £550m, primarily due to the large deployment of capital by Saudi Arabian clubs. Let’s hope the TV rights continue to rise…

MARKET DATA

As at 1^st September 2023. Source: InFront

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