News & Insight • Weekly Newsletters

15 September 2023 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• UK GDP numbers for July came in slightly weaker than expected at -0.5%, following growth of +0.5% in June
• In the US, year-on-year CPI was marginally higher at 3.7%
• Slightly better news from China as retail sales grew by 4.6% in August from a year ago, beating expectations of 3% growth. Furthermore, the People’s Bank of China cut banks’ reserve requirement ratio by another 25 basis points. There were some stronger manufacturing numbers too
• A “dovish hike” as the ECB raises rates by 0.25% to 4% but hinted that rates may have peaked
• US$5.6bn – according to the Anderson Economic Group this is the GDP cost to the US economy if the strike against all three major autos (Ford, GM and Chrysler) which started this week, were to last for just 10 days

COMPANY NEWS

• BP’s CEO Bernard Looney stepped down as undisclosed relationships come to light. This might lead to the company drifting away from their green goals
• Apple announced their new iPhone but the shares edged lower due to the lack of excitement
• Disney announced that it had reached an agreement with Charter to bring its channels back to the service ahead of Monday Night Football
• European non-food retail earnings season kicked off with Inditex, Primark (AB Foods) and H&M all holding their outlooks with healthy margins due to their market share and some good growth
• RTX, formed by the combination of United Technologies and Raytheon, released further details related to problems with its Pratt & Whitney engines division that it initially disclosed in July. RTX increased the scope of the required engine checks on the fleet of turbines that power Airbus’s latest A320 aircraft and grounded hundreds of the single aisle jets for months costing the company billions. Melrose could also be liable for up to $200m
• UK semiconductor chip designer, ARM lists on the US Nasdaq at a $54.5bn valuation. The shares rose 25%
• Shares in Tesla reacted strongly on the back of a research note from Morgan Stanley which stated that Tesla’s Dojo supercomputer could add as much as $500bn in value to the company
• Results from Fevertree were aptly mixed as revenue in UK, US and Europe was better than expected but management commented that sales since the end of the period were impacted by “unseasonably poor weather in the UK which has subdued the wider category over the key summer trading period.”

AI WATCH

As governments continue to seek to control – if not understand – AI, Nvidia, Google and Microsoft amongst others have agreed to adhere to a variety of standards to ensure ‘safety, security and trust’. The EU expects their own proposed measures – which would see AI creators liable for the consequences of the use of their products usage – signed by the end of this year

PAYMENTS NEWS

Shares in Visa finished lower after it was reported after the close on Wednesday it was beginning the process of allowing the large US banks to sell their shares in the company which are currently valued at US$96bn. In a filing, Visa noted that it was starting discussions with investors to amend its share structure implemented before its IPO in 2008 with its current structure having three share classes.  It was designed to ensure that the banks that owned Visa ahead of the IPO would still be on the hook for costs arising from its long running litigation with the largest merchants in the US such as Walmart and Target. The dispute with merchants began in 2005 when both Visa and Mastercard were both owned by the banks with retailers accusing the payment networks of violating antitrust laws by illegally inflating swipe fees that merchants pay on each transaction

THIS WEEK IN HISTORY

1942: The United States began selling War Bonds to raise US$13bn to fund World War II efforts

2008: American Insurance Group (AIG) becomes another of the beneficiaries of the series of bailouts of financial institutions deemed “too big to fail”.  The Federal Reserve and the Treasury Department poured a total of US$180bn into the beleaguered insurance group

INTERESTING ELSEWHERE

The trade links between the European automakers and China was probably one of the most friendly on earth. However, having reported last week that China is eyeing the EU car market, Ursula von der Leyen announced this week that Brussels would start to investigate whether Beijing is using lower energy and labour costs to unfairly support their own car industry and therefore dent imports from elsewhere

MARKET DATA

 As at 15^th September 2023. Source: InFront

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