News & Insight • Weekly Newsletters

22 September 2023 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• UK inflation came in lower than expected for once at 6.7%
• As expected, the Federal Reserve did not raise rates but did not rule out another hike later this year. At the same meeting, the Fed made significant upgrades to GDP and employment forecasts
• The Bank of Japan held interest rates at minus 0.1% and maintained its yield curve control programme despite August data showing that inflation exceeded the 2% target for the 17^th straight month
• Goldman Sachs and JP Morgan both slightly increased their GDP forecasts for China on the back of better recent economic data

POLITICAL WATCH

• Business responds to Rishi Sunak’s back pedalling (keeping it green) on the 2030 ban on the sale of new diesel and petrol cars. “Our business needs three things from the UK government: ambition, commitment and consistency,” said Lisa Brankin, Chair of Ford UK “(this move) would undermine all three” 

COMPANY NEWS

• A basket of UK retailers reported this week, with Next, DFS and JD Sports all showing their own resilience to the belt-tightening consumer. Dunelm also announced plans for more expansion and shares in Cazoo halved after it announced a restructuring agreement with convertible notes exchanged for debt and equity
• The results from Phoenix Group were mixed - very strong cash generation was muted by slight disappointments on IFRS17 conversion and Solvency II levels - but the investment story continues as it transforms from running-off closed life books, to one that is acquiring and growing open life books too
• Halma reiterated its guidance for “good organic constant currency revenue growth in the year ahead”
• Reassuring results from Renishaw where weakness in the semiconductor end markets was offset by investment in low emission transportation, defence, additive manufacturing and robotics
• Kingfisher (owner of B&Q) shares disappointed after it lowered its profit guidance by -6% primarily due to weaker trends in Poland but also France with current trading slowing to -2.4%
• Contract drug manufacturer Lonza announced that CEO, Pierre-Alain Ruffieux will leave the Swiss company by mutual agreement at the end of the month, amongst worries about the group's medium-term prospects
• Feedback from the Disney analyst day on the parks segment of the business is that they are going to invest another $60bn and buy more cruise liners

SMALL CAP NEWS

The directors of Pendragon, the car dealership which owns brands such as Stratstone and Evans Halshaw, agreed a proposal with Lithia for it to purchase the UK motor business for £250m, create a strategic partnership for Pinewood in the UK and invest £30m into an American JV. It later rejected a bid from largest shareholder Hedin Mobility which interestingly had raised £110m in July to fund acquisition deals as pointed out by Crystal Amber Investment Trust.

NEWS NEWS

Lachlan Murdoch takes over from his nonagenarian father at Fox and News Corp this week. Rupert Murdoch announced his ‘retirement’ and will become Chairman Emeritus from where he said he would “be watching our broadcasts with a critical eye, reading our newspapers and websites and books with much interest, and reaching out to you with thoughts, ideas, and advice.”

INTERESTING ELSEWHERE

In a nod to the excellent new Chemical Brothers album “For That Beautiful Feeling” with track titles such as ‘Live Again’, we must mention that new data showed the number of people aged 100 or over in England and Wales hit a record high in 2021. There were 13,924 centenarians in 2021 – 2,636 males (‘hey boy’) and 11,288 females (‘hey girl’) – up 24.5% from 2011 and much higher than the 110 registered in 1921. The Netflix series about Blue Zones (areas of the longest living populations) also mentions the secrets to getting to 100 which thankfully included wine!

THIS WEEK IN HISTORY

1873: After US bank Jay Cooke & Co. declared bankruptcy on Sept. 18, 1873, Cornelius Vanderbilt, the world’s richest railroad tycoon, held a secret meeting with other wealthy investors convinced that he and his allies could step in and prevent a stock market collapse the following day by aggressively buying shares of targeted stocks.  Unfortunately, while Vanderbilt was able to stave off a market crash for one day, the sell-off resumed the next day

1889: Nintendo was founded as a playing card company by Fusajiro Yamauchi in Kyoto, Japan. It wasn’t until 1977 that Nintendo launched its first home video game machines, the TV Game 15 and TV Game 6

MARKET DATA

As at 22^nd September 2023. Source: InFront

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