News & Insight • Weekly Newsletters

13 October 2023 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• Headline US CPI rose 0.4% in September and the yearly rate held steady at 3.7% as compared to market expectations for a tick lower to 3.6%. Core CPI eased to 4.1%
• Commodities such as gold and oil and gas rose to recent highs due to Middle East conflict worries
• The Fed minutes, albeit backward looking, were unanimous that rates would stay restrictive. They upgraded their comments about the US economy from “moderate” to “solid” while highlighting downside risks
• Fresh data from the Office for National Statistics showed that gross domestic product (GDP) increased by 0.2% in August, compared to a 0.6% drop in July
• Barclays consumer card spending grew 4.2% year-on-year in September – less than the latest CPIH* inflation rate of 6.3% but higher than August’s growth figure of 2.8% – as the late summer sun boosted in-store spending. Meanwhile, the Rugby World Cup drove spending at pubs and bars, yet growth slowed on restaurants and takeaways as Brits begin saving money for the festive period

COMPANY NEWS

• US earning season kicked off with the banks (as it tends to) with JP Morgan, Citigroup and Wells Fargo all beating expectations. JPMorgan CEO, Jamie Dimon, did warn it may be ‘the most dangerous time the world has seen in decades’
• Microsoft finally received clearance from the UK’s Competition and Markets Authority to complete its $69bn takeover of Call of Duty maker Activision Blizzard
• LVMH shares sold off over the week as revenue growth slowed to 9% rather than the c11% expected
• Pioneer was taken over by Exxon Mobil for $60bn as the latter tries to buy more assets in the Permian Basin. “We took something people thought was uneconomical and turned it [into] probably the largest oil and gas basin in the world,” CEO, Scott D Sheffield, told the Financial Times. “When you include all the natural gas and the natural gas liquids with the oil, it’s as big as Saudi Arabia.”
• PepsiCo assuaged fears about weight loss drugs being to blame for lower consumer spend on snacks and drinks as they released quarterly earnings and revenue that beat analysts’ expectations and raised its outlook for its full-year earnings
• Following on from “Diet Watch”, promising data from a Novo Nordisk drug trial looking at the efficacy of its blockbuster drug Ozempic in treating diabetics with kidney disease sent a shockwave across the healthcare market including dialysis groups DaVita (US) and Fresenius Medical Care (Germany) and Baxter International, the renal care specialists. Novo Nordisk then upped their growth expectations for the 2023 to 40-46% from 31-37% that it had released in August
• More weakness at the lighter end of the construction industry with both SIG and Travis Perkins announcing profit warnings
• British American Tobacco was told by the US federal drug regulator to stub out its sales of its menthol flavoured Vuse Alto vap, the most popular in the country due to underage usage
• Next announced a deal to buy Fatface for £115m

TRAVEL WATCH

1990’s pop music has had a renaissance with STEPS going on tour and Barbie Girl by Aqua getting a new lease of life. Sadly, the lyrics to We Like to Party by the Vengaboys couldn’t be further from the truth with Mobico (previously National Express) trimming its profit outlook and suspending its final dividend as “the wheels of steel [were not] turning”. The transport group said profitability was taking longer than expected and they were putting their North American school bus business up for sale – hopefully with the tag line of “The Vengabus is coming, And everybody's jumping, New York to San Francisco, An intercity disco”. Closer to home I Squared Capital is putting the wheels in motion to buy Deutsche Bahn’s international transport business Arriva, one of the biggest operators of red London buses and UK train services

BOARD SURVEY

PWC’s annual survey of boards showed some marked changes in corporate views: 50% think they are overpaid vs 70% in 2017; 73% believe gender diversity is important vs 90% in 2016 and 54% said that their business strategy accounted for ESG factors vs 64% two years ago

THIS WEEK IN HISTORY

1996: Fox News is launched by Rupert Murdoch

2008: US President George W. Bush signed the $700bn Troubled Asset Relief Program bailout into law

MARKET DATA

 As at 13^th October 2023. Source: InFront

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