News & Insight • Weekly Newsletters

22 March 2024 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• In the US, the Federal Reserve left rates unchanged but Chairman Powell did reiterate that he still expects three 25bps cuts this year (the market is pricing an 80% chance of a cut in June).
• In the UK, the rate of inflation fell by more than expected as February CPI was 0.6% month over month vs 0.7% expected with yearly CPI of 3.4% below estimates, reaching its lowest level since 2021
• The Bank of England held rates at 5.25% and Governor Andrew Bailey suggested they still have some way to go in tackling inflation
• As widely expected, the Bank of Japan hiked rates for the first time since 2007
• The Swiss central bank announced a surprise rate cut
• A year after Japan reopened its boarders for tourism, one popular destination: Gion, Kyoto’s Geisha district, is having to limit the number of tourists passing through the ancient town with fines being levied for anti-social behaviour

COMPANY NEWS

• Accenture shares fell as they guided to the bottom of their range. The shares were looking expensive having benefitted from the AI trend and AI growth remains impressive, but it is only 10% of sales
• Conversely, Micron had fantastic results, beating most analyst expectations and even mentioning they were one of the main beneficiaries of AI
• On the back of recent results Unilever CEO, Hein Schumacher announced a new growth action plan which included 7,500 job cuts, £800m of cost savings and the spin out of their ice cream business which includes brands such as Magnum and Ben & Jerry’s.
• Sad news in the sports world with Great Britain’s most decorated female Olympian Laura Kenny retiring. The news at Nike wasn’t much better as they reset their strategy as they are not going to hit their double-digit growth target and will focus on sport. This was followed by an underwhelming print from Lululemon as the middle-market consumer starts to row back on spending
• Luxury groups are struggling in Asia and Kering was the latest to confirm the downtrend with sales of their Gucci brand falling 20% year over year in the Far East
• ASML shares rallied on the back of a report from newspaper De Telegraaf saying that the Dutch government had launched a cross-ministry effort, dubbed “Operation Beethoven”, to encourage ASML to continue to invest in the country
• Positive comments from one of the UK’s most respected business leaders, Lord Wolfson, as Next announced record figures and saw a 17% jump in international sales
• Phoenix Group rose from the ashes as its shares rallied due to its operating profit coming in well ahead of expectations. They said that they would be moving to a progressive dividend policy

ACTIVIST INVESTING

We usually see activist investors targeting unloved companies by taking an ownership position in the business (via shares and/or derivatives) and then pressing management for a change. Currently that is the case at Unilever as Nelson Peltz (Trian Partners) is on the board.

It was interesting to find out that Elliot Management (who have recently been rebuffed in their takeover for Currys) had taken a 5% position in Scottish Mortgage Investment Trust

With UK businesses looking comparably cheaper than their US peers should we expect more Barbarians at the Gate?

THIS WEEK IN HISTORY

1975: King Faisal of Saudi Arabia, who had cut off the supply of oil to the US, is shot to death by his nephew

2023: Utah is the first state to limit social media for minors, including an overnight curfew and parental consents

MARKET DATA

 As at 22^nd March 2024. Source: InFront

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