News & Insight • Weekly Newsletters

05 April 2024 | Charlie Todd | William Buckhurst

That Was The Week That Was

HAPPY NEW FINANCIAL YEAR!

MACRO

• Despite Chairman Jerome Powell on Wednesday insisting that the Fed is sticking with the view of three rate reductions this year, other Fed speakers sounded a bit more hawkish. Minneapolis Fed President Kashkari said there is a possibility of no rate cuts this year, and Chicago Fed President Goolsbee, typically a dove, said that inflation is coming down slower than he expected
• Rate hikes were kicked further down the road on Friday afternoon as US non-farms payrolls came in at 303,000 in March, higher than the 200,000 expected
• The ECB reinforced messages of a likely rate cut in June
• Commodities are moving higher with gold (above $2,300) silver, cocoa and copper particularly strong recently. Brent crude also moved north of $90 per barrel

COMPANY NEWS

• Walt Disney managed to keep the activist Nelson Peltz (Trian Partners) out of the boardroom in a shareholder vote leaving Bob Iger to “focus” on running the company. They also announced that a password sharing clampdown on Disney+ will be rolled out in June
• Two of the Mag7 were busy with Microsoft announcing they were going to split out Teams from Office due to competition complaints. Meanwhile Alphabet (Google) announced they were looking into charging for their AI capabilities which is in stark contrast to their “free-mium” business model
• The share price of Tesla continued to fall as they announced Q1 deliveries of 386,810 vs 449,080 expected
• UBS restarted their share buy back after halting it in the wake of their takeover of Credit Suisse
• PVH Corp (owner of Tommy Hilfiger and Calvin Klein) announced a poor outlook for sales sending shares significantly lower. Levi Strauss sales were comparatively better as its DTC (direct to consumer) offering is gaining traction
• Schlumberger, the US oil services specialists, announced a deal to buy its smaller rival ChampionX for $7.7bn. An opportune takeover but interestingly Aberdeen’s RMSpumptools was recently bought by ChampionX for £90m – two owners in a year!
• UK listed but global information services company, Experian, announced a savvy bolt-on acquisition of Illion, one of the leading consumer and commercial credit bureaus in Australia and NZ, for A$820m 
• With upcoming elections in the States, healthcare can become a political football. US managed care stocks (particularly Humana, United Health and CVS) reacted to news that the initial proposal for Medicare Advantage rates for 2025 would remain unchanged, compared to the expected increase. Only once in the last decade has the final rates notice not increased
• Mondi and DS Smith announced an extension to the PUSU (put up or shut up) deadline whilst the other bidder, International Paper, outlined their proposal

WATER WATCH

With the Vitality County Cricket Championship starting this week it would be remiss of us to not talk about the weather. Even with March being particularly wet (27% higher rainfall than average but no records) it didn’t help the damp balance sheet of Thames Water as its parent company Kemble Water formally told its lenders it failed to pay interest on £400m of debt due. Kemble Water supplies water and waste services to 25% of the UK’s population and is funded entirely through dividends paid by Thames Water 

THIS WEEK IN HISTORY

1917: In an emergency Sunday session, US Congress formally declares war against Germany in response to President. Woodrow Wilson's call that "the world must be made safe for democracy." The news is largely priced into markets as the next day the Dow Jones drops 1.6% to 93.10

1998:  The Dow Jones Industrial Average closes above 9,000 for the first time, just over one year after it broke through the 8,000 barrier

MARKET DATA

 As at 5^th April 2024. Source: InFront

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