News & Insight • Weekly Newsletters

10 May 2024 | William Buckhurst | Charlie Todd

That Was The Week That Was

MACRO

• The UK is officially out of a recession as the economy grew by 0.6% in the first quarter – faster than both the US (0.4%) and the Eurozone (0.3%)
• The Bank of England kept interest rates at 5.25% but the committee was split at 7 (keep) and 2 (cut). After Governor Andrew Bailey’s comments the market expects rates to be cut pretty soon
• Chinese CPI data was positive at 0.3% in April, offsetting disappointing factory price declines
• The Biden administration look to be raising tariffs on Chinese electric vehicles from 25% to 100%

COMPANY NEWS

Results from 90% of S&P 500 companies so far – of those, 78% have beaten EPS (earnings per share) consensus and 59% have surpassed revenue expectations reports X poster Wall St Engine

• BP’s adjusted net income for the first quarter missed analyst estimates at $2.72bn v $2.92bn expected, but it plans a $1.75bn share buyback.
• When the hunter becomes the hunted. UK listed paper company DS Smith is in the process of being taken over by US firm International Paper, but Reuters announced that Brazilian firm Suzano Holdings was looking at IP
• UBS reported Q1 results with early signs that their takeover of Credit Suisse (to be completed at the end of the month) was fortuitous
• Walt Disney results were in line but the market got spooked by the financial guidance and the reliance on sequels for the franchises rather than new films
• Siemens Energy (who now own Siemens Gamesa) had better than expected results (net income of €108m v €29.9m loss predicted) as the company tries to emerge from a tough trading period
• Good results from the Italian bank, UniCredit plus there were signs that M&A activity in banks on the continent looks to be starting up again with Spanish bank BBVA bidding for Banco de Sabadell. There are a number of market pundits that have been expecting this for some time
• Another takeover offer for Wood Group from Dubai company Sidara at 205p – we highlighted the last bid by Apollo at 240p – so “opportune” would be the word!
• Canadian listed Shopify had decent results but then pointed to its margin falling by 0.5% - the shares fell and the market isn’t forgiving poor or underwhelming future guidance
• Similar story with Airbnb – better than expected results, poor guidance, share price fell
• Bookings at Uber increased 20% to $37.65bn v $37.97bn expected and EBITDA also grew 82% year on year. Shares fell when the company revealed losses on equity investments
• Arm had slightly better than expected results and management commented that all AI software models relied and run on the Arm compute platform and that as those models become larger and smarter, their requirements for more compute with greater power efficiency could only be realised through Arm – let’s see

“QUANT KING” DIES

Jim Simons, a mathematical genius and code breaker in the Cold War, who then founded a pioneering quantitative hedge fund called the Medallion Fund at his company Renaissance Technologies has died. From 1988 to 2018 the fund averaged 66.07% gross annual return (Renaissance did take a 5% annual fee plus a 20% performance fee which then increased to 44% from 2002).

“I did a lot of math. I made a lot of money and gave almost all of it away. That’s the story of my life”

THIS WEEK IN HISTORY

1867: The tracks of the Central Pacific and the Union Pacific were joined at Promontory, Utah, to form the first transcontinental railway in the United States

1994:  Nelson Mandela, whose efforts to end apartheid led to his imprisonment and earned him the 1993 Nobel Peace Prize (with FW de Klerk), becomes leader of South Africa.

MARKET DATA

The UK market continues to perform well…

As at 10^th May 2024. Source: InFront

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