News & Insight • Weekly Newsletters

21 February 2025 | Charlie Todd | William Buckhurst

That Was The Week That Was

MACRO

• The annual rate of inflation in the UK unexpectedly jumped to 3% (it was 2.5% last month). It was driven in part by the cost of air travel, food and private school fees. Rate expectations show that inflation is expected to peak at around 3.7% later this year. On the plus side, though, the “stickier” services component of inflation didn’t rise quite as much as expected
• The US continued to reshape its position towards Ukraine while Ukraine’s President Zelensky expressed his frustration about being left out of US negotiations with Russia in Saudia Arabia. Zelensky said Trump is living in a “disinformation bubble” while Trump called Zelensky a “dictator”. Meanwhile, China’s foreign minister said that Beijing supported Donald Trump’s bid to work with Russia
• Japan’s GDP growth came in at 2.8% for the fourth quarter of 2024, ahead of expectations and the third consecutive quarter of expansion. Meanwhile, the inflation rate climbed to 4% and the Japanese 10-year bond yield approached 1.5%. While Governor Kazuo Ueda has overseen three rate hikes in the space of a year, the continued strength in inflation encouraged speculation that the next hike could come sooner than expected
• The Conservative CDU, as expected, won the German elections; but as we went into Sunday night CDU looked to be refusing any form of coalition with the “far-right” AFD, who - with over 20% of the vote - achieved their best ever result

COMPANY NEWS

• Occidental Petroleum shares rose after they beat on earnings (although revenues slightly missed). They stated that they had reached their near-term debt reduction targets and hiked their dividend by 9%
• Intel closed the week sharply higher amid reports that TSMC had discussed the idea of operating Intel’s US factories while Broadcom would bid for Intel’s chip design and marketing business
• Schneider Electric shares rose after it forecast higher profits in 2025 after strong demand from data centres boosted sales in the fourth quarter of last year. Its industrial automation division also returned to growth in the quarter, echoing comments from German peer Siemens that automation was showing early signs of a cyclical rebound
• Walmart shares fell sharply towards the end of the week. Despite reporting earnings and sales ahead of expectations, they lowered their full-year guidance citing economic uncertainties, tariffs and the deportation of immigrants as potential reasons as to why sales might be lower than expected in 2025
• Hong Kong’s CK Infrastructure made a preliminary £7bn bid to take a majority stake in Thames Water, while indicating that it would require the troubled utility’s bondholders to take a significant haircut
• Alibaba rose strongly (up 8%) after reporting third quarter results as most metrics were above consensus estimates. Cloud Intelligence Group revenue increased 11%, slightly better than forecast as Digital Media & Entertainment sales were in line with forecasts. Like its US peers, it stated that cloud revenue growth driven by AI was set to increase and committed to capex
• Rio Tinto slightly missed expectations, and net debt was modestly higher than forecast. Production guidance was maintained, suggesting that 2025 will be led by better performance in copper and alumina. Oyu Tolgoi, the Mongolian copper asset, is expected to show growth ramping up by over 50% this year
• Shares in dating app company, Bumble, finished 30% lower after reporting in-line results but guided to lower revenue and profits. It also announced that it would continue its Fruitz and Official apps

HEADQUARTERS

With England and Scotland rugby fans heading to the Allianz Stadium, amicably known as “HQ”, to watch the Calcutta Cup, notable other headquarters hit the headlines:

• Among the fast-food chains operated by Yum Brands, and in a surprising move, KFC is relocating its US corporate headquarters from Louisville, Kentucky, to Plano, Texas. About 100 corporate workers will move from Louisville to Plano in the next six months as a result.
• This follows a handful of companies relocating to Texas. Elon Musk's rocket company SpaceX transferred its incorporation from Delaware to Texas last year (amid a pay row) and Meta CEO Mark Zuckerberg in January stated the company's content oversight teams would be moving from California.
• Oracle currently plans to set up its headquarters in Nashville, Tennessee, after CEO Larry Ellison announced the move from Silicon Valley to Austin, Texas

BUFFETT WEEK

Warren Buffett’s annual shareholder letter focused on his growing cash pile. Berkshire Hathaway’s enormous cash stake ended 2024 at a record $334bn, twice as much as a year earlier.  The increased cash stake largely came from $143.4bn of stock sales, including 62% of Berkshire's holdings in Apple and one-third of its stake in Bank of America. Berkshire has been a net seller of stocks for nine consecutive quarters.

Berkshire did buy some stocks though - it topped up its holding with roughly $405 million-worth of domestic oil company Occidental Petroleum, around $113 million in broadcasting corporation Sirius XM, and about $45 million in VeriSign, which is a provider of domain name registry services. Buffett also said that he would be likely to increase his holdings in the five Japanese trading houses he already owns. 

In a growing trend in corporate America, following the election of President Trump, Berkshire Hathaway removed any references to “diversity and inclusion” when referring to its hiring practices. 

THE WEEK IN HISTORY

2004: Former Enron chief executive Jeffrey Skilling is charged with fraud. He was originally sentenced to 24 years in prison but has since made deals to get that reduced. He was released in February 2019.

2020: Although stories about the Coronavirus emanating from China had been circulating since January, it was this week five years ago that the Covid canons start firing over the stock market. Global equities peaked on February 20^th and started falling sharply until they bottomed out in late March.

As at 21^st February 2025. Source: InFront