News & Insight • Weekly Newsletters

28 February 2025 | Charlie Todd | William Buckhurst

That Was The week That Was

MACRO

• A bizarre meeting in The Oval Office between President Trump, President Zelensky and JD Vance ends with arguments
• The new US Treasury Secretary, Scott Bessent, said the US private sector has been in a recession and placed blame on the Biden administration agenda. In a wide-ranging speech, Bessent said the Trump administration was looking to reverse what he characterised as huge government spending that came at the expense of the private sector
• Donald Trump said he would impose an additional 10% tariff on Chinese imports and press ahead with levies on Canada and Mexico from 4^th March
• US consumer confidence deteriorated at its sharpest pace in over three years, while 12-month inflation expectations surged, offering further signs that Americans are growing anxious about the potential negative economic impact of the policies of Donald Trump's administration
• Investors sold a record $3.3bn from Bitcoin ETFs in February, but the crypto-currency market surged late on Sunday when President Trump announced a strategic reserve fund to invest in digital currencies

COMPANY NEWS

• Nvidia reported a small beat on revenue, albeit with +114% growth, this was the “slowest” pace of growth in over two years. The new Blackwell chips accounted for 28% of the $39bn quarterly revenue. However, the Blackwell ramp has resulted in gross margins falling to the “low-70%s” but management stated that these should return to the “mid-70%s” going forward. The analysts’ call featured heavily the evolving use cases for AI, with CEO Jensen Huang repeatedly stating that we are still in the early stages of the cycle, citing that use cases are currently little beyond consumer large language models (LLMs), and are soon to move on to agentic, enterprise, sovereign, robotic, gaming, AVs, industrial use cases and more
• Vistra Corp, the Texan power generation specialist, who have been a huge beneficiary of the growing demand for AI datacentres, dropped sharply due to the lack of references to AI spend in their earnings release
• One loser from AI has been Chegg, the US online education service provider. Its shares fell by 31% following disappointing results. Chegg now has a market capitalisation of just $111m, having peaked at  $16bn
• In a surprise move, Unilever CEO Hein Schumacher is leaving after the Board wanted to accelerate the turnaround. Fernando Fernandez will step up from CFO
• AB InBev finished 8.6% higher after decent fourth quarter results that were better than expected across the board other than volumes, particularly in America
• Just Eat closed up 54.1% after Prosus announced that it had agreed to acquire the company for €4.1bn in cash. Prosus stating that the deal would allow it to compete more effectively against Uber Eats and Deliveroo
• Home Depot shares were up by 2.8% as they noted that there were some initial signs of recovery from the housing market. Results were in line and guidance was underwhelming. US off-price retailer rivals, TJX and Lowes also finished higher on their results
• Rolls Royce rose 15.9% after reporting excellent results as CEO ‘Turbo’ Turfan’s turnaround gains traction. Every metric was better than expected whilst they also increased mid-term forecasts. They also announced a new £1bn share buyback which would be completed through 2025 whilst also re-instating the dividend

TECH WEEK

In a bid to address sluggish sales, Apple has launched a new low-end smartphone, the iPhone 16e, priced in the US at $599. In the first three quarters of 2024, Apple sold 151.3m iPhones, which is some way behind the 231.8m sold over the whole of 2023. Customers are holding onto their phones and other products for longer. 

Moreover, the move from two-year subsidised phone purchase contracts to more transparent phone purchase plans has motivated some smartphone owners to wait to upgrade.

But at $599 it is still around 30% higher than the iPhone SE it replaces. That change puts the new 16e model in a whole different price category than its predecessor. And it means Apple has effectively abandoned the budget smartphone market, ceding those sales to Samsung, Alphabet (Android) and the China-based players.

RISE AND SHEIN

If Shein, the Chinese fast-fashion brand, lists in London, it will be one of the largest UK Initial Public Offerings (IPOs) in years. With an anticipated market capitalisation in the region of £40bn, the company would be valued at around a 25% discount to its last fundraising round in 2023. Moreover, it is undergoing last-ditch attempts to mend its image ahead of its London debut. 

In 2023 American regulators derailed attempts to list its shares in New York, citing concerns about the alleged use of forced labour. Its poor environmental record, combined with a lack of transparency, hasn’t helped. Unlike most of its competition, it does not disclose the identities of its direct suppliers. 

But Shein is working hard to mend public perceptions. To try and tackle fashion’s throwaway culture and cut waste, it has launched a second-hand sales platform, with over four million users in America. It has also committed to textile-recycling startups in Europe. Through the development of sophisticated algorithms, it achieves an unsold inventory rate of less than 2%, according to Boston Consulting Group. It has hired a global head of sustainability and committed itself to green pledges such as reducing greenhouse-gas emissions by a quarter by 2030 and reaching net-zero emissions no later than 2050

THE WEEK IN HISTORY

1933: The US Senate passes the Glass-Steagall Act, a substantial reform of the banking system, The bill was designed “to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes.” 

1995: Derivatives trader Nick Leeson sends a resignation fax to Barings Bank in which he admitted to making fraudulent and unauthorised trades that ultimately results in the bank’s bankruptcy

As at 28^th February 2025. Source: InFront