News & Insight • Weekly Newsletters

29 September 2023 | William Buckhurst

That Was The Week That Was

MACRO

• US bond yields continued to rise sharply with the ten-year pushing through 4.6%, a 16-year high
• Not helped by JP Morgan CEO Jamie Dimon who commented that the world may not be prepared for a worst-case scenario of US interest rates reaching 7% combined with stagflation. Dimon noted that rates may need to rise further to curb inflation and that the difference between 5% and 7% rates would be more painful to the economy than going from 3% to 5% was.
• Meanwhile, the core PCE index rose 0.1% month-on-month in August, which was less than the 0.2% expected and below July's 0.2%.  Year-on-year, the measure was down to 3.9% from 4.3%, which was in line with expectations
• UK workers are taking more sick days than at any stage in the past decade. Workers took an average of 7.8 sick days in the past year, up from 5.8 before the Covid pandemic, according to a study by the Chartered Institute of Personnel and Development

COMPANY NEWS

• Nike showed another quarter of “just doing” and delivering, whilst earnings were in line with consensus
• Accenture highlighted weakness in revenue from spending from tech clients as they guided to 2%-5% growth rather than 3%-6%. They also upped the dividend by 15% and announced a share buy back
• Diageo reiterated guidance with organic growth of 5%-7% and operating profit growth of 6%-9%
• In what was a widely expected move, the FTC sued Amazon accusing the company of monopolising online marketplace services by degrading quality for shoppers and overcharging sellers and accused Amazon of engaging in a course of conduct to exclude rivals in online marketplace services and stifle competition
• Trading in troubled Chinese real estate developer Evergrande was suspended after reports that its founder was in police custody
• Peloton closed up on the week after it was announced that it had reached an agreement to partner with Lululemon. The companies announced a new five-year partnership which involved using Peloton workouts and teaming up on apparel, manufacturing co-branded clothing that Peloton could sell on its website and in stores
• Two profit warnings in the gambling sector with Entain (bwin, Coral, Ladbrokes, PartyPoker and Sportingbet) stating that net gaming revenue had been “softer than anticipated” after the summer; and William Hill owner 888 announcing the performance of the group had been "mixed", with issues including customer-friendly sports results in September and the ongoing impact of safer gambling changes within the UK driving a year-on-year decline in revenue

AI WATCH

In what can only be described as talking yourself out of a job, an interesting comment from the Chief Services Officer of the European Central Bank, with Myrian Moufakkir stating “From playing chess to piloting drones — machines have become much smarter and play a role in many areas of our lives. So why not use artificial intelligence for central banking?”

Amazon has announced it will invest up to $4bn in Anthropic, a 2-year-old AI systems startup. The move was perhaps prompted by progress being made by OpenAI’s chatbot which promises a marked improvement in the way it interacts with users compared to Siri and Alexa. In further AI related news, as a direct result of the significant energy required to power the new technology, Microsoft are looking to hire a principal program manager for nuclear technology responsible for implementing a global Small Modular Reactor strategy

MERGER MARKET WATCH

The value of mergers announced this year, $2 trillion, is at its lowest level in a decade

THIS WEEK IN HISTORY

1829: Through the efforts of Robert Peel, England's first professional police force, London's Metropolitan Police (often called Scotland Yard), was founded

1932: In the week that Amazon was sued by the FTC, this week also marks the 91^st anniversary of when President Woodrow Wilson signed the Federal Trade Commission Act into law

MARKET DATA

As at 29^th September 2023. Source: InFront

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