Jeremy suggests that the equity market's buoyancy is partly a short-squeeze on Mag 7 as AI spend continues to reach new frenzied highs, and asset managers want "safe" US Dollar assets. The US may have started this war, but their assets and their energy are largely safe from its immediate effects.

Meanwhile Kevin Warsh is suggesting a new - and more nuanced - approach to Central Bank structures...lower interest rates for sure, but with a dose of academic justification.  Playing to the crowd, perhaps...persuading the bond markets, hard to tell. 

Echoes of Suez reverberate - and the "petrodollar" arrangements of arms sales and protection look thoroughly undermined.  Jeremy points out that this feels like "hypernormalisation"....everyone knows that the world order is changing, but is afraid to say it out loud. 

China may be the silent victor, but Japan's financial position and/or the bond markets could pose the real risk to markets.

Investors might do well to look to real-world assets, especially if energy exploration is about to become important once again.

Latin America could benefit from a more hinterland-focussed USA.  Good luck to the soon-incoming Fed Chairman....what a time to be Kevin Warsh.

Markets have been stung, although the US Dollar is once again the "safe haven" asset, making the inflationary impact worse for non-USA countries.  Those inflationary risks abound, and the independence of central banks in this critical period will once again be an issue.

Equity markets appear to be less worried than bond investors, although this could change, depending crucially on how long the current impasse persists in the all-important Strait of Hormuz.

When the oil price is more volatile than bitcoin, you know we're in interesting times... 

Key Topics & Highlights:

• Geopolitics & Trump 2.0: Analysis of the Trump administration's aggressive stances toward NATO and Europe, and its impact on global relations.
• Market Volatility: How the "Davos circus" and recent fears have driven investors into a risk-off mode, with strategies for navigating the uncertainty.
• The Commodities Boom: Discussion on the dramatic ascent of precious metals, driven by a weakening dollar and rising geopolitical insurance premiums.
• The Inflation vs. Growth Debate: An exploration of a hot U.S. economy (near 5% growth) versus moderating Western consumer price inflation, and its bond market implications.
• Six Themes for ’26: A breakdown of top investment themes for the year:
  • Robotics and Autonomous Driving.
  • The Space Economy.
  • The Rise of the Chinese Consumer.
  • Healthcare Catch-up.
  • Energy will join the Commodities Party.
  • The Ongoing "Great Rotation" (Capital moving from Dollar assets/Treasuries to gold and other geographies). 

Never any kind of advice, for information purposes only.

Brought to you by Progressive Equity. 

Don't forget to subscribe and leave a review to help us reach more investors navigating the 2026 markets!

There has been a data dump of macro numbers and rate decisions, and an important decision by Europe's leaders not to seize frozen Russian assets.

Overall, the critical question for investors in 2026 is whether central banks have done enough to tame inflation and pave the way for lower rates. Jeremy again highlights Japan as a source of risk to the bullish scenario.

Next week will be quiet, but always worth noting who might be sneaking out RNS's last thing on Christmas Eve.

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The primary focus is on the mixed messaging from the Federal Reserve with its interest rate decision described as a hawkish cut. Jeremy describes how we might interpret this move, which is now signalling only one further rate cut in 2026.

Kevin "The Real Asset" Hassett is widely expected to be announced as Jay Powell's successor in January. Further, this has also been widely interpreted as allowing inflation expectations to run wild, thereby impacting the prices of gold and silver.   

However, the Fed decision makers are also looking at their responsibilities for employment and the functioning of financial markets. To this end, you might be mistaken that they have restarted QE. The move to inject liquidity into the short-term money markets might not be strictly QE, but it does expand the Fed's balance sheet, at least in the short term.

Jeremy points to Japan as the source of the market dysfunction that policymakers might be preempting via this (temporary) injection.

In US megacap land, news comes of a $1.5 trillion IPO for SpaceX, and a busy week for the Ellison family. Larry Ellison's Oracle highlighted the risks around the AI data centre build-out, but also his son and other high-profile backers were behind the $108bn hostile bid for Warner Bros.

Jeremy highlights the precedent for such giant hostile bids, and it is an interesting list! Surely nothing to see here.

Looking ahead, there will be further evidence next week of the weakening US jobs market.

The events in Venezuela and the Ukraine peace process will also be centre stage.

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Macro markets have helped Rachel Reeves avoid short-term repercussions of the Budget. 

Next week’s Fed rate decision may be overshadowed by gyrations around the potential seizure of Russian monies - and what that means for the value of the dollar in the eyes of anyone who might one day upset the West. 

Jeremy and Gareth are joined by Progressive building and construction analyst and Property Week columnist, Alastair Stewart, to offer his views on the likely impact on the UK housing and housebuilding markets following Rachel Reeves' second Budget. Spoiler alert, he's bullish.

Looking ahead, Jeremy expects an easing of financial conditions from the US as, among other things, the White House considers ways to improve the Republicans' chances in next year's Congressional midterms.

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Our traditional reminder to keep one eye on Japan, where 10-year bond yields are soaring and the currency dropping...beware the carry trade unwinding with a bump. 

In the UK, we're all waiting to see which of the many-mooted taxes will be inflicted on us - the chances of a real surprise look pretty small.  Progressive client Gear4Music delivered a strong H1 result, perhaps demonstrating the resilience and operational gearing that we've been discussing may be a feature of a large number of UK micro-caps.  They have weathered Brexit, Covid, supply chain pressure and now consumer pain - with costs kept lean and strong operational efficiency, any recovery will flow straight to the bottom line - which is exactly what G4M has demonstrated. 

Next week we have US retail sales and durable goods data, and FOMC members with a number of speeches in the diary.  Confusion and contradiction remain, as the US economy sees Wall Street (mainly the Magnificent 7) whose AI and capex-fuelled world is growing rapidly, contrast sharply with Main Street where the average American is feeling real pain.  Should interest rates be set to rein in tech-bro exuberance and gently deflate a potential bubble, or to give some cost-of-living relief to the down-trodden masses ? 

This suggestion across most front pages today has thrown the gilts and the value of the pound into some turmoil.

Meanwhile, in the US, the government is reopening, but to the realisation that continuing to borrow without spending has exacerbated tight dollar liquidity, as evidenced by the sharp fall in Bitcoin.   

We are entering a more volatile market phase amid the absence of official US government data on October's employment and inflation. Essentially, investors must fly blind through a period of stormy weather. What could go wrong?

In the UK equity market, despite the politics, things are looking incrementally better, with the IPO market showing signs of fully opening up.

Gareth highlights FDM and Jeremy 4imprint as examples of how to cope with difficult times and manage expectations. Both companies had inline or marginal upgrades, and their share prices responded strongly.

Looking ahead, with the US remaining quiet, it's about inflation data from the UK and Japan, both high and sticky, and increasingly problematic.

Investors in the UK will be on the latest developments from the rumour mill at No. 11. In the US, investors will be looking for unofficial signs that the authorities might be prepared to loosen conditions to ease the impact of the shutdown.

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The UK, however, is still quaking at the impending budget, with so many possible taxes discussed that they can't all be needed...there may even be relief once the bad news is out.  Trainline's results looked solid, but Tim Martin at Wetherspoon used a trading update as a platform to berate the government on everything from corporate regulation to nuclear power.

Next week - and perhaps many weeks to come - will see the US Supreme Court deliberate the legality of Trump's tariffs...so this week's lack of fireworks may be a postponement rather than a cancellation.  What will happen when Liberation Day meets its own Judgement Day...? 

The Fed FOMC delivered a hawkish rate cut, which sent markets higher; however, things might get more uncertain as the US government shutdown starts to affect the collection of macroeconomic data for future releases. 

They also discuss the improved prospects for Javier Milei to deliver his small-state solution in Argentina, following a surprisingly positive congressional midterm election result. 

Meanwhile, the Mag Seven US mega tech companies continue their remarkable rise, with Nvidia still the clear winner. And the primary constraint on these tech titans' ambitions is reliable baseload energy, so it was unsurprising that Bill Gates and the UK government are signalling a retreat from specific net-zero policies and targets.   

Finally, the backdrop and outlook for the UK's stock market is looking and feeling more positive than perhaps was feared only a few weeks ago, ahead of next month's Budget. A string of IPOs and anecdotal evidence, including the update from broker Cavendish, suggests we could have a better run into year-end after the Budget is out of the way.

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There is a sense of finality about Trump's latest attempts to get Putin and Zelensky to agree on ceasefire terms. Trump is losing patience with both parties. The choice of Budapest as the location for Trump and Putin's meeting was no coincidence.

Meanwhile, Trump's on-and-off talks with Xi seem to be on again. The prospect of an emergent Grand Bargain remains on the table, giving equity markets hope.

Asset markets saw a significant rotation on Tuesday, with a dramatic collapse in precious metals prices and a spike in bond prices, leading to a decline in key sovereign yields. Helpful for both Rachel Reeves and Scott Bessent.   

However, it remains unclear if this is just a short-term price correction in gold or a longer-term structural shift. Should investors, still fearful of the pending fiat collapse, buy the dip in precious metals?   

Similarly, one needs to ask why bond yields are falling. Jeremy doesn't think there is any reassessment of governments' fiscal responsibility, but rather that it reflects worries about slowing economies or worsening credit quality in private markets.

Regarding the ongoing debate on the AI bubble, they discuss whether former UK deputy PM Nick Clegg can add any value to the issue. What do you think? 

Looking ahead, Jeremy covers imminent US and Japanese inflation data and also notes the prospect for updates from the Mag Seven NASDAQ giants over the coming few weeks.

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Jeremy highlights the ongoing strength of gold - FOMO bubble or long-term trend driven by debasement of currencies ?  And the great rewards of being a gold miner - with unparalleled revenue per ounce, and costs of drilling and transport (often oil-based) in decline.  

Bitcoin hasn't participated in the recent gold rally - although over a longer timeframe than the last few months, it has hugely outperformed.  Perhaps both can be safe havens in a world of unaffordable government debt and spiralling-down currencies ? 

Meanwhile equity markets have been relatively stable, although slightly spooked by the current pressure on US lenders, driven by greater-than-apparent losses flowing from a number of insolvencies that shouldn't have rippled the way they have. 

Gareth talks about Gear4Music, Sanderson Design Group and Oxford Metrics, all of which this week have highlighted decent trading (or better) along with the benefit of much cost-control, in each case well received by investors.  

Next week we have Chinese growth data and UK inflation which could exceed 4% for the first time in over a year.  The end of the week will bring US inflation (they're still publishing despite the government shutdown) - anything much above 3.0% will both rattle markets and possibly cost someone at the Bureau of Labor and Statistics their job.  Finally, don't forget Japan...Friday also brings their latest inflation print; as always we better hope there's nothing too surprising. 

Gold (and other precious metals) move to all-time highs, representing a foot on the brake. What are they worried about? Well, there are emerging risks around credit conditions in private markets and increasing concerns that the AI capex cycle is turning into a fully fledged bubble, one that Jeff Bezos, no less, called a good bubble. Jeremy mentioned the under-reported British Bicycle Bubble of the 1890s. See link for details: https://www.historyhit.com/the-great-british-bicycle-bubble-of-1896/

Trump, the peacemaker, is making progress in the Middle East, but not in time to win this year's Nobel Peace Prize. However, the consequences for any deal could involve much lower oil prices and maybe a disruption to the ascent of precious metals prices.   

Gareth discusses the UK car loan mis-selling update from the FCA, its impact on Vertu Motors and Secure Trust, and this week's results from Beeks Financial Cloud.

Looking forward, the macro news includes trade and inflation data from China, as well as employment and GDP data from the UK.

With the US government shut down, there are question marks over what to expect from the US market or whether the inflation data on October 15th will even be released.

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Over Q3, the $ has stabilised and the £ has weakened. The US is "boom baby boom", while the UK is flatlining with no economic growth and a long wait for the Budget on November 26th. 

The primary driver of growth in the US is a vast circular investment pattern in AI data centres. With increasing political pressure, the Fed is being compelled to initiate a rate-cutting cycle. However, AI might be a world-changing technological revolution, but as the dot-com bubble showed us, it can also be a financial bubble. 

In a week that Open-AI was valued at $500bn Gareth talks about the similarities to the early 2000s.

To complete the bearish take, there are also some early signs of stress in the US credit sector, which some compare to the early stages of the GFC.   

Gareth covers updates from some UK companies, including Pharos Energy, Watkin Jones, and Xaar, that continue to show resilient performance.

Finally, there are signs of life in the IPO market as Beauty Tech begins life as a new £300m market cap company, which might be the first of several new issues on their way to the London market in the coming months.

Looking forward, the US government shutdown has put the production of economic data in doubt, with the inflation numbers for October 15th also in question.

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Bond markets got the yips over talks of IMF visits for France and the UK. However, no one informed the FX market, and the value of the £ remained solid, helped in part by the weakening of the $. However, it's all relative, and the real value of things is reflected in gold and other real assets.

US labour markets showed more signs of weakness, but with persistent inflation.

US tech giants continue to dominate, but with little scrutiny of the returns that their substantial AI capital expenditures might yield. Oracle was in the spotlight this week, with some extraordinary results, launching its founder back into the top spot on the world's richest person leader board. 

Despite our volatile politics, UK equities remain in demand, and risk assets more broadly remain in good fettle.

The long wait for the UK Budget might be because they are working on a cunning plan for growth, or they are simply waiting for things to improve. Of course, both could be true. Either way is a frustrating wait.

Meanwhile, the results and updates offer a mixed bag, indicating that the UK consumer remains active. 

Jeremy offers a view on Treatt's fall from grace and its Board's disappointing acceptance of the modestly pitched PE offer the company received this week.

Looking ahead, the main focus will be on the Fed's rate decision, where the overwhelming expectation is for a 25 bps cut to 4.25%.

But most people will be more interested in President Trump's second state visit to the UK, which begins on Tuesday. Shhh, nobody mention Jeffrey Epstein.

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In the absence of much small-cap news, the pair consider the misfortunes of Drax, the former coal-fired power generation group, now reinvented doing the "green thing" of burning wood pellets to produce electricity.  This week saw news that the FCA is investigating the veracity of some of the their historic claims around the source of these pellets (Drax claims they're mainly "off-cuts" of wood that's already being logged).  Whether or not there's an issue, it is possible that the attention might focus minds on the genuine green credentials of shipping wood across the Atlantic to burn it, and then claiming that by capturing the carbon released and then burying it, the whole process is "carbon negative".  More broadly, some governments are actively against the renewables agenda, and others actively can't afford it. 

Next week we get the excitement of US jobs data - Trump wants data weak enough to prompt a big interest rate cut, but not weak enough to look like a recession. Whoever's in charge of "deciding" the number better tread a careful line, or they might join the jobless stats for the following months.

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UK inflation and the long end of the gilt market both look like they might be getting out of control. UK inflation has now been above target for 49 out of the last 51 reports. Not conventionally a scenario in which to cut rates, unless, of course, it is transitory.   

Jeremy talks about the significance of Jay Powell's speech at Jackson Hole later today (3 pm UK time) and asks whether he is prepared to die on the hill of inflation and central bank independence.

Gareth then highlights the dramatic warning and share price reaction from WHSmith this week and its potential implications.

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While the UK reporting season is a bit dull, the US Q2 reports have been more positive. There is a long wait for the Autumn Budget in the UK, and many companies are likely to face a long wait for the inevitable tax increases. Lots of comments out there about gambling taxes, IHT and maybe VAT increases.

Overall, the UK economic news this week has been poor but not calamitous.

Equity markets are moving to all-time highs, with powerful rallies seen from the early April lows, particularly in the US. 

Maybe investors are looking ahead to a period of policy easing. However, in bond markets, the message is more mixed. Will the Fed cut rates next month? A stronger-than-expected US PPI print for July indicates that tariff-induced inflation might be on the way, giving Powell a reason, or excuse, to keep rates on hold. 

There is a setup for a big showdown between the White House and the Fed. If Powell is focused on his legacy, then he might want to go out as the man who stood up to Trump and defended the economy from inflation, as Paul Volcker rather than Arthur Burns.

Gareth covers the updates from Xaar and Zoo Digital. Jeremy highlights the warning from Shoe Zone and suggests the shares might have overreacted to the news. Almost certainly meaning there is worse to come!   

Looking ahead, next week, there is UK inflation data, which might increase to 4%. So, it's not the typical environment in which to cut rates. 

We also have Japan's inflation data, which is expected to remain at a tricky 3.3%.

The main event is likely to be the outcome of the talks in Alaska. Will Trump and Putin move the lines on the map of Europe? 

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Plenty of noise around tariffs still, and still difficult to determine any signal. Meanwhile, the Fed and the BoE have both had contentious rate-setting meetings, highlighting the unprecedented way in which like-minded policymakers have differing views about the future path of monetary policy.

Jeremy questions whether we are seeing the end of the era of central bank global orthodoxy. There will be much chat at Jackson Hole about the existential threats to central bank independence and their ability to operate under the auspices of their increasingly fiscally challenged political masters.

Meanwhile, US company reporting is more positive than the newsflow from the UK, although equity markets are grinding higher on stronger capital flows.

On this point, Gareth mentions the divergent fortunes of Sanderson Design, which updated this week, in the US and the UK.

Looking ahead, we can expect a UK unemployment report, which is not likely to be encouraging for Rachel Reeves; US inflation data that is likely to confirm an ongoing rise in the core measure; and a UK Q2 GDP print, again, which might signal bad news for Rachel.

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The US FOMC decision (to leave rates unchanged) allowed Jay Powell to highlight that the credibility of the Fed relies on his ability to not bow to political pressure - highlighting that risks lie in both directions.  Jeremy's comment is that reduced rates could let the genie out of the bottle, with inflation expectations significantly heightened and permanently elevated. If the US is run like an emerging market, it could well end up with emerging market inflation - and interest rates - with major implications for all of us.  Meanwhile, Scott Bessant is looking to stablecoin mechanisms and untapped bank liquidity/leverage to help plug the gap in demand for US treasuries... 

Next month sees the Jackson Hole gathering of central bankers - but next week we have the UK MPC interest rate decision.  Markets are expecting a 25 basis point cut - but Jeremy cautions that the UK doesn't often like to jump the gun on rate moves, so the US "hold" this week might spell trouble for those expectations. 

Gareth talks about Progressive clients STV, IG Design Group, Forterra and SDI Group, and Jeremy highlights the strength of the UK market, buoyed partly by bid activity - with £3bn of incoming capital for IPF and Just Group, both of which saw takeover announcements.

Looking to the next week, US non-farm payroll data will show how the economy is coping with both tariff impacts and the changed migration dynamics in the US job market.  US PMI and UK rate decisions are due next week, but the main event is still likely to be Trump-related, whether and how much he provokes genuine and material trade wars with China, Canada, Mexico, Brazil...or others ! 

 
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Trump's new tariff "magic money tree" has encouraged him to ramp up the rhetoric on tariffs. Critically, the inflationary impact of higher tariffs is now coming into focus, impacting the growing feud between the White House and the Federal Reserve. 

Japan has struck a deal with the US, but the EU and China are awaiting their turn. Both of these larger trading partners present difficulties that the market seems relatively sanguine about. The risk that China plays hardball has been all but discounted.

Macro data shows that inflation remains elevated in both the US and the UK. The UK labour market has softened over the past eight months as the economy faces rising taxes in the Budget and the government deals with higher-than-expected borrowing. 

EY has reported on the highest level of UK profit warnings in 25 years. Several businesses, such as Treatt and Judges, have warned due to exposure to the US market and the weaker dollar. The UK market, meanwhile, continues to move higher, which appears to be more a result of capital flows than fundamentals.

Gareth discusses recent results from Van Elle and Severfield in the construction space.

Looking ahead, it is jobs week in the US, which should indicate a further slowing in the labour market. Additionally, the Fed Chair's press conference should be worth watching, even though no one is expecting any movement in rates.

We also receive the BoJ rate decision, which, as ever, can send shockwaves through the rest of the world's financial markets. Let's see.   

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Risk assets continue their march higher with Nvidia and Bitcoin reaching new all-time highs. Nvidia is the first company to be valued at over $4 trillion. 

In the UK, Gareth talks about housebuilder Springfield and merchanting business Lords Trading as prime examples of UK small-cap companies executing well on sensible capital allocation policies.

Looking ahead, it is mainly about inflation with data releases in the US, the UK and Japan.

Brought to you by Progressive Equity. 

We are halfway through 2025 and have had a turbulent Q2. Equity markets are recovering everywhere, but persistent dollar weakness has made the US seem less exceptional than usual.

In H2, the pressure will be on Scott Bessent to deliver some magic in the treasury markets and refinance well over a $1 trillion of longer-duration paper. The stronger-than-expected labour market, as measured by the non-farm payrolls yesterday, is not helpful. He is still wishing for a 10-year rate below 4.

The UK equity market remains attractive, and there are signs that the IPO market may reopen during H2. Let's see.

We discuss Secure Trust Bank's decision to put its motor finance activity into run-off, which investors appear to have welcomed. However, it is a sign that the regulations are driving this lending activity away from the transparency of the PLC world, which would be a shame. 

Looking ahead, we have some UK GDP data, and Wednesday marks the deadline for Trump's tariffs, which could lead to increased volatility. 

This week, Gareth and Jeremy spend some time discussing the new Bitcoin Treasury Company model being developed among a cohort of UK smaller companies. Is it magic money or a dangerous bubble?

Gareth also covers updates from Sanderson Design, Gear4Music and Vertu Motors.

Next week is jobs week in the US, and we will get inflation data for the Eurozone. Watch for a non-farm payroll number below 100,000, which the market is likely to take positively.

Brought to you by Progressive Equity.  

Progressive client news focussed on one stock, Oxford Metrics, whose H1 results statement highlights H2 weighting along with a skew towards US academia - a market segment clearly under pressure from Trump's defunding of large chunks of US educational budgets.  Smart Manufacturing growth will, over time, diversify the group away from these risks, but investors are worrying about the near-term. 

Following a recent IPO, the UK now has its own version of the US-based Strategy (fka Microstrategy) - a "bitcoin treasury" business known as The Smarter Web Company. The stock has rocketed post its recent float, and Jeremy and Gareth discuss the fact that, from almost all bubbles and collapses, there are persistent changes, and some survivors...

Speaking of survivors, Thomas Moore's fund at Aberdeen has now moved to trading at a PREMIUM to its NAV - after a decade of discounts...and the fund is raising new capital. 

Evidence of green shoots then, both in terms of micro-cap investor risk appetite, and investor perceptions of value at a steady and high-quality long term investment trust. 

Next week looks quiet - US GDP and inflation data will allow Trump to blame "Too Late Jay" Jerome Powell (and maybe Joe Biden) although clearly events in the Middle East will be key. 

More broadly, we have seen the US / China trade deal being pieced together, although President Trump couldn't help himself launching some other tariff threats even as the China situation appears to be stabilising.  Look for an interesting discussion next week about Jay Powell's competence if the FOMC dares to not lower rates...

On the UK front, Jeremy makes the point that the ongoing M&A departures are nowhere near to being replaced by IPOs - by a factor of 30:1, based on some work by Peel Hunt.  UK stocks are disappearing at a steady (and worrying) rate - those who remain are clearly "resilient" as we discussed previously, and they're becoming more and more scarce....hopefully this scarcity makes them attractive - a positive sign for valuations among those not (yet) acquired by mainly American bidders. 

We had Progressive client news from Gear4Music, who acquired some cut-price assets from a failed competitor, Idox, who saw 9% y/y growth in their order book in the H1 they reported, and Intuitive Investments Group who raised just under £10m to propel activity in Hui10, a business involved in modernising and streamlining the antiquated Chinese state lottery.  

Next week we have UK inflation and a rate decision (likely no change), and the US Fed rate decision (likely no change but watch for Trump's response).  Also, keep an eye on Japan -  they have a rate decision on Monday and inflation data on Friday; hopefully no surprises, although as Jeremy reminds us, at some point Japan could make headlines again.  In the meantime, we hope that the Middle East sees a degree of calm returning.

Brought to you by Progressive Equity. 

The UK has had growth forecasts downgraded by the OECD, to levels well below the OBR (and presumably Rachel Reeves's) expectations - so the likelihood appears to be further tax increases and spending cuts.  The Mansion House Accord and the Pensions Investment Review give some (but potentially morally questionable) impetus and cause for optimism - but Wise Technologies plans to move to a main US listing, and a pulled cobalt-related IPO bring us back to earth. 

Progressive stocks mentioned include IG Design Group, tinyBuild, SDI, all with news, but most broadly relevant is Van Elle whose early-stage involvement in housebuilding projects is being delayed by building regulator logjams....alongside earlier news from MJ Gleeson this points to a more-cautious view on the recently-rosy prospects for housebuilders. 

Next week is all about US data - non-farm payrolls, inflation data and sentiment from the University of Michigan...

Brought to you by Progressive Equity. 

Meanwhile, Japan's manufacturing prowess is under attack from China, its biggest competitor and from the US, its largest customer. The fact that Japan holds over a trillion dollars of US Treasury debt is a card to consider in its trade talks with the US. 

Meanwhile, Trump's tariffs have encountered a judicial roadblock, causing a sharp recovery in risk assets. However, this was not so helpful for bond markets, where investors had hoped that tariffs might plug some of the fiscal hole left by Trump's Big Beautiful Bill. 

In the UK, Rachel Reeves has signalled her intention to term forward its debt, increasing her interest rate exposure but lowering her short-term funding costs. Additionally, the IMF is offering air cover for her to bend her unbendable fiscal rules. A treat not afforded to her predecessors. Watch out for the spending spigots to turn fully on.   

The takeaway is that long-term global inflation expectations are out of the bottle, the bond market term premia hares are running, and there is a return to the old idea of outrunning the looming debt crisis. This raises the risk of monetary debasement, which should be beneficial for Bitcoin, gold, and (selectively) equities.  

Gareth covers updates from Beeks, and Watkins Jones. 

Looking ahead, it's jobs week in the US. We get EA inflation data and the ECB rate decision. Additionally, confirmation that the economy slowed sharply in Q1 could raise concerns about the potential for a recession in the US.   

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In the UK, inflation and government borrowing were higher than expected, making it a bad week for Rachel Reeves. But at least we have rejoined the EU (well, agreed to agree with them about a few things).

Despite all this, the UK market remained in a decent mood with small and mid-cap stocks outperforming large-cap stocks.

Gareth discusses updates and results from Forterra, IDOX and SDI Group.   

Next week, some US Q1 GDP data is widely expected to show a sharp decline in activity.

However, investors' main focus is likely to remain on the long end of the bond market and how to avoid the impact of FX and bond volatility. 

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However, although the market has round tripped from the lows of early April, there is lasting damage to financial market confidence from the weaker dollar and stubbornly higher long-term bond yields.   

The Saudis traded lower oil prices for US weapons and AI chips to help it turn its energy to power AI data centres.

But, the probability of a US recession has reduced.

The UK economy grew faster than any other G7 economy in Q1, and the UK equity market continued to perform better.   

Gareth discusses news from Progressive research clients: Idox announced an acquisition, Gamma Communications gave an AGM update, Vertu Motors released FY 2025 results, which talk of a good start to the year, Nexus Infrastructure released H1 results, which report on the housebuilding recovery progress, and Secure Trust Bank reported a good start to their new financial year.

Looking ahead, we have inflation data from the UK and Japan, both signalling increases, which looks like a particular challenge for Japan. We feel that they should take some advice on how Argentina has coped with its much greater inflation problem over the last 12 months!

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UK stocks discussed include ZOO Digital and Van Elle, and Jeremy describes the divergent outcomes for Alpha Group and Argentex...two payments/FX trading platforms who have had their resilience tested in recent years, with wildly different results.

Next week will see UK unemployment and GDP data, with US retail sales, inflation and consumer sentiment... watch for an angry Trump.   

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The UK small-cap space is delivering strong performance from stocks able to deliver not-worsening performance...we discuss Watkin Jones, Sanderson Design Group and IG Design as well as global shipping heavyweight Clarkson.

Jeremy highlights that lower energy prices could help pressure Putin towards peace, as well as potentially saving Labour's bacon - if they can wean themselves off Net Zero....

Next week is all about interest rate decisions...Trump vs Powell back in the headlines.

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Severfield is a case in point, but this week has seen a number of examples. Jupiter and AJ Bell are also talking more positively.

Still, risks abound, as the unfortunate Argentex investor base have seen - a canary in the coal mine, showing that volatility or abnormal market activity can lead to unforeseen consequences.

Jeremy wonders whether the attack on US university funding could likewise lead to unexpected outcomes....

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Although Trump's "shock and awe" has calmed this week, gold is rising, the dollar is falling and US government debt is highly volatile...it feels as though we've had "America's Brexit moment", a "global Liz Truss event" and now a re-run of Covid supply chain pressures - as we hear reports of ships halted in ports awaiting instruction, and markets can't tell whether current demand is real or stocking-up for an uncertain future. The UK has had more than its fair share of such volatility - and maybe we can manage it better.

Micro-cap news from Progressive clients tinyBuild and Gear4Music shows that stocks delivering "not worsening" news, having cut their costs and adapted their models, can perform strongly - both up 20% at one point this week.

The Easter weekend weather in the UK is forecast to disappoint - let's hope the UK's broader performance across the rest of the year reflects what we see as quite some potential. 

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Jeremy makes the point that the USA is now experiencing a Brexit AND "Liz Truss" moment at the same time - resulting in a falling dollar and rising rates.  Keep an eye on those two, and the gold price, and you have three metrics which give dashboard of the current situation - and level of trust in the US administration.

While Trump's economic guns are all trained on China, Scott Bessent is on his way to Japan - a major owner and buyer of US treasuries....remember the carry trade unwind panic of mid-last year...? 

Closer to home, we hope that the UK is next on Bessent's list, with a trade deal in the offing.

Small-cap news was from Nexus Infrastructure, Beeks and SDI Group.

Big data next week includes China GDP (required to be c.5%), UK inflation for March, US retail sales and hopefully a rate-cut from the European Central Bank. 

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UK stock news from Gear4Music, Pharos, tinyBuild, Intuitive Investments, Peel Hunt and Alphawave. 

Next week - in addition to early responses to the US tariffs - we get Chinese inflation data, plus both inflation and sentiment survey info from the USA.

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Ironically, Trump's erratic tariff-wielding tactics could drive capital AWAY from the USA, to the benefit of China, Germany and even the UK equity market.

And this week, a couple of UK stocks with "reasonable" news - Xaar and SRT Marine - saw 25%+ price moves suggesting that many stocks are priced for pessimism.  Gamma Communications delivered a solid 2024, and we think investors are more wary than they should be of German expansion.

Next week sees Chinese confidence data, European inflation and crucially US jobs...as well as 2 April seeing Trump's tariffs (probably....) come into effect. 

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Overall the forecasts of GDP growth in the major economies in the world are coming down, but inflation expectations remain heightened. Big US corporates such as Nike and FedEx cited trade uncertainty as a major issue and it’s been referenced increasingly in UK RNS announcements.

With US focus seemingly now more on longer term interest rates than the level of the US stock market, overriding market sentiment is one of capital flight from the US to the rest of the world. A survey documenting the capital allocation intentions of the world's largest asset managers listed the biggest one month allocation away from US equities ever recorded. Some has gone to Germany and the wider European market, some has gone into China and there's also been a big allocation into US treasuries. Although there's no direct evidence of much of this capital finding its way into the UK market yet, Jeremy and Gareth remain hopeful!

In the UK, Gareth talks about Beeks (BKS) and FDM who both had results. Employment data this week was pretty much as expected. However UK government borrowing data was running ahead of expectations,which doesn’t bode well for next week's Spring Statement and the brewing government dispute about whether they should continue to look to raise taxes or to reduce government spending.

Next week we have UK inflation data on Wednesday, and on Friday we get US PCE data (the Federal Reserve’s preferred inflation measure).

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The UK, and arguably Europe, haven't yet seen much benefit from the outflow of capital from the MAG Seven, but remember, the whole German market cap is not dissimilar to the value of Microsoft - so there's a lot more to go for.

UK companies discussed include STV, Forterra, Van Elle, Secure Trust Bank, Cakebox, Care REIT, Hornby and Science Group/Ricardo. 

Next week the big news is around inflation - hope for no upside surprises (especially from Tokyo). 

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In terms of the impact on Europe and the UK, Germany is stepping up and spending big, which is driving up both (European) stock markets and (German) borrowing costs.  Trump seems to be ignoring the stock market and is probably happy that US borrowing costs are falling - crucial for the upcoming refinancing of a significant chunk of US government debt.  

Closer to home, Severfield is seeing tough conditions which reflect a sluggish broader economy, and XP Power's £41m raise shows that UK markets aren't completely closed.  

Next week, we'll discuss US jobs data and inflation...unless Trump 2.0 delivers another surprise! 

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One thing that might get done is a US/UK trade deal...Jeremy describes how the stars could align, and how the UK's separation from Europe might save us from the worst of Trump's tariffs.

Absent much other UK stock news, Jeremy talks about LSEG, whose results demonstrate just how small the London Stock Exchange actually is, relative to the rest of the group's business. This leads to discussion of the US, where the OTC is generating real interest, and Singapore, where the authorities are actively promoting local investment and local listings.

Next week is jobs week in the USA...fingers crossed that all is well.

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Following JD Vance's lecture to Europe in Munich, the US initiated peace talks with Russia in Riyadh. This confirmed that the old world order has moved to a new one involving power projection by strong men operating in their own economic and strategic interests. Europe, the UN, and NATO are not involved.

Starmer's meeting with Trump will be a career-defining event for him and a pivotal opportunity for the UK as a potential bridge between the US and the rest of Europe at this critical juncture for the West.

It also represents Trump's desire to tidy up Ukraine and Gaza to get to his main match-up, the strongman heavyweight contest between the US and China. 

Xi has been boosting China's stock market and technology sector through a symbolic handshake with Jack Ma at a conference this week. The pair infamously fell out in 2021, with Ma disappearing from public view for a few years.   

Alibaba shares and the wider Chinese stock market have performed much better than the US Mag Seven over the last month but remain well below their peak values of 4 years ago.

Gold had another strong week, and Trump says he is going to Fort Knox to check that the gold is still there. Gold and real assets have become more central to investor options as bonds have lost their appeal as risk-off assets in a more inflationary world. 

Japan records much higher inflation, which seems to require much higher rates. However, the yen carry trade worries of last summer have not recurred.

In the UK, there remains mixed economic data, but, on balance, there is less likelihood of significantly lower rates soon as inflation trends up for the next few months.     

Gareth runs through the week in company news, with caution from Thruvision and Zoo Digital and positive updates from Oxford Metrics, Beeks and Springfield Property.

The main event will be the German election on Sunday, which will have consequences for wider European politics, but don't expect things to happen quickly. 

There are some US GDP and PCE inflation data, but the headlines will likely remain dominated by politics, with Starmer's trip to DC and Trump checking his gold reserves in Texas. 

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One outcome has been a new all-time high in the gold price, indicating heightened risks and uncertainties for global investors. The US inflation data also came in hot. Yet, counter-intuitively, it didn't dent the gold bull market, indicating perhaps investor concerns over policy errors or breakdown in the relationship between the Treasury and the Fed.

Relative to other monetary metals, gold looks expensive, and silver or platinum might offer better opportunities to protect against fiat money debasement. Not advice; do your own research. 

China's equity values have recovered strongly after the Deep Seek AI revelations. Alibaba's stock has risen over 40% in less than a month, indicating the impact of the dispersal trade.

The UK economy unexpectedly grew in Q4 last year. While negative sentiment surrounds the economy, UK assets remain relatively attractive to global investors.

This week, one example of how the UK government prioritises economic growth is emerging in the newsflow of the motor finance and retail sectors.

With significant exposure to car loans, Close Brothers and SU made constructive updates this week, indicating that motor finance might avoid the protracted drag on consumer lending that PPI became. 

Gareth covers the impact of government policy on Secure Trust Bank and Vertu Motors.   

Looking ahead, we will get UK inflation data next week, which is likely to indicate a flat annual rate of 2.5%. 

Also, we get Japanese inflation data, and the accompanying risk of the yen carry-trade unwind.

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The pair muse on Trump's tariff-based discussions with various world leaders, with Xi Jinping (the obvious and most-dangerous outlier) adding a bit of Chinese spice to the mix, with some largely-unreported moves.  Alastair describes the UK building stocks, and their reaction to the Bank of England's rate cut, as well as some (good and bad) fundamental drivers of sector activity. 

Progressive clients with news included tinyBuild and STV Group. 

Next week we have US inflation and both UK and EU GDP...which could put this week's halving of expectations in context...

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The week has been dominated by DeepSeek's sudden unveiling of a low-cost Chinese-created competitor in the AI (large language model) world.  George provides some useful perspective on what this means more broadly.  If the Magnificent Seven US tech names lose some of their lustre, the much-vaunted dispersal trade might follow, as investors look to move capital elsewhere...maybe even as far as the UK market. 

The pair discuss SThree, Manpower, FDM, Sage & Computacenter, and Progressive clients Idox and Van Elle (both with relatively upbeat updates).

Next week we have the Bank of England rate decision on Thursday, sandwiched by US PMI data earlier in the week and employment (non-farm payrolls) due on Friday.  Unless China drops another (figurative) bombshell in the meantime...

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Closer to home, Rachel Reeves is unveiling policy after policy designed to spur growth...can it last? And can it work?   

This week saw a slew of announcements from UK stocks - builders are doing better than retail, and in the Progressive camp, both Intuitive Investments Group and SRT Marine caught our attention.

Next week, we have US and European interest rate decisions, and US inflation...Donald will surely have something to say!

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Jeremy and Gareth discuss the ways that the USA is causing trouble for other countries - and Rachel Reeves.  But some benign inflation data rode to the rescue, and UK companies reporting "in line" trading are putting on double-digit percentage price gains: perhaps too much negativity is priced in??

We discuss Genus, Trustpilot, Hunting and Vistry, as well as Progressive clients Petro Matad, Xaar and Gamma. 

Next week, watch for Japanese inflation - and their interest rate decision.

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In terms of the UK, our "safe and stable" position feels a bit less safe and a lot less stable with public finances in the spotlight and rising long-term yields.  Jeremy has a suggestion for how to find and position a portfolio for these markets.

Next week, we have UK inflation and GDP data, US inflation and a number of China stats.   

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In the UK, higher inflation is partly driven by higher wage settlements, which running at twice inflations rate unsurprisingly led to the BOE decision to keep rates on hold this month. Stubborn inflation is a feature of both sides of the Atlantic. 

In the UK, the 10-year gilt yields are at levels not previously seen for over 20 years, surpassing the Truss tantrum level of two years ago. 

In other news, Japan kept its rates on hold, and China needs to stimulate further but is playing a waiting game. Putin suggests he is prepared to meet Trump, and the incoming US administration has shown it is prepared to play hardball over the debt ceiling brinkmanship, threatening to close the government down over the holiday break.

In company news, Gareth discusses a major contract win for Idox, and Petro Matad's progress and improving outlook for 2025.

Jeremy shares an update on his painful investment in Artisanal Spirits. Gareth suggests how the company might crystallise some of its unrealised value. Watch out for President Xi bringing a premium bottle of malt whisky for Donald Trump as his inauguration present next month!

Merry Christmas and a Happy New Year to both our listeners; you know who you are!

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The Labour government is enacting its own version of DOGE-lite in the UK. This week, the prime minister criticised Whitehall for its unacceptable "tepid bath of managed decline."

In the UK market, they discuss updates from housing beneficiaries Van Elle and Springfield Properties.

As Ashtead exits the FTSE 100, having worked its way up from near extinction 30 years ago, Games Workshop appears for the first time. From a single shop in Hammersmith, GAW has become a global content creator, and to mark the occasion, it has agreed a landmark TV and film deal with Amazon.

Alphawave Semi further complicated its relationship with the UK market by launching a convertible bond issue. S&U highlighted the motor finance industry's regulatory and legal issues. At the same time, Close Brothers and others saw large intraday price moves as the courts gave the plaintiffs leave to appeal against the FCA allegations the industry faces. Perhaps we are near the bottom of this story.

Looking ahead, the UK GDP data shows that the growth rate is slowing from 1.6% to 1.3% yearly. Next week, rate decisions will be made in the US, the UK, and Japan. The BoJ probably retains the largest element of surprise.   

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Stock news from Progressive clients in the form of Oxford Metrics and SDI Group, both of which are battling troublesome end-markets, but in each case with a degree of medium-term optimism.

Today will have delivered US jobs data, and next week the highlights are US inflation and UK GDP. 

The UK has been busy, with four Progressive clients ( Idox, Severfield, STV Group and IG Design) delivering news over the week, along with a flurry of results and trading updates.  Next week is "jobs week" - a couple of PMI Survey datapoints (China and the USA) plus US non-farm payrolls which are due on Friday. 

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Meanwhile, Trump makes his cabinet nominations, Musk-related stocks, bitcoin and the US Dollar all rise. Gareth's travels are more local...a private investor fair in Derby, with a slightly more gloomy feel about it...!  Progressive client news is mainly Gear4Music's ongoing revenue performance, and next week holds a couple of inflation-related data points, but will mainly be dominated by Mar-a-lago...

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Progressive clients Zoo Digital, Forterra, Petro Matad all had news - and Mike gives a quick synopsis of Secure Trust Bank's Capital Markets Event from Wednesday. 

Next week has a bit more in the way of UK & European data due early in the week, US jobless data, and UK consumer confidence on Friday....so plenty to look forward to, and to provide some direction for markets.

The main topic of discussion is obviously the US election, the initial market relief at the quick result, and market hopes for a capital-friendly and economically successful second Trump term.  The benefits of "drill, baby, drill" vs the pain of tariffs and removal of large pools of low-cost labour (illegal migrants) from the US economy ...the jury is still out, and may be out for some time. 

Meanwhile, although both the Bank of England and the US Fed lowered rates by the expected 25 basis points on Thursday, the mood music from both was more muted in terms of the path to future cuts.

Gareth talks through recent results from Progressive clients DP Poland and Secure Trust Bank, and Alastair discusses the UK Budget's impact on the building sector - with the big winners being housebuilders and infrastructure players as "capital investment" of £100bn over five years will make its way into the sector.  The downsides mainly relate to the Employer's National Insurance rise, with a 'triple whammy' of pain for the sector.

Next week should be quieter, with US CPI data on Wednesday the main economic highlight of the calendar. 

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Rachel Reeves may have (just) avoided a Kwarteng moment, but bond investors have been worried at the level of debt.  Equity investors, on the other hand, have shown relief that AIM's IHT benefits are largely intact following Wednesday.  But it was a "big" Budget with lots of new tax, and lots of near-term expenditure without lots of detail or reassurance around the detail or the benefit of much of that spending. 

Elsewhere, oil prices have tumbled, Japan has lurched to another political crisis, and gold, silver and bitcoin are all strong.  US tech Q3 has been good, but not good enough for investors - stocks have fallen on relatively "in line" trading. 

In the UK, we've seen a flurry of small deals - three Progressive clients (Vertu Motors, Van Elle and SDI) all bought UK-based businesses where the vendors may have been hurrying to beat any Budget changes to Capital Gains Tax.  Even discounting the Budget flurry, there does seem to have been a modest pickup in market activity.  

Following the recording of the podcast, Friday's US non-farm payrolls figure was weak...a gift for Donald Trump who can point to a weakening economy.  Next week obviously sees the US election - plus rate decisions in both the UK and USA on Thursday, where 0.25% reductions are expected...although the lower-rate trajectory might be less clear than previously hoped. 

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Bond yields globally are rising despite central bankers in general telling us that inflation is dead, although some more hawkish comments came from the Fed.  Meanwhile, the IMF has raised a warning flag over the “disconnect” between risk levels and financial market performance…who knew ?

Progressive clients with news included Gear4Music with an update showing nice quarterly revenue progression, and debt reduced, and Thruvision delivered H1 results in line with the recent update. More broadly in the UK, we talk about Franchise Brands considering a move up to the LSE main market, Morgan Sindall doing well in the building segment and Mike Ashley moving on from Mulberry to Boohoo…

Next week for UK investors will be all about the Budget, although it’s also US jobs week with the “lottery” of non-farm payrolls on Friday which could provide someone with useful fuel to spray onto the US election fire…it should be an interesting week !

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The UK has seen inflation fall to within the target range, with unemployment lower than expected....Sterling fell back against the dollar as interest rate expectations decline.  Retail spending has been strong - as maybe the feelgood factor is returning.  The Government's 10-year plan published today highlights almost every sector (except mining and oil & gas) as "growth".   Meanwhile, the US government continues to pile on debt, and China is seeing house price declines which even a powerful "Beijing bazooka" might struggle to reverse.

The Progressive clients with news were Thruvision, Sanderson Design Group and Vertu Motors...all seeing tough conditions in different areas, and all trying to find and exploit the pockets of growth and stability.

Next week - nothing of note!  Last time we said that though, the Japanese market collapsed and the USD/Yen carry trade hit the headlines for all the wrong reasons...
 
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The UK seems to be doing reasonably well despite investor worries over tax increases and bond-market concerns about increased borrowing.  Jeremy quotes a chancellor to Louis XIV, and suggests that Rachel Reeves will do well to produce a budget that "plucks the goose" enough to produce plenty of feathers, but doesn't bring too much hissing.  If she does that, markets could rebound strongly.

Despite all the headwinds, the UK market is still showing signs of life...deals from (or for) THG, CAB Payments, Sainsbury's Qatari investors and Tritax Eurobox all suggest that activity is beginning to rebuild, although investment groups are still seeing outflows, and company managements are selling shares, probably in advance of the Budget.

Progressive stocks with news included Petro Matad (closer to production at Heron-1), Beeks (strong FY24 results), ZOO Digital (fireside chat with management around AI risks and opportunity) and this morning a small acquisition from Oxford Metrics of a neatly-adjacent measurement business, Sempre. 

Next week sees a flurry of info - from the UK (unemployment data and inflation), Europe (expect a small rate cut), Japan (inflation - beware the carry trade) and China (info this weekend on stimulus detail, and late next week on GDP growth).  Plenty going on!

 
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In the UK, as well as a buoyant housing market, we have a suddenly-active set of equity markets, with plenty of deals, fundraisings and another IPO all on the radar.  Progressive clients tinyBuild, Petro Matad and STV all updated this week, and the overall UK plc report-card is looking quite positive...hopefully the Budget won't deliver any negative surprises. 

Just after recording this we will get the reaction to the US jobs number, some "extra spice" (as Jeremy puts it) for the end of this week, given its notorious unpredictability and high levels of historic revisions.  US inflation and UK GDP are the main data points for next week proper. 

 
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The main macro surprise this week has been some rapid and arguably extreme stimulus activities undertaken by the Chinese authorities...Jeremy points out that although this has been seen as something of a "sugar rush" of good news (Chinese equities rose by almost 4%) there may be a deeper concern over what the Chinese are seeing that requires such a major set of measures. 

Commodities responded well to the anticipated boost to China's economy - except oil, which has been weak and where the Saudi abandonment of a $100 per barrel target could lead to further price declines. 

In the UK, the Labour government is under orders to "cheer up" and the OECD is helpful with accepting more-lax borrowing rules to fund the Green Transition.  Hopefully the bad news has been delivered up-front, and the Budget at the end of October may be less painful than we've been led to believed.  

Alastair describes some recent caution he's seen in past weeks and months, with housing markets reflecting some of the doom-mongering talk, as confidence has perhaps ebbed, despite reducing rates. An unusually strong summer has been followed by a muted start to the usually-stronger autumn.  ISG, a major contractor in the industry has collapsed into administration, with risk that Government projects especially in prisons and schools may be impacted.  Exposure to bad debts so far seems contained (as many saw this coming) but could turn into a fast-breeder issue if other contractors are brought down. 

UK company news has seen a flurry of reporting - Progressive clients ZOO Digital, Van Elle, IG Design Group, Tern and Oxford Metrics all with updates, and initiation of coverage on a new client, Nexus Infrastructure.  Exposure to overseas markets (especially the USA) is proving problematic with a number of economies potentially slowing.  There are also risks of disappointment as strong Sterling means companies translate overseas profits into less-favourable exchange rates for UK investors.  

Next week sees more news from China with some PMI data which might drive sentiment, especially given this week's stimulus news.  We also have inflation data from the EU, but the main event might be USA payroll figures, with a weak expectation (130k vs last month's 142k)...if the number is weaker than that, expectations on US interest rates might decline which could provide a boost to equities.  

 
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But there is risk - Jeremy highlights that the last time the Fed cut rates by 0.5% in one go was (coincidentally also September 18th) back in 2007...at that time, perhaps the Fed knew some things that the rest of us didn't, but either way, the following 15 months saw the S&P halved in value under what we now know as the Global Financial Crisis.  This time, we're all hoping it is different.  All perhaps except Donald Trump who is saying that the Fed must think the US economy is in very bad shape...

UK inflation was static this week at 2.2%, and rates were held steady. 

UK markets saw a flood of corporate reporting, which was generally on-track with expectations.  Progressive had four clients with news - Springfield Properties (Scottish housebuilder) saw debt reducing and returned to paying a dividend, alongside an extension of our forecasts by another two years.  Printhead specialist Xaar delivered a solid and in-line H1, with material opportunities in markets not traditionally associated with printing (coatings for EV batteries, and jewelry molds) although they are still reliant on some more-traditional product launches by customers to help deliver the second half of the year.  DP Poland reported that its Domino's Pizza businesses in Poland and Croatia performed very well across their H1, with more store openings planned, happy customers and early signs that they are attracting franchisees, whose efforts and capital could further accelerate performance and improve returns.  Finally, Mongolian oil & gas explorer Petro Matad may no longer be an "explorer"...their plans to move to production at the Heron field took a step closer, with a deal close to finalisation allowing product (due to begin flowing in October) to be transported, stored and then sold through a neighbouring oilfield. 

Returning to the theme of a possibly-slowing US economy, UK investors were reminded of the risks by TT Electronics...their warning seemed to be operational rather than economy-induced, but clearly signals that all is not always gold across the Atlantic.  Keep an eye on FX translation of US profits to Sterling - the dollar has been weakening for some time.  

Next week looks quiet, with inflation and interest rates data from Japan (spoiler alert - post our recording, at 2.8% inflation was as expected, and rates were held) and US Core PCE inflation due next Friday. 

The economic data in the UK have not been great, but they are OK. GDP is flat for the second consecutive month, and employment data is mixed.

Ashanti's agreed £2bn offer for Centamin this week highlights the huge disparity between the price of gold and the valuation of gold miners. Evidently, the cheapest way to acquire gold reserves is via M&A rather than digging. 

Gareth discusses Gamma Communication's positive financial results and its development of valuable relationships with Microsoft and Cisco.  Given its growing ambition, Gamma plans to move from AIM to the main market.

Jeremy highlights news this week from Alpha Group, where founder and CEO Morgan Tillbrook announced plans to step aside in favour of Non-Executive Chairman Clive Kahn. Alpha shares weakened as Clive is not well known in public markets. However, his strong track record in the global payments and FX world with Travelex and World Pay, among others, makes him a strong candidate to take Alpha Group to the next level. 

Next week, we could see a re-run of August's yen carry trade volatility with the US rate decision followed by Japan's inflation data and the BoJ's rate decision the following morning. The consequences of an unexpectedly high (>3%) Japanese CPI print could set things off again.  
     

Back in August, the concerns related to a rising Yen and falling dollar, a "carry trade" that might unwind with consequent selling of US assets. This time, the worry is that although Fed Chairman Jerome Powell has told us that the main worry is no longer inflation, near-term economic data need to land in a very small "Goldilocks zone". Too strong (hot) and the economy might stoke the fires of inflation, preventing the rate cuts Jay Powell has pretty much promised; too weak and the economy is cooling fast, potentially falling towards recession territory and jeopardising the soft landing that markets have pretty much promised themselves.   Markets seem worried about this too...Japanese equities have tumbled 4%, and NVIDIA has lost almost half a trillion dollars in value, in just over a week. 

Relative to these global concerns, UK plc is trading quite well, even if the UK retail investor is fretting about potentially-rising taxes (especially on Capital Gains) in the October budget. 

Company news includes a decent trading update from Vertu, strong H1 results from STV and Concurrent Technologies, and an interesting announcement from ASOS, including some positive uses of AI to improve operational metrics and profitability.  

By the time this podcast is aired, we will know the US jobs data from Friday - [spoiler alert...Jeremy was right - the number was weak, missed the Goldilocks level, and markets fell]. Next week we will get UK unemployment data on Tuesday, Wednesday brings UK GDP and US inflation data, and an interest rates decision from the ECB on Thursday. 

Brought to you by Progressive Equity. 

Markets have had a few days to digest the comments from US Fed Chairman Jay Powell, who last week steered towards lower US rates at the Jackson Hole gathering of central bankers.  The fear might have been that this could prompt new worries over the US-Japan carry trade, but so far, both debt and equity markets have been stable...essentially saying "OK, we were expecting this....now please deliver the soft landing with lower rates and stable, low inflation".  The US dollar continues to slowly weaken, useful for most non-US nations.  

The big corporate news of the week was the much-awaited Q2 results for NVIDIA - a doubling of revenue to $30bn (!), uplift to next-quarter guidance and a $50bn (!) share buyback all looked good, but weren't enough to stop the shares tumbling 7%.  We discuss whether this means a cooling of appetite for the "Magnificent Seven" tech titans, or investor concern over the wall of spending - much of which is the others in the Mag Seven buying chips from NVIDIA...we ask whether investor worry over what could be a "winner takes all" game could bring more scrutiny on future investments.  

One bright side from this shift in attitude might be that smaller (and non-US) stocks could get more attention from big investors - and once again, the UK would be very well placed to benefit.  

Next week is mainly about jobs - some big US jobs data points which, although volatile and hard to predict, will hopefully show that the US economy is  robust but not overheating...anything other than that would make it tricky for Jay Powell to engineer the much-anticipated soft landing. 

Brought to you by Progressive Equity. 

While the markets see upside, stock market history suggests that the start of these cycles is followed by increased market volatility and corrections. The most recent examples were following cuts in 2000, 2007 and 2019. 

For now, the $ is weakening, and the £ and, worryingly, the Yen are strengthening.

Gareth discusses Beeks, Zoo Digital, Watkin Jones, Petro Matad and STV in the UK. Jeremy also mentions a deal announced today by Facilities by ADF.

They talk briefly about the tragic death of tech entrepreneur Mike Lynch.

Next week is quiet but will feature the repercussions from Jackson Hole, Eurozone inflation data, and US core PCE inflation data. 

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UK GDP data was up 0.6% quarter-on-quarter, showing the economy is growing, albeit slowly, and putting the UK at #3 in the G7 group - a reassuring backdrop for investors. 

Meanwhile we also had inflation “down but not out”…with the figure this week showing a less-than-expected rise to 2.2%. Producer prices are showing some signs of increase at the output side, and there were slightly higher levels of inflation in terms of inputs which suggests that companies are swallowing some of the price increases. This can’t last forever, so there are a couple of warning bells longer-term for the inflation outlook.  

Nevertheless, the outlook for the UK economy seems solid, and the UK markets are seeing good levels of interest from global investors. It might not feel like we’re off to the races, but at least our markets survived the recent volatility relatively unscathed when compared to other major financial centres. 

Sterling remains strong, and the US dollar is gradually weakening…strange with global risks rising in both the Middle East and Europe, and potentially a sign of pressure from the central bankers. We’ll learn a lot more from the Jackson Hole meeting of those central bankers in the next week – most of all regarding rate outlooks for the USA and Japan, affecting the all-important but hard-to-quantify Yen Carry Trade, for which a small wobble rocked markets dramatically over the past fortnight. 
 

UK company news saw regulatory approval for a major deal at Beeks, a reassuring update from CML Microsystems, but a major warning from Accesso Technology, who are seeing weak levels of customer visits at the visitor attractions/theme parks they serve. 

Next week we have FOMC minutes in the USA, and Japanese inflation data which could re-focus people on the carry trade if the figure is out of line with the 2.9% expectation. 

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The US unemployment rate of last Friday triggered the Sahm Rule, indicating that the US is in recession.

This was the spark that lit markets and, in particular, uncovered concerns about the global Yen debt levels and the popular Yen carry trade. US tech stocks and Japanese equities fell sharply. This came on top of a few weeks in which oil, copper prices and the dollar had all weakened.

Markets stabilised during the week, but markets remain nervous.

The questions now being asked are what is the extent of the carry trade, and what can be done about it? 

The policy response will be the main concern of the Fed's summer recess in Jackson Hole later this month.

So far, at least, the UK is largely looking on as an observer, not in the eye of the storm.

In the UK, things continue, and companies continue to broadly deliver against expectations.

They discuss Sanderson Design #SDG update and its prospects with lower rates expected along with the wider housing and housing-related markets. 

Next week, we get inflation prints from the UK and the US and the flash print of the UK's Q2 GDP y/y growth rate which should be approaching 1%.

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European growth is slowing (the German economy is in decline) but inflation is nudging upwards - not a good combination. Elsewhere, we saw one rate rise, one rate reduction and a "wait and see".  Japan saw rates rise, just as US rates were signposted likely to be reduced in future months (possibly September) - this could lead to significant volatility - the Yen has soared and Japanese stocks plummeted (6%).  The reduction in the UK was partly expected, but clearly good news - and markets price in another 1% or even 1.5% of reductions in the coming quarters. 

US market volatility continues, with Nvidia yo-yoing in a way that a mega-cap stock perhaps should not - all on the back of confusion over AI spend and adoption.  But the bigger US (and global) issue is the "freight train" of debt - and Jeremy explains that some sneaky short-term arrangements being used in the US could lead to a major and dangerous combination of refinancing needed just as the Federal debt ceiling is being renegotiated very early in 2025 - tricky at the best of times, but if the US election is still being contested, the outcome could be severe indeed. 

Closer to home, Progressive stocks with news included Van Elle, Xaar, Severfield, Forterra and Watkin Jones - with the "light at the end of the tunnel" sentiment common to these groups also echoed by FDM Group.  Rathbone is seeing more-positive investor sentiment.

Next week there's US PMI data due, as well as some trade and inflation figures to come from China. Other than that, we're expecting a fairly quiet week. 

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Markets reacted in a cautious way to Biden's decision to step aside in favour of Kamala Harris, and there are some signs that global economies remain fragile.  We also had warnings and downgrades from a number of bellwether stocks - notably Unilever and Nestle, as well as UPS and a slew of automotive players.  

But a big theme this week has been a retracement from Tesla and Alphabet whose AI investments seem to be concerning their investors, with consequent extrapolation to Nvidia and its "entourage".   

Ian reprises his recent blog on AI - with his view that "this time it's different"...we're not in a Cisco-style collapse from the early-2000s. Telco spend in the late 1990s was arguably unsustainable and all chasing the same customer wallets...this time around, the cash is plentiful, the expected use cases are many and varied, and hopefully investors' expectations are being managed.  Big Tech is spending vast sums on AI - and mainly Nvidia hardware to run it.  Some of them will get it wrong, but probably not all...and there could be a crop of newly-emerging players we've never heard of yet, but who come through with killer AI applications to dominate new industries.  Next week's reporting from Microsoft, Meta, Amazon and Apple should tell us a bit more about how the big players are finding things... To hear more from our tech team on this and other tech news, read the latest Talking Tech Insights or listen to their podcasts. 

The Trump "rotation trade" started off as a risk-on psychology pushing traders to "bank" their gains in the mega-cap tech names and hunt (or forage) for better returns in smaller stocks and (even) international markets such as the UK. Sadly, this is now morphing into more of a risk-off attitude, with nervousness around a number of asset classes.   Within this, the UK economy appears more resilient than a struggling Europe and what seems to be a slowing USA. 

Progressive client commentary centred on Beeks Financial Cloud and STV Group, both of which delivered positive news and signs of strong growth in both cases. 

Next week sees a flurry of data - notably the UK interest rate decision (potentially a 25bp cut, but nothing guaranteed), European GDP growth and US jobs data as well as a hopefully-unexciting US Fed rate decision.  Jeremy has for some time been highlighting the challenges facing Japan - any shock moves next week (they have an interest rate decision due) could have ramifications greater than you might think...

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With England’s football woes kicking off the week, the rest was dominated once again by politics. In the UK the new Labour government’s policies were outlined in the King’s Speech, with much talk around changes to the planning process and the likely positive repercussions for UK housebuilders and the construction sector as a whole. 

Trump’s near assassination, recovery and then announcement of Vance as his running mate in the VP slot, gave plenty more to discuss. They talk about the rise of JD Vance and his links to various tech billionaires, then contemplate what a second ‘Trump Trade’ and ‘MAGA’ regime might look like, and what the repercussions might be for the Fed, the US and the rest of the global economy. Yield curves have already steepened and the USD weakened, whilst gold prices reached a new all-time high and there began to be a discernible swing in the equity markets from large cap to small cap.  

In China weaker GDP data in the second quarter continued to trouble the rest of the world. In the US inflation was heading in the right direction towards the 2% target and UK inflation remained on target at 2%, with UK unemployment rates unchanged and a period of real wage growth continuing.

Progressive companies discussed include Secure Trust Bank and Pharos Energy, and other stocks mentioned include luxury goods companies Hugo Boss and Richemont, which followed Burberry and warned this week citing weakness in demand from China.

Next week there’s likely to be more political discussion around Biden’s suitability as the Democrat candidate, and economic highlights will include German consumer confidence data on Tuesday, UK PMI on Wednesday, US Q2 GDP data and on Friday, US PCE inflation figures.

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There are emerging signs that the unwinding of the concentrated US tech rally might lead to a dispersal of returns to smaller, more value-oriented equities. If sustained, this dispersal trade should be positive for the UK market.

They discuss DP Poland, Springfield Properties, Gleeson, Barratts, Johnson Service Group, Wetherspoon, PageGroup and Hays among UK companies.

Next week's highlights include the UK's June Inflation and unemployment data, the ECB's rate decision, Japan's June inflation, and the Donald Trump show in Wisconsin, otherwise known as the Republican Party Convention.

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We have a look at CML Microsystems results.

Jeremy tries to compare the UK market to the England football team's progress to date at Euro '24.

Next week, we get UK GDP data, US inflation data, and more politics.

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The headlines remain dominated by politics with more than one election every week during 2024.

The UK election outcome is largely known, but there is more uncertainty elsewhere.

We have seen a return of Yen weakness, which highlights the high level of Japanese government debt and very low bond yields. This could potentially have negative consequences for other financial markets, specifically the US treasury market.

UK companies discussed include Sanderson Design, Vertu Motors, Gear4Music, Watches of Switzerland, Warpaint, Revolution Beauty, AO World, and Marks Electrical, which all updated investors this week. The plight of the UK consumer has been uncertain, but there are increasing signs of a better H2. At least they are saying that their results will be more H2-weighted than usual. 

Next week, there are elections in France (Sunday) and the UK (Thursday), but on the economic news, the highlight will be US jobs data, with the main focus on Friday's non-farm payroll data, will they surprise to the downside for once?!

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This week's macro focus is on the UK, with annual inflation landing on target at 2%, the Bank's decision to keep rates on hold, and better-than-expected retail sales and consumer confidence data.

In UK company news, they discuss ongoing M&A activity, including today's revelation that Carlsberg has been trying to buy Britvic.

They also discuss updates from Severfield, YouGov and Spectris.

Next week, the focus will be on US GDP data showing a slowing rate of growth, with UK GDP data improving from
last year's shallow recession.

Finally, US PCE inflation data ends the week which is expected to reveal a slowly falling US annual inflation rate of 2.6%.

Made possible by Progressive Equity.   

They also cover the US rate decision and inflation data this week.

The UK is keeping calm and carrying on as Raspberry Pi successfully launches onto the market and they discuss other companies including DFS, Peel Hunt, Oberon, Oxford Metrics and Idox.

Next week is expected to see the first UK inflation print below 2% in three years. 

Made possible by Progressive Equity.  

Lower commodity and energy prices and the start of the rate reduction cycle as the ECB lowers rates are included this week.

Politics is having an impact in India and Mexico, and looking into next week, we have the European elections underway this weekend.

Jeremy talks about the British Chamber of Commerce survey of the UK economy and a study from the think tank The UK in a Changing Europe about the unheralded success of the UK among developed nations in the performance of its services sector.   

The UK stock market moves into a leadership position, and the IPO market, led by Raspberry Pi, is notable.

Stocks mentioned: Workspace PLC, STV, CML Microsystems and Springfield Properties.

Next week the macro focus will be on US rates (unchanged) and US inflation (also unchanged).

In the UK we get unemployment and GDP data on Wednesday.

The outlier could be the rate decision from the BoJ on Friday.  

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The UK's M&A train rolls on with Royal Mail owner, IDS has agreed a 370p offer from Daniel Kretinsky.

They discuss DP Poland, Petro Matad, Tern and TinyBuild.

Next week's highlights are expected to include the ECB's decision to lower rates and employment data from the US.

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In the US, Nvidia is a sprinting giant that rose one HSBC in value in the minutes following its better-than-expected Q2 earnings release.

They also discuss the growing M&A activity in the UK market and the barbarians in the boardrooms of UK PLCs, in the cases of XP Power, IQGeo, Keywords, and Hargreaves Lansdowne. The UK is under siege by PE and strategic buyers looking for attractively priced assets. Going forward, expect shareholders to put up a stronger fight, but at the same time, UK PLC boards need to be transparent about what their true cost of capital is and what value these external investors can bring.   

Next week, the macro news will likely be dominated by US GDP data, which will be closely analysed for signs of a decelerating US economy.

Brought to you by Progressive. 

In UK company news, Raspberry Pi has announced its intention to IPO in London. They discuss Cerillion, Zoo Digital, Vertu Motors, Headlam, and the recent tendency for sharp positive price reactions to company updates where significant short interests are present.

Next week's highlight will likely be the UK's inflation data on Wednesday, which offers something for the bulls and the bears. MoM data will likely show an increased rate, and the YoY print shows a falling rate. 

Brought to you by Progressive Equity Research. 
    

The BoE is pretty explicitly steering towards a rate cut at the next meeting in June. Lower mortgage rates are on the horizon, and the feel-good factor is returning, albeit too little, too late for the current government. This makes the general election call likely to be later, not sooner.

Meanwhile, China is steadily working through its problems, and its manufacturing recovery is slowly coming through. China is supplying the West with cheaper manufactured goods such as EVs, which is incrementally deflationary but has political implications.

In the UK, they discuss Informa as an example of UK B2B media companies having inherent value to the AI giants. Informa has done a deal with Microsoft. Also, they discuss Wetherspoon's colourful update and the experiential leisure provider XP Factory, owner of Escape Hunt and Boom Battle Bar, which continues to grow quickly. Meanwhile, ITV has updated a positive trend in ad revenue year to date, with positive implications for others, including STV in Scotland.

They discuss the outlook for UK GDP growth (data out after this recording showed decent Q1 GDP growth of 0.6%) and US inflation data. Jeremy compares Argentina's inflation rate, also due next week, to the US, 3.5% versus 300% annualised rate, which for Argentina is historically low!

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The macro topics for discussion are the Yen, the continued volatility in the Asian currency markets, the Federal Reserve policy rate decision and what the Bank of England might do with regards to its own interest rate decision next week.

Alastair talks about why he thinks housebuilders are getting busier and the implications of this for the wider sector - spoiler alert, it's all about land buying. Other companies discussed include Concurrent Technologies, IG Design, Revolution Bars, Smiths News, Shell and Alpha Financial Markets.

With things seemingly looking up and signs that capital is beginning to flow back slowly into the market, Jeremy looks to next week when the UK will hear the Bank of England's rate decision, and Q1 GDP data will be released. 

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If you'd like to hear more from Alastair Stewart, read his daily Property & Construction sector update here. Or to read our daily market update click here.

Gareth and Jeremy discuss the prospect of great equity market dispersal, the benign political risk of the UK, the demise of ESG, and the attractive value of UK-listed assets. Meta and Nvidia share prices are falling, and the Magnificient Seven shows signs of fragmentation. It might be too early to call. Still, there are signs of the global equity market fragmenting. Meanwhile, a new age of realism has replaced accepted ESG ideology in politics and corporate strategy. In this context, they discuss the offer for Anglo American from Aussie miner, BHP. In the UK, results and updates continue to be broadly in line with expectations, the FTSE 100 has moved to an ATH and Filtronic's share price soars into low earth orbit as they sign a remarkable deal with Elon Musk's SpaceX. In next week's news, they highlight European GDP and US jobs data next week, plus the increasingly important Japanese interest rate picture as the BoJ announces its policy rate guidance.     

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In Q1, small caps underperformed large caps in Q1 in UK and US. The UK IPO market remains moribund. There have been more deaths than births in the UK market YTD. Is the UK stock market just a dumpster fire, or can it recover? Gareth is hopeful for a recovery.

Jeremy highlights the Middle East conflict, its limited impact on financial markets, and what to look for going forward. The big news is UK inflation, but he remains sceptical that the UK will cut rates ahead of the Fed.

Gareth discusses the week's company news, highlighting the Severfield results with a strong order book and a share buyback.

In next week's news, Jeremy highlights US PCE inflation data and the Bank of Japan's interest rate decision.

Brought to you by Progressive Equity.  

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Interview with David Einhorn on broken smaller companies markets. https://open.spotify.com/episode/47E0aMdqtHMkZJznZyWXKW?si=7UMko5KKSNadw8vRVQMU1g

Brought to you by Progressive Equity Research. 

They also discuss Bloomsbury Publishing and the demand for fantasy fiction, XP Power and implications for de-stocking in industrial supply chains, and the cancellation of the Close Brothers dividend due to the new PPI on wheels.

There is not much on the calendar for next week's macroeconomic data; FOMC minutes are about it.

Brought to you by Progressive Equity Research.  

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In the UK, they talk about STV, specifically its studio business, PE investor Chrysalis being more confident about the prospects of IPO exits for its companies, and IT services supplier FDM demonstrating more signs of stability. 

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This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Brought to you by Progressive Equity Research. 

Companies mentioned this week include UK housebuilders, M&S, Marks Electrical, Sosander and Xaar. 

It’s a quiet day for macro news; investors are focusing on US inflation data later today for clues about the Fed rate decision, where the next FOMC meeting is on January 30th.

The SEC finally approved Bitcoin ETFs in the US market, widening the scope for investors to access the alternative asset, for example, via 401K pension plans.

The Winklevoss brothers first proposed a Bitcoin ETF in 2013 when the price was $500. The regulator’s reluctance to sanction this product over the last decade has “saved” US investors from participating in an instrument that has risen 90-fold in dollar terms over the period.

UK Company News

Trustpilot expects to report profits above the top end of the range of market expectations. In addition, it continues to deliver strong cash generation and announced plans for a £20m share buyback.  

Mpac Group, the packaging and automation provider, updated that its H2 revenue and profit were substantially above H1, aided by the normalisation of margins. It had a closing order book of £75.0m (FY22: £67.2m). Its H2 order intake was the highest ever. 

GlobalData expects to deliver underlying revenue growth of 7% and EBITDA growth of 28%, with stronger-than-expected margins of 41% versus 36% last year. It is reorganising to operate across three customer-focused divisions – Healthcare, Consumer, and Technology. Before Christmas, it announced plans to sell a minority stake in its Healthcare business, which accounted for c.36% of revenue, at a valuation of £1.1bn, raising net cash proceeds of approximately £434m for the group. 

GlobalData is among several UK-listed B2B media companies that are realising significant value from their divisional portfolio, in this case by bringing in private equity to take a minority stake in a division, which exposes the UK market’s considerable undervaluation of these assets. The move also delivers Mike Danson, the founder and CEO, the opportunity to fund non-dilutive acquisitions, where he has a strong record. 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

The Bitcoin price was more volatile than usual overnight as speculation waxed and waned regarding the SEC’s expected approval of about a dozen applications for ETFs. There remain strong indications that SEC approval will be granted today for ETFs from providers such as Blackrock and Fidelity, among others, despite erroneous reports online that approval had already been granted late yesterday.

UK Company News

Persimmon said they anticipate market conditions will remain highly uncertain during 2024, particularly for first-time buyers. However, they note that mortgage rates are beginning to ease, and input costs continue to moderate. 

Greggs said that FY23 total sales were up nearly 20%, opening 220 new shops to end the year with 2,473. Inflationary pressures are reducing, and its full-year outcome remains aligned with its previous expectations.

Sosander, the female fashion brand, updated on a record quarter with revenue up 23%. Gross margins rose due to reduced promotional activity. Joint CEOs say this continues to validate their multi-channel strategy after successful launches in Australia and Canada, and they plan to open their first UK store this spring. They also reiterated their strategic goal of delivering £100m+ revenues and a pre-tax profit margin of at least 10% in the medium term. 

Marks Electrical updated Q4 revenue growth of 17.8% and increased market share in its retail household appliances and electrical goods categories. However, despite proactive cost action, it warned that product margins did not rise to the expected level with a material impact in the peak trading period, which has had a material impact on profit guidance. 

Marks Electrical is a well-run but tricky business to get right. business with an actively involved founder and CEO, Mark Smithson, leading from the front. He is justifiably proud of the 60,000 TrustPilot reviews, with 95% 4 and 5 stars. He knows from 37 years of trading that margin fluctuations are inevitable. These periods present an opportunity to learn, ultimately enabling the Group to create long-term value and position us as the UK’s leading premium electrical retailer. Marks’ focus on the premium end of the market with a small but growing share should be attractive if the UK housing market continues to recover and lead to increased housing transactions. In the meantime, Marks will remain in the investor doghouse. The shares are sharply lower today.  

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Oil prices dropped sharply yesterday as OPEC+ struggles to maintain production discipline, evidenced by Angola splitting away from the producer cartel last month.

This week’s main macro focus remains on Thursday’s US inflation data. Expectations are for the year-on-year headline rate to be unchanged from last month’s 3.2%.

Equity markets were strong overnight, led by US technology. Nvidia was up 6% and announced a new AI chipset for PCs, while the broader US market was in a risk-on mood.

Bitcoin continued its upward price move amid growing speculation of SEC permitting spot Bitcoin ETFs as soon as tomorrow. It is up 10% YTD.

UK Company News

Games Workshop updated that employee morale is good, and its hobbyists are having fun, too, but not much fun was reported elsewhere in the UK today. 

Recruitment stocks were marked lower as Hays warned of a hiring slowdown. 

Jupiter warned that retail investors continue to withdraw funds from equity markets and has made some changes to its fund manager lineup. 

Low-cost house builder and land development company MJ Gleeson completed the sale of 769 homes during the half-year, 14% fewer than last year. However, it entered the second half with a much stronger forward-order book. But it also warned that full-year gross margins are now expected to fall from previous expectations due to higher selling incentives and longer sales cycles. Against the backdrop of stabilising interest rates, the Board anticipates a recovery in demand for low-cost housing in the seasonally busier selling period over the coming weeks and months.

Gleeson shares and those for other housebuilders led the recovery in the UK market over recent weeks on hopes of lower rates. Today’s news is mixed with confirmation of a strongly recovering top line. However, higher-than-expected costs in 2023 mean the recovery in profits is happening from a lower base than previously believed. 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Last week saw a New Year market hangover following the pre-Christmas party mood.

Bond yields are higher (up 30 bps in the case of US and UK 10-yr benchmarks), energy prices and the dollar are higher, and equities have sold off.

Rising tensions in the Middle East and extended supply lines from Asia to Europe are the proximate causes. But sticky inflation data from Europe and continuing strong reported US employment trends also raise questions over the speed of future rate cuts.

For this week, US inflation data on Thursday will likely be the main event and offer critical input for the Fed’s rate decision in March.

There is also scope for further deflationary evidence in China with its inflation data on Friday. Investor sentiment remains negative in China and Hong Kong despite renewed support measures to stimulate activity.

Amidst this Chinese uncertainty, Taiwan goes to the polls this Saturday to elect its new President.

We also get UK GDP data on Friday, which are expected to show a slowing economy but not one yet in recession.

UK Company News

In the UK today, positive news is reported from two providers of CFDs and spread betting, reflecting improved market trading conditions in recent weeks. CMC Markets now expects to generate profits ahead of previous expectations by about 15%, while Plus500 updated that revenue and profits would be significantly ahead of current market expectations. 

CMO, the online retailer of building materials, updated that while demand remains resilient, consumers have shifted towards smaller projects, driving lower profitability. Despite this warning, it reports market share gains and gross margin improvements. 

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Powell’s promised punch bowl is good enough for now

Macro & Overnight

Following the party mood induced by Jay Powell last week, talking about lower rates in 2024, there has, over recent days, been a rearguard action from central bankers to try to remove the punch bowl.

Ironically, ECB President Lagarde, who should think about lowering rates more than the Fed, claimed she hadn’t even considered it.

The Bank of England just cut and pasted the language from previous announcements that the battle against inflation is not over, and rates will be higher for longer.

The BoE’s reluctance to join Powell’s party may be at least partly because we get UK inflation data on Wednesday, where the headline will be for a further modest decline in the headline rate to circa 4.3%, but with an increase in the underlying core measures.

Such is the reflexive nature of markets that the mere hint of lower rates next year makes lowering policy rates less necessary, in what former Bank Governor Mervyn King described as the Maradonna effect. Just as England’s defence assumed the great player would shimmy around them, allowing him a straight path from the halfway line to score “that goal,” so too might central bankers decide that bond market investors have eased financial conditions sufficiently to make lowering rates early next year unnecessary.

However, such is the nature of relief rallies that it will take more than this to stop the Santa rally into the year-end.

UK Company News

Games Workshop has updated investors on its negotiations with Amazon over exclusive use of its Warhammer IP for films and TV productions. This will undoubtedly be welcome news for Games Workshop’s legion of loyal private shareholders. 

Professional services company RBG has warned that its Legal Services division has not seen its typical H2 seasonal strength. It saw lower activity in Commercial Real Estate and Equity Capital Markets, with transactions delayed into 2024 or cancelled altogether. Its corporate advisory division, Convex Capital, reports transactions taking significantly longer. Although revenue for FY 2023 will be only slightly lower than expectations, EBITDA will be sharply lower at £4m versus last year’s £15.8m due to one-off costs and write-offs.  

The restructuring and right-sizing of RBG involves more significant challenges than first thought. Although HSBC renewed its lending terms last week, slower markets in commercial property, capital markets, and private company M&A are impacting it hard. The company has surplus assets, including office space and litigation assets left over after the Lionfish disposal, but it remains debt-encumbered. Lower rates and revitalised financial market activity can’t come soon enough.  

Prognosticator   

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Fed to pivot, Santa rally back on & Music Magpie is reinvented

Macro & Overnight

The Federal Reserve kept Fed funds steady at their 22-year high for a third consecutive meeting but indicated 75 bps reductions in 2024 in its so-called “dot plot” projections.

In essence, Jay Powell is saying the quiet part out loud. They have been at least thinking about, thinking about lowering rates. They may even be thinking about lowering rates, but the idea of higher for longer has been scrapped. The door that bond investors have been pushing on for the last few weeks has just been opened, allowing bond yields to tumble and risk assets to rise. This is not the pivot, but enough to incite animal spirits all the same.

However, there is never a free lunch and policy changes have consequences. As the inflation train has left the station, the next arrival will be the fear of deflation and recession. Eventually, it will be a case of “careful what you wish for.”

If the Fed slashed rates by 100 bps next week, risk assets would plummet on fears of the unknown. Central banks can’t afford to lose control or be seen to lose control of the interest rate narrative; governments have a lot of bonds to sell. Overnight sharply rising gold and bitcoin prices suggest this might be a problem for the monetary system.

However, the US 10-year Treasury yield is below 4%, a fall of 100 bps in just eight weeks, and the Santa rally is now back on course.

Today, we get rate decisions from the Bank of England and the ECB. They will follow the Fed’s lead on further pauses. But being closer to recession, the language used will be what is interesting.

UK Company News

Music Magpie has updated that its consumer technology revenues for H2 were up 7.5% over the same H2 period in 2022, with rental subscribers growing by 21%. Its leverage has been reduced and is mitigated by its growing contracted rental revenue and asset base. 

Music Magpie came to the market two years ago with a de-clutter model turbocharged by lockdown. It has reinvented itself as a mobile phone and consumer device recycling business, feeding the stock for an attractive second-hand phone rental business. Success is oblique, and long-term success goes to the most adaptable. One to keep an eye on.  

Prognosticator  

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

UK GDP weaker, UK rates to fall & another UK small-cap bid

Macro & Overnight

The UK economy contracted in October, although year-on-year measures remain in positive territory.

Following weakening employment data, rate hikes must now be firmly off the table, and it is a matter of when, not if, rates head down next year, which is good news for UK risk assets, such as equities.

Later today, we get US producer price inflation data, followed by the Fed’s interest rate decision this evening.

UK Company News

Recruitment company Impellam has recommended a PE offer at a 66% premium over yesterday’s price and a 150% premium to the price back in April before the offer period, valuing the business at £483m. The primary beneficiary is Lord Ashcroft and his family interests, but the trend is clear: the UK stock market values companies substantially below that of PE, trade and strategic acquirers. This trend is becoming all too obvious.  

Defence electronics supplier Cohort reported revenue up 22%, driven by higher UK MOD sales. It had a record closing order book extending to 2033, with increased defence spending in all regions. 

Revolution Beauty has resolved certain historical matters regarding related party transactions with co-founder and 15% shareholder Tom Allsworth. Additionally, the former Boohoo CFO is to become Revolution’s CFO. 

With the historical results now filed and the listing restored, Revolution Beauty is being cleaned up, a process one might ultimately expect to result in its acquisition. Boohoo owns 27% and the two co-founders 15% each. Watch this space.     

Scottish housebuilder Springfield Properties updated that trading in H1 2024 has been in line with management expectations, stable but subdued. Land sales have helped reduce debt. It reported that cost inflation continues to decline, and there are early indications of a return in homebuyer confidence. It expects to meet market expectations for the full year. 

See here for the Progressive note. 

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

UK’s unemployment rate for October was unchanged from the previous month. Annual average earnings growth over the three months to October fell, and job vacancies rose, indicating a softening labour market.

Investor focus today will be on the US CPI inflation data a day ahead of the Fed’s FOMC rate-setting meeting. Although rates are expected to be put on hold again, the focus will be on clues for the direction and speed of travel for 2024.

In Japan, slightly higher producer prices allowed BoJ officials to dismiss suggestions of an imminent end to its negative rates policy.

UK Company News

In the UK, another smaller company has announced a potential offer at a significant premium. This time, small and struggling Smartspace, a software provider to the office market, has been approached about an offer at a 144% premium to yesterday’s closing price. At £25m, it is not material in a market context. However, it is illustrative of the UK market’s value. 

FRP Advisory, the specialist Restructuring, Corporate Finance, Debt, Forensics and Financial Advisory business, said it is experiencing increased demand for advice. Its restructuring team is much more active than during the same period a year ago. It expects to exceed current consensus market expectations. 

Headlam, the UK’s leading floorcoverings distributor, updated that its results will be broadly in line with expectations. September and October were weaker than expected, but November trading improved. However, volumes and revenue remain below last year, better in the UK but lower in Europe. Operating cost inflation in H2 remains elevated but should moderate next year. Headlam states that UK floor covering volumes are around 20% lower than in 2019 on a rolling 12-month basis. 

Sosandar, the online women’s clothing brand moving to an omnichannel model, updated that its sales growth had accelerated with better full-price sales, improving gross margins. The rollout of its store estate should allow it to deliver profitable growth with less discounting and accelerated delivery of its medium-term target of £100m+ revenue and a 10% margin. Market expectations for the year ending 31 March 2024 are currently revenue of £46.8m and PBT of just £100,000. 

Sosandar is an example of how difficult it is to create a new fashion brand from scratch. The co-CEOs Julie Lavington and Ali Hall have worked wonders to grow this company and bring it to the verge of household recognition. However, the business is still hardly profitable after seven years, six as a listed company.   

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Central banks look to reassert control in a busy week for macro data

Macro & Overnight

It is a big week for macroeconomic data. While the US soft landing narrative remains intact, the world economy is walking a fine line between deflationary recession and re-emergent inflation. How the world’s governments finance their growing debt burdens in this sensitive environment adds further complications. But investors will, this week, get some important new data points to fix our position on this delicate path.

Top billing goes to interest rate decisions from the US Federal Reserve on Wednesday, followed by the Bank of England and the ECB on Thursday.

All three central banks will leave rates unchanged and take the opportunity to remind investors that rates can still rise or at least stay high for longer.

Such will be the similarity of the central bank messaging, it might appear co-ordinated. But the extent to which bond markets respond to central banks messaging will be critical.

Last Friday’s strong US jobs data marginally lessened investors’ animal spirits. Central bankers will feel they must do more to contain the markets’ bullish mood and regain control of the inflation narrative.

Today, we get November’s US consumer price inflation data, showing little change and making the journey to 2% seem more difficult.

On Wednesday, we get US producer price inflation, which will be scrutinised for signs of re-emerging inflationary pressures into 2024.

Similarly, investors will note US retail sales data on Thursday and China’s industrial production data on Friday for recessionary or deflationary signals.

In the UK, we get October unemployment data tomorrow and GDP data on Wednesday.

Oil prices and the Dollar are firming up, and bond yields have risen in Asian trading overnight. With gold and bitcoin prices falling, the indications are that the liquidity-fuelled pre-Christmas rally is at least pausing for breath.

It’s a typically quiet Monday with little UK company news.

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Yen rises, 10 yr Gilt yield below 4% & luxury spirits lower

Macro & Overnight

The Japanese yen has strengthened on suggestions that the Bank of Japan is nearing the end of its negative interest rate policy. The advance has reversed the recent strength in Japanese stocks and bonds.

Japanese rate normalisation has been talked about many times, but there is growing conviction we are now getting close. The repatriation of Japan’s yield-seeking capital is a source of potential instability for Western debt and equity markets that we ignore at our peril.

The UK 10-yr Gilt yield is below 4% for the first time since May.

Today’s primary focus will be the US non-farm payroll data, unemployment rate and general household jobs survey. While settling the auto workers’ dispute is disruptive to this data in the short term, the longer-term picture remains that employment conditions are deteriorating.

UK Company News

Artisanal Spirits, the owner of the Scotch Malt Whisky Society, has now surpassed 40,000 members. However, its revenue this year will be £2m lower than estimated at £23m. It cites weaker performance in China and slower than anticipated take-up of its 50th-anniversary product range. It remains confident that it can continue to grow profitably in 2024. 

High-end premium single malt Scotch whisky is not proving to be the inflation hedge hoped. Diageo, owner of Johnnie Walker and Brown-Forman, owner of Jack Daniels, have both recently warned of slowing sales. Luxury consumption is under pressure in different categories, but there are fears of a structural trend away from alcohol consumption as well. Artisanal is barely profitable but has a solid stock-backed balance sheet of maturing stock. Its membership-driven direct-to-consumer model has value, but cashflows and values are declining in the short term, and the share price is off sharply this morning.   

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Financial conditions ease, UK bids continue & Energean enters Morrocco

Macro & Overnight

Oil prices continued lower overnight, with Brent now 22% lower than its September high. This decline indicates slowing demand from a weak global economy, a lack of OPEC+ unity, and a boost to consumers in oil-consuming countries.

The $ was up and the £ weaker while US and UK 10yr yields lowered further, converging on the 4% level, which is 80 bps lower than the August highs.

Together, these data points indicate a continuing easing of financial conditions globally.

China’s reported trade data are mixed but offer no respite from the deflationary feel evident elsewhere.

UK Company News

Smart Metering Systems has received a recommended offer from PE giant KKR at a 40% premium, valuing SMS at £1.3bn. The relentless takeover of the UK mid-market continues.   

Publisher Bloomsbury updated that its revenue is now expected to be comfortably ahead and profit materially ahead of current market expectations. 

Energean, the oil and gas producer focused on the Mediterranean, announced its entry into the Morroccon offshore market via a farm-in agreement over AIM-listed Chariot’s gas development and its associated exploration acreage. This new country entry is well-aligned with Energean’s strategy. The deal includes a $10 million upfront with an option to increase its working interest to 55%.

The conflict in Israel and Gaza has impacted Energean’s share price amid concerns that the conflict could spread. Its main Karish offshore Israel gas asset has remained operational. It derives most of its income from fixed-price commercial offtake agreements with Israeli utilities, thus protecting it from the lower oil price. This new country entry is a welcome sign of a sensible long-term growth plan and path to diversifying risk in its capital allocation policy.   

The Kelso THG debate rumbles on today, with Kelso issuing another announcement urging the larger THG to break itself up, citing evidence of much higher nutrition business valuations elsewhere.  

SDI has reported that its H1 revenue increased marginally despite the expiration of profitable COVID contracts. SDI acquires private companies at discount values to those on the quoted markets. These subsidiaries are then encouraged to grow for the benefit of all stakeholders. It reports that it has several new acquisition opportunities under review. So, despite headwinds, it remains confident about the future. Note here. 

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

PE strikes Ten Entertainment

Macro & Overnight

The US Jolt job openings data estimates there were about 600,000 fewer job vacancies in October than in the prior month and about 20% fewer than a year ago.

The more widely followed non-farm payroll data is on Friday, where investors will look for an affirmative indicator of lower employment or higher unemployment. In an example of bad news being good news, this would be a positive indicator of lower interest rates next year. As the saying goes, the Fed wants you to lose your job.

However, US services ISM/PMI data showed this vital employment sector remains in positive territory, within the 50-55 range of the last few months. And out of the negative, contractionary territory, it briefly visited last year.

UK Company News

In the UK, there is a recommended private equity offer for Ten Entertainment at a 33% premium, valuing the company at GBP287m, continuing the long cycle of the ten-pin bowling industry moving in and out of PE ownership. The premium looks modest and focuses on the potential for a higher offer and the prospects for its larger listed peer, Hollywood Bowl.   

Likewise, the floor coverings distributor updated that November 2023 has proved to be a record revenue and profits month. Growth resulted from increased volume rather than price inflation. The company continues to invest in logistics, sales teams, and point of sale to expand its geographical coverage. Its performance reflects good supplier relationships and presence with independent retailers and contractors. It sees further growth in 2024, citing its medium-term ambition of exceeding £200m in revenue.

Likewise CEO, Tony Brewer is a 40-year flooring veteran and co-founder of Headlam, the UK industry leader. At an age when most people would be spending more time on the golf course, Tony founded Likewise and has grown it at pace to be a national distributor, taking share in a GBP 2bn pa UK market. Flooring retailers require efficient value-added distribution to compete effectively with the major multiples. Tony and his team know how to operate well in the space and seem destined to continue taking market share for some time.     

Uranium investment company Yellow Cake’s H1 report estimates a proforma NAV of 658p based on a spot price of $81.45 /lb and over 21m lbs of inventory. It continues to expect higher uranium demand as nuclear energy is critical to meeting net-zero ambitions. Notably, China’s nuclear capacity target has increased significantly. On the supply side, Yellow Cake cites its ten-year framework agreement with Kazatomprom, the world’s lowest-cost producer, which allows it to acquire $100 million of uranium annually until 2027, as key to its investment case. 

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Macro & Overnight

There is little new today in macro; attention remains on US employment data culminating in the non-farm payrolls on Friday for clues on the inflation and recession trade-off in the world’s biggest economy.

UK Company News

There is a flurry of news from some interesting smaller technology companies in the UK. 

AdvancedADVT has announced the cancellation of its main market listing and admission to AIM. 

AdvancedADVT is a hangover from the 2021 SPAC boom and launched as an acquisition vehicle for founder Vin Murria. The shares, suspended pending restructuring after acquiring various small software and data solutions businesses from Captita earlier this year, will be relisted on AIM from January 10th. In unusual praise of the AIM market, Vin said today that AIM provides a more suitable regulatory environment and greater flexibility for a company of its size. It also announced today that it has already agreed the sale of one of the Capita businesses to Fintel for GBP3.5m.  

CML Microsystems, the communications semiconductor supplier, reported H1 results showing 5% revenue growth, 9% PBT growth and a decent cash outturn. It expects the FY to be in line with expectations. 

Solid State, the design in component and computing supplier, reported H1 results. Revenue increased by 48%, PBT by 25% and diluted EPS by 7%. It lowered debt with another decent year of cash generation and trades in line with FY expectations. 

Oxford Metrics reported FY results with revenue ahead by 53% and PBT by 152% and ahead of market forecasts. Its focus on motion capture has driven impressive growth, but it was also positively impacted by the unwinding of prior year component shortages. OM’s revenue is derived from the life science, entertainment, and engineering sectors. 

OM is a business undergoing significant transformation. After the sale of Yotta and the transformation of the balance sheet, the new management focus on motion capture looks promising. Its new markerless capture technology can provide growth for OM over the coming years with the added attraction of a more significant software component. Progressive has made its second upgrade to revenue and profits in recent weeks, and based on its forecasts today, OM trades on an ex-cash PE of 11x. Note here. 

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Macro & Overnight

Investors ignored Powell’s Friday speech, indicating that the Fed remains prepared to raise rates. With falling bond yields and a weaker dollar, markets believe the inflation train has left the station, and the next train due is a recession. Regardless of their hawkish tones, investors no longer believe the central banks’ higher-for-longer rhetoric as rate cut expectations are now priced in for H1 2024.

The longer rates remain at current levels, the greater the recession probability. This concern is reflected in lower oil prices despite a backdrop of increasing Middle East conflict.

However, fears of rapidly lower interest rates risk inflation and financial repression. And higher prices for gold and Bitcoin reflect these concerns.

The Bitcoin price action has become significantly more “risk-off” since the regional banking crisis. The price has now doubled since March and is up 140% YTD.

This week’s US macroeconomic news includes ISM services data and JOLT job openings tomorrow, followed by nonfarm payrolls on Friday.

Weaker jobs data will further fuel recessionary fears and drive rate expectations lower. A bullish set-up for the Santa equity rally, but raises the spectre of recession in 2024.

UK Company News

It is a typically quiet Monday for UK company news, with nothing to highlight today. 

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Macro & Overnight

US GDP growth in Q3 has been revised upwards to 5.2%, primarily interpreted as a further sign of a soft landing but not jeopardising the market expectation of lower rates in 2024. Bond yields and the US dollar both fell further.

China’s PMI data indicates that its manufacturing sector is still contracting.

Oil prices firmed as US data showed falling inventories ahead of the delayed OPEC+ meeting today, where the producer cartel will try to agree production cuts among some of its smaller members.

UK Company News

Bootmaker Dr Martens said there is an increasingly tricky consumer environment in the US, reporting H1 revenue down 5% and PBT by 55%. It noted widespread macroeconomic caution amongst wholesale customers, which means that FY revenue will decline by more than previously guided, and it is withdrawing previous FY25 revenue guidance. Its debt costs will also be higher.

Struggling high street challenger Metro Bank announced annual cost savings of at least £50m, up from the previous estimate of £30m as it reviews its policies of extended opening hours and seven-day-a-week trading. Its plans involve shedding 20% of its staff. It is also streamlining its Board. 

These moves come days after shareholders approved a capital raise as part of a £925 million rescue deal where Colombian billionaire Jaime Gilinski now takes a controlling stake. Gilinski has a successful track record of rescuing struggling banks in Latin America. He made his name after acquiring the Colombian assets of the failed Bank of Credit and Commerce International in the 1990s. 

Prognosticator    

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Macro & Overnight

Indications of the Fed pivot strengthened overnight as the DXY dollar index weakened, Treasury yields fell, and gold pushed to its highest level since May, only a tad below its all-time high.

Global bond markets, up 4.9% in November, are on course for their best month since December 2008, as measured by the Bloomberg Global Bond Index.

Pivot watchers will now focus on Fed Chair Powell’s speech this Friday. However, markets must absorb US GDP data later today and core PCE inflation data on Friday morning.

UK Company News

The payments and FX provider, Equals, remains in discussions with potential PE buyer Madison Dearborn. 

Harbour Energy updated that it continues to focus on asset development outside the UK. It is also evaluating several material M&A opportunities, saying that recent large oil industry transactions indicate that M&A conditions are improving.  

Kelso, the small-cap investment company, has declared a 3% interest in fishing retailer Angling Direct, adding to its collection of listed retailers THG and The Works. 

Kelso’s model of highlighting undervalued UK-listed small-cap stocks is interesting, and it says that it will talk about its Angling Direct investment thesis at the Mello event tomorrow. At last year’s event, Kelso highlighted the case for THG, formerly The Hut Group.   

Inkjet print head supplier Xaar updated that although profits are ahead of board expectations, conditions have become more challenging in H2, and management is guiding to lower revenue and profit levels for 2024. Note here. 

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as of the previous day’s close. 

US bond yields fell overnight as the Treasury market absorbed sizeable two and five-year bond auctions. The world’s largest capital market is proving resilient, and its price action supports the view that interest rates have peaked and the US economy is heading for a soft landing.

By way of a reminder that inflationary pressures and supply chains have not gone away, the Baltic Capesize Dry Goods Index rose 12.8% yesterday for the third straight day of increases to an 18-month high.

UK Company News

It is a busy day for UK corporate results and updates—phrases such as “resilient performance” and “challenging trading” feature in most company commentaries. 

Augmentum Fintech continued yesterday’s newsflow from the listed VC and private equity space, highlighting the wide valuation gap on offer between privately held assets and their current public valuations.   

DP Eurasia, the Domino’s operator in Turkey, says it is coping with Turkish inflation, which was last officially reported at over 60%.  

IG Design, the gift wrap and stationery supplier, reported continued uncertainty over consumer demand. However, profits and margins remain aligned with the Board’s expectations, and cash flow delivery is expected to be stronger. Note here. 

Supreme, the manufacturer, distributor and brand owner of fast-moving consumer products with a large share of low-cost vaping products, expects trading for FY 2024 to be significantly ahead of company-issued guidance, helped by its cost advantage in this category. It said the UK e-cigarette regulations review ends next week. However, it remains confident that the Government will continue to recognise the vaping industry’s important role in delivering the country’s ‘Achieving Smoke-free 2030’ initiative. 

Let’s see, but if correct, Supreme does look well positioned in this segment. 

Saietta, the unprofitable electric motor supplier, announced a successful placement to raise £6m—a modest but important step for the somewhat dormant UK smaller company capital market.

Prognosticator   

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

Following the US holiday, there is a busy week of macroeconomic data to catch up on.

We have the German GfK consumer confidence series tomorrow and Eurozone economic sentiment indicators on Wednesday.

Also, on Wednesday, we get US Q3 GDP estimates.

Thursday brings inflation data for the Eurozone and the US. Expectations are for a flattening out following recently reported declines, raising fears that rates must stay higher for longer.

China will report on its manufacturing PMI surveys this week, which will be closely watched for indications of the direction of travel for the world’s second-largest economy.

Fed chair Powell speaks on Friday.

The COP-28 Climate Summit opens in Dubai on Thursday as 7,000 delegates fly into the oil-rich nation and spend the next two weeks devising and agreeing on plans to reduce the world’s carbon emissions.

There is no sign that last year’s COP-27 commitment for Western countries to compensate developing countries for coping with the impact of the green transition has progressed. The pre-event in Berlin this Summer took nine days to reach an agreement on the agenda for this year’s event. Don’t expect much by way of concrete outcomes from Dubai.

UK Company News

Things are happening in the listed VC space. Chrysalis has agreed with Jupiter and its managers that they will leave Jupiter to launch a new management entity. Molten Ventures will acquire the smaller VC Forward Partners in an all-share merger and looks to raise an additional £50m via an equity raise. 

Concurrent Technologies, the electronic component supplier to the defence sector, now expects to deliver revenue ahead of market expectations and substantially higher than any prior half-year in the company’s history. Order intake has continued growing strongly, giving the Board confidence in material revenue growth this year. The anticipated lifetime value of “major design wins” secured in FY23 is estimated to be more than £100 million. The management has continued to invest in the company’s operational scale to deliver an increasing level of revenue in the coming years. Accordingly, profit in FY23 will align with current market expectations. 

Concurrent CEO Miles Adcock has professionalised and upgraded the capabilities of this company in recent years. Despite material supply chain disruptions last year, Concurrent did not lose orders. Today’s update highlights the growing scale and quality of this company’s order book. Its large order intake in 2023 alone is estimated to bring total revenue to the group 4x larger than last year’s total.  

Prognosticator 

Macro & Overnight

US investors are enjoying their holiday break as the ceasefire in Gaza started with hopes of hostage releases later today.

UK measures of consumer sentiment and spending look better than feared.

As measured by GfK, UK consumer confidence is improving, albeit bumping along the bottom at -24 for November versus -28 in October.

ASDA’s survey of consumer residual ‘spending’ power (hardly ever mentioned in mainstream media) was up 12% in October, the strongest growth rate over two years – driven by falling inflation (now 4.6%) and growing real wages (c.7%).

Japan’s inflation rate notched up from 3% to 3.3%, a figure most countries would celebrate, but with negative interest rates, things are different in Japan.

German GDP growth has moved from an annualised 0.1% in Q2 to -0.4% in Q3.

Oil prices stabilised at lower levels, with the Brent benchmark at $81, as OPEC+ stability is under scrutiny following the cancellation of its weekend meeting. The suggestions are that far from being prepared to share Saudi Arabia’s pain of production cuts, smaller producers, such as Angola and Nigeria, are seeking quota increases. With major oil-consuming economies like Germany slowing down, there is a risk that oil will break down below its established trading range.

Sweden has just reported its sixth consecutive month of negative producer prices. For much of Europe, a deflationary recession has overtaken inflation as the main fear.

Prognosticator

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

The recent decline in global energy prices went unnoticed by the UK's OFGEM energy regulator, which announced that the UK retail energy price cap would rise by 5% in the new year. 

As the US takes its Thanksgiving holiday, the UK is busy absorbing yesterday's Autumn Statement. As usual, the Chancellor pulled fewer rabbits from his hat than the build-up suggested. The political theatre attached to this event ramps up as election year approaches.

In summary, the giveaways, such as NI reductions and increased investment allowances, were less than the inflationary-fueled fiscal drag on tax revenues. Hence, the UK will still have its highest tax take as a proportion of GDP since World War Two.

However, it is worth noting that the UK's GDP is a full 2%age points higher than that forecasted by the OBR only six months ago.       

There were no new measures to address the functioning of the UK's capital markets. And the only direct action for stock market investors was a plan to revive the If You See Sid campaign to widen share ownership and sell off the Exchequers' remaining holding in Nat West Bank to retail investors. This holding in Nat West is a hangover from the Global Financial Crisis, which the government has struggled to offload to institutional investors for the last 14 years. It was recently embroiled in the "debanking" scandal that cost it its CEO. Perhaps the campaign should be renamed If You See Nigel, Please Don't Tell Him.   

Motorpoint Retail, the used car supermarket, reported significant H1 revenue and profit declines, driven by lower volumes and a fall in finance commissions. It also suffered an increase in finance expenses during the period. More recently, it has seen reduced wholesale used car prices of about 6% in just the last six weeks, more deflationary signals.

Prognosticator