Market Prognosis

A concise summary of the major macro events of the past 24 hours, and selected UK company-specific news.

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February 19, 2024

Curry’s take out & AI bubble spreading

Macro

Very little new in macro.

Commentary over the weekend centred on the prospect of rising inflation halting the decline in rates. Some even suggested the next move in rates to be upwards.

Regardless of such concerns, the AI bubble marches on with significant product launches last week and this week with results from Nvidia. It is now bigger than Amazon and Alphabet, a rise of over 200% over the last 12 months.

Increasing evidence shows AI is starting to bubble up in equities outside the Magnificent Seven. Last week, UK-based ARM rose 80%, and YTD, Super Micro, the largest holding in the Herald IT, is up 275%.

UK Companies

Elliott Advisors has confirmed its interest in Currys. Press speculation today suggests JD.com is also interested. 

With Mike Ashley’s Frasers holding stakes in Currys and AO World and two of the world’s biggest players, China’s JD and Elliott from the US, showing serious interest, there is an emerging bid battle as they fight for the right to deliver your next fridge freezer. Meanwhile, Marks Electrical, a smaller, maybe nimbler player in this market, is worth watching closely. 

Dialight anticipates challenging market conditions will persist through 2024 with longer than usual order cycles for major projects due to inflationary pressures, shortages of critical skills, and economic uncertainty, particularly in the key US markets. Its sales pipeline increased by c.7% from December 2022, with a more substantial opening order book for 2024. 

Transense Tech, the provider of specialist sensor technology and measurement systems, reported revenue increased by 10%, with profit up 146% to £0.63m. It reported engagement with two new tyre manufacturers, five new tyre and maintenance management software providers, two major UK service centre groups and several large UK-based fleet operators. To service this opportunity, it will create new sales channels and proceed with planned increases in overhead in the second half of the year appropriate to manage a modest reduction in short-term profit expectations. It sees itself as increasingly well-positioned to deliver medium and long-term. However, revenue will be heavily H2 weighted, but revenue visibility is now much clearer, and it is increasingly well-positioned to deliver medium and long-term growth. 

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