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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June 7, 2023

FOMC trilemma: pause, skip or raise

Macro & Overnight

The Fed rate decision next Wednesday is looming on the horizon. The FOMC trilemma is whether to pause, skip or raise.

Veteran interest rate guru Jim Grant has said that the old order of smooth interest rate cycles might be a thing of the past, and we should get used to more volatile month-to-month changes.

Indeed, Australia’s surprise decision yesterday to increase rates, having not changed rates last month, perhaps illustrates Grant’s thesis.

The persistently weak oil price continues to signal a deflationary recession, and today’s lower global OECD growth forecasts, weaker-than-expected German industrial production, and Chinese exports all make this scenario seem plausible.

UK Company News

City Pubs said that trading continues to be strong for the 23 weeks to June 4th, with sales up 20%. LFL sales improved by 13% and would have been higher if not for recent train strikes. Costs have remained in line with expectations, and there is now clear evidence of abatement in some areas, although food inflation remains high. It thinks that in the short-term, pub prices will fall, and we are therefore, while it has a strong balance sheet, there is no rush to go out and acquire. 

Concurrent Technologies announced a distribution agreement with SoC-e to supply networking equipment. This deal strengthens Concurrent Technologies’ position to deliver solutions rather than just components.

James Fisher has announced a new revolving credit facility. 

IQE’s CFO is to depart with immediate effect.  

Ramsdens, the pawnbroker and retailer, issued strong H1 results with continued positive momentum into H2. It now has 158 stores and continues to benefit from restrictions on other forms of subprime lending and continued recovery in travel-related FX demand.  

Prognosticator 

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