Immaculate Disinflation or Slump?

Macro & Overnight

The inflation narrative has shifted from when it might peak to how far it will fall. The corollary is whether we see a soft or hard landing: an immaculate disinflation or a slump.

The big question is how central banks, led by the Fed, will react.

Markets now expect the Fed to make two further 25 bps increases, followed by a move to reduce rates later this year. In effect, the market sees a worse economic downturn and is telling the Fed that “we don’t think you have the guts to fire any more bullets later this year.”

We get US GDP numbers on Thursday in a quiet week for macro data.

In the short term, the improved rate outlook has helped US technology stocks, precious metals and Bitcoin. Such risk assets have had a solid start to the year.

Microsoft confirmed its plans to invest further into OpenAI, the owner of ChatGPT.

UK Company News

The Artisanal Spirits Company, the owner of The Scotch Malt Whisky Society, expects to show growth of 20%. Membership grew by 12%, with c.37,000 at the year-end. Sales benefited from more normalised trading conditions with a record December. Its supply chain facility became operational on time and within budget in Q4 2022, with the inaugural franchise agreement in South Korea and a new partnership in Malaysia. The company also announced that the CFO would immediately become the CEO. The group continues to deliver results consistent with market expectations.

Accrol, the tissue converter, showed H1 results with 14% volume growth against a market which grew by just 1%, reflecting Accrol’s value proposition. The company now expects a full-year outturn marginally ahead of current expectations.

Bango, the platform for data-driven commerce used by carrier billing telcos and merchants, increased its focus on acquiring, retaining, and monetising users. The acquisition of DOCOMO Digital has solidified its leading position with merchants such as Amazon and Google. The company is confident strong growth will continue in 2023 and beyond. 

City Pub Group issued a Q4 update indicating that the World Cup’s tailwind and train strikes’ headwind impacted the estate’s performance. However, overall the group performed in line with market expectations. Over the past three months, several acquisition opportunities have arisen, and the company expects pub prices to continue to soften, but they are well placed to acquire attractive assets. Energy costs have started to decline, and trading has begun better than expected in 2023.

Eleco, the construction software specialist in SaaS transition, updated that its revenue is in line and its cash flow is ahead of expectations. For FY23, as a whole, Eleco expects to see growth in revenues for the first time since it announced the SaaS transition. This is a potential inflection point for the business. 

M&C Saatchi updated that revenue and profits are in line with and y/e net cash of £30m. 

Marstons, the pub company, updated like-for-like sales for the 16 weeks to 21 January +12.9%. This includes the impact of the Omicron variant in December and January last financial year, but still, a better performance than the train strike impacted Fullers from yesterday.  

Roundhill Music, the music rights investment fund, updated that its Net Publisher’s Share (NPS) in the first nine months of 2022 was $21.8 million compared to $16.0 million for the nine months to 30 September 2021, a 36.1% increase. The NPS growth was driven by robust performance from multiple catalogues, successful synchronisation placements, and licensing fee income. Placements for Eric Carmen’s “All By Myself” accounted for almost half of the total increase in synchronisation income. This profile demonstrates that in any particular year, a tiny subset of songs in a catalogue can make huge outlier returns. These songs are often all by themselves. 

Prognosticator