Inflation sticky, UK avoids recession & Warpaint upgrades again
Macro & Overnight
Oil and gold prices rose overnight as Middle Eastern tensions increased following joint airstrikes in Yemen.
However, markets seem relatively relaxed about such risks, for now at least.
UK’s November GDP outcome was stronger than expected at +0.3%, increasing the prospect for the UK to avoid a technical recession in 2023.
It might be more difficult to rid the world of inflation than we thought. US inflation came in higher than expected yesterday, and markets wobbled. Even China’s inflation data this morning looked stronger than feared, with a month-on-month marginal increase in CPI.
So, if it wasn’t sharply lower inflation that spooked the Fed into their pivot last year, what was it? Perhaps it sees a credit event similar to the regional bank crisis of last year brewing among US lenders and real estate developers.
UK Company News
In the UK today, The Ruffer Investment Company, always good for reasons to be bearish, said that it believes tighter liquidity conditions present a significant risk to markets. It has reduced its portfolio duration since the bond market is now pricing six interest rate cuts in 2024. Its managers believe that the soft landing is now nearly priced, but the scenario in which the market’s six interest rate cuts are validated is the arrival of recession. Ruffer enters the new year with the mindset that we are continuing to travel towards danger rather than away from it.
Burberry updated that it experienced a further deceleration in December trading and now expects results to be below previous guidance.
Warpaint updated that it continued its strong trading into Q4, reporting sales have exceeded previous expectations and expects to report profits ahead of prior guidance.
Warpaint has raised guidance three times in the last twelve months, and the shares have more than doubled over the period.
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