February 16, 2023

Party like 1999

Macro & Overnight

US retail sales rose the most in over two years. With strong employment trends, inflation that is not slowing as quickly as hoped, and US Treasury yields that are heading back to 4%, the question must come if the Fed is confident about the “disinflationary forces” mentioned just the eleven times in Jay Powell’s last press conference.

Investors are NOT following Fed instructions to slow things down. Wall Street is partying like it is 1999 in full risk-on mode, with semiconductor stocks, tech stocks, and crypto assets all moving higher despite the increasing threats that the Fed wants to remove the punch bowl.

To echo the 1999 theme, dotcom favourite Cisco (once the world’s largest company) was up 10% after the close as it doubled growth guidance, saying that tech infrastructure spending is holding up better than expected.

 

 

UK Company News

PE fintech investor Augmentum Fintech confirmed that NatWest Group has agreed to acquire a majority stake in portfolio company Cushon. The deal represents a 46.2% uplift and implies an increase of 3.1p over the last published NAV for Augmentum.

Creo, the medical device company focused on surgical endoscopy, announced a proposed fundraising by way of an accelerated bookbuild to raise a minimum of £25.0 million.

MJ Gleeson, the low-cost housebuilder, said that confidence, underpinned by improved mortgage rates, is slowly returning to the market, evidenced by improving net reservations. Its reservations in the last four weeks have doubled from the low levels seen before Christmas but remain below the levels typically seen this time of the year.

Despite the closed energy switching market, Moneysupermarket reported revenue up 22% with a strong performance in money and travel channels. The first few weeks of 2023 have seen similar trends as in Q4 in Insurance and Money. As previously guided, the ongoing conditions in the energy market mean it is unlikely that switching will return in 2023. On this basis, the Board is confident of delivering market expectations for the year. Guidance moved to the top end of the current forecast range. Interestingly a report in the Daily Telegraph today said that energy switching would resume in weeks due to the low wholesale energy price.

Oasis has gone public regarding its frustrations with the management of Restaurant Group. This is a summary of the Oasis litany of complaints published today. Restaurant Group’s activist shareholder Oasis has been engaging with TRG for several years based on a firm belief that the Company possesses a strong portfolio of core assets, including Wagamama and Brunning & Price. However, despite the considerable value of these assets, TRG has one of the worst-performing share prices of any UK leisure company, materially worse than its closest peers and disproportionately worse than what the impact of the challenging sector backdrop would alone justify. Poor shareholder experience of this long-term decline in market value is further exacerbated when considering the Company’s three equity raises since 2018. The persistent loss of focus is particularly concerning considering guidance on the Company’s strategic direction and means of value creation, appreciating the necessity for transparency in realising a more efficient market appraisal of underlying value and promoting the opportunity for strategic outcomes in full market view. There, they said it.

 

Prognosticator

NB Prices are as at the previous day’s close.

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