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 14, 2023

US CPI

Macro & Overnight

All eyes will be on US inflation data later today. The direction is down. The issues to understand are: how fast will it drop, where will it bottom and have inflationary expectations taken hold among market participants?

Data today suggests this is a potential problem in the UK. Growth in average regular pay rose 6.7% in the final three months of 2022, compared with the same period in 2021 — a rate below inflation but higher than expected.

The White House announced a sale of 26m barrels from the Strategic Petroleum Reserve. Expectations are that the US was seeking to refill the SPR, given it is at its lowest level in years, a move that should provide a short-term ceiling to oil prices.

There is a continuing guessing game over the next Governor of the BoJ and, more importantly, what policy agenda they might have. The indications are that Japan is contemplating a significant monetary policy shift. As a significant buyer of US bonds, and a major global economy, there are transmission risks to what happens here.

 

UK Company News

Plus500, the online provider of CFD trading and related services, reported FY results. Over 24 million worldwide customers have registered on its trading platforms since its inception. Its customer deposits increased to $2.3 billion. Plus500 has established a new commercial B2B model as a market infrastructure provider. It is also now a full clearing firm member of the CME Group exchanges. In 2022 it developed the ‘TradeSniper’ trading platform. It also gained access to the Japanese retail trading market and has a new regulatory licence in Dubai. ‘Plus500 Invest’, the Group’s proprietary share dealing platform, has been rolled out across Europe. The Company has also further optimised the Company’s marketing technologies. It has launched a major global advertising campaign featuring actor Kiefer Sutherland and established a multi-year global partnership with the Chicago Bulls. Financially the Company has continued strong cash conversion in FY 2022 of 112%. Last year, it executed a share buyback programme of $180.2m and made dividend payments of $90.0m ($0.947 2 per share). 

Consumer lender Amigo updated on an important milestone in its tortuous battle for survival. The conclusion of the Enforcement proceedings represents an important milestone for the Company in bringing the Legacy Issues to a close. Since the Enforcement Action commenced in 2020, the Board of the Company has completely changed, and the engagement of subject matter experts has substantially refreshed the senior management team. This approach has allowed Amigo to reflect on past behaviours and to develop its new business proposition, RewardRate, which fully incorporates the lessons learned. Enforcement of regulation has wholly changed the subprime lending market, with many companies having to restructure or disappear altogether. Today is an essential step for Amigo, but it still has a mountain to climb in relaunching itself. 

Prognosticator 

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