The Market Call

The Market Call gives a periodic summary of major macro events, market themes and selected UK company-specific news.

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May 10, 2024

Week Ending 10/05/2024 – Less QT, Lower Rates, Break Dancing Pensioners, Alcohol & Axe Throwing and Argentina’s 300% Inflation

Gareth and Jeremy discuss the improving macroeconomic backdrop, with easier financial conditions driven by the Fed's decision to reduce its balance sheet less quickly. Is negative QT the same as QE? The effect is the same.

The BoE is pretty explicitly steering towards a rate cut at the next meeting in June. Lower mortgage rates are on the horizon, and the feel-good factor is returning, albeit too little, too late for the current government. This makes the general election call likely to be later, not sooner.

Meanwhile, China is steadily working through its problems, and its manufacturing recovery is slowly coming through. China is supplying the West with cheaper manufactured goods such as EVs, which is incrementally deflationary but has political implications.

In the UK, they discuss Informa as an example of UK B2B media companies having inherent value to the AI giants. Informa has done a deal with Microsoft. Also, they discuss Wetherspoon's colourful update and the experiential leisure provider XP Factory, owner of Escape Hunt and Boom Battle Bar, which continues to grow quickly. Meanwhile, ITV has updated a positive trend in ad revenue year to date, with positive implications for others, including STV in Scotland.

They discuss the outlook for UK GDP growth (data out after this recording showed decent Q1 GDP growth of 0.6%) and US inflation data. Jeremy compares Argentina's inflation rate, also due next week, to the US, 3.5% versus 300% annualised rate, which for Argentina is historically low!

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