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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December 8, 2023

Yen rises, 10 yr Gilt yield below 4% & luxury spirits lower

December 8, 2023

Yen rises, 10 yr Gilt yield below 4% & luxury spirits lower


Macro & Overnight

The Japanese yen has strengthened on suggestions that the Bank of Japan is nearing the end of its negative interest rate policy. The advance has reversed the recent strength in Japanese stocks and bonds.

Japanese rate normalisation has been talked about many times, but there is growing conviction we are now getting close. The repatriation of Japan’s yield-seeking capital is a source of potential instability for Western debt and equity markets that we ignore at our peril.

The UK 10-yr Gilt yield is below 4% for the first time since May.

Today’s primary focus will be the US non-farm payroll data, unemployment rate and general household jobs survey. While settling the auto workers’ dispute is disruptive to this data in the short term, the longer-term picture remains that employment conditions are deteriorating.


UK Company News

Artisanal Spirits, the owner of the Scotch Malt Whisky Society, has now surpassed 40,000 members. However, its revenue this year will be £2m lower than estimated at £23m. It cites weaker performance in China and slower than anticipated take-up of its 50th-anniversary product range. It remains confident that it can continue to grow profitably in 2024. 

High-end premium single malt Scotch whisky is not proving to be the inflation hedge hoped. Diageo, owner of Johnnie Walker and Brown-Forman, owner of Jack Daniels, have both recently warned of slowing sales. Luxury consumption is under pressure in different categories, but there are fears of a structural trend away from alcohol consumption as well. Artisanal is barely profitable but has a solid stock-backed balance sheet of maturing stock. Its membership-driven direct-to-consumer model has value, but cashflows and values are declining in the short term, and the share price is off sharply this morning.   

Prognosticator 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close. 

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close.