The Market Call

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

The Market Call

Episode posted on 12/04/2024

Gareth and Jeremy discuss the week in markets. US inflation is proving sticky, and it is increasingly difficult to justify cutting rates on economic grounds. The question is whether the BoE or ECB would cut ahead of the Fed. China is exporting deflation. In the UK, GDP grew more than expected in February, and the January figure was revised upwards. In UK equities, there is heightened debate and concern about whether the UK market is fit for purpose, with Shell making noises about relisting in the US. However, UK PLCs continue to carry on, retiring equity and receiving bid approaches. (This week saw an offer for Lok'n'stor and an approach for Centaur Media). However, the UK market issues are more cyclical than structural and can improve quickly on the return of liquidity. Next week's macro highlight will be the UK inflation data, with expectations for a month-on-month fall from 3.4% annualised to 3.1%. A UK set-up with rising GDP, falling inflation, and rate cuts should be positive for UK equities. Let's see.       

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Episode posted on 17/03/2024

Legendary technology analyst and new Progressive team member George O'Connor joins Gareth & Jeremy. Jeremy discusses the backdrop for persistent inflation and higher for longer interest rates including higher commodity prices, including gold. They discuss how pawnbrokers, H&T and Ramsdens illustrate how higher gold prices lead people to sell gold objects for their scrap value. George updates us on his recent Master Investor Show appearance and the contract extension announced by Beeks' Financial Cloud. Looking forward Jeremy highlights the outlook for interest rate decisions in the coming week from the Bank of Japan, the US Fed and The Bank of England.  

Episode posted on 10/03/2024

Gareth and Jeremy discuss the UK budget, the prospect of rate cuts, and the new high in gold prices. There are more bids in the UK; this time, for Spirent and Virgin Money. We had results from STV & Beeks, and updates from housing-related companies Travis, Ibstock, Headlam, and Likewise, all looking for a pick-up in housing activity. Next week's main macro news will be US CPI and PPI inflation data.

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Episode posted on 02/03/2024

Jeremy & Gareth discuss recovering UK housing activity, the UK's IPO prospects, the EV problem, Bitcoin ETFs, the knockout bid for Wincanton as another indicator of the value in the UK small cap market, improving evidence of equity fund raises, and updates from Taylor Wimpy and Howden Joinery. Looking into next week, setting Wednesday's Spring Budget aside for now, Jeremy highlights the prospects for data about the US jobs market and the impact on inflation expectations. 

Interview with David Einhorn on broken smaller companies markets. https://open.spotify.com/episode/47E0aMdqtHMkZJznZyWXKW?si=7UMko5KKSNadw8vRVQMU1g

Episode posted on 25/02/2024

Gareth & Jeremy discuss the path for interest rates, Nvidia and the AI bubble, the parallels to the dot-com bubble, and what might happen next. In the UK they discuss Springfield Properties, Currys, Dialight, and Gooch & Housego. Finally, Jeremy looks at the macro data that might impact markets this week.

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Episode posted on 17/02/2024

In their weekly chat, Jeremy & Gareth discuss the UK recession, the trends for inflation and interest rates and how stock markets are behaving and the outlook for the consumer. They ask whether the UK might go it alone and cut rates before a move from the Fed.

They also discuss Bloomsbury Publishing and the demand for fantasy fiction, XP Power and implications for de-stocking in industrial supply chains, and the cancellation of the Close Brothers dividend due to the new PPI on wheels.

There is not much on the calendar for next week's macroeconomic data; FOMC minutes are about it.

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Episode posted on 11/02/2024

Gareth and Jeremy are joined by Alastair Stewart, who talks about the Barratts Redrow acquisition, the outlook for the housebuilding sector, house price data and the emerging recovery in transaction volumes. Additionally, they cover the updates from Beeks Financial Cloud and Sanderson Design, and in next week's news, they highlight the release of some potentially disappointing UK macro data.

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Episode posted on 04/02/2024

Rate Reductions on Hold but Outlook for UK Small Caps Remains Positive

Jeremy and Gareth discussed issues in markets last week with the outlook for interest rates, inflation, the UK housing market, emerging banking strains based on commercial real estate lending with echoes of last year's US regional banking crisis, and the Mag Seven reporting season.

In the UK, they talk about STV, specifically its studio business, PE investor Chrysalis being more confident about the prospects of IPO exits for its companies, and IT services supplier FDM demonstrating more signs of stability. 

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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.

   

Episode posted on 21/01/2024

Jeremy McKeown and Gareth Evans are joined by Scott Evans of the London Business School and co-compiler of the Deutsche Numis Market Indices to discuss the performance of mid and small-cap last year, over the long term, and what might be driving equity market performance in 2024. In addition, they mention updates from Concurrent Technologies and Gamma Communications from last week.   

Episode posted on 14/01/2024

Jeremy McKeown & Gareth Evans discuss the macro drivers behind this week's equity markets and some company updates that caught their attention. 

Companies mentioned this week include UK housebuilders, M&S, Marks Electrical, Sosander and Xaar. 

Episode posted on 11/01/2024

Macro & Overnight

It’s a quiet day for macro news; investors are focusing on US inflation data later today for clues about the Fed rate decision, where the next FOMC meeting is on January 30th.

The SEC finally approved Bitcoin ETFs in the US market, widening the scope for investors to access the alternative asset, for example, via 401K pension plans.

The Winklevoss brothers first proposed a Bitcoin ETF in 2013 when the price was $500. The regulator’s reluctance to sanction this product over the last decade has “saved” US investors from participating in an instrument that has risen 90-fold in dollar terms over the period.


UK Company News

Trustpilot expects to report profits above the top end of the range of market expectations. In addition, it continues to deliver strong cash generation and announced plans for a £20m share buyback.  

Mpac Group, the packaging and automation provider, updated that its H2 revenue and profit were substantially above H1, aided by the normalisation of margins. It had a closing order book of £75.0m (FY22: £67.2m). Its H2 order intake was the highest ever. 

GlobalData expects to deliver underlying revenue growth of 7% and EBITDA growth of 28%, with stronger-than-expected margins of 41% versus 36% last year. It is reorganising to operate across three customer-focused divisions – Healthcare, Consumer, and Technology. Before Christmas, it announced plans to sell a minority stake in its Healthcare business, which accounted for c.36% of revenue, at a valuation of £1.1bn, raising net cash proceeds of approximately £434m for the group. 

GlobalData is among several UK-listed B2B media companies that are realising significant value from their divisional portfolio, in this case by bringing in private equity to take a minority stake in a division, which exposes the UK market’s considerable undervaluation of these assets. The move also delivers Mike Danson, the founder and CEO, the opportunity to fund non-dilutive acquisitions, where he has a strong record. 

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.