Weekly Blog 11/01/2019

Mike BaxterWeekly Blog0 Comments

Happy New Year! Global markets seemed to breathe a sign of relief that 2018, a year characterised by volatility and political uncertainty, was over. That is not to say that these issues have dissipated, far from it, however investors have been encouraged by positive developments in US-China trade talks, after the conclusion of three days of negotiations. In addition, the increasingly dovish tone by Federal Reserve policymakers, suggesting a less aggressive tightening of monetary policy, has been viewed favourably.

Since we have been offline, the US is on track for its longest-ever government shutdown. This follows a stand-off in which President Trump has reiterated his demands for congressional funds to build a wall along the Mexican border, one of his key campaign pledges. The Democrats, who control the house, refuse. Typically this would have little impact on the US economy, however, if it continues, which Trump seems happy for it to do, Fed chair Jay Powell has warned that there may be a more meaningful effect.

Brexit uncertainty has continued into 2019. Following its delay in December, during which the Prime Minister has been seeking assurances from the E.U over the Irish backstop, MPs are due to vote on Theresa May’s Brexit deal on Tuesday. The government recently lost a vote on a key amendment and as such if the deal fails, which it looks likely to do, the government must come back to parliament in three sitting days with a plan B.

 Markets in a minute

  • The FTSE 100 is up 3.92% YTD.
  • The 10 year Gilt yield has fallen to 1.29%.
  • Hedge funds shorting Ted Baker would have been unhappy on Wednesday as the share price rose 29% following a great Christmas period.
  • Taylor Wimpey increased 6%, building on a positive set of results.
  • On Tuesday, Amazon overtook Microsoft as the largest company in the world and has said that to date it has sold more than 100m Alexa devices.
  • Tesla shares rose on the news that Larry Ellison, founder of Oracle, has a $1bn stake in the car company, which he revealed following his appointment to the Board. Now that’s a commitment!
  • As much as $34bn was lost from the market value of US retailers on Thursday as Macy’s issued a profit warning and its share price fell c. 18%. This highlights that retailers on both sides of the Atlantic are struggling to cope with the shift to online shopping.
  • German digital bank N26 became Europe’s most valuable financial technology start-up after raising $300m to fund its international expansion, valuing the Berlin-based lender at $2.7bn.

Quote of the week

‘It’s literally flying off the shelves … Now that we know it is selling, we want to get it out there as quickly as possible. The shops that do have it are selling out instantly and the shops that didn’t get it are screaming for it.’

Greggs CEO Roger Whiteside on the success of the vegan sausage roll, which has been the best-selling new menu addition in six years. Certainly not the half-baked idea that some may have predicted…!

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