Friday 29/10/21

  1. In MACRO & OIL NEWS, US growth slows, traders bank on an interest rate rise and Shell targets emissions
  2. In TECH NEWS, Facebook outlines a new future while both Amazon and Apple suffer
  3. In UK PROPERTY NEWS, mortgage rates rise and buyers swerve doer-uppers while Lloyds’ profits double
  4. In INDIVIDUAL COMPANY NEWS, WPP booms, Sainsbury’s urges early shopping, Tesco tries rapid delivery, Premier Foods offers up more plant-based foods, ABInBev benefits from lockdown and Sky offers Apple TV+
  5. AND FINALLY, I bring you the world’s scariest numbers…



So US growth slows, traders bet on a rate rise and Shell outlines emissions targets…

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Covid and supply chain crunch slow US growth and recovery (Daily Telegraph, Louis Ashworth) cites the latest figures from the Department for Commerce which show that US GDP growth slowed down considerably in Q3 due to supply chain disruptions and rising Covid cases. It rose just 0.5% between June and September, which was weaker than the market had expected. The automotive sector was particularly sluggish (mainly due to – you’ve guessed it –

chip supply shortages!) as was personal consumption. Tricky times.

Then in Traders braced for rate rise after inflationary Budget (Daily Telegraph, Russell Lynch and Louis Ashworth) we see yet again that traders are now pricing in a 0.15% increase in the current UK interest rate of 0.1% with a further increase to 0.5%  in the December or February meeting. This comes at a time when ECB president Christine Lagarde continued to bat away similar talk about a rate rise in Europe. Strap in!

In oil, Shell pledges to halve emissions by 2030 as it reports lower profits (The Guardian, Jillian Ambrose) shows that the oil major announced plans to cut its carbon emissions in half by the end of this decade just days ahead of the Cop26 climate talks in Glasgow. It did this as it announced disappointing profits for Q3, “impressive” when you consider the strong oil and gas markets at the moment. * SO WHAT? * Critics say that this is just a token gesture as it only applies to 10% of Shell’s total emissions because it doesn’t take into account the other 90%, which includes use of its oil and gas by transport, homes and industry. If you throw into the mix US hedge fund manager Daniel Loeb, of Third Point, sticking his oar in and calling for the company to break itself up then it all adds up to a fun day in the office for Shell!



Facebook announces a new future while Amazon and Apple suffer…

Facebook changes company name to Meta in focus on Metaverse (Wall Street Journal, Sarah E. Needleman) highlights a new direction for Facebook as it has now changed its name to Meta in order to reflect its future direction. The announcement was made at its annual developer event where Mark Zuckerberg outlined his vision for the metaverse, which he sees as the key to winning back younger users. He said that “We believe the metaverse will be the successor to the mobile internet” and that the company is building a metaverse platform called Horizon. The company’s shares will trade under the new name from December 1st. * SO WHAT? * There are other players in the metaverse already, including the likes of Nvidia and Unity Software while Roblox and Epic Games have already flirted with the metaverse by hosting virtual concerts that had millions of attendees. It really does sound like the future is metaverse – I wonder who else is going to join them??

Elsewhere in the world of tech giants, all is not well. Apple warns of supply chain woes while Amazon faces increased labor costs (Wall Street Journal, Tim Higgins) shows that the company is warning about supply chain issues that are expected to hamper iPhone and other product manufacturing, putting a dampener on the all-important Q4 and Amazon earnings suffer as growth slows, costs rise (Wall Street Journal, Sebastian Herrera) highlights challenges at Amazon, which posted Q3 sales that fell short of market expectations as the company said that labour shortages, supply chain disruptions and increased freight and shipping costs would further weigh on earnings. * SO WHAT? * We have become accustomed to just hearing success after success for these companies, don’t you think? However, I think it’s probably wise to manage expectations given the headwinds that companies are facing at the moment. Having said that, I think that underlying demand is still strong so I don’t expect them to underperform all that much, especially as this is affecting everyone, meaning that customers will be more understanding. For instance, I think that if you wanted to buy the latest Apple laptop and saw that it wouldn’t be delivered for, say, a month, then you probably won’t go elsewhere because everyone else will be experiencing the same supply chain issues.



Mortgage rates rise, buyers change habits and Lloyds Bank profits double…

Lenders raise UK mortgage rates as inflation fears take hold (Financial Times, James Pickford) shows that UK banks and building societies are increasing mortgage rates in anticipation of interest rate rises. Halifax, Nationwide and Santander have already increased their rates over the last two weeks, HSBC and NatWest raised them yesterday and Barclays is expected to raise them today. * SO WHAT? * Obviously, this won’t affect those who are already locked in on lower rates but it will put pressure on those who are on floating rates. It’ll be interesting to see whether this puts a dampener on the still red-hot property market. I personally don’t think it’ll have that much of an effect given

that the rate is still pretty darn low from a historical perspective. If the market DOES lose momentum, however, I think it’ll be more down to furlough after-effects and a post-Christmas spending hangover. We’ll see soon enough, I guess!

Interestingly, Supply and labour shortages hit property market (Daily Telegraph, Matt Oliver) shows that demand for “fixed-upper” homes is weakening as house hunters don’t want the hassle of long waits for builders and rising project costs. Such properties are usually quite attractive because they offer more scope for personalisation at a lower cost but potential buyers are losing their appetite for such places given all the supply chain problems. Meanwhile, Lloyds profits double to £2bn as it benefits from mortgage boom (The Guardian, Kalyeena Makortoff) shows that the booming mortgage market and economic bounce-back from Covid helped the bank to double its profits over the last quarter! Given other pressures, though, will this momentum continue??



WPP booms, Sainsbury’s urges shoppers to get in early, Tesco’s tries rapid delivery, Premier Foods offer more plant-based, ABInBev benefits from lockdown upgrades and Sky offers Apple TV+…

In a quick scoot around some of today’s other interesting bits of news, WPP shrugs off supply chain worries to lift sales forecast for third time (Financial Times, Alistair Gray) backs up what I was saying yesterday about advertising as the advertising giant said that it was lifting its sales forecasts for the third time this year. This follows on from strong performances reported by rivals such as Publicis, Omnicom and Interpublic over the last few days. As I’ve said before, advertising spend is often seen as a leading economic indicator, so strength here is encouraging.

Meanwhile in supermarkets, Buy turkeys and Christmas food now, urges Sainsbury’s (Daily Telegraph, Laura Onita) is one supermarket’s way of trying to minimise supply chain disruption and Tesco and Gorillas join forces to test 10-minute delivery service (The Guardian, Sarah Butler) shows yet another development in the world of super-fast grocery delivery as Tesco is to test out rapid delivery of over 2,000 items from a handful of its supermarkets while Premier has exceedingly green plans (The Times, Ashley Armstrong) shows that Premier Foods, the maker of Mr Kipling cakes and Bisto gravy, is planning on tripling its plant-based food sales by 2030 as part of a health-focused overhaul! Maybe we’ll be washing this all down with premium beer as per Lockdown sales of premium beer boost brewing giant (Daily Telegraph, Hannah Boland), which says that the world’s biggest brewer has seen its quarterly revenues boosted by rising demand for premium brands such as Leffe (one of my faves!) and Tripel Karmeliet. We can perhaps soon kick back drinking said beverage whilst watching new content on Sky as per Sky adds Apple TV+ to get last app missing from its streaming list (Daily Telegraph, Ben Woods), which says that Apple TV+ will be available on Sky Q from later this year. Nice!



…in other news…

I thought I’d leave you today with something a bit “out there” in Unluckiest numbers in the world – and why people try to avoid them (The Mirror, Emily Sleight). Do you have an unlucky number? You do wonder whether fear of a particular number actually makes it unlucky. Still, fears of specific numbers generate some amazing words! “Hexakosioihexekontahexaphobia”, anyone?? Wha—-😱?

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Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿

(markets with an * are at yesterday’s close, ** are at today’s close)