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cover art for Central banks' race to reassure equity markets after collapse of Silicon Valley Bank

Tuesday, March 14, 2023

Central banks' race to reassure equity markets after collapse of Silicon Valley Bank

Season 1, Ep. 71

It was always going to take a big news story to divert the attention of equity markets away from hanging on every word that Jerome Powell (Chair of the US Federal Reserve, "Fed") utters about inflation and the likely path of interest rates. The sudden collapse of Silicon Valley Bank ("SVB") proved to be just the story. To put it simply, the Fed's policy of aggressively raising interest rates has had the effect of pushing borrowing costs to a level above where many cash-hungry start-up companies can sustainably raise finance. At the same time, those very same high interest rates feed into (and have a negative effect on) the discounted cash flow valuations which are commonly used to value unprofitable start-up companies - the result being to effectively starve them of the opportunity to raise equity finance. So, choked of all forms of finance, their only option had been to draw upon cash reserves held with the likes of SVB. As cash calls gathered pace, SVB had to liquidate some of its "low risk" capital (i.e. US Treasuries) much earlier than it had expected it would need to. Due to the rate hiking over the past year, those “low risk” Treasuries were not worth nearly as much as they had been 12 months prior - and so SVB faced a cash shortfall, which it tried to plug via a hastily arranged equity fund-raising. If there is one thing guaranteed to cause panic amongst investors and savers alike, it is a bank that admits it cannot meet customer redemption requests...

Stocks featured:

Direct Line, Legal & General and Robert Walters

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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Wednesday, May 31, 2023

Implications of the US Debt Ceiling Agreement on the Economy

Season 1, Ep. 82

Nvidia, the American multinational technology company, announced first quarter results last week which beat expectations and sent the share price soaring approximately 24.6% last week. Nvidia issued guidance for substantial sequential revenue growth in the second quarter as demand for content-creating artificial intelligence bolsters its data centre platform. The company said that revenue has been largely flat at $11 billion, plus or minus 2%, for the July quarter. The consensus among analysts was for revenue of $7.13 billion before the outlook was given, and later raised to $11.09 billion. In the first quarter, revenue declined 13% year over year to $7.19 billion, but surpassed expectations for $6.52 billion. Generative artificial intelligence drove significant upside for Nvidia’s products, and has created significant opportunities for broad-based global growth which provides an exciting outlook for the company...Stocks featured:Nvidia, Marks and Spencer and Pets at HomeTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Wednesday, May 24, 2023

UK markets remain flat as labour market shows signs of easing

Season 1, Ep. 81

Informa shares increased approximately 4% last week as it was announced the company had reached an agreement to acquire Winsight for $380 million and that its acquisition of Tarsus completed ahead of schedule. The acquisition of Winsight is expected to accelerate Informa’s growth by offering expansion within the business-to-business foodservice market. Informa’s acquisition is also expected to deliver strong financial returns with earnings accretion from the outset and a post-tax return ahead of Informa’s long-term weighted average cost of capital in the first full year of ownership. The deal has been fully funded by in-year cash flow growth and Informa’s balance sheet, with the expectation to further grow revenues, margins, earnings and cash flow..Stocks featured:Informa, YouGov and BT GroupTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Tuesday, May 16, 2023

Bank of England raises rates as food prices remain high

Season 1, Ep. 80

Beazley is a UK-based global specialist risk insurance and reinsurance company. Last week the company issued a trading statement announcing its net income at $104 million for the quarter ended 31 March 2023, marking a recovery from a loss of $92 million in the prior-year period. Management also remained confident in its growth guidance of mid teens gross premium written and mid 20s net premium written for 2023 full year. The positive trading statement resulted in Beazley’s share price rising approximately 3.87% for the week...Stocks featured:Beazley, Vertu Motors and ASOSTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Wednesday, May 10, 2023

Fed chair warns shift to cutting rates may not happen quickly

Season 1, Ep. 79

HSBC reported strong first quarter results this week and announced record profits as the bank benefited from the new era of higher interest rates and the rapid reopening of China. HSBC reported profit before tax of $12.9 billion, up $9 billion compared to the first quarter of 2022, an increase of approximately 230%. HSBC also saw revenue increase by 64% to $20.2 billion which was largely driven by higher net interest income in all of HSBC’s global businesses due to interest rate rises. The strong results enabled HSBC to announce its first quarterly dividend since 2019 of $0.10 per share, as well as a share buy-back of up to $2 billion. Management announced that HSBC expects to be able to have substantial future distribution capacity for dividends and share buy-backs. Markets responded positively to this announcement, sending the share price up by approximately 4.53% last week...Stocks featured:HSBC, Shopify and PearsonTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Wednesday, May 3, 2023

Collapse of First Republic Bank renews stress in the banking sector

Season 1, Ep. 78

It was a big week for Microsoft with the announcement of third quarter results alongside the announcement that the proposed $68.7 billion acquisition of Activision Blizzard had been blocked by the Competition and Markets Authority (“CMA”). The CMA expressed concern that Microsoft’s proposed acquisition of Activision Blizzard would harm competition in the fast-growing cloud gaming market. It appears that Activision Blizzard intends to work with Microsoft to appeal this decision. Microsoft’s third quarter results beat analyst expectations on both the top and bottom lines which led to the share price increasing approximately 7.52% last week. Microsoft’s announcement focused on the early feedback from the artificial intelligence demand that Microsoft have had so far. Microsoft explained that this will be an area of focus for investment with the expectation that this will help improve customer transformation and in time result in strong revenue growth...Stocks featured:Apple, Meta Platforms, Microsoft and PrudentialTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Wednesday, April 26, 2023

UK inflation remains stickier than forecasted as CPI remains above 10%

Season 1, Ep. 77

The UK is showing that inflation continues to remain stickier than forecasted as consumer price inflation for March slowed by less than expected to 10.1% from 10.4% in February. The largest downward contributions came from motor fuels and heating oil prices, alongside soaring food prices which weighed heavily. Notable rising food prices included olive oil prices rising 49% in the year to March, sugar up 32% with milk, cheese and other dairy products all up over 30%. Food price inflation remains a thorn in the side to the Bank of England (“BoE”) achieving its inflation target of 2%. The Office for National Statistics (“ONS”) stated that this is the strongest increase in food prices in more than four decades. Retailers said that food inflation is a delayed effect of energy and commodity price rises during the past year along with poor harvests and a period of sterling weakness. As we enter the UK growing season, we are more likely to see a slowdown in food inflation, which hopefully will provide some ease to consumers...Stocks featured:Alphabet (Google), Amazon, Anglo American, Glencore, Meta Platforms (Facebook) Microsoft, Teck Resources and TeslaTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Wednesday, April 19, 2023

IMF predicts UK economy will decline by less than previously predicted in 2023

Season 1, Ep. 76

The UK stock market saw gains last week as the FTSE 100 index climbed by 1.8%. It was announced that the UK economy stagnated in February as Gross Domestic Product (“GDP”) showed zero growth, largely as a result of the widespread industrial action which led to a disruption in productivity. GDP was below expectations of a 0.1% increase and even further below January’s 0.4% growth figure. The largest contributor to negative growth in services came from teacher strikes and was partly offset by growth in the construction sector. There have been concerns over growth in the UK in recent months, but it appears to be slowly easing as the International Monetary Fund (“IMF”) predicted that the UK’s economy would decline by 0.3% in 2023, which is less than its previous forecasts. However, upward revisions in GDP and improving global economic conditions have given increased confidence that a recession in the UK is less likely, with the focus shifting towards identifying signals for an anticipated rebound...Stocks featured:Citigroup, JPMorgan Chase & Co, LXi REIT, Superdry and Wells FargoTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Tuesday, April 11, 2023

OPEC+ cuts oil production by 1.65 million barrels per day

Season 1, Ep. 75

The Easter bank holiday saw many people enjoy a longer weekend as markets were on hold for a couple of days. Nonetheless, news was still plentiful as global markets continued to move in multiple different directions. One of the key news stories was that Saudi Arabia made a surprise decision to cut oil production by 500,000 barrels a day, alongside other OPEC+ nations joining them to result in a total production cut of 1.65 million barrels a day until the end of 2023. This saw the oil price surge by approximately 6% last week and it will be interesting to see what impact this will have on the price of oil for the remainder of the year...Stocks featured:Alphabet Inc (Google), AstraZeneca, Entain and RS GroupTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Tuesday, April 4, 2023

Bank of England Governor insists UK banking sector remains in good health despite "heightened tension"

Season 1, Ep. 74

Last week, revised official data revealed that the UK avoided a recession last year, helped by the energy bill subsidies provided by the government to ease pressures on households from the cost of living crisis. Notably UK GDP grew by 0.1% in the 4th quarter demonstrating the UK economy is still seeing some growth. However, there are signs the housing market remains weak as Nationwide said house prices fell in March at the fastest annual rate since the 2007-2008 financial crisis. Alongside this, Bank of England data demonstrated that there was a big drop in net mortgage lending in February. This was largely due to rising interest rates as a result of persistent high inflation, which is still weighing heavily on affordability for house buyers...Stocks featured:Intel Corporation, Ocado and Rio TintoTo find out more about the investment management services offered by Walker Crips, please visit our website:https://www.walkercrips.co.uk/This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.