The best statistical news about the Winter Solstice is that for every day over the next six months, we will have more sunlight than darkness. Naturally, cloud, rain and a bunch of other things bog this up, but you get the general point. And, as the darkest hour is before the dawn and the like, isn't it wise to be at least a little bit optimistic about the UK economy in 2024?
The Governor of the Bank of England and I must be related somehow, albeit his direct ancestors over the last century or so had much more access to any of the money than my direct ancestors did. Interestingly, there was only one of us who studied undergraduate Economics but, then again, only the now Bank of England supremo started his career at the London School of Economics and then the Bank of England itself whilst the closest I have been with the latter is visiting its rather good museum (worth a trip in my opinion). Anyhow, the reason I am rambling on about Mr Bailey is that today's Consumer Price Index (CPI) numbers are rather good news for him. Interest rate cuts set fair for 2024 then?
As the saying goes, “you have to kiss a lot of frogs before you find your prince”. Or was it toads? Anyhow, I am not interested in frogs, toads or princes, but the underlying concept is a realistic one: if you want to do alright as an investor over time, then you are going to have to accept that you are going to make a bunch of mistakes. I know online that apparently some people spend ten minutes a day doing a couple of deals, and then they start driving the luxury car but I think most of us know the reality: the investment game is always 90% perspiration and 10% inspiration. The other day, I had a look back at the choices and performance numbers of my personal pension fund since I left the institutional investment world a little over ten years ago.
I learnt over the weekend that the market cap of the top five members of the MSCI All Country World Index (Apple, Microsoft, Amazon, NVIDIA and Alphabet) is in excess of the combined weight of the indices in Japan, France, China and the UK. From a purely statistical perspective, this can easily change after a few good or bad days one way or another (even before we consider the wealth of unlisted names and the like), but you get the general insight: like it or loath it, the world of Silicon Valley has become progressively more and more important over the past few years.
Capita (CPI) may have been a marvellous performer between the early 1990s and the mid-2010s, but the “leading provider of business process services, driven by data, technology and people” has had a shocker since. Still, at least its pre-close update on Thursday could mention a “positive operational performance across both divisions”. Is there any share price recovery hope for 2024 after a further 80% share price dump over the last five years?
As I noted back in early November, “even if you don’t need a new mobile, laptop, fridge or another electrical good, shares in Currys (CURY) still look cheap to me”. Back then they were kicking around the 45p level and, after today's first half update, they are at a 50p share price despite observing that it is a “tough environment”.
I have not been a fan of Unilever (ULVR) historically. Don't get me wrong, I have certainly happily eaten a Magnum ice cream or two over the last few years, but generally I have found other global fast-moving consumer goods corporate names more of interest. And, whilst the company seems to be getting a bit smarter in terms of its business focus under its newish CEO, I had to smile this morning when I read that "Unilever's 'green' claims come under CMA microscope"…
Are you looking forward to Christmas? There will be no turkey at our household, but the premium salmon offering coming from our local supermarket looks rather attractive (online). As for the world of investments, there is really only one week of note left in the year. I know you will be able to continue to buy or sell shares at various parts of the last couple of weeks of the year (especially if you are trading in various developing economies), but the only outstanding matters to focus on are either macro or predictive centred in the larger cap world (ex a dodgy pre-Christmas profit warning). What is happening during the mid-December big week for the global investment markets? There are two matters of particular note in my opinion.
I see the packaging company DS Smith (SMDS) describes its half year numbers as a “robust performance in challenging environment” which means it is “on track” for its FY24 hopes. Are there concerns though from an 18% year-on-year fall in revenue, a 15% fall in operating profit, a flat half year dividend and a small negative free cash flow number?
A few weeks ago Imperial Brands (IMB) gave a corporate update which was positively received by the market. However, despite “reiteration of FY23 delivery in line with guidance”, today's update from larger peer British American Tobacco (BATS) has not been taken so well, with the company's shares down over 5% as I write and trading at around a five-year low. What is going on?
