Trade Related Uncertainty & US Capital Flight

Listen to this week’s macro update here:

The common theme last week among central bankers and companies was trade-related uncertainty.

Overall, the forecasts of GDP growth in the world's major economies are coming down, but inflation expectations remain heightened. Big US corporations such as Nike and FedEx cited trade uncertainty as a major issue, and it’s been referenced increasingly in UK RNS announcements.

With the US focus seemingly now more on longer-term interest rates than the level of the US stock market, overriding market sentiment is one of capital flight from the US to the rest of the world. The BoA survey documenting the capital allocation intentions of the world's largest asset managers listed the biggest one-month allocation away from US equities ever recorded. Some has gone to Germany and the wider European market, some has gone into China and there's also been an, maybe temporary, allocation into US treasuries. Although there's no direct evidence of much of this capital finding its way into the UK market, we remain hopeful!

UK employment data this week was pretty much as expected. However, the UK government's borrowing data was running ahead of expectations, which doesn’t bode well for this week's Spring Statement and the brewing government dispute about whether they should continue to look to raise taxes or reduce government spending.

In the UK, Gareth talks about Beeks (BKS) and FDM, both of which had results.

Next week, we will have UK inflation data on Wednesday, and on Friday, we will get US PCE data (the Federal Reserve’s preferred inflation measure).

In The Company of Mavericks - Update

I am planning a new series of the ITCOM podcast with an exciting line-up of guests taking shape. I am keen to hear suggestions of mavericks you know who might make engaging contributions. I am particularly interested in hearing from founders of UK-listed smaller companies who have backed themselves to be different.

Please message me with any suggestions and, ideally, introductions where possible.

Jeremy

jeremymckeown@gmail.com