The week ahead – Fed Minutes, Hays and Imperial Brands results

1) Fed Minutes – 08/10 – having cut rates for the first time this year by 25bps at its most recent meeting there do appear to be some splits opening up on policy. With Bowman and Waller breaking ranks in July pushing for a rate cut then, they backed the consensus in September, even as new governor and recent Trump appointee Steve Miran pushed for a bigger 50bps reduction. Recent comments from various Fed speakers do appear to suggest that some members aren’t convinced that inflation is the tamed beast that the likes of Bowman and Waller believe it to be. These concerns aren’t entirely misplaced given the recent upward adjustment to Q2 GDP which showed the US economy is doing very nicely thank you. Having said that there is some concern over the condition of the labour market which does appear to be showing some signs of slowing, with recent June payrolls adjustments showing a decline in jobs, while the 911k reduction in jobs numbers in the latest annual BLS figures calls into question the accuracy of the monthly data already being collated. Will this week’s Fed minutes add anything else to the discussion about the timing of the next Fed rate cut that haven’t already been parsed by recent comments from a multitude of Fed speakers in recent days.

2) Hays PLC Q1 26 - 10/10 – there hasn’t been much in the way of joy for Hays shareholders since the company posted its full year results back in August with the shares drifting to their lowest levels since 2008 last month. As a reminder the recruitment company reported that like for like net fees decreased 11% to £972.4m, which in turn resulted in a 56% decline in operating profit to £45.6m. Reduced final dividend by 0.29p, bringing total dividend to 1.24p. Temp and contracting fees were down by 7%, however the permanent side of the business saw a 17% fall with momentum slowing further in the final quarter of the year. Hays described the current slowdown as the “Great Hesitation” with a 20% decline in hiring more than offsetting a 3% increase in average pricing. The company has also been cutting costs, reducing its cost base by £6m to £75m over the last 12 months.

Currently trading in line with expectations with no significant change in momentum, although with September to come, and the summer holidays end there may be an improvement as the business heads into Q1, however given the current mood in business this may well be overly optimistic. The bigger question is whether all of this pessimism is already priced in and whether we might be due a rebound.

3) Imperial Brands Q4 25 – 07/10 – one of the better performers on the FTSE100 this year the shares have gone from strength to strength over the past couple of years, more than doubling from their lows of October 2023. Having fallen out of favour in the middle of the last decade over concerns that government crackdowns on smoking, as well as the challenges of shifting their business models to new NGP products, the shares fell from their 2016 peaks of over 4,100p, sinking to post Covid lows of 1,207p before finding a semblance of a base. With governments continuing to raise barriers to future revenue with advertising bans, as well as bans on the sales of its products to younger smokers, the challenges for the tobacco, as well as vaping industry have never been greater. This means that revenues from NGP as well as other areas are more important than ever. When the company reported in May the share price saw a sharp fall after reporting a 3.1% decline in total revenue to £14.6bn, as well as the news that CEO Stefan Bomhard was stepping down after 5 years in the role. The shares found a modest base a few days later, and now four months later have recovered all of the losses, as the focus shifted back to how the underlying business was performing, with CFO Lukas Paravicini installed as new CEO from October 1st. While revenues were lower the company managed to gain market share in all of its priority markets of +6bps, with strong growth in NGP net revenue, which rose 15.4%, as well as a reduction in operating losses of 14%. Management also said they expected to deliver full year results in line with guidance of low-single digit growth in tobacco and NGP net revenue, and to grow Group adjusted operating profit close to the middle of a mid-single digit range, The company also announced a 78.5% increase in the dividend to 80.16p per share.

4) Constellation Brands Q2 26 – 07/10 – in a sign that even the smartest investors don’t always get it right initially the decline in the Constellation Brands share price since April won’t make for comfortable viewing for Berkshire Hathaway who bought 5.62m shares in the owner of Corona and Modelo beers for the sum of $1.2bn at the start of Q2 this year. Having fallen to their lowest levels since March 2020 there doesn’t appear to be much stopping the prospect of further declines. The cost of higher aluminium tariffs and lower demand for its products saw the company report Q1 revenue of $2.52bn and lower profits of $3.22 a share. The higher costs are no better illustrated in its net income numbers which fell from $877m a year ago to $516.1m. Operating margin slipped 150bps of 1.5%, while net sales were also sharply lower falling 5.8%, although part of that decline can be attributed to the sale of Svedka vodka. At the time 2026 Constellation Brands said it expected comparable earnings per share of between $12.6 to $12.90 a share and for organic net sales to come in flat. At the time there was some scepticism about this which was confirmed at the start of September when the company downgraded its forecasts for the year to between $11.30 and $11.60. They also slashed expectations for organic net sales to a decline of between 4% and 6%.

5) PepsiCo Q3 25 – 09/10 – it’s been a relatively modest quarter for PepsiCo share price wise, edging slightly higher in the wake of a decent set of Q2 numbers in July, with net income coming in at $1.26bn. While its best known for the Pepsi brand the company also has a big snacks division which includes the Walkers Crisp, Tostitos and Lays brands. Net sales saw an increase of 1% to $22.73bn even as demand for its drinks and sales slowed. Food volumes fell 1.5% and was flat for its drinks, with North America a key drag. With volumes struggling the company has been cutting costs as it strives to maintain its margins, closing two manufacturing plants during the previous quarter. On the question of tariffs, the company maintained its guidance, having cut it during Q1, saying it expects core EPS to be roughly unchanged from last year, and organic revenue to rise by a low single-digit percentage. Q3 profits are expected to come in at $2.26 a share.

6) Levi Strauss Q3 25 – 09/10 – has seen its share price almost double since the lows back in April, when concerns over tariffs prompted some sharp falls. Since then, the company has managed to post two strong quarters of growth, with direct to customer growth seeing some solid gains. When the company reported in Q1 there was an expectation that while there would be a tariff impact the strength of the brand would allow these to be mitigated to some extent by the ability to increase prices, along with a robust supply chain. Its Q2 numbers reinforced this optimism when the company upgraded its full year guidance on earnings to between $1.25 and $1.30 a share, assuming a 30% tariff on China, and a 10% tariff on the rest of the world. Levi’s said that they anticipate that tariffs will add $25m to $30m to its costs. Q2 revenue came in at $1.45bn well above $1.37bn expected and profits were 22c a share, above the 13c consensus. For Q3 Levis said it expects sales to increase by 3% and 4% higher, EPS of between 28c and 30c a share.