1)    Trump Inauguration – 19/01 - a lot of the recent turmoil in markets since the start of the year appears to be being blamed on concerns that Donald Trump as the incoming 47th President of the United States could make inflation much more difficult to control if he delivers on his promises to raise tariffs significantly in the coming months. When Trump was on the campaign trail, he was quite vocal on his desire to encourage US multinationals to onshore their production capability when he said “the most beautiful word in the entire dictionary of words is the word, tariff”. This week could give us an early taste of how keen he is to hit the ground running, with the California/LA wildfires likely to be top of his agenda. We could also see some fairly rapid executive orders signed which could give us early indications of his thinking on domestic oil and gas, renewables as well as immigration and labour policy.

2)    UK Wages/Unemployment (Nov) – 21/01 – concerns about rising rates got a modest reprieve after the latest inflation numbers for December came in slightly softer than expected, and raising expectations that the Bank of England would be in a position to cut rates further at its next meeting on the 6th February. The slowdown from 2.6% to 2.5% also helped to halt the recent sharp rise in UK borrowing costs we’ve seen since the start of the year, which has seen the UK 10-year gilt yield surge from 4.56% to as high as 4.92% earlier this month. Core prices and services inflation also slowed to 3.2% and 4.4% respectively undershooting expectations markedly. Since September last year we’ve seen the cost of long-term borrowing rise by more than 1% despite two 25bps rate cuts from the Bank of England in that period. This rise in the costs of borrowing, while very much a global phenomenon due to concerns about the effect a strong US dollar and a Trump presidency would have on inflation, has been even more notable in the UK due to concerns over the fiscal effects that the new government’s tax plans might have on the UK economy. Fears over sticky wage inflation and job losses have fed into these concerns, with this week’s latest unemployment and wages numbers set to be keenly scrutinised for evidence of a slowdown in hiring and wage costs which may struggle to come down markedly in the coming months due to recently announced public sector pay rises and increases in the minimum wage. In October unemployment remained steady at 4.3%, and while it remains low on a historical basis there is evidence that it could start to rise significantly over the next 12 months if recent reports from small and medium sized businesses are any guide to the government’s recent budget. Early indications from the business sector suggest that this year could be a challenging time for some UK workers as business adapts to the higher costs being imposed on them in the weeks and months ahead. Wage growth unexpectedly shot up to 5.2% in the 3 months to October last month and there appears little sign that it is set to slow down markedly in the months ahead with this week’s numbers not expected much in the way of comfort to those who might be hoping for multiple rate cuts from the Bank of England in the coming months.

3)    UK Public sector borrowing (Dec) – 22/01 – the public finances have understandably been front and centre in the past few months, due to the recent budget which increased the burden of tax on businesses, but also raised the cost of employing people. The net effect of the budget has been to hammer consumer and business confidence as well as raising concerns over possible stagnation in the UK economy. It has also raised concerns that the Chancellor of the Exchequer will be able to meet her fiscal rules, with the recent surge in UK government bond yields increasing the amount payable on the amount of debt the government has. This sharp increase in borrowing costs has put the public finances and the monthly borrowing numbers very much back in the markets gaze as having to pay higher levels of interest on existing borrowing means less money for everything else. In November government borrowing fell from £18.2bn to £11.2bn, as self-assessment paper returns got filed ahead of the 31st October deadline. Borrowing tends to fall as we head towards year end as online returns continue to get filed ahead of the January deadline. This time last year December borrowing came in at £6.7bn, which was then followed by the highest ever January surplus of -£15.6bn. It will be interesting to see how much of a similar trend plays out this year, and whether we see a similar number improvement this time around.    

4)    Bank of Japan rate decision – 24/01 - less than a year ago the Bank of Japan finally broke with convention from the last few years and started raising interest rates. Recent comments from governor Ueda suggested that another hike could be up for discussion when the central bank meets later this week. In July the Japanese central bank pushed rates up to 0.25% in the belief that the 2% inflation target was in reach. Ueda said the positive wages outlook would be one key factor in determining whether to push rates higher now, or whether we might have to wait until March. In a recent report released earlier this month the Bank of Japan cited rising wages as well as other costs indicating that the hurdles to another rate hike were falling away. Expectations are for a 25bps hike by the end of Q1, barring any significant market surprises meaning we could see a hike this month, or at the following meeting in March.   

5)    Manufacturing/Services flash PMIs (Jan) 24/01 – having seen further economic weakness manifest itself in the recent December PMIs for France, Germany and the UK, this week’s flash January numbers aren’t expected to show any significant improvement. Manufacturing in Germany has been in a long depression for almost 2 years with the latest German GDP numbers showing the economy there contracted for the second year in succession. French manufacturing hasn’t been much better with both countries seeing readings of 42.5 and 41.9 respectively with the services sector performing better. UK manufacturing also saw a slowdown in December to 47 and an 11-month low with weakness in output, new orders and employment, with business optimism sliding to a 2-year low. While services were more positive across the board even here optimism is in short supply, with UK employment seeing declines for the 3rd month in a row in December despite a positive headline reading of 51.1.    

6)    easyJet Q1 25 – 22/01 – Outgoing CEO Johan Lundgren left new CEO designate Kenton Jarvis with a solid set of full year numbers back in November as the UK’s biggest budget carrier saw a headline profit before tax of £610m, a £155m increase on last year. H2 saw headline profits of £960m driven by a 7% increase in passenger growth. For the full year, group revenues saw a 14% increase to £9.3bn, 9% of which came from passenger ticket revenue. Ancillaries saw a 13% increase while easyJet holidays revenues rose 47% to £1.1bn. As we look towards this week’s Q1 numbers a look back at the November guidance would be instructive given that H1 tends to be loss making, with Q1 generally the weakest quarter. On this occasion losses are forecast to improve, with Q1 bookings 80% sold, and Q2 26% sold. Capacity is expected to grow by 3% in FY25, while easyJet holidays is planned to grow by 25% from a base of 2.6m customers.

7)    JD Wetherspoon Q2 25 – 22/01 – it’s not been a great few months for the JD Wetherspoon share price, we’ve seen a slow decline since the 863p peaks back in 2024, with shares taking an additional leg lower in the lead-up, as well as aftermath of the budget at the end of October. Currently trading at just above its 2023 lows the pub chain, run by its colourful Chairman Tim Martin has always enjoyed aiming barbs at those it disagrees with. On the numbers themselves the recent update in November saw the company report a 5.9% rise in like for like sales, with food and bar sales increasing 5.7% and slot machines rising 13.5%. Two new pub sites opened during the period along with three franchise sites all of which appear to be performing well. Another 7 new pubs are due to open including sites at major transport hubs, London Bridge Station, Fulham Broadway underground station and Manchester Airport. On costs Wetherspoon said the recent budget changes would add an extra £60m to its annual costs along with a 67% increase in national insurance contributions. On the outlook Tim Martin expressed caution while saying that they would have to increase prices while all the while trying to stay competitive.      

8)    Harbour Energy Q4 24 – 23/01 - Harbour Energy shares have seen a decent rally since the start of the year, in spite of a modest decline in 2024. The shares are still well off their 2022 peaks in the wake of the implementation of the oil and gas windfall tax which virtually wiped out all of their profits, having sunk billions of pounds into Tolmount East field back in 2023, and its Talbot operation which came on stream at the end of last year. When Harbour reported in August there was some good news even as revenues slipped to $1.9bn, the company was able to generate a small profit before tax of $400m, although with an effective tax rate of 85% that fell to $100m after tax. In November the UK oil company reported that the addition of the Wintershall Dea business saw that revenues for the 9-months to the end of September expected to be $3.1bn. Total capex of $1bn for the same period with full year guidance revised up to $1.8bn and $1.7bn. Full year estimated free cash flow is expected to come in at $300m excluding one-off acquisition costs. The increased final dividend for 2024 is expected to be paid in May 2025.

9)    Netflix Q4 24 – Netflix shares have continued to go from strength to strength as it continues to see off the challenge of the deeper pockets of the likes of Disney, Apple and Amazon, despite a slowdown in net additions in Q3 to just over 5m, with the ads business accounting for over 50% of new signups, taking global subscribers to 282.72m. Its ability to continue to maintain, as well as grow its market share is unmatched, and helped in no small part by its expansion in other markets, as well as its better late than never decision to start hedging its FX risk. In Q3 revenues came in at $9.82bn a 15%, $1.3bn increase on the same quarter the year before. Its expectations for the current quarter are for $10.12bn, a 14.7% increase on Q4 last year, and an increase in net additions in excess of what we saw in Q3, although its operating margins and profits are expected to slip back from Q3 in what tends to be its weakest quarter. Netflix For 2025 Netflix said it expects to see annual revenue of between $43bn-$44bn based on FX rates up to the end of September, an increase of around 12%, with an operating margin of 28%. Profits are expected to come in at $4.17c a share.

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