This week’s Market Call sees Jeremy and Gareth talk mainly macro - there was very little UK stock news, but a lot going on more broadly.

Markets have had a few days to digest the comments from US Fed Chairman Jay Powell, who last week steered towards lower US rates at the Jackson Hole gathering of central bankers. The fear might have been that this could prompt new worries over the US-Japan carry trade, but so far, both debt and equity markets have been stable...essentially saying "OK, we were expecting this....now please deliver the soft landing with lower rates and stable, low inflation". The US dollar continues to slowly weaken, useful for most non-US nations.

The big corporate news of the week was the much-awaited Q2 results for NVIDIA - a doubling of revenue to $30bn (!), uplift to next-quarter guidance and a $50bn (!) share buyback all looked good, but weren't enough to stop the shares tumbling 7%. We discuss whether this means a cooling of appetite for the "Magnificent Seven" tech titans, or investor concern over the wall of spending - much of which is the others in the Mag Seven buying chips from NVIDIA...we ask whether investor worry over what could be a "winner takes all" game could bring more scrutiny on future investments.

One bright side from this shift in attitude might be that smaller (and non-US) stocks could get more attention from big investors - and once again, the UK would be very well placed to benefit.

Next week is mainly about jobs - some big US jobs data points which, although volatile and hard to predict, will hopefully show that the US economy is robust but not overheating...anything other than that would make it tricky for Jay Powell to engineer the much-anticipated soft landing.

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Gareth and Jeremy discuss the prospects for Jackson Hole, the chances of a rate-cutting cycle starting at the Fed in September, and whether the US is heading for a soft or hard landing.

While the markets see upside, stock market history suggests that the start of these cycles is followed by increased market volatility and corrections. The most recent examples were following cuts in 2000, 2007 and 2019.

For now, the $ is weakening, and the £ and, worryingly, the Yen are strengthening.

Gareth discusses Beeks, Zoo Digital, Watkin Jones, Petro Matad and STV in the UK. Jeremy also mentions a deal announced today by Facilities by ADF.

They talk briefly about the tragic death of tech entrepreneur Mike Lynch.

Next week is quiet but will feature the repercussions from Jackson Hole, Eurozone inflation data, and US core PCE inflation data.

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This week’s Market Call sees Jeremy and Gareth discussing the UK outlook.

UK GDP data was up 0.6% quarter-on-quarter, showing the economy is growing, albeit slowly, and putting the UK at #3 in the G7 group - a reassuring backdrop for investors.

Meanwhile we also had inflation “down but not out”…with the figure this week showing a less-than-expected rise to 2.2%. Producer prices are showing some signs of increase at the output side, and there were slightly higher levels of inflation in terms of inputs which suggests that companies are swallowing some of the price increases. This can’t last forever, so there are a couple of warning bells longer-term for the inflation outlook.

Nevertheless, the outlook for the UK economy seems solid, and the UK markets are seeing good levels of interest from global investors. It might not feel like we’re off to the races, but at least our markets survived the recent volatility relatively unscathed when compared to other major financial centres.

Sterling remains strong, and the US dollar is gradually weakening…strange with global risks rising in both the Middle East and Europe, and potentially a sign of pressure from the central bankers. We’ll learn a lot more from the Jackson Hole meeting of those central bankers in the next week – most of all regarding rate outlooks for the USA and Japan, affecting the all-important but hard-to-quantify Yen Carry Trade, for which a small wobble rocked markets dramatically over the past fortnight.

UK company news saw regulatory approval for a major deal at Beeks, a reassuring update from CML Microsystems, but a major warning from Accesso Technology, who are seeing weak levels of customer visits at the visitor attractions/theme parks they serve.

Next week we have FOMC minutes in the USA, and Japanese inflation data which could re-focus people on the carry trade if the figure is out of line with the 2.9% expectation.

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This week Jeremy and Gareth discuss what was supposed to be a quiet week but was anything but.

The US unemployment rate of last Friday triggered the Sahm Rule, indicating that the US is in recession.

This was the spark that lit markets and, in particular, uncovered concerns about the global Yen debt levels and the popular Yen carry trade. US tech stocks and Japanese equities fell sharply. This came on top of a few weeks in which oil, copper prices and the dollar had all weakened.

Markets stabilised during the week, but markets remain nervous.

The questions now being asked are what is the extent of the carry trade, and what can be done about it?

The policy response will be the main concern of the Fed's summer recess in Jackson Hole later this month.

So far, at least, the UK is largely looking on as an observer, not in the eye of the storm.

In the UK, things continue, and companies continue to broadly deliver against expectations.

They discuss Sanderson Design #SDG update and its prospects with lower rates expected along with the wider housing and housing-related markets.

Next week, we get inflation prints from the UK and the US and the flash print of the UK's Q2 GDP y/y growth rate which should be approaching 1%.

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This week has seen a flurry of macro data, giving Jeremy and Gareth plenty to discuss.

European growth is slowing (the German economy is in decline) but inflation is nudging upwards - not a good combination. Elsewhere, we saw one rate rise, one rate reduction and a "wait and see". Japan saw rates rise, just as US rates were signposted likely to be reduced in future months (possibly September) - this could lead to significant volatility - the Yen has soared and Japanese stocks plummeted (6%). The reduction in the UK was partly expected, but clearly good news - and markets price in another 1% or even 1.5% of reductions in the coming quarters.

US market volatility continues, with Nvidia yo-yoing in a way that a mega-cap stock perhaps should not - all on the back of confusion over AI spend and adoption. But the bigger US (and global) issue is the "freight train" of debt - and Jeremy explains that some sneaky short-term arrangements being used in the US could lead to a major and dangerous combination of refinancing needed just as the Federal debt ceiling is being renegotiated very early in 2025 - tricky at the best of times, but if the US election is still being contested, the outcome could be severe indeed.

Closer to home, Progressive stocks with news included Van Elle, Xaar, Severfield, Forterra and Watkin Jones - with the "light at the end of the tunnel" sentiment common to these groups also echoed by FDM Group. Rathbone is seeing more-positive investor sentiment.

Next week there's US PMI data due, as well as some trade and inflation figures to come from China. Other than that, we're expecting a fairly quiet week.

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Gareth and Jeremy are joined this week by Ian Robertson to bring a "tech perspective" given the tumble in US mega-cap tech stocks.

Markets reacted in a cautious way to Biden's decision to step aside in favour of Kamala Harris, and there are some signs that global economies remain fragile. We also had warnings and downgrades from a number of bellwether stocks - notably Unilever and Nestle, as well as UPS and a slew of automotive players.

But a big theme this week has been a retracement from Tesla and Alphabet whose AI investments seem to be concerning their investors, with consequent extrapolation to Nvidia and its "entourage".

Ian reprises his recent blog on AI - with his view that "this time it's different"...we're not in a Cisco-style collapse from the early-2000s. Telco spend in the late 1990s was arguably unsustainable and all chasing the same customer wallets...this time around, the cash is plentiful, the expected use cases are many and varied, and hopefully investors' expectations are being managed. Big Tech is spending vast sums on AI - and mainly Nvidia hardware to run it. Some of them will get it wrong, but probably not all...and there could be a crop of newly-emerging players we've never heard of yet, but who come through with killer AI applications to dominate new industries. Next week's reporting from Microsoft, Meta, Amazon and Apple should tell us a bit more about how the big players are finding things... To hear more from our tech team on this and other tech news, read the latest Talking Tech Insights or listen to their podcasts.

The Trump "rotation trade" started off as a risk-on psychology pushing traders to "bank" their gains in the mega-cap tech names and hunt (or forage) for better returns in smaller stocks and (even) international markets such as the UK. Sadly, this is now morphing into more of a risk-off attitude, with nervousness around a number of asset classes. Within this, the UK economy appears more resilient than a struggling Europe and what seems to be a slowing USA.

Progressive client commentary centred on Beeks Financial Cloud and STV Group, both of which delivered positive news and signs of strong growth in both cases.

Next week sees a flurry of data - notably the UK interest rate decision (potentially a 25bp cut, but nothing guaranteed), European GDP growth and US jobs data as well as a hopefully-unexciting US Fed rate decision. Jeremy has for some time been highlighting the challenges facing Japan - any shock moves next week (they have an interest rate decision due) could have ramifications greater than you might think...

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Gareth and Jeremy discuss the tumultuous week that was.

With England’s football woes kicking off the week, the rest was dominated once again by politics. In the UK the new Labour government’s policies were outlined in the King’s Speech, with much talk around changes to the planning process and the likely positive repercussions for UK housebuilders and the construction sector as a whole.

Trump’s near assassination, recovery and then announcement of Vance as his running mate in the VP slot, gave plenty more to discuss. They talk about the rise of JD Vance and his links to various tech billionaires, then contemplate what a second ‘Trump Trade’ and ‘MAGA’ regime might look like, and what the repercussions might be for the Fed, the US and the rest of the global economy. Yield curves have already steepened and the USD weakened, whilst gold prices reached a new all-time high and there began to be a discernible swing in the equity markets from large cap to small cap.

In China weaker GDP data in the second quarter continued to trouble the rest of the world. In the US inflation was heading in the right direction towards the 2% target and UK inflation remained on target at 2%, with UK unemployment rates unchanged and a period of real wage growth continuing.

Progressive companies discussed include Secure Trust Bank and Pharos Energy, and other stocks mentioned include luxury goods companies Hugo Boss and Richemont, which followed Burberry and warned this week citing weakness in demand from China.

Next week there’s likely to be more political discussion around Biden’s suitability as the Democrat candidate, and economic highlights will include German consumer confidence data on Tuesday, UK PMI on Wednesday, US Q2 GDP data and on Friday, US PCE inflation figures.

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This week, Gareth and Jeremy discuss the positive set-up for UK equities, helped by stronger-than-expected GDP growth for May, the firm £, and lower US inflation, which has raised hopes of rate cuts. The new Labour government's honeymoon period is underway, and they are looking busy, but will it last forever?

There are emerging signs that the unwinding of the concentrated US tech rally might lead to a dispersal of returns to smaller, more value-oriented equities. If sustained, this dispersal trade should be positive for the UK market.

They discuss DP Poland, Springfield Properties, Gleeson, Barratts, Johnson Service Group, Wetherspoon, PageGroup and Hays among UK companies.

Next week's highlights include the UK's June Inflation and unemployment data, the ECB's rate decision, Japan's June inflation, and the Donald Trump show in Wisconsin, otherwise known as the Republican Party Convention.

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