Smart politicians only promise what they know they can deliver, so it was perhaps not surprising that the Prime Minister, setting out his priorities for the year ahead, made his first pledge to ‘halve inflation in 2023’. Morningstar’s in-depth look at inflation shows some analysts think it might have peaked already with food and energy prices weakening. Of course, ‘halving inflation’ does not mean that prices will be falling any time soon, they are just going up at a slower rate – but smart politicians are no doubt gambling that many voters will fail to grasp this essential point. But as the article indicates, weaker inflation could create some interesting opportunities for investors.
This week Sam Bankman-Fried, the founder of collapsed cryptocurrency exchange FTX, entered a not guilty plea to the multiple fraud charges he faces in the US. The plea was expected and a date, October 2, has now been set for the courtroom showdown. With news that one of his former girlfriends is set to testify against him, and the fact that the legal action will be overseen by no-nonsense judge Lewis Kaplan – who oversaw the sexual abuse case against Prince Andrew as well as defamation suits against President Trump – it is clear that this is shaping up to be one of the highest-profile fraud cases for years.
It’s Been a Happy New Year for Investors
Rather than a ‘Santa rally’, investors have enjoyed a ‘Hogmanay hike’, with most major stock markets starting the year in positive territory. Many will be hoping this may might continue in 2023, although the underlying economic background remains tough. Not all investors fared badly in 2022 though. We round up the data and found that energy and natural resources funds were the strongest performers last year, with BGF World Energy delivering the highest return to investors, at 57.16% for the year. At the other end of the scale laggards included technology funds and US large cap growth funds (which tend to be heavily skewed towards tech stocks). Bottom of the pile was MS INVF US Growth, which produced a 55.98% loss over the year.
$1 Trillion Bite Taken Out of Apple
It is not hard to see why technology-themed funds have struggled in 2022, as it emerged that Apple (AAPL) – one of the biggest tech companies on the planet – is now worth $1 trillion less than it was a year ago. The group’s market value is now just under $2 trillion after a sustained technology rout. However, despite this fall it still remains that world’s largest publicly listed company, with other $2 trillion-plus companies, including Microsoft (MSFT) and Saudi Aramco (2222), also seeing their valuations fall below this threshold.
How Much it Costs to Persuade People to Leave Tokyo
The Japanese government is paying families a staggering 1 million Yen per child (around £7,000) to move out of Tokyo and resettle in more rural areas. It is hoped this will reduce overcrowding in the city and reverse the population decline seen in many smaller towns and villages. The move comes as the reverse seems to be happening in the UK – with the ‘race for space’ seen during the pandemic slowing down, and the trend being a return again to urban areas. Could the UK government adopt a similar initiative to Japan, perhaps as part of its levelling-up agenda? It seems unlikely, but the question remains, how much would you have to pay Londoners to leave the capital for good?
There’s No Such Thing as a Free Lunch (or Cup of Coffee)…
Times are clearly tough at Goldman Sachs (GS). Investment bankers returning to work after the Christmas break were dismayed to find their free coffee perks removed. While machine coffee remains free, the investment bank is no longer offering free ‘luxury’ drip coffee to all workers. Some staff have been complaining about paying $2.99 from a sub-standard cup of ‘Seattle’s finest’, but others may be more concerned about the prospect of imminent job cuts, with Goldman Sachs managers asked to identify ‘poor performers’ this month, to help reduce the overall headcount.
…But Festive Lattes Boost Revenue at Greggs
Investment bankers might turn their nose up at high street takeaway coffees, but this certainly isn’t the case for many UK consumers. Festive hot drinks, such as salted caramel lattes, helped boost sales at Greggs (GRG) over the last quarter. The Newcastle-based bakery chain is rapidly becoming a barometer for the UK’s food tastes. After the previous discourse around its vegan sausage roll, liked also by many meat-eaters, it is perhaps not surprising that its vegan festive baguette and festive bake – a turkey and cranberry pasty – contributed to more buoyant sales. The prices of baked pastries may be increasing, but Greggs’ figures show that this hasn’t dented our appetite for cheap, warm food this winter.
Amazon Workers to Walk Out
It isn’t just train drivers, health professional and public sector workers that are involved in industrial action over pay demands. Amazon (AMZN) workers are the latest to announce strike action, with workers at the online giant’s Coventry warehouse due to walk out on January 25. This is the first ever strike at Amazon in the UK and will involve members of the GMB union, who are in a pay dispute with the company after it offered a 50p per hour increase to wages. Amazon remains the largest retailer in the world, but it is not immune from the more difficult economic headwinds. This week it announced it will be cutting more than 18,000 jobs in a bid to cut costs amid cooling consumer demand.
UAE Relaxes Alcohol Rules for Tourists
Dubai scrapped a 30% alcohol tax this week, and will no longer charge tourists or expats for ‘permits’ to buy alcoholic drinks. It is hoped these changes will make the city, in the United Arab Emirates, more attractive to Western tourists and overseas workers — which doesn’t sound bad at present, given the grey winter days and onset of dry January. It is also likely to be an opportunity for many Western drinks brands, with two of the major retailers in Dubai announcing they have already reduced prices to reflect this tax cut. However, it should be noted that these changes only benefit tourists. Muslims in the region remain prohibited from acquiring licenses for the purchase of alcohol.
Estate Agents Won’t Lose Out in Housing Market Slump
It’s not hard to see why estate agents aren’t universally loved. Property prices may be sliding, with fewer house sales going through, but this hasn’t stopped Purplebricks — an online estate agent — bumping its prices up by 50%, to plug the gap in revenue. It currently charges a flat fee of £1,999 to sell a property in London and the southeast, which will jump to £2,999 next month. Its more expensive £2,499 package, which actually includes viewings, is set to increase to £3,999. Purplebricks, rather incredibly, described this as a ‘modest’ increase and said this followed a review ‘to ensure we offer the best combination of value and ever-improving service’. It remains to be seen if other estate agents, most of whom charge a percentage of the sale price, follow suit,and also ratchet up their fees.
