France: Instability ahead
The country is entering another period of political turbulence over next year’s budget. Niall Ferguson sees Beyrou’s days as prime minister as numbered, expecting him to lose the confidence vote on September 8th. This will put President Macron back into the driver’s seat, and Niall expects him to nominate another minority government that can secure a 2026 budget with PS cooperation. Yet such a budget would reduce the deficit only marginally. The other scenario is parliamentary snap elections in autumn, which would raise the risk of a victory for RN. In any case, Niall expects the risk premium on French sovereign bonds to rise in the coming weeks, with Frech political instability a major European theme for 2H/2025.
Edition: 219
- 05 September, 2025
Consumer Staples
Scott Mushkin downgrades DG to Sell, citing widening price gaps with competitors, which threaten margins and volume share gains over the next 12-18 months. R5’s latest fieldwork shows a total basket premium of 9% vs. Walmart - well above the typical 3-7% range. Scott now sees pressure from WMT starting to impact the back half of 2025; while Amazon’s push to speed up delivery times in rural areas, coupled with its low pricing for everyday essentials also appears be gaining momentum. At the same time, Dollar Tree is making inroads into DG’s core markets. Finally, regulatory risks from SNAP eligibility changes and the MAHA movement targeting sugary foods are expected to negatively impact sales.
Edition: 217
- 08 August, 2025
Technology
Revelare recently hosted a call for their clients on APP’s e-commerce advertising expansion. Their guest speaker was Jonathan Snow, co-founder at Avenue Z, an advertising, performance marketing and PR agency managing $75m+ in digital media spend annually across APP, Facebook, Instagram, TikTok Shop, Snap, among other platforms. Mr. Snow provided an update on his agency’s use of APP’s advertising platform for ecommerce clients, growth of brands on the platform, APP’s performance relative to Meta, growth of advertising budgets for APP, how they test for incrementality, audience demographics, CPMs, improvements to the tech stack, and competition from Unity and Liftoff, among other topics.
Edition: 208
- 04 April, 2025
From Tokyo to Seoul
Niall Ferguson’s team spent two weeks in Tokyo and Seoul and spoke with high-level policymakers, diplomats, economists and investors. Both countries are looking to reduce their US trade surpluses ahead of President-elect Donald Trump’s anticipated tariffs, including by purchasing more US LNG and increasing US FDI inflows. Niall is increasingly confident that the Japanese economy’s wage-price growth cycle and the BoJ’s continued policy normalisation will continue into H1/2025. In Seoul, even President Yoon Suk-yeol's own People Power Party wants him to resign. If he does not resign in the coming weeks, he expects the National Assembly to impeach him. Either way, a snap presidential election in H1/2025 is Niall’s base case. He maintains his bearish outlook on South Korea’s export-dependent economy, which is driven primarily by structural factors rather than political risk, though defence makers will likely return as a bright spot in 2025.
Edition: 201
- 13 December, 2024
Europe: Budget crunch in Berlin and Paris
In France as well as Germany, upcoming budget negotiations could fracture fragile governments. France’s sovereign risk premium could rise further if Marine Le Pen, the leader of the far-right Rassemblement National (RN), decides to censure Prime Minister Michel Barnier in December. In Berlin, Niall Ferguson expects the Free Democrats (FDP) to exit the three-way coalition of Chancellor Olaf Scholz over budget negotiations this autumn. German snap elections in February or March 2025 would be market-positive. The center-right Christian Democrats (CDU) would most likely emerge victorious and open the door to a slight softening of the debt brake to allow for higher defence spending. In France, however, the risks are to the downside as Barnier braces himself for an exceptionally short term as president.
Edition: 196
- 04 October, 2024
Communications
New tactical short idea from Hesham Shaaban - the key metric here is North American APRU, given not only the materially higher ARPU differential vs. International, but also because there is limited if any DAU growth. Hesham doesn't believe SNAP has shown enough to suggest that it is about to hit the new reported high in second half ARPU that consensus is expecting. The company likely can't get to Street 2H24 revenue estimates without doing so. The only reason he is not fundamentally bearish is because it is still possible that SNAP could eventually find a way to drive meaningful engagement beyond chat (although there is little evidence of this so far).
Edition: 191
- 26 July, 2024
Ultimate euphoria
The Euphoriameter of valuation, sentiment and volatility suggests the US stock market is in a speculative bubble beyond the extremes of the March 2000 TMT bubble peak. Michael Belkin claims the bubble has disguised a deterioration in the US economy, with US retail sales languishing and leading economic indicators remaining negative. Investors need to protect themselves. He recommends LONG Treasury bonds, which are a low-buy investment that could benefit from a risk-off move by asset allocators who sense the approaching recession. This speculative bubble isn’t just confined to the US; European stocks were a consensus must-buy until the French snap election fractured that illusion, and Japan and China were also must-buys that have now rolled over and are being sold.
Edition: 189
- 28 June, 2024
Communications
SNAP shares sink 35% amid fears over growth. Craig Huber provides his take on the company’s 4Q23 results and updates his earnings estimates. He remains bearish with a 12-month TP of $8 per share based on 2.3x 2025(E) revenue or 26.6x FCF. Craig continues to view SNAP’s smaller scale as a disadvantage to larger peers in this environment and much prefers Meta’s fundamentals and stock. Despite the law of larger numbers, META saw advertising in 4Q grow 24% vs. SNAP’s total revenue growth of 5%, and for 1Q24 Craig expects 26% ad revenue growth at META vs. only 14% growth for SNAP.
Edition: 179
- 09 February, 2024
Strategists’ ideas for 2024
Paul Krake outlines the ideas he believes the sell-side community will emphasise for the year ahead (not his own recommendations). They will be strewn all over the financial media and rapidly become the consensus. They may all be promoted through the medium-term lens of being winners for 2024, but in practice, they are nothing more than trading strategies. Ideas will include: US small cap to outperform; China to rally; mining and climate infrastructure to snap back; KPSI to outperform; large cap banks to outperform the SPX; long US duration; short USD; and long AUD, MXN and KRW.
Edition: 172
- 27 October, 2023
Polish roulette
Niall Ferguson sees a low probability that the ruling right-wing coalition led by Law and Justice (PiS) will secure a third consecutive majority on its own in the upcoming election. It is more likely that elections will result in a hung parliament. This will set off coalition negotiations, in which the far-right upstart party Konfederacja is likely to play kingmaker. The best outcome for Polish assets is if PiS falls short of an overall majority by a few seats only. In this case, it will persuade a few Konfederacja MPs to join its ranks. The worst outcome is if either PiS or liberal opposition party Civic Platform falls short of a majority by 8-10 seats or more, forcing either party to rely on Konfederacja for outside support. Such an arrangement may collapse quite quickly, leading to snap elections within 12 months.
Edition: 170
- 29 September, 2023
SVB failure triggers historic sell-off: A buying opportunity for Bank stocks
Financials
Charles Peabody provides a post-mortem on Silicon Valley Bank and points out that historically when banks perform so badly, they turn out to be good buys. Charles thinks rates have peaked on an interim basis, and bank earnings should be a calming influence. Revenues are strong and credit issues remain benign (albeit “normalising”). Most banks have sensible deposit beta assumptions, few are exposed to crypto, and few banks took on interest rate risk like SVB. As these fundamental facts become apparent during previews and actual results in April, bank stocks should snap back. Top Buys include JPMorgan, Citigroup, and Wells Fargo.
Edition: 156
- 17 March, 2023
How to outperform in a bear market
Valens conducts deep fundamental work to identify investment themes that could underperform the broader market, and leverages proprietary tools including an adjusted accounting database, Embedded Expectations Analysis, and Earnings Call Forensics, among others, to identify which names are at risk for material downside. Over the past year, their Thematic Short Idea List has declined by 18%, while the broader market has only declined by c.6%, showcasing how owning these names in a long portfolio could lead to significantly poorer results. Recent shorts include Snap (-81% since inception), Six Flags (-42%), and Cognex (-41%).
Edition: 141
- 05 August, 2022
Short model portfolio outperforms by 31%
26 out of New Constructs’ 32 ideas outperformed in 1H22 with an average return of -50% compared to a 19% decline for the S&P 500. Underscoring just how important reliable fundamental research is in turbulent markets, their model portfolio has beaten the S&P by an even wider margin (48%) since the start of 2021. Top performers have been Coinbase, Carvana, Peloton, Snap, Beyond Meat and Lyft. As we enter 2H22 high conviction shorts include Netflix, Uber, Shopify and Robinhood.
Edition: 140
- 22 July, 2022
Communications
Have Apple’s new privacy restrictions permanently damaged Snapchat’s ad business? AAPL’s new anti-tracking restrictions represent more of a short-term headache than any permanent degradation of SNAP's ad value, according to Blueshift’s interviews with advertisers, agencies and other industry specialists. However, perception of SNAP as an ad vehicle skewed negative, with sources citing a lack of innovation, slow movement on e-commerce tools and a continued perception of Snapchat as a messaging app.
Edition: 127
- 21 January, 2022
US: Taking advantage of Fed movements
Higher realised inflation + labour shortages > higher realised macroeconomic volatility > different reaction function from the FOMC and other central banks > higher policy uncertainty > abrupt multiple compression > good for unloved assets. It seems obvious to some, as James Aitken explains, but not to everyone. As risk premia is set to rise, investors should snap up shares from indiscriminate sellers in de-rated quality businesses, that is if they’re confident in earnings growth offsetting the Fed’s multiple compression.
Edition: 127
- 21 January, 2022
Communications
Stock hit hard on disappointing quarter and 4Q outlook, but at <$60 the shares are a Buy - Craig Huber argues the headwinds facing SNAP (and the digital advertising sector overall) will only temporarily dampen its revenue growth trajectory. The social media company continues to head in the right direction focusing on building out its sales and marketing functions globally, creating innovative ad experiences around video and AR with a focus on ecommerce, and there are still areas of the platform that have strong engagement that it has not begun to monetise.
Edition: 122
- 29 October, 2021
Italy: The new Cold War will keep Draghi in Rome longer than anticipated
Ignored by Washington for three decades, Italy has become a key element of China’s pivot to the West with Beijing developing a powerful network of Italian politicians and business elites. Francesco Galietti believes a new Cold War is underway, one that will further tie Italy with Europe and Washington. After the G7, Draghi’s Atlanticism and Western framework will see the chances of him staying around rise exponentially; if he were to leave Rome, China’s network of friends would snap back immediately.
Edition: 113
- 25 June, 2021