UK: Recession denial

Economic Perspectives

The recent improvement in the GfK measure of UK consumer confidence, from -45 in January to -30 in April, is welcome but does not signify that recession will be avoided this year. The tightening of monetary conditions operates with a lag. The greatest cumulative impact of higher borrowing rates – and the tightening of lending conditions following an exodus of bank deposits, as customers rebel against puny savings rates – has yet to be seen. Disappointing retail sales data for March has been blamed on the weather, but that does not explain why non-store sales volumes are still 10 per cent lower than a year ago. The noose around the neck of UK households is still tightening. Peter Warburton’s recession forecast remains.

- 28 April, 2023

Signify (LIGHT NA) Netherlands

Industrials

the IDEA!

Underestimating FCF strength / resilience - only temporarily under pressure due to a sharp increase in working capital. Ongoing price increases that are being implemented and the continuous efficiency measures combined with the integration benefits particularly from the Cooper acquisition, will see profitability improve. Gross margin to return to c.38.5%, and looking beyond 2023, a realistic objective is an adjusted EBITA margin of 13%+. Expects the FCF ratio will quickly return to 8% of sales next year and in the long-term 10%+ is achievable. TP €39.95 (50% upside).

- 14 October, 2022

Copper starts a new upwards trend

HED Capital Management

Richard Edwards likes to remind readers from time-to-time about compressions; they act as attractors, the phenomenon known from mathematical complexity theory. When formed they signify a change in market dynamic is imminent. Recently, copper movements appear to be indicating a new trend having seen a rise, followed by a brief compression then a renewal of the increasing price. Copper becomes a BUY.

- 18 March, 2022