Where finance and media intersect with reality


Spot Markets Live Transcript (30/1/23)

Izabella Kaminska10:58

Hello and welcome to Spot Markets Live, the weekly round-robin of stocks and markets news.

Today I’m joined by Anjuli Davies… my courageous partner in crime operating from the murky outposts of the commuter belt.

Hello Anjuli!

Anjuli Davies11:00

Good morning. Lovely and sunny here for a change

Izabella Kaminska11:00

Today is my last week leading the sessions, but I leave you all in good hands.

Hopefully, this will give me bandwidth for a further Friday session.

But – fear not (for those of you who aren’t already thinking what a relief!) I will continue moonlighting on the Monday sessions when I can.

As we move ahead with the new arrangement, Anjuli (being way more organised than me) has devised a survey to ensure we cater to the right needs and demands.) If you have a moment, do give us some feedback.

Also please feel free to email me any feedback

[email protected]

Izabella Kaminska11:01

But today is a bumper corp news day so let’s get on with the action.

On the markets side, European markets have opened lower across the board.

Supposedly on “investors focusing on Fed meeting this week”. But really it’s all a bit of a correction after a big rally last week.

The pound is still in recovery mode at 1.24 against the dollar.

Bitcoin is staying bolstered at $23,000.

M&A chatter is having an impact on the gainers board with Sainsbury up 2% on speculation about it becoming a target.


Anjuli as a former M&A correspondent, what do you think?

Anjuli Davies11:02

Well… honestly this was like the most rumoured takeover target over and over and over again…

Izabella Kaminska11:02


Anjuli Davies11:03

I can’t tell you how many times PE have run the slide rule over Sainsbury’s

And how many times they failed to make it work

The latest is that Costcutter owner Bestway has acquired a 3.5pc stake in Sainsbury’s worth almost £200m

The Telegraph have reported that they initially looked at buying the whole company


Bestway have however said they have no plans to make an offer

But they could purchase more shares in the future

Izabella Kaminska11:05

I am not a supermarket expert, but I did speak to Bruno Monteyne, a senior analyst covering European food and household, personal care and cosmetics at Bernstein Research, last year, and there was anticipation about consolidation .

Anjuli Davies11:05

“Sainsbury’s and its larger rival Tesco have been left as only two listed supermarket chains of scale. The billionaire Issa brothers acquired Asda in 2020 and US private equity firm Clayton, Dubilier & Rice acquired Morrisons in 2021.

Sainsbury’s has also been linked with a take-private swoop. In January 2021, hedge funds began increasing bets that the supermarket was a takeover target after Canadian convenience store operator Alimentation Couche-Tard said it was examining takeover targets, when a €16bn deal with French supermarket Carrefour was blocked by politicians in Paris.

Qatar Investment Authority is currently a major shareholder in Sainsbury’s with more than a 14pc share of the supermarket, with Czech billionaire Daniel Kretinsky’s Vesa Equity Investment holding a 10pc stake.

Clive Black, an analyst at house broker Shore Capital, said: “The news comes as a surprise to us and may spark some chatter around both Sainsbury and the wider sector with respect to corporate activity and equity values.”

Izabella Kaminska11:05

“Bigger ecommerce centres become more efficient. So if you have more economies of scale than you had before, and you have the margin, that tells you that as consumers shift online and retailers follow, this will accelerate consolidation in grocery retail.”

Apparently the regulators don’t like the idea of industry consolidation though?

Monteyne was saying that in the age of Amazon, however, something will have to give.

Anjuli Davies11:06

There was an interesting piece in the Times on the weekend about a Dutch retailer

Private equity have long tried to make it work in retail

Whilst this seems like a puff piece, apparently 3i are going to make a killing

“3i put £240m into Dutch retailer Action. Now the stake is worth £10bn

At Action’s current valuation, 80 people from 3i’s private equity team — most of whom had nothing to do with the deal — are in line to share £1.24 billion between them.”

Izabella Kaminska11:09

Anjuli Davies11:09

3i is led by Simon Borrows

I’ve met him a few times, he’s a nice guy. They usually go for small to medium sized deals, which I guess this once was….

Izabella Kaminska11:11

Amazing outperformance really

“Despite the turmoil caused to the global economy by the war in Ukraine and to the UK economy by the disastrous mini-budget in September, 3i has seen the value of its assets rise by 11.6% during the final quarter of last year and its total return rise by 26.8% since April 2022 to £16.49 per share including a 23.25p per share dividend paid on 11 January.”

And it’s all down to this Dutch costcutter retailer Action, which I had not even heard of until today.

11:13It’s maybe indicative of the fact that really boring but profitable businesses are the future in the current paradigm. I was talking to another private equity firm, and they were saying a similar thing. It’s not about faddy tech stocks anymore. It’s about properly managed boring business.

Anjuli Davies11:13

They had at one point activist investor Edward Bramson trying to shake up the business back in 2013

Izabella Kaminska11:14

But there’s more on our radar this week than PE.

Marc Ostwald of ADMSI has a helpful list of earnings to expect this week:

As noted it will be a very busy week for earnings in the US (107 S&P 500 companies reporting) and around the world, with Bloomberg News noting the following as being among the highlights: AMD, Aflac, Allstate, Alphabet, Amazon, Amgen, Aon, Apple, Banco Santander, Bristol-Myers Squibb, Canadian Pacific Railway, Cigna, ConocoPhillips, Deutsche Bank, Electronic Arts, Eli Lilly, Estee Lauder, Exxon Mobil, Ferrari, Ford Motor, General Motors, Gilead Sciences, GSK, Hershey, Hitachi, Honeywell International, Humana, ING Groep, LyondellBasell, Marathon Petroleum, McDonald’s, McKesson, Merck, Meta Platforms, MetLife, Mitsubishi, Mitsui, Mizuho Financial Group, Mondelez International, Moody’s, Novartis, Novo Nordisk, NXP Semiconductors, Pfizer, Phillips 66, Qualcomm, Samsung SDI, Sanofi, Shell, SoftBank, Sony, Starbucks, Sumitomo Mitsui Financial, Sysco, T-Mobile US, Takeda Pharmaceutical, Thermo Fisher Scientific, UBS Group, UniCredit, UPS & Zimmer Biomet.

I’m mainly interested in Amazon, Alphabet, Apple, the banks and the pharma stocks.

Amazon reports on Feb 2

The key thing to be looking out for is whether the slowdown at AWS seen in the last quarter persists. Last week we saw Microsoft suggesting this could be a theme.

Microsoft Corp. shares plunged by the most in three weeks after the company warned of a slowdown in cloud and business software sales.

Shares were down as much as 4.2% at $231.97, the lowest since Jan. 4. Microsoft said late Tuesday that Azure cloud-computing sales in the current period will slow by 4 or 5 points — down from the mid-30s percentage-wise at the end of the fiscal second quarter. The business had been a bright spot in an otherwise lackluster earnings report.

I mean in the grand scheme the share price fall was hardly a thing.

But layoffs remain the talk of the town.

Here’s a good outlook for what to expect at Amazon

Can Amazon Web Services increase operating margins? Just how much did AWS sales grow in the current economy? Will Amazon’s massive layoff round effect AWS? CRN breaks down the five most important thing to watch during Amazon’s fourth quarter earnings report next week.

@BHJ that’s a very good question. Someone I was talking to last week, noted that cloud was becoming more important to MSFT than its core sub business.

And of course worth noting that Microsoft has plunged into the generative AI market by putting up $10m for OpenAI and its ChatGPT thingy

(We at the Blind Spot btw are committed to not outsourcing our commentary to an AI).

Microsoft on Monday announced a new multiyear, multibillion-dollar investment with ChatGPT-maker OpenAI.

Microsoft declined to provide a specific dollar amount, but Semafor reported earlier this month that Microsoft was in talks to invest as much as $10 billion.

The deal marks the third phase of the partnership between the two companies, following Microsoft’s previous investments in 2019 and 2021. Microsoft said the renewed partnership will accelerate breakthroughs in AI and help both companies commercialize advanced technologies in the future.

Anjuli Davies11:21

Not going down the BuzzFeed route? Apparently they are set to deploy ChatGPT

Izabella Kaminska11:21

I am not a robot.

Struggling online publisher BuzzFeed will start using artificial intelligence (AI) to help write its quizzes after laying off dozens of employees.

The media company, known for its light-hearted articles and “listicles”, will work with OpenAI, the creator of ChatGPT, on the initiative.

The quiz would ask prompt questions such as “Pick a trope for your rom com” and “Tell us an endearing flaw you have” before using AI to generate a write-up based on the responses, according to a memo to staff from chief executive Jonah Peretti.

This is just what we all need in the world right now

Izabella Kaminska11:23

Of course Microsoft’s investment in OpenAi makes sense if you consider the exponential server demand that generative AI (or whatever it’s called) creates. Because it allows for MSFT to deploy its Azure cloud business as a solution to that problem, in an endless feedback loop that might lead to the end of the planet.

A la this

Izabella Kaminska11:24

Anyway moving on…

We’ve also got the Fed, the ECB and the BoE coming out with policy decisions. For those who don’t know, here’s the expectation from the Fed, also courtesy of Marc Ostwald at ADMSi

The Fed is expected to dial down its rate hike pace for a second meeting, with a 25 bps hike to 4.50%-4.75% expected, and markets pricing in just on further 25 bps hike at the March meeting. While there has been the usual rotation of regional Fed president voters, which at the margin can be seen as a potentially dovish shift, the fact is that Kashkari has swung from being arch dove to arch hawk, Boston Fed’s Logan has been vocal in opposing markets easing of financial conditions, as has Harker.

What other corp news caught your eye today Anjuli?

Anjuli Davies11:26

Lots of corporate news out today actually. Low cost airline Ryanair has shrugged off the collapse of fellow low cost carrier Flybe and announced that it will deliver record profits in the current financial year as it predicts a surge in demand, especially from Asian travellers. Demand also stimulated by a strong US dollar

“Bookings are showing no signs of recession at this point in time,” Chief Financial Officer Neil Sorahan told Reuters.

“We had record bookings in week two and week three of January, very robust demand into Easter and the summer without fare stimulation,” he said.

Shares in the airline were down 1.1% at 15.36 euros at 0840 GMT but were up more than 25% since the start of the year.

Ryanair has predicted surging demand will send the cost of air travel higher days after rival low cost carrier Flybe collapsed.

Europe’s largest discount airline said it was “confident” about the months ahead.

Flybe collapsed into administration for the second time in two years over the weekend, leaving thousands of passengers stranded and 277 staff out of work.

Meanwhile, Ryanair raised its profit outlook for the year to a range of €1.325bn (£1.16bn) to €1.425bn (£1.25bn) as it boosted sales by 57pc to €2.31bn (£2bn) in the final three months of last year. Profits for the period were €211m (£185m) compared to a €96m (£84.2m) loss the year before.

Chief financial officer Neil Sorahan said: “We will deliver record profits in the current financial year and we would expect to continue to grow profitably into next year and beyond.

“Based on current booking profiles, we think that fares will rise into Easter and the summer.”

Passenger numbers should reach 168m this fiscal year, the airline said, and rise to 225m by 2026.

Meanwhile, fellow low cost carrier Flybe announced on Saturday that it would stop flying, for the second time in three years, cancelling all flights and making 276 workers redundant. There were apparently 75,000 future bookings impacted by the news.

According to the administrators Interpath, Flybe had struggled to withstand a number of shocks since its relaunch last year, not least the late delivery of 17 aircraft from lessors which severely compromised its efforts to build back capacity and remain competitive.

From Reuters:


Hurt by Britain’s COVID-19 pandemic lockdown, Flybe first fell into administration in March 2020, impacting 2,400 jobs.

In October 2020, it was sold to Thyme Opco Ltd, a firm controlled by Cyrus Capital, and in April 2022 it resumed flights, albeit on a smaller scale.

Izabella Kaminska11:28

Anjuli Davies11:28

Shares in insurer Legal And General lead the fallers this morning on the FTSE 100, down 2.5 percent at pixel time after CEO Nigel Wilson announced he would be retiring after a decade in the job. He is currently one of the longest sitting CEOs in the FTSE 100 and is well respected amongst the financial community. He will stay in his post until a successor is found.

Izabella Kaminska11:29

Anjuli Davies11:29

Worth mentioning bookmaker 888 Holdings. They are the biggest fallers by far on the FTSE250 this morning, down nearly 28% at pixel time after CEO Itai Pazner said he would step down immediately. Ominously no reason was given for his departure. The company’s share price has fallen 40% since his tenure began around 4 years ago.

It also added that it would suspend VIP activities in the Middle East pending an internal investigation.

The bookmaker also said that some anti-money laundering and Know Your Client processes were not followed for its VIP customers in the Middle East region.

Izabella Kaminska11:29

that is quite a chart actually..

Anjuli Davies11:29

Sounds intriguing

Other big corporate news…

Consumer good giant Unilever has appointed a new CEO.  Hein Schumacher, currently the chief of Dutch dairy business FrieslandCampina, will replace Alan Jope as its chief executive from July 1.

Shares seemed to like the news, trading around 0.7 percent higher and the appointment was also welcomed by board member and activist Nelson Peltz. Schumacher had been a non-executive director on Unilever’s board since October last year.

Investors seemed to welcome news of an external appointment, its first since Paul Polman joined from Nestle in 2008.  Unilever’s shares have been underperforming its peers under Jope, whose failed bid for GSK’s consumer healthcare business last year saw investors lose faith in him . So what does this mean for the consumer good giant?

 It’s long been rumoured that they could look to sell off its food business to focus on personal goods, beauty and home care , but some analysts note, why hire a food executive if that’s the near term plan?  Could it look again at some M&A  – any ideas ?

Izabella Kaminska11:31

So I was also quite intrigued by the Sunday Times story about BP.

They’re saying its low valuation makes it a target.

The low valuation is partly because of ongoing fossil fuel stigma but also because of its UK-domicile and thus sterling exposure.

Looks cheap all things being relative.

This at least was the view of Michael Stiasny, head of UK equities at M&G Investments.

BP’s annual energy Outlook for 2023 also came out overnight. I think you could say the view was overall “optimistic”. The energy giant has trimmed its demand forecast for 2023 based on the view that demand for energy security will accelerate the shift into renewables.

Not sure if BP is aware that most of the world’s solar panels are dependent on China, which produces over 90% of global PV wafer stock. So not sure how that squares with this news:

There’s a reasonable theory that BP has been captured by the green lobby and its outlook has lost the independence it used to have.

(Full disclosure, I worked for BP for a couple of years in the early noughties as an associate editor of their internal magazine).

It’s worth noting BP said last November that it was considering retiring its annual Statistical Review of World Energy, which had become an incredibly valuable statistical resource on all matters fossil fuel. They said this was because of it moving increasingly towards renewables.

But since when are statistics a bad thing? I never really understood the rationale. Surely you would want to maintain a good overview of current usage? Of course, if the stats show that despite all western efforts to reduce fossil fuel demand, both consumption and production are still growing – that could be a little awkward.

Here’s how Oil Price covered the news at the time:

Anjuli Davies11:37

Who would buy them? there was always the Exxon-BP rumour flying around…

Izabella Kaminska11:38

Yeah, so this is a good question. Given that most of its assets are not in the UK, it’s likely to be bought by a asset stripper type organisation in my opinion.

11:39The best trade on BP, is picking up its concessions and rights to fields that will otherwise never get extracted – by any group that is not so committed to the renewable transition. Chinese players come to mind. But then, likely, we would have a TikTok/Huwaei type national security issue.

So what happens then?

11:41 The obvious buyers are those who actually pose a security risk to us. But they might be blocked on security grounds. So for the time being, I reckon the share price just gets ever cheaper, the dividend ratio gets ever better, and the low valuation becomes a sort unexploitable arbitrage.

Anjuli Davies11:41

@Richard 😉

Izabella Kaminska11:41

*sort of

@RH – haha.

But it did get me thinking about Tesla, which everyone was convinced was going to perform poorly and yet last week we saw this news:

Tesla Inc. stock extended its rally on Friday, pushing weekly gains to nearly 35%, as investors cheered the EV maker’s earnings and top executive Elon Musk’s assurances that demand is not a problem at Tesla.

Tesla shares ended at their highest since Dec. 9, when they closed at $179.05. The stock also extended its winning streak to a sixth day, up 41% in that span.

Weekly gains of 33% were the best since the week ended May 10, 2013 when the stock rose 40.7%.

11:44 So obviously, there’s a lot of cognitive dissonance with respect to Tesla these days, because Elon — having been made king of the world by the ESG movement, is now pissing off all the sort of people that conventionally would support a big green name like Tesla.

What ESG maketh, however, it can also un-maketh

11:46 It’s fair to say that the big sell off in Tesla the last month or so, could have been down to the idea that Elon’s Twitter activism and general rogue approach to governance has made him a bit of an ESG red alert. Were the funds that made him, trying to unmake him by rotating out of the stock? No firm info on that other than a lot of conspiracy theory.

But, fair to say, there were a lot of headlines about his demotion from world’s richest man at the time.

Of course, if Tesla really does crack the Chinese market, an ESG boycott to get him in line on governance matters might be much harder.

Point being, unlike BP, you can’t really ban his core product can you?

11:48 If and when the China becomes self sustaining he achieves his own escape velocity. And remember, he is one of few Western companies that has managed to cut a deal in China that doesn’t require a 51/49% partnership split.

Anjuli Davies11:48

What about the short squeeze angle?

Izabella Kaminska11:49

Yeah, that’s no doubt a thing too. The upside surprise clearly popped some of that positioning leading to the outperformance.

Of course it’s been noted too that Elon’s free speech fundamentalism doesn’t seem to extend to criticising the Chinese.

Which I think kind of says it all. Elon’s pathway to independence and being able to do what he wants in the West is entirely linked to being funded by Chinese consumers.

11:52 Does that mean he is a Xi puppet? I don’t know. But it reminds me of how (if you watch the latest Vatican Girl documentary on Netflix) the fight to bring down communism in Poland and eastern Europe was allegedly helped by the polish pope and the Vatican, entering into a seedy relationship with the mafia to help disguise the fund flow.

So all it’s not the first time the “free speech” crusade will have been funded by less than desirable bedfellows.

But enough Tesla Vatican intrigue from me!

What should we cover in the last 7 minutes?

Izabella Kaminska
Headline RedBox Global
11:11 Some slightly related news from the wire now:
Anjuli Davies11:54

Should we mention Iran?

Izabella Kaminska11:54

Yeah, some explosions over the weekend have been linked to drone attacks originating from Israel (according to Iranian sources)

Iranian expat sources I know confirmed the attacks took place.

Anjuli Davies11:55

Do you watch Fauda Izzy?

Izabella Kaminska11:55

Nope, what’s that?

Anjuli Davies11:56

It’s amazing, it’s about a special forces unit within Israel who target Palestine “terrorists” dubbed the Homeland of Israel

Izabella Kaminska11:56

ooh. sounds good. Do get your Netflix tips to us as well dear readers 🙂

Anjuli Davies11:58

Maybe to finish up…Interesting puff piece in the Telegraph about the revamp of marmite estate agent Foxtons. Apparently its newish CEO, Guy Gittens,  wants to “bring fun back” so he’s gone out and bought 350 new yellow and green minis, mostly electric.

“Foxtons was once well-known for its branded cars buzzing about London, but under previous management the number in service had dwindled to just 20. Gittins ordered 350 new vehicles, many electric.”

He continues to assess where it all went wrong:

“For Gittins, cutting back on Minis was a classic example of what went wrong: the policy saved a few pennies but at the expense of visibility on the streets, staff morale and prestige.”

Apparently miserable salespeople are bad at their job so that’s why he’s also taking the top 100 performing employees skiing in Italy to celebrate.

Izabella Kaminska11:59

Oh gawd, i remember the minis. I didn’t realise that it had been such a strategic decision to abandon them.

To be fair, the marketing was cliche but incredibly powerful.

Ok, on that cheery note, we are going to call it a day. Do join us next week. Anjuli will have a special guest. And do reach out to her on the email we shared above with any specific feedback.

Take care everyone!

Anjuli Davies12:01

Adieu Izzy !

Izabella Kaminska12:01

Bye everyone.


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