Is the peak, or maybe plateau, in inflation almost here? Figures from the US and, this morning, the UK showed the key Consumer Price Index measures of inflation pulling back from their highs. I guess we will find out more about how close we may be to any pivot when the Federal Reserve announces its latest interest rate decision this evening. An increase is on the cards, probably of 0.5 per cent, but the language around it will be closely watched for indicators of when rises may be tapered. Then tomorrow it is the Bank of England’s turn.
Equities remain in something of a holding pattern until we get more clarity from central banks with the FTSE100 down 0.4 per cent at lunchtime with the FTSE250 off 0.5 per cent. In Europe the Dax was down 0.7 per cent and the CAC 0.5 per cent.
While inflation may pause, and even fall, in the coming months the slide is unlikely to be as precipitous as the rise this year after all many of the pressures in the global economy such as supply chain issues, energy prices and, latterly, upwards pressure on wages will be around for most if not all of next year.
UK inflation dipped to 10.7 per cent in November, from October’s multi-decade high of 11.1 per cent with the slide in the oil price over the month meaning the falling cost of fuel at the petrol pumps was one of the key drivers during the month.
The sheer strangeness of the collapse of crypto-exchange FTX took a new turn into the surreal following the arrest in the Bahamas of FTX’s founder Sam Bankman-Fried. The congressional investigation being led by the House Financial Services Committee heard some startling testimony from the FTX’s new chief executive and bankruptcy specialist John Ray, who listed some of the core issues that led to the exchange’s collapse. Mr Ray, who oversaw the bankruptcy of Enron in 2001, described the management of FTX as “grossly inexperienced and unsophisticated”.
One of the more startling examples of this was the company’s apparent use of “QuickBooks”, an accountancy package intended for sole traders and small and medium-sized businesses, for all of its bookkeeping. Mr Ray added that while the auditing was yet to be completed, partly because FTX did almost no record-keeping, the loss of client funds may be in the “billions”. JH.
LXi Reit extends leases on 122 Travelodge hotels
Long-income real estate investment trust (Reit) LXi (LXI) has extended its lease contract with Travelodge on 122 hotels.
The lease renegotiation for the hotels in the portfolio LXi acquired from its merger with Secure Income means that the average unexpired lease term on the assets has increased from 19.5 years to 28.5 years. The deal also increases the average unexpired lease term across LXi’s entire portfolio from 25.6 years to 27.3 years.
The company said it was “delighted” with the deal. ML
Mid-cap Reits’ results reveal real estate’s mixed fortunes
Mid-cap real estate investment trusts (Reits) Custodian Property Income (CREI) and Ediston Property Investment Company (EPIC) both posted results this morning – revealing mixed fortunes in the property market. Custodian, which owns a mix of mid-sized commercial property assets, swung to a £14mn pre-tax loss due to a valuation hit while Ediston, which only owns out-of-town retail shopping parks, posted an increase in pre-tax profit to £21.5mn thanks to a much more marginal valuation hit. Custodian said its portfolio had shown “resilience” while Ediston said its results showed the “attractiveness” of its assets. ML
SThree banks double-digit growth despite recession fears
Specialist recruitment company SThree (STEM) has enjoyed a strong year, despite fears about the jobs market.
In a full-year trading update, the group – which focuses on white-collar roles in science, technology, engineering and finance – reported net fee growth of 19 per cent. All of the group’s core regions reported double-digit increases, with the Netherlands proving to be a standout performer.
There are signs that the jobs market is slowing down however. Management noted a “softer trading environment” towards the end of the year, and net fees from permanent roles fell by 5 per cent in the final quarter. However, this was comfortably offset by demand for contractors, and total net fees still grew by 9 per cent in the final three months of 2022.
SThree is confident that its focus on temporary jobs will help it weather a recession. This is holding true for now: the group’s contractor order book is up 19 per cent year-on-year at £186mn.
The group will publish its full-year results on 30 January 2023. JS
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