FintechZoom AMC Stock Analysis: In-Depth Insights and Real-Time Data

Economic

Summary:

Explore FintechZoom's comprehensive analysis of AMC stock with real-time data, financial insights, advanced charting tools, and market trends. Stay informed and make strategic investment decisions with expert-driven insights.

AMC Entertainment Holdings Inc. (AMC) has become one of the most talked-about stocks in recent years, driven by a combination of retail investor interest, market volatility, and the shifting landscape of the entertainment industry. Known for its dominance in the movie theater sector, AMC faced significant challenges during the COVID-19 pandemic, leading to a dramatic impact on its stock price. However, the company’s stock has also been at the center of the "meme stock" phenomenon, resulting in unprecedented market movements.

Overview of AMC Entertainment Holdings

AMC Entertainment Holdings Inc. is one of the largest movie theater chains globally, operating theaters across the United States and internationally. The company’s extensive network of theaters has made it a household name in the entertainment industry. However, AMC has faced numerous challenges over the years, particularly with the rise of streaming services and the impact of the COVID-19 pandemic, which temporarily shuttered many of its locations.

Despite these challenges, AMC has remained a key player in the entertainment sector, and its stock has experienced significant fluctuations due to various factors, including the company’s financial performance, market trends, and the influence of retail investors.

Key Factors Influencing AMC Stock

Meme Stock Phenomenon: AMC became one of the most notable "meme stocks," where retail investors on platforms like Reddit’s WallStreetBets drove the stock price to extraordinary levels. This phenomenon has introduced significant volatility to AMC’s stock, making it a focal point for both retail and institutional investors.

COVID-19 Impact: The pandemic had a profound impact on AMC’s operations, with theaters closing and revenue plummeting. The company’s ability to navigate this crisis and adapt to the changing landscape has been closely watched by investors.

Streaming Competition: The rise of streaming services such as Netflix, Disney+, and HBO Max has changed the dynamics of the entertainment industry. AMC’s response to this shift, including its strategies to attract audiences back to theaters, is a critical factor in its stock performance.

Debt Management and Financial Health: AMC’s financial health, particularly its debt levels, has been a point of concern for investors. The company’s efforts to manage and reduce its debt while maintaining operations are key to its long-term viability.

Market Sentiment and Retail Investor Influence: Retail investor sentiment has played a significant role in AMC’s stock movements. The company’s popularity among retail investors has led to extreme price swings, making it a stock that requires close monitoring.

FintechZoom’s Comprehensive Coverage of AMC Stock

FintechZoom is a premier financial technology platform that offers extensive analysis and insights into AMC stock. The platform provides investors with a wide range of tools and resources to help them navigate the complexities of investing in a volatile stock like AMC.

Key Features of FintechZoom’s AMC Stock Analysis

Real-Time Stock Data and Market Updates: FintechZoom offers real-time stock quotes, market data, and news updates for AMC stock. This feature is crucial for investors who need to stay informed about the latest market movements and news affecting AMC.

In-Depth Financial Analysis: The platform provides detailed financial analysis of AMC, including key metrics such as revenue, earnings per share (EPS), and debt levels. This analysis helps investors assess AMC’s financial health and understand the factors influencing its stock price.

Advanced Charting and Technical Analysis Tools: FintechZoom’s advanced charting tools allow investors to analyze AMC stock trends, apply technical indicators, and customize charts to suit their investment strategies. These tools are essential for identifying patterns and making informed trading decisions.

Historical Data and Performance Metrics: Investors can access historical data and performance metrics for AMC stock on FintechZoom. This data is valuable for understanding the stock’s past performance and making predictions about future movements.

Market Sentiment and Social Media Analysis: Given AMC’s status as a meme stock, understanding market sentiment is critical. FintechZoom aggregates news articles, analyst ratings, and social media sentiment to provide a comprehensive view of how the market perceives AMC.

Analyst Ratings and Price Targets: FintechZoom offers insights into analyst ratings and price targets for AMC stock, helping investors gauge the stock’s potential based on expert opinions.

How FintechZoom Enhances AMC Stock Analysis

Real-Time Data and News Updates

For a stock as volatile as AMC, staying updated with real-time data is crucial. FintechZoom provides continuous updates on AMC’s stock price, trading volume, and related news. This allows investors to react swiftly to market changes, particularly during periods of high volatility.

Comprehensive Financial Insights

FintechZoom’s financial analysis tools offer a deep dive into AMC’s financial statements, including income statements, balance sheets, and cash flow statements. Investors can analyze these documents to assess AMC’s financial stability and growth potential. The platform also provides comparisons with industry peers, giving a broader context to AMC’s financial performance.

Advanced Charting Capabilities

Technical traders will appreciate FintechZoom’s advanced charting tools, which include customizable charts, technical indicators, and trend analysis features. These tools allow traders to identify key support and resistance levels, monitor price trends, and develop trading strategies tailored to AMC’s unique market behavior.

Historical and Trend Analysis

FintechZoom’s access to historical data enables investors to track AMC’s performance over time, providing insights into long-term trends and potential future movements. This is particularly useful for understanding how AMC has reacted to past market events, such as earnings reports or industry shifts.

FastBull’s Role in Enhancing AMC Stock Analysis

FastBull is a fintech platform renowned for its real-time market signals and in-depth analysis. The integration of FastBull’s tools with FintechZoom’s comprehensive platform provides investors with additional resources to optimize their investment strategies in AMC stock.

FastBull’s Contributions to AMC Stock Analysis

Real-Time Market Signals: FastBull offers real-time market signals that alert investors to significant market movements and potential trading opportunities. For a stock as volatile as AMC, these signals can be invaluable in identifying entry and exit points.

Expert Analysis and Commentary: FastBull provides detailed reports and expert commentary on AMC’s market position, competitive landscape, and future prospects. This analysis adds depth to FintechZoom’s coverage, offering investors a well-rounded view of AMC’s stock.

Strategic Trading Insights: FastBull’s trading strategies are tailored to different market conditions, helping investors navigate the complexities of trading AMC stock. These strategies are based on both technical and fundamental analysis, providing actionable insights for optimizing trades.

Integration and Synergy

The collaboration between FastBull and FintechZoom creates a powerful combination for AMC stock investors. By leveraging the real-time signals and expert analysis from FastBull alongside FintechZoom’s comprehensive data and tools, investors can make more informed decisions and improve their trading outcomes.

Conclusion

AMC Entertainment Holdings Inc. (AMC) has been at the center of the stock market’s most dramatic movements in recent years, driven by a combination of retail investor enthusiasm, market volatility, and industry challenges. FintechZoom provides a robust platform for analyzing AMC stock, offering real-time data, in-depth financial analysis, advanced charting tools, and expert insights.

The integration of FastBull’s real-time market signals and strategic analysis further enhances FintechZoom’s offerings, providing investors with a comprehensive toolkit for navigating the complexities of AMC stock. Together, these platforms empower investors to make informed decisions, capitalize on opportunities, and manage risks effectively. As the market continues to evolve, the collaboration between FintechZoom and FastBull exemplifies the power of fintech innovation in shaping the future of stock analysis and investment strategies.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Glendon

Economic

Matterport, Inc. (NASDAQ: MTTR) has been making waves in the spatial data industry, offering innovative solutions for digitizing and datafying physical spaces. As an investor, it's crucial to understand the company's fundamentals, growth potential, and market positioning before deciding whether to add MTTR stock to your portfolio. In this comprehensive review, we'll dive deep into the key aspects of Matterport to help you make an informed investment decision.

Company Overview

Matterport is a spatial data company that focuses on creating digital twins of physical spaces. The company offers a range of products and services, including the Matterport Capture Services for enterprise subscribers, Matterport Pro3 and Pro2 cameras for capturing 3D spaces, and smartphone capture solutions for both iOS and Android devices.

Matterport's technology enables users to create highly accurate and detailed digital representations of properties, buildings, and other physical environments. These digital twins can be used for various applications, such as virtual tours, property management, construction planning, and facility maintenance.

Financial Performance

Matterport's financial performance has been a mixed bag in recent years. While the company has reported impressive revenue growth, it has also struggled with profitability and cash burn.

In its most recent quarter, Matterport reported revenue of $28.5 million, representing a 5% year-over-year increase. However, the company also reported a net loss of $31.8 million, highlighting the challenges it faces in achieving profitability.

Despite these challenges, Matterport has a strong balance sheet, with $369 million in cash and cash equivalents as of March 31, 2024. This provides the company with the financial flexibility to invest in growth initiatives and weather any short-term setbacks.

Growth Prospects

Matterport's growth prospects are closely tied to the adoption of digital twins and spatial data technologies across various industries. The company has identified several key growth drivers, including the expansion of its enterprise subscriber base, the development of new products and services, and the penetration of international markets.

One area of particular focus for Matterport is the real estate industry. The company has been working to increase the adoption of its technology among real estate professionals, who can use digital twins for virtual tours, property management, and marketing purposes.

Another growth opportunity for Matterport is the expansion into new verticals, such as construction, facilities management, and insurance. The company's technology can be applied to a wide range of use cases, and it is actively exploring ways to leverage its expertise in these areas.

Competitive Landscape

Matterport operates in a competitive market, with several other companies offering similar spatial data and digital twin solutions. Some of Matterport's key competitors include Autodesk, Bentley Systems, and Trimble.

To maintain its competitive edge, Matterport has been investing in research and development to enhance its product offerings and stay ahead of the curve. The company has also been pursuing strategic acquisitions to expand its capabilities and customer base.

Analyst Opinions

Wall Street analysts have a mixed outlook on Matterport stock. According to MarketBeat, the consensus rating for MTTR is "Hold," with a price target of $4.50, implying a potential upside of 11.66%.

Some analysts believe that Matterport's growth potential is not fully reflected in its current stock price, while others are more cautious due to the company's profitability challenges and competitive landscape.

Risks and Considerations

Investing in Matterport stock comes with several risks and considerations. These include:

Profitability challenges: Matterport has struggled to achieve profitability, and there is no guarantee that it will be able to do so in the near future.

Competitive pressures: The spatial data and digital twin market are highly competitive, and Matterport may face increasing pressure from larger, well-capitalized competitors.

Regulatory risks: As a technology company, Matterport may face regulatory challenges related to data privacy, security, and intellectual property.Valuation concerns: Some investors may view Matterport's stock as overvalued, given its current financial performance and growth prospects.

Conclusion

Matterport is a promising company with a unique value proposition in the spatial data and digital twin market. However, investors should carefully consider the company's financial performance, growth prospects, competitive landscape, and risks before deciding whether to invest in MTTR stock.

While Matterport has significant growth potential, it also faces significant challenges in achieving profitability and maintaining its competitive edge. Investors should conduct their own due diligence and consult with a financial advisor before making any investment decisions.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Glendon

Economic

The U.S. stock market has been on a rollercoaster ride in recent weeks, with key economic data fueling significant volatility. Investors have been closely monitoring indicators such as the Consumer Price Index (CPI), retail sales, and employment figures, which have heightened concerns about inflation and the potential for a recession. These concerns have been further exacerbated by the Federal Reserve’s monetary policy decisions, particularly the anticipated rate cuts.

Inflation Pressure: CPI Data Signals Persistent Concerns

The Consumer Price Index (CPI) remains a focal point for investors as it directly reflects inflationary pressures in the economy. In July 2024, the CPI recorded a 3.2% year-over-year increase, slightly exceeding the Federal Reserve's target of 2%. The core CPI, excluding food and energy prices, also posted a 3.3% year-over-year rise. These figures indicate that inflation is cooling but remains above the desired level, keeping investors cautious.

Following the release of the July CPI data, the stock market reacted sharply. The S&P 500 dropped 1.5% in a single day as fears of delayed interest rate cuts by the Federal Reserve took hold. The persistent inflationary trend suggests that the road to price stability may be longer than anticipated, contributing to market uncertainty.

Retail Sales Slowdown: A Sign of Consumer Strain?

Retail sales data is another critical indicator that has influenced recent market movements. In July 2024, retail sales rose by 0.3% from the previous month, a figure that fell short of market expectations. When excluding auto and gasoline sales, the increase was a modest 0.2%, down from 0.8% in June.

This slowdown in retail sales growth has sparked concerns about the health of the U.S. consumer. With inflation and rising interest rates beginning to pinch, the ability of consumers to maintain spending levels is under scrutiny. These concerns have added to recession fears, with markets reacting to any signs of weakening consumer demand.

Jobs Report: Mixed Signals from the Labor Market

The July 2024 jobs report provided mixed signals about the state of the U.S. labor market. The economy added 180,000 jobs, which was below the expected 200,000. However, the unemployment rate held steady at 3.6%. Wage growth also showed signs of slowing, increasing by 4.2% year-over-year, down from 4.4% in the prior month.

These figures have raised questions about the strength of the labor market. While unemployment remains low, the deceleration in wage growth suggests that the labor market may be losing momentum. This has amplified concerns about a potential economic slowdown, with the stock market experiencing a sell-off in response to the weaker-than-expected jobs data.

Federal Reserve's Dilemma: Balancing Inflation and Growth

The Federal Reserve's response to these economic indicators has been a key driver of market volatility. Investors are keenly watching for clues about the central bank's next move, particularly regarding interest rate cuts. As of mid-August 2024, the market’s expectation of a 50 basis point rate cut at the September FOMC meeting had dropped from 75% to 50% following the release of recent economic data.

Economists, including Goldman Sachs chief economist Jan Hatzius, have cautioned that the market may be overestimating the likelihood of significant rate cuts in the near term. While there is a strong case for cumulative rate cuts over the next 1-2 years, the immediate outlook remains uncertain, contributing to ongoing market volatility.

Global Economic Impact and Investor Strategies

The global economic landscape is also influencing U.S. stock market dynamics. China's economic slowdown, with its Q2 2024 GDP growth revised down to 4.5%, has had ripple effects across global markets. Additionally, Europe's energy crisis continues to disrupt supply chains, adding another layer of complexity to the inflation outlook.

In response to these global challenges, investors have been reallocating assets into safer options such as U.S. Treasuries and gold. The yield on the 10-year U.S. Treasury note fell to 3.75% in August 2024, reflecting heightened demand for lower-risk assets. Gold prices have also surged, reaching $2,000 per ounce as investors seek stability amid ongoing market turbulence.

Conclusion: Navigating an Uncertain Market

The U.S. stock market remains highly sensitive to economic data, with each new report shaping investor sentiment and driving market movements. As the Federal Reserve continues to balance its dual mandate of controlling inflation and supporting economic growth, market participants must stay vigilant. The interplay between domestic economic indicators and global influences will likely continue to dictate market trends, making it crucial for investors to remain informed and adaptable.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Owen Li

Cryptocurrency

Argentina is on track to become a crypto powerhouse, with new President Javier Milei championing Bitcoin and other digital currencies. His support is driving a wave of innovative policies aimed at boosting the nation's position in the global crypto market.

In the recent statements, Milei stressed that owning Bitcoin can be a turning point in the future battle for the preservation of national currencies. His pro-crypto stance will help garner much attention from local as well as international investors, which will place Argentina as a major player in the crypto space.

Milei, said, “There will be free competition of currencies so if you want to use Bitcoin there will be no problems… and you can also use other units such as WTI, BTU and the one that is most appropriate for your business.

Milei's statements come amid global discussions on Bitcoin. Donald Trump has recently proposed creating a major Bitcoin fund if he becomes president again. This highlights how cryptocurrency is increasingly becoming a key element in international economic strategies.

Argentina, under President Alberto Milei, aims to tackle fiscal challenges using Bitcoin's decentralized features. Endorsing Bitcoin, Milei is seen as a pioneer of financial innovation and economic freedom.

The possible advantages of Bitcoin, including inflation hedge and enhanced financial reliability, are beneficial for the country. It is believed that the new administration of the president of Paraguay, Mario Abdo Benítez, and the economy minister, Santiago Peña, will promote the use of Bitcoin and incorporate it into the financial system of the South American state.

This strategic emphasis on Bitcoin may help to attract more foreign investments and have a more stable economy for Argentina. The potential benefits of this strategy are to attract investments and innovative individuals who are involved in the creation of new cryptocurrencies and related services.

With the changes of the world economy, Argentina's adoption of Bitcoin under President Milei could open the door for other countries to do the same.

Source: Crypto Times

Risk Warnings and Disclaimers

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Central Bank

Economic

US economy worries take front and centre

The panic about the US economy being on the verge of a recession has mostly eased but markets remain jittery. Investors see a real risk that the Fed’s delay in cutting rates has made a downturn inevitable. Sticky inflation is the main reason why the Fed has stayed this cautious. But inflationary pressures finally seem to be receding in a more sustainable manner.

Next week’s CPI report is expected to underscore this trend and in the absence of any surprises, the data may not do much in allaying the slowdown fears as the focus has shifted somewhat to the growth side of the story. But in the event that the inflation numbers shock either to the upside or downside, the ripple effects will certainly be more notable.

CPI to likely maintain downward trajectory

The headline rate of CPI is expected at 2.9% y/y in July, easing slightly from the prior 3.0%. The month-on-month figure is anticipated to have accelerated, however, from -0.1% to 0.2%. Core CPI is forecast to slow too on an annual basis from 3.3% to 3.2%, but inch up from 0.1% to 0.2% month-on-month.

Week Ahead – US CPI to Test Market Nerves, RBNZ Might Cut Rates_1

A large upside surprise would be the worst outcome for the markets as it would mean the Fed won’t be able to slash rates very rapidly even as the economy is losing steam. On the other hand, a big miss would likely boost expectations that the Fed will cut rates by 50 basis points in September, cheering investors.

A busy US agenda

The CPI numbers are due on Wednesday and will be preceded by producer prices on Tuesday, while on Thursday, the spotlight will turn to retail sales. After flat growth in June, retail sales are forecast to have risen by 0.3% month-on-month in July, which may go some way in calming fears about a recession.

Week Ahead – US CPI to Test Market Nerves, RBNZ Might Cut Rates_2

On Friday, the University of Michigan’s consumer sentiment survey will also be important, in particular, the inflation expectations for the next one and five years. Other releases will include the New York and Philly Fed’s manufacturing gauges, as well as industrial production for July, all out on Thursday, while on Friday, building permits and housing starts will attract some attention too.

If the upcoming data give a further green light to aggressive rate cuts, the US dollar could come under renewed pressure, having barely rebounded from the past week’s selloff.

Pound on the backfoot ahead of UK data flurry

The pound has retraced almost all its July gains, underperforming all other majors this month apart from the dollar. Although the Bank of England’s rate cut is to blame for some of this weakness, the riots across English cities have also been weighing on sterling as they’ve occurred just as investors had priced out political risks for the UK.

However, the focus over the next seven days will firmly be on the economy, starting with the labour market report on Tuesday. A somewhat cooler labour market has helped wage growth moderate to 5.7% y/y but ideally, BoE policymakers will need to see a further drop before being ready to lower rates again.

July CPI figures will follow on Wednesday and could be key to shaping rate cut expectations for the BoE’s September gathering as the odds for a second 25-bps reduction currently stand at around 30%. Headline inflation was unchanged at 2.0% in June – bang on the BoE’s target. But it probably edged up in July to 2.3% y/y, supporting the reasoning behind the hawkish cut at the August meeting.

Week Ahead – US CPI to Test Market Nerves, RBNZ Might Cut Rates_3

Investors will also be keeping a close eye on services CPI, which like wages, remains elevated.

On Thursday, the UK will publish preliminary GDP readings for the second quarter. The economy is projected to have expanded by 0.7% q/q in Q2, maintaining the same pace as in Q1. Rounding up the weekly releases on Friday will be July retail sales.

Although the likelihood of a back-to-back rate cut in September is quite low, a broadly soft set of data could nevertheless push up market expectations, in a further setback for sterling.

Will the RBNZ join the rate-cut club?

The Reserve Bank of New Zealand meets on Wednesday for its latest policy decision. Economists are not anticipating any change but there is growing consensus among traders that the RBNZ will announce a 25-bps reduction in the cash rate. Easing expectations started to gain traction after the previous meeting when policymakers sounded upbeat about the prospect of inflation returning to the 1-3% target range in the second half of this year, which was later backed by the Q3 CPI report that showed inflation falling to 3.3%.

Week Ahead – US CPI to Test Market Nerves, RBNZ Might Cut Rates_4

Further building the case for looser policy was the RBNZ’s own survey on inflation expectations that pointed to the lowest expectations in more than three years.

Subsequently, investors have ramped up their bets for an August cut to about 80% so should the RBNZ decide to proceed with one, the New Zealand dollar will probably not suffer huge losses unless policymakers signal that more are on the way.

Can the aussie extend its recovery?

With the RBNZ looking certain to begin reducing rates later this year if not at the August meeting, the RBA is increasingly becoming the odd one out. Governor Michelle Bullock has pushed back on market bets of a cut anytime soon, but investors still see a reasonable chance of a move by December.

Nonetheless, the RBA’s hawkish stance is supporting the Australian dollar’s rebound attempt against the greenback, although next week’s releases may pose a downside risk. The wage price index for the second quarter is due on Tuesday and the employment report for July is coming up on Thursday.

In addition to domestic indicators, aussie traders will also be watching China’s latest monthly data dump. The July readings for industrial production, retail sales and fixed asset investment are out on Thursday. Any disappointment, especially with retail sales, would add to concerns that China’s economy is stuck in the slow lane, possibly hurting the aussie.

Week Ahead – US CPI to Test Market Nerves, RBNZ Might Cut Rates_5

Yen bulls look to Q2 GDP

Finally in Japan, second quarter GDP numbers are due on Thursday. The data will be vital for the Bank of Japan where there’s an ongoing debate about whether the economy is strong enough to withstand higher interest rates. Other releases will include corporate goods prices on Tuesday and machinery orders on Friday.

The yen rally is currently taking a breather after the impressive gains over the past month. However, a print that’s stronger than the expected 0.5% q/q could revive the bulls.

Source:XM

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Devin

Economic

Once labelled the "sick man of Europe", the UK economy is anything but nowadays.

Despite slow economic growth, a lingering cost-of-living crisis and some enduring effects of Brexit, there have been definite green shoots of recovery spotted by economists over the past few months.

Inflation has fallen back to the Bank of England's 2 per cent target, gross domestic product growth has held its own and business confidence is doing well.

British manufacturers had their best July in two years, with factories increasing output and new orders at the fastest pace since February 2022.

"UK manufacturing has started the second half of 2024 on an encouragingly solid footing," said Rob Dobson, director at S&P Global Market Intelligence.

Meanwhile, a survey by the Institute of Directors of optimism among business leaders regarding the prospects for the UK economy, showed a huge improvement in July and the highest result the Directors' Economic Confidence Index has achieved in three years.

"This looks like an early vote of confidence in the new government, given the smaller movements in the other economic measures, which point to modest improvement in economic conditions," the IoD's chief economist, Anna Leach, said.

In a finely balanced decision on Thursday, the Bank of England cut interest rates by 0.25 per cent to 5 per cent, the first reduction in more than four years.

Noting that rate cuts are good for businesses and households, Janet Mui, head of market analysis at Brewin Dolphin, said the beginning of the rate-cutting cycle is "significant because central banks don't tend to just cut once or twice".

"Financial markets are pricing in another rate cut in November and about four to five rate cuts in 2025."

Is the UK the Most Attractive European Economy for Investors?_1

But the welcome that the rate cut received was accompanied by a healthy dose of caution, mainly because economists calculate that inflation, far from being defeated, is predicted to regain a little strength towards the end of the year.

“It's not safe to assume this is the first cut of many," said Steve Clayton, head of equity funds at Hargreaves Lansdown.

"The Bank of England said there are still inflationary risks, so while it decided a slight reduction in rates was appropriate, it went nowhere near suggesting that significant and sustained cuts are on their radar screen yet."

Nonetheless, the UK economy seems to be "faring relatively well compared to our European peers", Stuart Cole, chief macro economist at Equiti Capital, told The National.

"Look at Germany," he said, "where the economy is basically stalling, unemployment is rising, it is battling a depressed industrial sector and where the services sector is showing no signs of increased activity despite a rise in real incomes."

As such, if there is a sick man in Europe currently, analysts tend to point to Germany, whose economy has struggled in the wake of Russia invasion of Ukraine and is only expected to grow by 0.2 per cent this year. Is the UK the Most Attractive European Economy for Investors?_2

Is the UK the Most Attractive European Economy for Investors?_2

Indeed, for James Athey, a fund manager at the Marlborough Group, Britain was never really the sickest patient in Europe, even when it looked that way in the wake of Brexit.

"Over the last 10 years, the UK compound growth rate has been higher than Germany, France and Italy," he told The National.

"Since Brexit, there is only France of those four which has economically outperformed [up to the first quarter of this year – the most recent UK data available].

"France is unequivocally not a country we should observe with envy. The parlous state of their economy is a significant vulnerability."

'Red herring'

But does this mean the UK economy is about to sprint ahead?

Definitely not, say most economists, given that most consumer-facing parts of the UK economy are still having a hard time and, for most Britons, the cost-of-living crisis is still very much clawing away at household budgets.

Britain's new chancellor Rachel Reeves also placed another dark cloud over those household budgets on Monday with the prospect of higher taxes and slashed government spending in an October budget, having announced she and her team had found a £22 billion "black hole" in the UK's public finances.

Is the UK the Most Attractive European Economy for Investors?_3

In the run-up to the recent UK election, Ms Reeves' Labour Party was highlighting that faster economic growth would raise the money to solve the thorny issues in the public purse.

But the "black hole", which Ms Reeves said came about as a result of the former Conservative government's “unfunded and undisclosed” spending commitments, may mean budget cuts and tax rises are brought forward.

However, many analysts point out that about £10 billion of the black hole is attributable to Ms Reeves's decision to award a pay rise of 5 per cent to 6 per cent to public sector workers.

But for others, such as Tim Sarson, KPMG's UK head of tax policy, the £22 billion "black hole" is somewhat of a "red herring" and "neither surprising, nor particularly huge".

"What's really at stake is the significantly greater ramp-up in investment and spending demanded over the longer term to keep up with our ageing demographics and restore the quality of public services to peer standards," he told The National.

"For that, this or future governments may need increased economic growth, and some tax rises, and potentially increased borrowing.

"Given tax rates on a number of parts of the population are already high by historical standards, it's difficult to see tax picking up more than a portion of the bill."

Stability after stagnation

Ms Reeves does at least represent stability and there is nothing markets or investors love more.

In the 14 years of rule by the Conservatives, there were five prime ministers, seven chancellors and eight foreign secretaries.

The most stark example of the instability during those years came during the ill-fated premiership of Liz Truss, when a "mini-budget" containing £45 billon of unfunded tax cuts in September 2022, led to investors demanding an additional yield on government debt, something that became known in the financial markets as the "moron premium".

But that is in the rear-view mirror now, said Thomas Pugh, economist at RSM, adding that following a long period of stagnation, the UK economy is "recovering and the stock market is showing signs of life".

"A period of political stability should bring confidence to consumers and businesses alike, which – combined with a return to normal levels of inflation and rising real incomes – will allow consumer spending and investment to rise steadily over the next few years," he told The National.

But while Ms Reeves projects the image of a fiscally prudent Labour chancellor in the same vein as Gordon Brown about 30 years ago, the party's enormous 158-seat majority in the UK parliament also lends a high degree of policy stability.

"The clear-cut election result in the UK in July also contrasts strongly with France, whose political travails could be weighing on the euro, and even the US, where a close, fractious presidential contest is possible and a contested result a possibility,” Russ Mould, investment director at AJ Bell, told The National.

As such, investor appetite for UK government bonds or gilts has been strong of late and if the new chancellor maintains prudence with the UK's finances, there is little reason why that strength cannot continue.

"Demand for gilts from overseas may well increase if this fiscal conservatism is maintained – particularly if, as we expect, such conservatism is absent in the US and the eurozone remains marred by instability and divergence," Mr Athey told The National.

No 'magic bullet'

So, while the UK economy is still finding its feet again in terms of growth, the £22 billion "black hole" in the fiscus is of little concern to economists, even given its ability to make headlines and its use a political point-scorer.

Is the UK the Most Attractive European Economy for Investors?_4

As regards the investment case, the UK economy continues to look more attractive than some its G7 peers and many investors will take the position that when it comes to where to put their money, it is often the case of placing it with the best of a bad bunch.

"It is true that in recent weeks there has been a strand of conversation out there which suggests that international investors see the UK as having entered a period of relative stability – certainly relative to the likes of France and the US," Mr Athey said.

"This should certainly support international capital flows into the UK, particularly given how well sterling has performed of late."

While the UK economy is no Olympic sprinter at the moment, it is certainly less sluggish than it was even at this time last year, but there remains some doubt that its fitness levels are of the order to deliver the growth it needs.

Mr Cole told The National that international investors are "caught between a rock and a hard place at the moment" and the UK economic outlook is "at risk of deteriorating going forward".

"I am not convinced yet by the growth story and think a lot of what we are seeing is a short-term bounce from last year's recession rather than anything more structural, that is, more the speed of recovery rather than the size of the economy in the long run," he said.

"Taxes are going to have to rise and there will no doubt be an increase in borrowing too, and I do not believe that Labour has found the magic bullet to suddenly place the UK on a higher trend rate of growth.

"If I was an international investor, I would be waiting to see exactly what this new Labour government means, and that certainly means waiting for October's budget and next year's spending review."

Being cautious may be the prudent strategy at the moment, but for James Sproule, chief UK economist at Handelsbanken, it shouldn't be forgotten that the fundamental reasons for investing in the UK have not, and have never, altered.

"The UK has long been one of the easiest countries in the world in which to invest. The things that sit behind this ease of investment are as much cultural as anything else [language, legal systems], so they are not going to fade quickly," he told The National.

Source: The National News

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Economic

Economic pundits, markets and the media are in collective freakout mode, resurrecting the ‘R’ word: recession. US unemployment jumped from 4.1% in June to 4.3% in July, while payroll gains of 114,000 underperformed expectations of around 175,000. Concurrently, stocks capped off a bad week, for the overextended NASDAQ in particular, and the sell-off is continuing in reaction to the unemployment report and unwinding of large global carry trades.

Media and analysts thundered. Reactions included: a recession is not off the table; recession fears are being fanned; recession probabilities are deepening; the Sahm Rule recession threshold has been triggered.

It seems as if only a month ago, the dominant public narrative was that inflation was too high, sticky and far above the Federal Reserve’s 2% target. Services and shelter prices were a trouble spot, food prices were elevated and public opinion polls were finding that – with elections approaching – the scourge of inflation was the number one US economic challenge and threat.

Prior to the employment report, many economists felt the Fed was on the verge of accomplishing a major success, engineering a Goldilocks soft landing.

Now, alongside the recession headlines, renewed Fed bashing has emerged – the Fed is seizing defeat from the jaws of victory. Long pilloried for being too slow to tighten and not having been tough enough in the fight against inflation, the Fed seemingly overnight is now being pilloried by armchair quarterbacks and second guessers as behind the curve, too restrictive and slow to move.

Further, somehow in the 180-degree flip from inflation to recession fears, the American public missed out on being informed that inflation was no longer a central worry. While reports to that effect might have made for boring copy – and there were some to be fair – it hadn’t yet sunk into the American psyche that key inflation measures had declined to 2.5% year over year and are poised to moderate, partly because services and shelter prices are easing.

Markets need to chill

There is no doubt that July data are pointing to softness, some indicators sharper than others. But the soft landing story should remain the base case for now, though one shouldn’t discount recession concerns and must always prepare for downside risks.

The New York Fed nowcast is projecting Q3 growth of 2.1% at a seasonally adjusted annual rate. The Atlanta Fed nowcast predicts 2.5%. The July S&P composite purchasing managers index was up, buoyed by services. June industrial production and capacity utilisation were solidly up. Torston Slok, Apollo’s chief economist, observes that many real-time consumption indicators (air travel, retail sales) show no signs of a slowdown. Labour market conditions are still strong in that unemployment, even at 4.3%, is highly favourable by US historical standards (Figure 1).

Figure 1. Unemployment rate still favourable by historical standards

To be sure, key voices, such as William Dudley, former New York Fed president, called for easing at the July Federal Open Market Committee meeting. But many of the newer criticisms of the Fed are excessive. The Fed didn’t have the employment data when the FOMC met.

Further, after having been pilloried for so long over inflation, and against the electoral backdrop with comments from candidate Donald Trump, the FOMC would understandably want a fully convincing case that could command a strong committee consensus before cutting rates. Committees rarely exhibit dexterity, except under duress.

One month’s data don’t make a trend. Some analysts have argued that weather-related events may have impacted the outcome. Further, there are debates about whether the labour market’s softening is being impacted by expanded labour supply dynamics or a fall in labour demand. The latter would be a more deleterious signal for the economy, while the former might suggest the labour market and underlying economic health remain more solid than suggested by the rise in the unemployment rate.

There are also many moving pieces in the economy. Markets are already discounting a series of Fed rate cuts over the remainder of the year and into 2025. Thus, even though the FOMC left the Fed Funds rate unchanged, market rates have fallen appreciably, advancing much of a rate cut’s impact. For example, 10-year Treasuries are down one percentage point since end-April and mortgage rates (for 30-year fixed) have plummeted. Oil prices are tanking, which will boost real incomes.

The Fed is clearly heading towards cutting the Fed Funds rate at its September gathering as Chair Jerome Powell foreshadowed at his last FOMC press conference. Further data may indeed buttress recession probabilities. But, for the time being, the reactions to the US July employment report and the emerging critique of the FOMC and its July decision are overdone. Markets should chill.

Source:Mark Sobel

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