The Market Call - Week Ending 14th February 2025

This week, Progressive's Gareth Evans and Jeremy McKeown tackle the investment implications of Trump 2.0. After shocking the world with his suggestion of turning Gaza into the Riveria of the Middle East, Trump has moved on to Ukraine. Such events illustrate how the accepted World order has broken down. Where is the UN in all of this? One outcome has been a new all-time high in the gold price, indicating heightened risks and uncertainties for global investors. The US inflation data also came in hot. Yet, counter-intuitively, it didn't dent the gold bull market, indicating perhaps investor concerns over policy errors or breakdown in the relationship between the Treasury and the Fed. Relative to other monetary metals, gold looks expensive, and silver or platinum might offer better opportunities to protect against fiat money debasement. Not advice; do your own research. China's equity values have recovered strongly after the Deep Seek AI revelations. Alibaba's stock has risen over 40% in less than a month, indicating the impact of the dispersal trade. The UK economy unexpectedly grew in Q4 last year. While negative sentiment surrounds the economy, UK assets remain relatively attractive to global investors. This week, one example of how the UK government prioritises economic growth is emerging in the newsflow of the motor finance and retail sectors. With significant exposure to car loans, Close Brothers and SU made constructive updates this week, indicating that motor finance might avoid the protracted drag on consumer lending that PPI became. Gareth covers the impact of government policy on Progressive clients Secure Trust Bank and Vertu Motors. Looking ahead, we will get UK inflation data next week, which is likely to indicate a flat annual rate of 2.5%. Also, we get Japanese inflation data, and the accompanying risk of the yen carry-trade unwind.