Cambridge Weekly – 11th February 2019

Is 2019’s market recovery beginning to stutter?

After one of the worst Decembers for global investors since the Great Depression, followed by the best January since 1987, February has started not too badly for investors. While up overall, the 7th week of the 2019 stock market recovery ended with a little bit of stuttering. This was quickly blamed on Trump and Brexit, which admittedly are easy targets – but so they have been all along.

Fiscal boost for Europe?

After covering the near-term economic prospects of China and the US over the past two weeks it is time to turn to Europe. Disappointingly, following the 2017/early 2018 upward surge, Europe’s economy is struggling. Earlier this month, economists’ Eurozone (EZ) growth forecasts were cut to just 1.6% for this year, while sentiment surveys painted a similarly dour picture. The latest data released this week only adds to the mood. Spanish industrial production ended last year -6.2% down year-on-year, versus expectations of -2.3%. Meanwhile, the Italian economy has already entered recession, and is now expected to stagnate with just 0.2% growth this year.

UK’s Interserve: shareholders take it in the neck

After a few days of teetering on the brink of administration, Interserve, one of the UK’s largest public service providers, has managed to get very close to a restructuring deal this week that it hopes will keep the company alive. The rescue package essentially involves giving its creditors £480mn worth of newly issued stock in exchange for some of its existing debt, and shifting much of the remaining amount onto its profitable businesses. £275mn of debt (although some sources state it as high as £350mn) will be put onto the balance sheet of RMD Kwikform, an equipment services unit of Interserve and one of the few bright spots in the entire set up.

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