One Knightsbridge Capital Monday Espresso Podcast

Monday Espresso Podcast - 1st September 2025

[00:00:00] Sarah Todino: Good morning. It's Monday, the 1st of September. I'm Sarah Todino, assistant portfolio manager at Marlborough, and I'll be running through some of the main news from last week with portfolio manager Rory Dowie. Good morning, Rory.

[00:00:12] Rory Dowie: Good morning, Sarah.

[00:00:13] Sarah Todino: So Rory, why don't we start with how markets performed last week?

[00:00:16] Rory Dowie: Yeah, so last week markets were broadly flattered down though the S&P 500, those top 500 companies in the US did manage to make an all time high on Thursday before giving that back a little bit on Friday, that high on Thursday was supported by the US GDP data. That is gross domestic product basically gives us an idea on the US economy and that grew 3.3% over Q2, so quite solid numbers there.

[00:00:40] Rory Dowie: Across other markets, the UK and Europe put down one and 2% respectively. Whilst EM was down around that as well. So fairly mixed to subdue performance last week.

[00:00:51] Sarah Todino:  Yes. In Europe, the French Prime Minister's proposed austerity plan faced opposition in parliament, which forced a confidence vote. So sentiment here was cautious, unsettling bond markets and weighing on the Euro slightly. Investors are wary of fiscal risks and potential political gridlock there. So Rory, what about the picture year to date?

[00:01:18] Rory Dowie: Yeah, so obviously we talk weekly in these podcasts, but it's important to zoom out as well.

[00:01:21] Rory Dowie: Clearly, this year has been quite a volatile year. We had the tariffs back in April. There's been a lot of conversation in the investment community around, you know, are we going to get inflation from those tariffs, et cetera? Are we going to get rate cuts? But remarkably, even with all that volatility most markets are now up double digits this year.

[00:01:39] Rory Dowie: The US is now up 11%, UK 12% with Europe, slightly lagging at 9% in Japan, up 7%, but really the standout has been emerging markets. They're up 17% now year to date, so pretty solid returns, albeit quite a volatile journey together.

[00:01:56] Sarah Todino: Thanks Rory. So the key update in earnings this week was Nvidia. So that drove tech optimism heading into the Q2 results, given markets a lift ahead of the announcement, but when it reported, despite beating earnings and revenue estimates, the stock drops 3.2% in after hours trading, and that was due to slower AI chip demand.

[00:02:17] Sarah Todino: So, Rory, can you tell us a bit more there?

[00:02:19] Rory Dowie: Yeah. As you say, the long anticipated bellwether Nvidia was reporting now actually has a larger market cap. i.e. it's larger in its market capitalization than the entire Japanese stock market, such as being its unbelievable growth over the last few years, and they reported earnings after the bell on Wednesday.

[00:02:36] Rory Dowie: The numbers were solid enough. Revenue grew 56% year on year, and both revenues and earnings came in marginally ahead of what the market was expecting. However, under the surface, there were a couple of points to note, particularly within that data centre segment that is the chips and infrastructure, that's to do with the build out of data centers.

[00:02:54] Rory Dowie: And whilst that grew 56% year on year, that came in 1% behind expectations. And really that was due to the actual chips themselves within the compute segments. And that was 'cause there was a slightly slower ramp on one of their new chips. However, though, as we spoke about after Q1, Nvidia focusing on the networking side of it through their new NV link, that's essentially the infrastructure that you plug the chips into and growth there was absolutely sensational.

[00:03:17] Rory Dowie: That was up 98% year on year. To try to put that in a bit of context. I know there's a bit of jargon there, but to think about Nvidia and the NV link and their chips. Think of it like the Apple ecosystem. So apps on an iPhone are sort of similar to the chips and then on the iPhone and the Apple operating system itself, the equivalent to NVIDIA's NV Link.

[00:03:36] Rory Dowie: So NVIDIA's really sort of slightly trying to pivot towards that ecosystem, like the iPhone, like the operating system, as opposed to be solely relying on those sort of chips.

[00:03:46] Sarah Todino: So the guidance was in line with expectations, but it's important to note that the guidance didn't include any assumptions around China, which could drive meaningful upside over the second half of the year if they agreed a trade deal with the US administration.

[00:04:01] Sarah Todino: So we also had some economic data on Friday, Rory?

[00:04:04] Rory Dowie: Correct. In the US we had personal consumption expenditure, bit of a mouthful, but that is basically the federal reserve's preferred measure of inflation. The key difference versus actual inflation is that that excludes the volatile food and energy category.

[00:04:17] Rory Dowie: So that PCE gives you a slightly cleaner kind of calculation of the inflationary backdrop and that PCE rose 0.3% in July. That was broadly in line with expectations and the US markets did take that positively on Friday, and actually it was kind of nice to have that off some more volatile data prints we've had over the past few weeks.

[00:04:36] Rory Dowie: If you recall, a couple of weeks ago we spoke about data on the employment side, the non-farm payrolls, and then also some of the PPI, the kind of cost of producing data that we had a couple of weeks back that came a little bit hot. So I think this data coming in line with expectations that kind of buoyed markets, and I think that hope for September rate cuts following Powell's speech at Jackson Hole last week is hopefully still on the cards or market certainly thinks so.

[00:04:59] Sarah Todino: So lots to take in from last week. What are we looking out for this week?

[00:05:02] Rory Dowie: The usual slew of economic data we have. Non-farm payrolls in the US and then in Europe we have producer price index, cost of production data. Just mentioned that we had that a little bit hot in the US a couple of weeks ago.

[00:05:14] Rory Dowie: It was ahead of expectations, so again, it'd be interesting to see in Europe if we get any tariff impact there.

[00:05:20] Sarah Todino: Great. Thank you Rory. And thanks to everyone for listening. And as always, do let us know if you have any questions and we'll be back next week with more insights.