15/09/25: Earnings update, Fed pressure & UK GDP
Monday Espresso Podcast - 15th September 2025
[00:00:00] Nathan Sweeney: Good morning everybody. It is Monday the 15th of September and today I'm really pleased to be joined by Eddie Kennedy. So Eddie is our head of personal portfolios and I've been dying to get Eddie on the show recently, but it's been very difficult because he has been so busy on the personal portfolio side.
[00:00:16] Nathan Sweeney: So Eddie, really great to have you on the show and yeah, have things been going with you?
[00:00:21] Edward Kennedy: Excellent, Nathan. Thanks for having me on the show. It's, it's been super busy. I mean, lots of interest from clients, obviously lots going on in markets.
[00:00:29] Nathan Sweeney: Yeah. And speaking of markets, how did markets perform over the last week?
[00:00:32] Edward Kennedy: You know, they had a solid week. US, Europe, UK, and Japan were all up about 1%. Actually emerging markets outperformed developed markets. They were pushed higher from Chinese technology stocks with names such as Alibaba and Tencent. Up around 15%. At 8% respectively.
[00:00:50] Nathan Sweeney: Okay. And then were there any real highlights across the week at all?
[00:00:54] Edward Kennedy: Yeah, it was another US name this time reporting earnings from a bottom up perspective that rallied 40% post earnings. The most significant number within Oracle's report was a company's RPO. What is that? Well, it's basically it's backlog of contracted business. This skyrocket a massive 359% year on year.
[00:01:18] Edward Kennedy: To a record $455 billion. This figure represents contracts that are signed, but revenue not recognized yet. So the CEO emphasized that the company signed four multi-billion dollar contracts with three different consumers in Q1 alone and expects the backlog to exceed 500 b illion dollars and all this is on the back of Oracle's Gen two AI cloud infrastructure.
[00:01:47] Edward Kennedy: It's really supporting that and have deals with open AI ,XI, Meta, Nvidia, AMD to name a few.
[00:01:53] Nathan Sweeney: Yeah, so it's really highlights one of the spillovers of AI. So we've got all the big tech names that everybody talks about and suddenly along comes Oracle and you know, the share price really moves on. The kind of the AI initiative.
[00:02:06] Nathan Sweeney: Yeah. So really good to see a bit of that broadening out there. Just looking at any economic news, was there anything that really stood out during the week?
[00:02:14] Edward Kennedy: Yeah, well it was, that was quite a big week for economic news, more so to do with jobs and inflation. So I think the US Federal Bank has currently stuck between a rock and a hard place over the last few months with the expectation of inflation to increase due to tariffs and a slowing US economy, making it challenge to determine the right level to set interest rates.
[00:02:36] Edward Kennedy: However, recent job data shifted the market consensus to further cuts in the near term. The American job market has been running a much lower gear than previously thought. According to a report released on Tuesday, the US economy added about 911,000 fewer jobs than initially estimated for the year ending in March.
[00:03:00] Edward Kennedy: Now this was the hold that would be the largest annual revision downwards for US jobs, data on record. However, we don't find out the full figure and the full revision until February, 2026.
[00:03:13] Nathan Sweeney: Yeah, it was interesting and I did see a chart on this and it shows that, often you do get these revision to job numbers and I suppose it highlights that, it can be difficult to try and collate all this data.
[00:03:24] Nathan Sweeney: The economic data that comes out, they always have to go back and make adjustments. Sometimes they're up and sometimes they're down. So something just to be mindful of when data comes out generally, and you know, we would tend not to react to any kind of single data point because when you get multiple data points, then you can see that trend.
[00:03:41] Nathan Sweeney: Is there anything else on the horizon on the data front?
[00:03:43] Edward Kennedy: Well, talking about the other side of that trade report jobs and inflation. On Thursday we've got consumer price inflation for the US, which was 2.9% in August from a year earlier, which is up from 2.7%. So it's gradually increasing, even though tariffs have been pushed through, it doesn't seem to, it's feeding through as much to inflation, but still well above the Fed's 2% goal.
[00:04:08] Nathan Sweeney: Yeah, it's kind of interesting. There's a lot of pressure on the central bank to cut rates. And so if you look at that one side, so weaker jobs markets, so less people being employed, it's, that's really good for the Fed because it gives them room to cut interest rates, and as you mentioned, you know, the inflation really hasn't risen much given the tariffs that have come through.
[00:04:29] Nathan Sweeney: And so again, if you think, you know from the Fed's perspective, if they have interest rates at a higher level than inflation, it gives them room to begin to cut. And I think markets are pricing in a couple of rate cuts now and possibly even three rate cuts by year end.
[00:04:43] Nathan Sweeney: Generally that's good for equities because it reduces financing costs and means future profitability. Did you have anything on this side of the water at all that was worth looking at?
[00:04:53] Edward Kennedy: Yeah, this side, the pond, we did have GDP numbers. It was, it was not great. It was recorded at zero growth in July. This is a figure really dragged down by manufacturers.
[00:05:05] Edward Kennedy: The data from the Office of National Statistics followed a figure of 0.4% growth in the previous month, which was a lot better. But we did have negative growth in May of about 0.1%. So it looks like the UK is sort of stagnating, sort of around this level.
[00:05:22] Nathan Sweeney: So no real news there. This is, obviously been a common theme for the last couple of years, but I think that you know, the key thing, again on inflation as well, so some people are concerned about UK inflation, but we did point out a lot of that was due to seasonal factors and we expect that to come down and, we may even see the Bank of England renewing their rate cuts as well in line with the Fed. Looking ahead, is there anything we should be focused on for the week?
[00:05:44] Edward Kennedy: Yeah, well writing this off, it's all going to be about what central banks do next week. We've got the Fed's decision on the 17th of September, which obviously markets now really pricing in that rate cut that you talked about.It could be positive for equities.
[00:05:58] Edward Kennedy: While the Bank of England meets the day after the Fed. Our expectations are here probably to keep rates unchanged, although before actually the Bank of England announced its interest rates, it does get a chance to look at UK inflation print that happens on the 17th of September.
[00:06:15] Nathan Sweeney: Yeah, so a lot to keep markets busy for the week. Really good to have you on the show. Lots of great insight there, which I'm sure our listeners will really appreciate. But yeah, please do make some time for us 'cause we'd love to get you back on the show. Thanks everybody and yeah, have a great week.
