One Knightsbridge Capital Monday Espresso Podcast

Monday Espresso Podcast 20th July 2026

[00:00:00] Rory Dowie: Good morning. Today's Monday the 20th of July. I'm Rory Dowie, portfolio manager here at Marlborough. Joining me today, once again is Nick Warmisham. Nick is one of our senior investment analysts on the team. Nick, good morning.

[00:00:12] Nick Warmisham: Good morning, Rory.

[00:00:13] Rory Dowie: Another busy week in markets last week, I won't mention the football.

[00:00:16] Rory Dowie: We had an escalation in the Middle East, which we touched on last week on the pod and oil continued its march higher on the back of that news now above $85 a barrel.

[00:00:25] Rory Dowie: We also had earning season in the US gathering pace. The major banks kicked it off alongside TSMC. Now we will touch on some interesting themes across those earnings prints, but firstly, Nick markets, how do they get on?

[00:00:36] Rory Dowie: Last week,

[00:00:37] Nick Warmisham: Choppy last week, up one day down the next. The US finished down just under 2%. Europe was down 1% and the UK actually finished up 70 basis points. Further east things were more challenged. The KOSPI or Korean market finished down around 10% and the Nikkei was down about 6%.

[00:00:58] Rory Dowie: Some clearer weaker performance, particularly in some of those Eastern markets.

[00:01:02] Rory Dowie: We spoke about it on the pod last week, but investors are becoming increasingly concerned about AI spend or capital expenditures, and actually we may see some cuts to some of that investment that's been driving markets over the couple of years, where the market seems to be pricing that anyway.

[00:01:17] Rory Dowie: The market's penalising companies downstream of that spend then, as opposed to rewarding them as it has done last quarter.

[00:01:24] Rory Dowie: In simple terms, this quarter so far, it's kind of been the reverse of that trade and you can see that in the regional performance. Korea highly exposed to that spend, SK Hynix for example, and Samsung, they fell quite aggressively and that pulled down the Korean market lower.

[00:01:38] Rory Dowie: Actually parts of the US market they're exposed, fell by far more than that 1% decline we saw in the headline index. Moving on, Nick, what's the latest in the Middle East with the Iran US conflict?

[00:01:50] Nick Warmisham: Yes, we saw continued escalation over the week to which Iran responded by attacking tankers passing through the Strait of Hormuz.

[00:01:58] Nick Warmisham: The US are targeting Iranian infrastructure that gave Iran a choke hold on the Straits of Hormuz. The worry really is that both sides are in this cycle of escalation once attacks start, which is rather ominous.

[00:02:11] Nick Warmisham: As you mentioned, Rory Oil is responding on the news up over $85 a barrel now from around $70 a couple of weeks ago.

[00:02:20] Rory Dowie: Seems like we're back to where we were before that memorandum of understanding was signed just a few weeks ago then. One that we'll obviously keep quite a close eye on given potential inflationary impacts that that may have given the oil piece that you've mentioned there Nick.

[00:02:33] Rory Dowie: Moving on, second quarter, earnings commenced last week. That is company's reporting, corporate updates for the periods end of March to the end of June.

[00:02:41] Rory Dowie: Nick, the banks kicked us off last week. What was the latest there?

[00:02:44] Nick Warmisham: At a headline level, the numbers are very strong Rory. JP Morgan, Goldman Sachs, and Bank of America, all the expectations and grew earnings upwards of 30% year on year.

[00:02:55] Nick Warmisham: The strong performance was driven by the trading and investment banking division, which profited from the volatility during the Iran conflict and broader market activity.

[00:03:04] Rory Dowie: Strong numbers. Then across the banks, any interesting comments from leadership across those banks?

[00:03:09] Nick Warmisham: One which caught my eye was from the CEO of JP Morgan.

[00:03:13] Nick Warmisham: He stated that we are getting close to as good as it gets, clearly a positive signal, but is that an indication that it's actually hard to improve from here?

[00:03:24] Rory Dowie: Yeah, not calling the top in performance, but clearly he is highlighting the strong environment for bank earnings, particularly strong markets and volatility, so that helps the trading divisions and overall assets, which banks typically earn a fee on.

[00:03:38] Rory Dowie: As Dimon said, if this is as good as its gets, quote unquote, then in a case that things can only deteriorate from here, is that perhaps a negative for these large banks?

[00:03:46] Rory Dowie: That's a dynamic we are keeping an eye on, but as you said Nick, there really, really strong earnings.

[00:03:51] Rory Dowie: Moving on away from banks, we also had TSMC or Taiwan Semiconductor Manufacturing report. They essentially manufacture all those advanced AI chips that we've spoken about that are designed by companies like NVIDIA and Advanced Micro Devices. Nick, what's the latest from TSMC?

[00:04:07] Nick Warmisham: Yes. TSMC delivered a near flawless Q2 with revenue landing at the top of its guidance range. Management gave some of its most positive commenting years with the CEO describing AI demand as extremely robust and noted that the demand supply gap is looking very big through 2029 to 2030.

[00:04:29] Nick Warmisham: Interesting though the stock was off on the day and that was because TSMC announced plans to increase capital expenditure to meet the demand.

[00:04:37] Nick Warmisham: The market doesn't really like companies spending money at the moment on AI as such. It was worried about where the end return on that spend is coming. So despite the excellent numbers, the stock sold off .

[00:04:50] Rory Dowie: So strong numbers, but again, the market in an unforgiving mood when it comes to that spend on AI and that's very much the theme we've seen over the last couple of weeks specifically.

[00:04:59] Rory Dowie: I would highlight, you mentioned it there, C.C. Wei, the TSMC CEO Nick, he's one of the best at understanding and demand and he's been notoriously good at meticulously forecasting demand over the years gone by.

[00:05:10] Rory Dowie: So for me, amidst all the noise and the volatility we're seeing in the semiconductor space at the moment, I think those comments from the CEO, that is a real kind of positive signal amidst all the kind of negative news and stock performance we're seeing in that area.

[00:05:23] Rory Dowie: Keeping an eye on time, Nick, just to finish it off, what have our listeners got to look out for this week?

[00:05:29] Nick Warmisham: Earning season continues to gather pace in the US this week. Macro data is a bit quieter but clearly closer to home, the leadership piece where it's expected, Andy Burnham will take over as UK Prime Minister is one of the main stories.

[00:05:42] Nick Warmisham: We'll also be keeping an eye on the Middle East situation.

[00:05:46] Rory Dowie: Very clear, thanks for joining. Nick. To our listeners, as always, thanks for tuning in here if you have any questions, and wishing you all a great week ahead.