I never had one of the much coveted ‘chopper’ bikes when I was a lad. One Christmas I did get a Raleigh racing bike, which apart from my tendency to fall off it and a saddle that could well have been made by Gillette opened up the world (well, a few hundred square miles if I’m honest) to me. So, I was saddened to see the Nottingham based cycle manufacturer go to the wall this week (something I also did a fair few times whilst riding!).

The graph of the FTSE 100 Share Index this week looks like one of those mountain stages on the Tour de France as markets react to more uncertainty in the Straits of Hormuz. Meanwhile, the US tech heavy markets resemble more of a hill climb as they race to near all-time highs.

The whys and wherefores of the stock markets are hard to predict, but portfolios have been gently on the rise so ‘stay invested for as long as possible and let them do their thing’, remains the message. There are intangible but positive feelings out there, as you’ll see in the rest of the bulletin.  

Market Commentary

To give us a bit more insight in what has been going on [Ed – you mean ‘some insight’] we have the usual expert contributors from the investment world, starting off with the team at Tatton Investment Management with the Tatton Weekly, covering the following:

• Regaining confidence after July’s drought – Another Iran deal, but not with the US, provided succour to oil prices, while the real market dynamic may have been the liquidity injection resulting from last week’s Yen support by both Japan and the US. 
• July asset returns review – The UK’s stock market is tech light and energy rich, so its performance in July was an outlier in a difficult month for markets as both bonds and equities sold off, fuelled by energy supply and AI growth sceptics.   
• US earnings flatter to deceive – A company’s earnings in the US are not just its revenues, so if corporate earnings rise, as the Mag 7 prove, it is not always equal to higher sales.

And in a double dose of Lothar, in their latest market update Lothar Mentel, Tatton’s Chief Investment Officer and CEO explains why, this summer, equity markets seem to be refraining from taking recent, and barnstorming, rates of corporate profit growth as expectations for future returns. He also discusses why war, and AI, dented consumer confidence and have kept oil price driven price rises from turning into systemic inflation pressures, which, together with elevated bond yields have allowed central banks to refrain from rate hikes. He concludes with an optimistic outlook for growth, but not, of course without the risks of the Iran war and the requirement for AI firms to deliver benefits to the ‘real’ economy as well as themselves.  

Rathbones’ latest Monthly Digest looks past the noise as Iran, AI, and central banks leave investors waiting for resolution.

In this piece:

• Markets are waiting for a ‘deus ex machina’, but a crisis would be a high price to pay for clarity.
• The Iran war looks contained for now, though dwindling oil buffers leave little room for complacency.
• AI demand keeps rising, but investors are questioning funding, returns, and who ultimately pays.

Keyridge Investment Management has introduced the Keyridge Compass, a new monthly tool that gives a clear, at-a-glance view of where markets stand and where they think they’re heading.

Each month their investment team distils their views into a single composite score, tracking seven key signals and translating them into practical tilts across equities, bonds, alternatives and cash. The result is a score from 0 to 100, with a simple framework to interpret it:

• Below 40: Caution
• Above 50: Constructive
• Above 70: Conviction

And this month’s score on the door is:

July’s reading: 56/100. Earnings strength amid shifting sentiment.

We’ll see where we go with that one!!

And if anyone was wondering where the RBC Brewin Dolphin Markets in a Minute publication, well they are off on their holidays and should be back next week, hopefully well relaxed and with lots of interesting insights for us. 

The Yen for an Explanation

So as Guy Foster and Janet Mui snooze in the sun (I’m not suggesting they are doing that together before I get into trouble) I saw a piece penned by James Baxter at Tideway that I thought you might find interesting:

Conspiracy theories are rife over last week’s joint intervention to prop up the Yen in a combined effort by the US Treasury and Bank of Japan, the first in 15 years.

At just over 200%, Japan has the largest debt-to-GDP ratio in developed countries. It has been keeping its interest rates low to try and stimulate its economy, this has led to weakness in the Yen. This in turn aggravates inflation, as Japan is a big importer of food and other goods. Inflation in Japan was already under pressure from the US/Iran oil shock. The Bank of Japan have been buying Yen on a couple of occasions this year to try and prop up the currency and last week the US joined them in this effort. Collectively they pushed the Yen up around 4% on the day.  

The US has a vested interest in keeping the Yen strong, as it makes their exports to Japan more competitive and they want to balance their trade deficit with Japan. But it is also thought that the US worries that Japan will start to sell its vast holding of US Treasuries to buy Yen. The US also has a big debt balance that is starting to attract attention and US bond yields are still rising.  If Japan started selling Treasuries this would further pressurise US rates, which hurts the US economy, adds to the debt pile and unnerves the stock market as the risk-free rate increases. So, the US joined in the Yen buying effort and to fund their Yen purchases they sold some of their Euro reserves, not their dollar reserves.

This last point is reported in the FT today as having ‘blindsided’ the European Central bank.

We are all aware that many developed countries rely on heavy government borrowing, which is often funded internationally as well as domestically tying countries together. It’s been a worry for as long as I have been advising, and to not invest because of it would have been a grave mistake over the last 40 years. Every now and then it rears its ugly head but then it goes away again. Keep calm and carry on!

Epic Visions

As the highest point reached by SpaceX so far has not been the spare price, but the upper stage of their Falcon 9 rocket as it hit the moon, 7IM have commented on the why some great endeavours come to a natural end. The reference to SpaceX is mine so they are not saying anything about that, just that because something is great doesn’t necessarily mean it won’t come to an end. 

Humans landed on the Moon in 1969 but haven’t been back since 1972. 

Concorde entered commercial service in 1976 but was permanently grounded in 2003. 

And in summer 2026, Christopher Nolan can’t find enough cinemas to show “The Odyssey” the way he wants.

These seem like completely unrelated things. But! They’re actually all the same story:

We know exactly how we did all these things. The blueprints exist. The science exists. The knowledge exists. Butdoing something and knowing how to do something aren’t the same thing.

What’s missing are the parts. And the machines that made the parts. And the people who made the machines that made the parts. And the guy known only as “Electric Eric” who retired 15 years ago but always knew how to fix the problem. 

What connects them at a deeper level is complex ecosystem required to develop and sustain them. And as it turns out the complex ecosystem creates incredible competitive advantages … and sometimes they become the single point of failure.

The Apollo programme involved around 400,000 people and more than 20,000 partners, suppliers, and universities … and it became too expensive to maintain. 

Concorde was built by a network of 800 specialist manufacturers spread across Britain and France … it then had to be retired as it wasn’t commercially viable.

And the IMAX projector is waaaay more complicated than you realise.

Custom lenses, shutters and rotors, lights that are so hot they need water cooling at all times, and film reels that weigh (for “The Odessey”) more than 300kg. IMAX doesn’t make projectors anymore – it spends its time and money salvaging and rebuilding old ones. There are just 41 IMAX 70mm projectors in the WORLD (and only a couple of hundred people trained to use them).

Source: IMAX

In each case it wasn’t just that the machine was complicated. There were supplier relationships. Manufacturing know-how. Specialist expertise. Distribution networks. Decades of accumulated experience. They become success because the designers and engineers build using the best technology available at the time in their ecosystem of the time. But eventually technology moves on and the whole thing disappears. And when digital cinema arrived, workshops making parts for actual film projectors either adapted or disappeared … 

… who knows whether the next Nolan film will be on IMAX*

Fun Fact from Quartet IM

In the US, there are now more air-conditioning units than cars, and on the hottest days of summer, cooling can account for around 70% of peak electricity demand in some regions.

I included an article recently about the changing need for energy brought on by air conditioning and as we look set to enter yet another heatwave this week (I wonder whether they will start naming the heatwaves like they do storms??)  temptation grows…

Pension Gifting

The attached paper came from my secret Mail Online reader but as ever is a good one. It covers the ultimate in delayed gratification – gifting into pensions to create a legacy for future generations. If you are interested in more information about this, please speak to your usual JB Wealth advisor.

Today is the start of the Edinburgh Fringe Festival, which has reminded me I need to get my haircut [Ed – you fool!] and I’m off now to speak to my mortgage adviser about the need to finance my son’s new school uniform. I hope to catch up with you next time.