Finimize - 🇬🇧 London's a ghost town

What’s going on here?

On the first day of Christmas, the US inflation report gave to economists… precisely what they expected.

What does this mean?

Prices that consumers paid for goods and services were 2.7% higher in November compared to the same time last year – perfectly matching economists’ forecasts. And the “core” inflation gauge – which excludes volatile food and energy costs – was an as-predicted 3.3%. And though it’s always nice to be right, the core measure’s monthly pace has been stuck at a naughty 0.3% for four months now – and that raises concerns about when inflation might start falling again. The next move belongs to the Federal Reserve (Fed): the central bank is widely expected to cut US interest rates next week despite the risk it could nudge inflation – which is still above its 2% target – even higher.

Why should I care?

For markets: Unwrapping a gift they knew Santa would bring.

Traders were already laying near-certain odds on a US interest rate cut next Wednesday, and this no-surprises inflation report hasn’t done much to shake that up. That said, Bank of America analysts are warning that investors might have cozied up too much to the “Goldilocks” scenario of good economic growth, falling inflation, and interest rate cuts. Instead, folks should be worried about the possibility of inflation picking back up and undoing the Fed’s work – and adjusting their bets accordingly.

The bigger picture: A tale of two wallets.

According to JPMorgan, inflation has been hopped up by things richer folks tend to spend on, like plane tickets and cars. Meanwhile, energy costs – which take up a bigger chunk of the budget for the less well-to-do – have been easing. The hope, then, is that more ordinary Americans will have a little extra cash to spend over the holiday season and that US economic momentum will continue a while longer.

What’s going on here?

The UK’s initial public offering (IPO) market has been dropping like a stone, sinking to 20th place globally – below countries like Oman and Malaysia.

What does this mean?

London’s stock market is now like the last kid picked in gym class. The amount of money raised from stock debuts in the UK has nosedived 9% this year to a paltry $1 billion. That’s even smaller than in Oman – a market just 1% of London’s size. It’s a spectacular fall from grace for the UK, whose market used to strut its stuff in the top five worldwide. Great Britain, indeed. Fingers are now crossed that fast-fashion giant Shein will choose London for its big IPO next year. But let’s not sugarcoat it: when a supposed financial powerhouse like the UK can’t convince homegrown companies like Just Eat to stick around, it’s less "mind the gap" and more "grab the lifeboats".

Why should I care?

For markets: Greener pastures.

A buzzing IPO market isn’t just for bragging rights: public listings fuel growth, attract global capital, keep a country competitive, and give domestic investors more options at home. And the challenges are stacking up for the UK. Companies worldwide are flocking to markets that offer the potential for higher valuations and a local investing audience with more appetite for risk. And even with some new, looser regulations for companies going public, investors and execs agree: Britain doesn’t measure up.

The bigger picture: Private is the new public.

As the UK’s public markets flounder, private equity firms are circling like hawks – looking to swoop in and buy up companies for cheap before selling them on for more. It’s part of a bigger trend: private markets are outshining public ones. See, more deals are being done behind closed doors nowadays, with investors piling into private assets and companies opting for private funding, forgoing the glamour of a big stock market debut.