Good morning. It’s Paul here, with the SCVR for Weds.

I had to chuckle at one reader's feedback on the small cap value report - "Waaay too much focus on small caps!" :-)

Estimated time of completion: 3:00pm (a bit later than usual, as a placing has just been announced by Sosandar (LON:SOS) so I want to comment on that, in addition to everything else).
EDIT at 13:31 - I'm tired out now, after a mammoth report, so today's report is now finished.

Sorry I didn't get round to looking at PLUS or RWS, but they're quite big, so you can find analysis of them elsewhere easily enough. My focus here is mainly on the smaller, overlooked stocks that have little to no coverage elsewhere.


GDP first quarterly estimate, UK Oct to Dec 2019

I’ve signed up for the Office for National Statistics (ONS) emails of important economic data, so I can comment here direct from the source material, rather than second-hand via newspaper articles.

It’s no great surprise that UK GDP (the main measure of economic performance) was flat in Q4 2019, given all the political uncertainty. The ONS says this is as expected.

The first estimate for the whole of 2019, is that UK GDP grew +1.4% - not too shabby in the circumstances [source: section 3]

Bear in mind that GDP statistics strip out inflation. The most recent inflation figure I have (CPIH) is +1.4% for the 12 months to Dec 2019, coincidentally the same figure as GDP growth. To put that into the same terms that companies report their revenue, we need to add the figures together. Therefore, just to be standing still, a UK business should be reporting organic revenue growth of 2.8% (i.e. GDP growth, plus inflation).

We should also bear in mind that initial estimates of GDP are often revised subsequently, sometimes quite a lot. Do you remember how, when coming out of the financial crisis after 2008, there was prolonged talk of a double-dip, or even triple-dip recession? It turned out that neither actually happened, as the initial GDP estimates were subsequently revised upwards, hence were initially too pessimistic.

Ed Balls and David Cameron both cover this issue in their respective memoirs – both of which are worth a read or a listen. I recently enjoyed both books, in audiobook format, as it’s less…

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