The Week Ahead (13 – 17 Jul): US Inflation, UK GDP, US Banking, Ocado, Crest Nicholson

It's been a rather challenging week to be an equity investor. Things appeared to be getting back to normal for the major indices before Trump decided that the middle of the NATO summit was a good time to launch another surprise attack on Iran. The S&P 500 naturally took a dive in response on Wednesday:

Perhaps the criticism over signing up to an MOU that pretty much gave Iran everything it wanted finally got to him?

Anyway, the markets promptly recovered when Trump claimed that "they want to make a deal so badly", and that the Iranian leadership had actually called him, trying to revive negotiations after the massive wave of US airstrikes. How true this is, or whether it's just another case of TACO, no one knows.

The oil price naturally went the other way:

However, the price remains elevated compared to where it started the week, suggesting that the commodity markets don't think it is all over.

In the UK, matters have been complicated by news that Andy Burnham is almost certain to be the next Prime Minister, marking a change in government strategy that may affect UK-focused businesses. UK indices have generally responded in step with global trends this week, suggesting that this news is neither unexpected nor likely to be too onerous for UK equities.

Here's what we can look forward to next week:

Economic Calendar

US Inflation

We get the US CPI data for June on Tuesday. In May, headline CPI jumped to 4.2% year-over-year (the highest in years, heavily driven by energy sector pressures), while Core CPI was at 2.85%:

[All charts in this section: Trading Economics]

Core Inflation is the one to watch. Even excluding volatile food and energy, inflation has jumped in the US economy in response to global events. Forecasts are for the June core CPI to hover around 2.85% and remain there through the end of the year. However, core inflation coming in hot will almost certainly be an active trigger for a 25bps interest rate hike at the next Fed meeting on 29 July. A rise in rates is not currently forecast until 2027, so this has the power to upset the equities apple cart, if it happens:

UK GDP

The monthly GDP estimate for May will be released on Thursday. Q1 performance was surprisingly strong, with GDP growing by 0.6% in the first quarter, fueled by a 0.8% expansion in the services sector and a 1.6% jump in construction.

However, individual monthly data began to cool, with April's monthly GDP contracting by 0.1%. Retail and consumer services output will be key, as the risk is that spending on essentials such as energy will reduce discretionary retail spending. Forecasts indicate flat growth in UK business investment in 2026. The construction and manufacturing components of this GDP release will reveal whether companies are freezing capital expenditures amid macro uncertainty. The Bank of England is in a tough spot. Market expectations had previously priced in multiple rate cuts. Still, with energy-driven inflation projected to peak above 4% by winter, near-term interest rate cuts are unlikely unless the May GDP figures are very weak.

Companies Reporting

The bulk of the UK news flow at this time of year remains associated with AGM's, which often have accompanying trading statements. International newsflow looks to be picking up, including several large European companies reporting.

As usual, let us know via the comments if you think we've missed anything of note.

US Banking Sector

It is US bank reporting week, with all three Mega-Cap Diversified Banks (JPMorgan Chase, Bank of America, Citibank) reporting on Tuesday, together with Goldman Sachs. Wednesday sees the second investment bank titan, Morgan Stanley, release results. Here's what to look out for:

JPMorgan Chase & Co (NYQ:JPM)

The EPS consensus has been nudging higher recently, suggesting these results will be strong. Look for updates on their loan growth portfolio, which has accelerated faster than historical averages so far this year. Their net interest income guidance for the remainder of 2026 will heavily dictate the stock price movement.

Bank of America (NYQ:BAC)

Analysts expect steady, quiet growth, though its consumer-facing banking division faces minor pressure from flattening credit card spending. Global markets activity will be the engine here. Watch how much market share their equities trading desk clawed back and look for updates on capital allocation following late-June's successful Dodd-Frank stress test results.

Citigroup (NYQ:C)

Citigroup has seen the highest positive analyst revisions in the last quarter, up 4.7 %. The market has heavily discounted its stock against expected improvements in its Return on Tangible Common Equity. Execution of the ongoing restructuring program will be key. Any positive surprise in corporate banking fee income or lower-than-expected restructuring charges will likely move the stock price.

Goldman Sachs (NYQ:GS)

Expect stellar numbers from the capital markets division. The red-hot first-half IPO rush, headlined by the $86 billion SpaceX IPO, will have generated massive windfalls. Banks raked in an estimated $500 million in cumulative fees from that single deal. The Vampire Squid will have had its blood funnel hoovering up its share of those.

However, traditional M&A advisory remained underwhelming due to persistent geopolitical uncertainties. This may take the shine off otherwise strong reporting.

Morgan Stanley (NYQ:MS)

Morgan will be subject to the same factors as Goldman. However, its stickier wealth-management inflows may provide a more stable outlook.

Others

A few other super-regional and specialised commercial lenders are also likely to report next week, such as Wells Fargo & Co (NYQ:WFC)  US Bancorp (NYQ:USB), M&t Bank (NYQ:MTB), Citizens Financial (NYQ:CFG) , State Street (NYQ:STT) and Bank Of New York Mellon (NYQ:BNY).

Across the sector, pay attention to the guidance on share buybacks. Because the Federal Reserve's annual stress test results in late June confirmed deep resilience across both the "Global Systemically Important Banks" and larger regionals, any bank that fails to announce an increased dividend or a beefed-up share repurchase program will likely be penalised by the market.

Ocado (LON:OCDO)

I think it is fair to say it has not been a great five years for the company:

It has been continually loss-making, something that is not predicted to end any time soon:

CEO Tim Steiner's ability to raise capital from the market to continue funding these losses continues to amaze me. This is one of the reasons the recent announcement detailing his planned leadership transition (stepping down to a Founder role by the start of the 2028 financial year) leaves the company at somewhat of a crossroads. Management previously set an ambitious goal to deliver roughly £150 million in cost savings across the year and turn free cash flow positive by the second half of 2026. Analysts are highly sceptical of this timeline. In the upcoming results, watch the free cash outflow figures closely. If the cash burn remains high, concerns regarding a potential capital raise or further investor dilution down the line will inevitably spike.

Other things to look out for are:

• Technology Solutions: This is Ocado's primary valuation engine, where it charges international third-party retailers to use its proprietary automated robotic "grid" systems. Investors need to see a robust pipeline of new CFC openings. If more partners delay or scale back their automation rollouts, Ocado's valuation will face immediate downward pressure.
• Ocado Retail: The UK consumer-facing grocery business, which is jointly owned with Marks & Spencer, has been the operational highlight of the business recently. It has successfully leveraged M&S's improved quality perception to acquire active customers and expand market volume share. Despite solid top-line revenue growth, this division has struggled to cross the threshold into true profitability. Investors will want to see if rising volumes have been enough to offset structural investment drags and marketing acquisition costs.

Crest Nicholson Holdings (LON:CRST)

The UK housebuilding sector continues to fascinate me. It is either a huge opportunity to buy cyclical businesses at mult-year lows, or a series of value traps which have overpaid for their land banks, and shareholders will be picking up the tab.

Crest Nicholson's interim results were originally scheduled for late April but were deliberately pushed back to mid-July. The delay was to give the housebuilder extra time to finalise an orderly covenant reset and conclude constructive discussions with its lenders regarding temporary covenant relaxation. When this was announced in April, the shares suffered a significant decline from worries about this, despite an already weak trend:

That Covenant waiver has not yet been forthcoming. However, we would expect any announcement to coincide with the appearance of results, or non-appearance and suspension. It is this binary nature of the outcome that I find particularly interesting and have a small controlled risk position here. It seems to me that they will either survive and recover from recent falls over time, or they won't, and the attraction of someone else taking the ultimate downside is strong.

Assuming they get the waiver, the market will want explicit confirmation that the covenant reset process has been completed with lenders and will look for the specific new terms or margins attached to their debt facility.

Other things to watch:

• Cost-Cutting Progress: The company has been navigating an aggressive "year of transition" aimed at restructuring the business to protect its bottom line. Investors will want to see whether recent overhead reductions and their strategic shift toward mid-market homes have begun to stabilise margins, or whether sticky build-cost inflation continues to erode profitability.
• Reservation Trends: While the structural headwinds are real, recent UK housing market indicators have shown early signs of stabilisation. The market will be particularly interested in the private reservation rate per site per week and the total value of the forward order book heading into the second half of the year.

[Disclosure: Mark has a long position in Crest Nicholson Holdings (LON:CRST)