MONTHLY NEWSLETTER – SEPTEMBER 2023

1 September 2023

We look at the global phenomenon that is Coca Cola, how the UK continues to be a core global financial centre and how “middle America” needs rebuilding.

*|MC_PREVIEW_TEXT|*

Average isn’t common

Averages are everywhere and although they can help to simplify things, they are not always useful!

If you are deciding to take an umbrella, the weather report will show the average likelihood of rain in an area.
When watching football, or tennis, or cricket, the bottom of the screen is usually filled with graphics showing averages of possession, first serves made, or runs scored.
Or as you count your steps daily trying to reach that 10,000 average (76% of British people).

But, no-one in the UK has exactly 1.9 children!!
Sometimes averages are worse than useless, they are misleading……
U.S. Air Force Lt. Gilbert Daniels found this whilst trying to design a cockpit for the average US fighter pilot in the 1950s. More than 4000 pilots had 10 key measurements taken – chest/legs/arms. Not one of the pilots matched the overall average! He might have the average arm-span, but longer or shorter legs, or wider or thinner chest. The average pilot did not exist!
We see the same thing in finance, The average year in markets does not really exist.
Although the average return of the S&P 500 (Standard & Poor’s) over the last 42 years is 10%, only once in this time has the actual annual return been 10% (in 2016). Only three other years are even within 2%, there are positive years, sideways years and terrifying negative years.
When setting our expectations, the chart below is a good reminder that the average annual return isn’t at all common.

Value of a brand

Guess what this map shows? There is a hint in the colour scheme……

It shows where, as of 2023 you can officially buy Coca-Cola. If you are in Russia, Cuba or North Korea you are out of luck.
Unsurprisingly, as ‘Coca-Cola’ is the second most understood word in the world (after OK) according to Coca-Cola, it is arguably the most successful brand ever.
The idea of a brand is clearly worth something. If offered all of Coca-Cola’s business empire- the recipe, the factories, the distribution, the fridges, but not the logo, would you get a good deal? Is it the label or the product you want? Difficult to answer, for lots of big companies globally not just Coca Cola. What’s the iPhone worth without the Apple logo? Or a burger that isn’t Big? How much of the cost of your flat white is in the Starbucks logo on the side?
One of the most significant trends in investing has been the rise in intangible assets over the last fifty years – intangibles aren’t just brands; intangible assets includes software, copyright, patents and even consumer data (our data!).The chart below shows the change in the US market. Most of the value of the world’s largest market isn’t visible or touchable.

Rebuilding middle America

There are 330 million people in the U.S. it is the third most populated country in the world after India and China. But Americans aren’t spread evenly across the land mass.
This map shows exactly that…….the orange represents the 105 million Americans living in the 270,000 square miles along the east and west coasts with the remaining 225 million people scattered across the 3.4 million square miles that remain.

The grey mass of the interior is often referred to as ‘fly-over country’ which infers you fly over them on your way to somewhere more interesting.
The offshoring of manufacturing over the past fifty years have caused a steady drain of people away from their home states. Jobs will attract people. The U.S. government s aiming to reverse this trend. There has been about $500 billion of private investment into high-tech U.S. industries announced in the last couple of years. Nearly half is aimed at semi-conductors, much of the rest at clean energy and battery technology.The map below suggests the era of coastal dominance might be over, showing where investments are being made.

UK Report on the jobs market

Permanent placements fall at quickest rate since June 2020.
Upturn in candidate availability gathers pace.
Pay pressures ease only slightly amid rising cost of living.

Commenting on the latest survey results, Claire Warnes, Partner, Skills and Productivity at KPMG UK, said: “The latest survey results reflect the current summer weather – damp, but with some possible bright skies on the horizon. “Recruiters told us that their clients aren’t yet confident enough in the economic outlook to commit to permanent hires, leading to the steepest pace of decline in placements since June 2020. Conversely, the growth in billings for temporary workers weakened last month as job hunters hold out for permanent roles. “Businesses are also still freezing hiring, with some redundancies, which led to the sharpest upturn in labour supply since December 2020. This is good news for recruiters who have an even larger pool of candidates to place, but with the number of vacancies available increasing at the slowest pace for nearly two and a half years, supply and demand are once again off balance.

Key facts about the UK as an international financial centre 2022

TheCityUK as used the latest available annual data to highlight the a number of measures and markets that demonstrate the UK’s role as an international financial centre.

Our mailing address is:
[email protected] to change how you receive these emails?
You can update your preferences or unsubscribe from this list.

Back to News