UK inflation takes centre stage with Entain PLC and JD Wetherspoon

Inflation returns to centre stage with an ugly looking number expected by pretty much everyone.

The UK consumer price index hit 5.1% last time, which was much higher than expected and also a ten year high, with the RPI index hitting a 30-year peak of 7.1%.

This seemed a key reason behind the Bank of England last month deciding to increase interest rates by 0.15% to 0.25%, although this move had been more widely expected the month before.

Producer price growth hitting 14.3% November suggested there is potential for UK headline inflation to move even higher, above the 2008 highs of 5.2% and to levels last seen in March 1992.

Bank of England governor Andrew Bailey has already said that he expects CPI to hit 6% in the coming months, which is clearly well above the central bank’s 2% inflation target.

Ladbrokes owner onto a winner in the US

Entain PLC (LSE:ENT)  the Labrokes and Coral owner, said it will publish a trading update for its US joint venture BetMGM on Wednesday, with a wider group update from the FTSE 100-listed group pencilled in for Thursday.

Analysts are expecting more positive news, as the bookie reported a 4% gain in revenues year-on-year in its third-quarter results, despite high growth in the comparative period the year before.

BetMGM though is key to the valuation of Entain, according to Peel Hunt today.

“It could be sold, at the right price, or could be the key reason why MGM could make another approach for Entain.

“Tomorrow’s update should help us understand if the North American market, and BetMGM’s share of it, is really as attractive as we think it is.”

US rival DraftKings walked away from offer talks in October after making a £16.2bn bid for Entain and can’t return with a bid for at least six months (ie late April) unless another bidder emerges

BetMGM partner MGM Resorts is seen as one such potential suitor.

Spoons-ful of losses?

A trading update from JD Wetherspoon Plc (LSE:JDW) presents another opportunity for the company’s chairman, Tim Martin, to get his soapbox out.

Brexit, tax handicaps for pubs (compared to retailers) and the government’s handling of the pandemic are regular themes, with the latter occupying the voluble Mr Martin of late.

“As previously reported, there have been no outbreaks, as defined by the health authorities, of Covid-19 among customers in Wetherspoon pubs,” Martin said in last month’s update.

Well, no reported outbreaks, at least.

Somewhere in the rant about the government’s mercurial policy on the Covid-19 outbreak was some actual reference to profits, with Martin suggesting the pubs group’s first-half results “may be loss-making or marginally profitable”.

Wednesday 19 January – major announcements due

Finals: Crest Nicholson Holdings PLC

Trading announcements: Antofagasta PLC, Appreciate Group PLC, Audioboom  Group PLC, BHP Group…