10/08/26: US job losses, double-edged results & UK house prices

Monday Espresso Podcast 10th August 2026

[00:00:00] Andrew Shaw: Today is Monday the 10th of August. I'm Andrew Shaw and I'm joined this morning by James Millward, one of our Investment Analysts here at Marlborough. James. Good morning.

[00:00:09] James Millward: Morning Andrew.

[00:00:10] Andrew Shaw: Three things today, the surprising set of US jobs numbers on Friday, which put the Federal Reserve, that's the American Central Bank and an awkward position, a run of company results where the numbers were excellent and the share prices fell anyway, and of course to home UK house prices.

[00:00:26] Andrew Shaw: James, before all that, how did markets get on?

[00:00:29] James Millward: A week of two halves. Markets started quite strongly on hopes that a deal was close to reopening shipping in the Middle East. That pushed oil sharply lower and the US markets hit record highs midweek.

[00:00:39] James Millward: By Thursday, those hopes have sadly faded. Oil went back up, technology shares came under pressure and the market gave back much of the gains.

[00:00:47] James Millward: Moving to performance. The FTSE was broadly flat for the week while Europe was up 2% and EM and Asia was down about half a percent each.

[00:00:56] Andrew Shaw: Well, let's start with those jobs numbers then. What happened in the US?

[00:00:59] James Millward: So on Friday we got the monthly employment report from the Bureau of Labour Statistics, a US government body that counts how many people are in work.

[00:01:07] James Millward: Economists had expected the American economy to add 83,000 jobs in July. Instead, it lost 23,000 jobs.

[00:01:15] Andrew Shaw: So not just weaker than expected, it was actually going backwards.

[00:01:18] James Millward: Exactly, and more importantly, the detail is buried underneath. Each month there revises early figures as more data comes in. And this time May and June were both cut heavily.

[00:01:28] James Millward: Between them, 103,000 jobs were thought to exist, but in fact they didn't, and they were taking out the numbers.

[00:01:35] James Millward: The losses came in local government, education, retail and financial services. Healthcare was a bright spot. One caveat, immigration's fallen sharply, so the economy needs fewer jobs each month just to stand still. A weak number today isn't quite as alarming as it would've been a few years ago.

[00:01:52] Andrew Shaw: Yeah, there's something in there that will confuse people though, and that is that unemployment actually fell to 4.1%.

[00:01:59] Andrew Shaw: James, how can the economy lose jobs and unemployment go down at the same time?

[00:02:04] James Millward: Great question, and the answer matters. To be counted as unemployment, you have to be actively looking for work. If you give up, you drop out the labour statistics altogether and that's what's happening.

[00:02:14] James Millward: The share of American adults in work or looking for work is at its lowest in five years. So unemployment is falling for the wrong reasons.

[00:02:22] Andrew Shaw: A healthier looking headline masking a weaker picture underneath though. And the timing is what makes this interesting really, because nine days early the Fed had held rates steady, but three of its members voted to raise them, worried that expensive energy would keep pushing prices up.

[00:02:38] James Millward: Indeed, and it went right down to the wire. On Wednesday, two days before these numbers landed, Fed, governor Lisa Cook, said publicly that she saw inflation as the bigger of the two and that the Fed should be ready to raise rates next month if needed then Friday happened.

[00:02:54] Andrew Shaw: Yeah, which captures the bind.

[00:02:56] Andrew Shaw: The Fed has two jobs, to keep prices stable and to keep people in work. Normally those point in the same way, and right now they're point in opposite directions.

[00:03:06] Andrew Shaw: If you cut rates to support jobs, then you risk fueling inflation. And if you raise rates, then you deepen the job losses. And this one's on a fairly new Fed chair.

[00:03:17] Andrew Shaw: We covered Kevin Warsh's nomination earlier in the year and he took over in May. He's deliberately stopped the Fed hinting at where rates might go on the view that investors should form their own judgments, where central banks had signalled their intentions for years, precisely so markets wouldn't be caught out.

[00:03:34] Andrew Shaw: Markets thought a rate rise next month was more likely than not, at around 55% chance and within minutes, most traders had flipped to expecting no change at all. So bond yields fell and shares rallied.

[00:03:46] Andrew Shaw: Anyway, let's turn to company results. And we had a, run of them last week and it was a bit of a strange story.

[00:03:52] James Millward: Yeah, indeed. We had three big American tech companies reporting, so AMD, SanDisk and SpaceX. All three beat what analysts has expected. All three saw their share prices fall though.

[00:04:03] James Millward: Starting with AMD, which make chips powering AI data centres and is NVIDIA's closest competitor. It had record revenues of 11.5 billion, up 50% on last year.

[00:04:14] James Millward: Its data centre business more than doubled, profits beat forecasts and it told investors to expect around $13 billion in the current quarter more than the market was looking for. Shares fell around 9% off the back of that news.

[00:04:27] Andrew Shaw: Which on the face of it makes very little sense.

[00:04:30] James Millward: Yeah, indeed. Then we have SanDisk, which makes memory chips, the components that store data in your phone's, laptops, and increasingly AI data centres.

[00:04:38] James Millward: Revenue is reported at just under 9 billion against an expected figure of 8.4 billion, and across the full year sales rose around 175%. Here's the detail that I would pull out though.

[00:04:50] James Millward: Revenue jumped by half compared with the previous three months, but roughly two thirds of that came not from selling more chips, but from charging more for them.

[00:04:58] James Millward: That's a genuine shortage in memory.

[00:05:01] Andrew Shaw: Yeah. Which will eventually reach the rest of us in phones or laptops getting more expensive.

[00:05:06] James Millward: Yeah, indeed and that's the direction in travel. But again, shares fell about 10% purely because the forecast for the next three months came in fractionally below what analysts wanted.

[00:05:15] James Millward: And SpaceX reported for the first time since floating in June, revenue nearly doubled comfortably beating expectations. However, shares were down 8% because it's spending far more on artificial intelligence than investors have bargained for. It's expected to spend over $18 billion in the next three months.

[00:05:34] Andrew Shaw: So what should our listens take from this? I think it's one of the more useful lessons in investing and that's a share price already reflects what people expect to happen. The question is never simply were the results good? It's were they better than what was already priced in.

[00:05:51] Andrew Shaw: When a company has a run up enormously, merely excellent stops being enough. Closer to home, we had house price figures on Friday.

[00:06:00] James Millward: Yes, we did. In Lloyd's in the index that used to be called Halifax. The average home in the UK was worth just a touch under £300,000 in July. Essentially unchanged on the month and up just 0.1% on a year ago. That's the weakest annual growth in almost three years. And there's a real north south split underneath.

[00:06:20] James Millward: Northern Ireland up 7.4% over the year. Scotland up 3.6%, Southeast down 2%, and London was down 1.3%.

[00:06:29] Andrew Shaw: And the explanation runs straight back to where we start and that's the Bank of England held rates at the end of July. And like the Fed three of its nine members voted to raise them, worried about the same energy costs.

[00:06:42] Andrew Shaw: Before the conflict in the Middle East, markets expected two cuts this year. Now they're seriously considering raises.

[00:06:48] Andrew Shaw: James, what should listeners watch out for this week?

[00:06:51] James Millward: So, the US inflation data on Wednesday is the big one followed by producer prices, the cost of goods leaving the factory gate. On Thursday, those will shape whether markets think about Fed cuts, holds or hikes next month.

[00:07:05] Andrew Shaw: Great, thank you James.

[00:07:06] Andrew Shaw: To summarise, the US unexpectedly lost jobs in July leaving the federal reserve caught between a weakening jobs market and stubborn inflation.

[00:07:14] Andrew Shaw: A run of excellent company results was met with falling share prices. A reminder that what matters is performance against expectations not in isolation and UK house prices have stopped growing with Southern England falling outright, there's hopes of rate cuts, giveaway to talk of rate rises.

[00:07:32] Andrew Shaw: Listeners, as always do reach out if you have any questions. Wishing you all a great week ahead.