Bailey Shut the Door on Cuts - Gold Slipped Out the Back

The macro work

Britain's rate-cut hopes weren't just stalled last week — they were shown the door. I argued Andrew Bailey's flat "no" is the clearest sign yet that Bank Rate holds at 3.75% all year, with inflation jammed at 2.8% and two rate-setters itching to hike, not cut. The classic safe haven took the hint: I called time on gold, down 14% in its worst quarter since 2013 as cash bolts for yield and AI. Money did move into defence, though — I parsed the £15bn surge that carried Rolls-Royce near 1,457p on Starmer's investment plan, while noting that near record highs, plenty is already in the price. And the index still climbed: I tied the FTSE's 1.7% Thursday pop to 10,652 to a soft US jobs print — payrolls up just 57,000 against a 110,000 forecast.

The corporate calls

On the corporate desk, the week split between cheap-looking Americans and a slice of British history. I spelled out the bull case for Lululemon, down 78% from its 2023 peak yet on a forward P/E of 10.6 — priced like a dying brand it plainly isn't. I singled out Alphabet as the boring AI winner: $39.7bn of quarterly operating profit, up 29.7%, and cloud sales up 63%, all at a below-market P/E of 25.5. Closer to home, I waved off the Halifax name after 173 years as Lloyds folds it into its own from early 2027. And I unpicked BT's near-2% jump to 198.8p, the FTSE 100's top riser on a $625m Verizon tie-up.

Bailey shut the door, gold slipped out the back, and defence kept climbing — Britain's safe-haven map, redrawn in a week. Now, to the rest of the issue.

No Budget, no bill, not even an official policy — yet Burnham capital gains tax fears are already moving serious money. Advisers say founders are racing to complete business sales and wealthy investors are cashing out early, spooked by talk of equalising capital gains tax with income tax at 45%. The twist? Every gain banked at today’s 24% rate is revenue the plan’s £14bn promise will never see. Here’s what’s driving the rush, and why the last hike is a warning.

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Britain spends a lot of time worrying about industries it has lost. This weekend, the British Grand Prix showcases one it quietly dominates: Formula 1 pumps £12bn a year into the UK economy, and 10 of the sport’s 11 teams call these shores home. Silverstone expects the biggest crowd in F1 history — while the sport warns that visa red tape puts the whole show at risk. Here’s the business case behind the party.

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There's a quiet comedy in the week's script: gold, the thing you're meant to reach for when the world turns frightening, fell out of favour precisely because the world found shinier things to chase. The oldest safe haven going, undone by a brand-new one. Turns out fear has a fashion cycle too. — M.B.