The Market Call - Week Ending 29th August 2025

This week, Progressive's Jeremy McKeown and Gareth Evans debate Trump's ongoing attacks on the US Fed...perhaps Powell is rolling over, but the recently "sacked" board member Lisa Cook is not.  The dollar fell and long bond yields rose, but not by much.  France is showing renewed (and traditional) political risk, and the landscape across Europe feels pressured.  The UK is once again facing an Autumn of Worry as the budget's tax-more-or-spend-less balancing act seems destined to repeat last year's wheel of fortune on which part of the economy will bear the brunt of new taxes. 
 
In the absence of much small-cap news, the pair consider the misfortunes of Drax, the former coal-fired power generation group, now reinvented doing the "green thing" of burning wood pellets to produce electricity.  This week saw news that the FCA is investigating the veracity of some of the their historic claims around the source of these pellets (Drax claims they're mainly "off-cuts" of wood that's already being logged).  Whether or not there's an issue, it is possible that the attention might focus minds on the genuine green credentials of shipping wood across the Atlantic to burn it, and then claiming that by capturing the carbon released and then burying it, the whole process is "carbon negative".  More broadly, some governments are actively against the renewables agenda, and others actively can't afford it. 
 
Next week we get the excitement of US jobs data - Trump wants data weak enough to prompt a big interest rate cut, but not weak enough to look like a recession. Whoever's in charge of "deciding" the number better tread a careful line, or they might join the jobless stats for the following months.