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The Carrick Espresso is your essential five-minute investment briefing, equipping you with everything you need to know for the week ahead. Marlborough's Multi-Asset Solutions Investment Team summarise market events over the past seven days and preview the key events in the week ahead, while also sharing their expert insights.
Monday Espresso Podcast - 5th May 2026
[00:00:00] Rory Dowie: Good morning. Today is Tuesday, May the 5th. Hope you all had enjoyable long weekends here in the UK.
[00:00:06] Rory Dowie: I'm Rory Dowie, portfolio manager here at Marlborough.
[00:00:09] Rory Dowie: I'm delighted to be joined by Andrew Shaw. Andrew is one of our senior investment analysts on the team. So Andrew, firstly, good morning.
[00:00:16] Andrew Shaw: Morning, Rory.
[00:00:17] Rory Dowie: Lots going on last week.
[00:00:19] Rory Dowie: The long weekend came at a good time, really. But headlines were stolen last week by earning season in the US. We had the so-called big boys reporting. Those hyperscalers who are underpinning their AI trade. They announced Q1 performance and also gave guidance on capital expenditures for the rest of this year.
[00:00:35] Rory Dowie: We also had a flurry of central bank meetings and rate decisions, though nothing too major on that front, to be honest. And at the start of last week, we also had news of the UAE announcing that they will leave OPEC. Before we get into that, Andrew, April following March's week returns due to the Middle East conflict, how did April finish up?
[00:00:55] Andrew Shaw: Strong month, Rory. In fact, it was stronger than March was weak. The US returned 9.6% while Japan was up 11% and Korea was up a phenomenal 22%. Here in the UK, we're essentially flat and Europe was up just 2.6%.
[00:01:13] Rory Dowie: Okay, so markets were rebounding off those lows from March, Japan, EM, and the US really driving that equity performance.
[00:01:20] Rory Dowie: Getting into last week then, aside from the Middle East, the debate in equity markets at the moment and has been for some time is AI and that AI capital expenditure. Did we get an update last week on that front?
[00:01:32] Andrew Shaw: Yeah, on Wednesday night, all four of the so-called hyperscalers, that's Microsoft, Amazon, Alphabet, or Google, and Meta re: Facebook reported after the bell.
[00:01:42] Andrew Shaw: The headline was simple that AI spending is accelerating, not decelerating.
[00:01:47] Andrew Shaw: The combined CapEx, that's capital expenditure guidance for these four companies is now approaching $720 billion for the full year of 2026. For context, going into the quarter, the market was expecting $670 billion at the high end of estimations.
[00:02:05] Andrew Shaw: And so we've added another $50 billion of CapEx in a single earnings cycle. That is a massive number.
[00:02:12] Rory Dowie: Yeah, so spend, spend, spend really there, Andrew, or investment, investment, investment rather. We've spoken a number of times about the monetisation angle. Basically, the spending is fine if we can see a return on the spend.
[00:02:24] Rory Dowie: We saw some indications of that last quarter which we spoke about. I guess the update this time around, what was there to be seen?
[00:02:31] Andrew Shaw: Simply, Rory, we've got further evidence that the money is turning into revenue. Google Cloud grew 63% year on year to $20 billion, that was far ahead of expectations. And Google's cloud backlog, the remaining performance obligations nearly doubled in a single quarter to $460 billion.
[00:02:51] Andrew Shaw: AWS saw Amazon web services re-accelerated to 28% growth. Its fastest in 15 quarters, and is now running at $150 billion annualised run rate.
[00:03:03] Andrew Shaw: Microsoft Azure grew 29%, so across the board, the cloud businesses are not just spending, they are monetising.
[00:03:10] Rory Dowie: Good to hear that, Andrew. And you also saw that in the market reaction.
[00:03:13] Rory Dowie: Wasn't simple across the board. Alphabet bounced 10%, though Meta was down. The market, I think there is a bit more nervy on the monetisation aspect from Meta's perspective. Clearly these cloud businesses, Microsoft, Amazon, Google, et cetera, you know, you're seeing those in the growth numbers. I think from Meta's perspective, people are a little bit concerned about, you know, where that monetisation comes from.
[00:03:35] Rory Dowie: You know, is it going to be those Meta Rayban sunglasses that you've probably seen on social media? Maybe the market needs more? Changing tact, central banks, lots of meeting last week. Headlines, Andrew?
[00:03:46] Andrew Shaw: It was all very boring, to be honest, Rory. Five major central banks met last week. That's the Fed, the ECB or European Central Bank, the Bank of England, the Bank of Japan and the Bank of Canada. And the theme across all of them is the same. They're very much stuck.
[00:04:02] Andrew Shaw: The Iran war has created a textbook stagflation shock and energy prices are pushing inflation higher, but growth is slowing. So nobody really wants to tighten into a supply driven crisis with fears of what they may do to the economy and to economic growth.
[00:04:18] Andrew Shaw: And so everyone held rates where they were.
[00:04:20] Rory Dowie: Very clear, and we've alluded to that on the pod over the last few weeks. The last thing that you want central banks to do is to raise rates into economy that has supply-driven inflation and economic growth that is ultimately vulnerable. So central banks are really waiting to see, how that Middle East situation pans out.
[00:04:36] Rory Dowie: Moving on at the start of the week, we also had news that the UAE, the United Arab Emirates would leave OPEC. OPEC being the organisation of the petroleum exporting countries. That is essentially a cartel of oil producing nations. They coordinate production levels and influence the global price of crude oil.
[00:04:54] Rory Dowie: The basic mechanism is simple. Members agree to produce a certain number of barrels per day each, and by collectively restricting or increasing supply, they can then move the oil price up or down. Andrew, I guess, UAE leaving OPEC, what are the implications?
[00:05:10] Andrew Shaw: The UAE has 4.8 million barrels per day of capacity, but was only producing 3.2 million under its OPEC quota, and that leaves spare capacity of 1.6 million barrels per day.
[00:05:25] Andrew Shaw: I mean, that number's roughly 1.5% of global supply. So if you don't have that quota and the Strait of Hormuz opens and the situation normalised, then the UAE can bring those barrels to market and start selling them and increase their revenues and also maybe increase supply and, maybe bring down oil prices in the longer term.
[00:05:46] Andrew Shaw: This is potentially the most dangerous implication for OPEC. If the UAE, a wealthy, influential member, can walk away, ramp production independently, it weakens the incentive for other members to stay and comply.
[00:06:00] Andrew Shaw: Countries like Iraq and Nigeria, which have often struggled with the quota discipline, might look at the UAE and think the same thing.
[00:06:08] Andrew Shaw: Cartels only really work if the cost of defection is high and the UAE's just demonstrated that it isn't, and if you leave, you can go and do your own thing.
[00:06:18] Rory Dowie: One to keep an eye on then, in theory, maybe potential supply and price easing down the road on oil, but not yet whilst we have the Straits of Hormuz as they are.
[00:06:27] Rory Dowie: Andrew, keeping an eye on time. So wrapping up this week, what have we got to look out for?
[00:06:31] Andrew Shaw: Lots of economic data this week, Rory. Non-farm payrolls in the US, but probably most importantly, we have earning seasons continuing in the US. We've got Berkshire Hathaway and AMD, also, any developments between Iran and the US.
[00:06:46] Rory Dowie: Thanks, Andrew, for joining me. Listeners, hope you found that useful. Please reach out as always if you have any questions and wishing you all a great week ahead.