Category: Uncategorized

1. In MACRO NEWS, the Brexit drama rumbles on while UK productivity worsens
2. In TELECOMS NEWS, Arqiva makes a £2bn sale and Vodafone axes 1,000 stores
3. In TECH NEWS, Samsung beats forecasts while Tesla/Panasonic relations get strained on batteries
4. In INDIVIDUAL COMPANY NEWS, pilots sue Boeing, Domino’s suffers, recruiter profit warnings reflect uncertainty and M&S sees new management for its food division
5. In OTHER NEWS, I bring you (possibly) my new favourite band…

So BoJo battles on while tariff talk causes a stir and UK productivity hits 5-year lows…

Brussels plays for time as UK goes on the attack (Financial Times, Sam Fleming and Guy Chazan) looks at what might happen in the event of another extension to the Brexit deadline as it is looking increasingly like current talks are about to fail. The EU doesn’t want to be blamed for being the cause of the breakdown and some officials see value in keeping the option of an extension open beyond October 31st or until after a UK election. The UK side has become notably more hostile in tone in the last 24 hours as Germany’s Angela Merkel was blamed by BoJo for torpedoing any possibility of reconciliation following a phone call where the German Chancellor objected to his proposal to exclude Northern Ireland in a customs union with the bloc. However, the Germans say that he was misrepresenting the contents of the phone call as part of a blame game. The drama continues ahead of talks scheduled for next week.

In the meantime, UK plans low-tariff regime in a no-deal Brexit (Financial Times, George Parker) highlights a proposed temporary tariff regime that was announced yesterday for a no-deal Brexit scenario whereby 88% of imports would be tax-free. * SO WHAT? * The Treasury has

wanted to keep import taxes low in a no-deal exit in order to head off a potentially massive sudden rise in inflation. Such proposals obviously aren’t good for everyone and representatives from the farming and ceramics sectors in particular objected that this would be unfair given that their own exports into the EU would be hit by new higher tariffs while imports would benefit hugely from the lack of taxes. The National Farmers’ Union said the new proposals would give “zero protection against cheap imports coming in from around the world”. Whatever is negotiated, there are always going to be some losers and they will, quite rightly, complain loudly.

Productivity falls at fastest rate since 2014 as Brexit hits investment (The Guardian, Richard Partington) cites the latest data from the Office for National Statistics which shows that labour productivity – which measures economic output per hour of work – fell by 0.5% in the three months to June versus the same period a year ago, making it the worst performance since the middle of 2014. * SO WHAT? * Many economists believe that improvement in productivity is key to boosting economic growth and improving living standards and BoJo himself said last week in the Conservative Party Conference that “With infrastructure, education and technology we will drive up the productivity of this country and bring it together”. Many say that without investment and improvement in productivity, the economy is likely to continue to slow down – and this has been made worse by Brexit uncertainties.

Arqiva sells its telco division to Cellnex for £2bn and Vodafone cuts store numbers…

Arqiva sells telecoms division to Spanish giant for £2bn (The Times, Arthi Nachiappan) heralds a deal that will make Barcelona-based Cellnex the biggest independent operator of wireless infrastructure in Britain as it bought 7,400 mobile towers and the rights to market another 900 sites in the UK, allowing Arqiva to focus on its broadcasting mast business. Cellnex Telecom is Europe’s largest independent operator of wireless infrastructure and the deal is expected to complete in the second half of 2020. * SO WHAT? * This is just the latest in a string of acquisitions by Cellnex, which recently bought the marketing and operational rights for 220 high towers from BT, the broadband provider, in June. Arqiva will be using most of the proceeds from the sale to pay down debt.

Vodafone shuts 1,000 stores in Europe as focus shifts to online (The Times, Alex Ralph) heralds moves by the company to address the rise of online shopping and the industry’s rather ropey record on customer satisfaction by revamping 40% of its 7,700 European shops by the end of the next financial year and closing 15%. Although this move was not billed as part of cost-cutting efforts, Vodafone is trying to cut operating expenses to the tune of €1.2bn within three years as it faces debts of around €47bn. The company plans to introduce more “experiences” in stores, more convenience outlets and kiosks as well as click-and-collect services. A spokesman said that closures weren’t expected in the UK, but didn’t really shed much light on where they would fall. * SO WHAT? * Interestingly, Vodafone has actually been INCREASING the number of outlets in the UK – and plans another 24 this year and 50 next – while competitors such as O2 and EE have been reducing theirs, according to the Local Data Company. Vodafone is not known for excellence in its customer service and so it’s good to see that it is taking measures to address this given that it’s a competitive market out there!

Samsung performs less badly than expected and the Tesla/Panasonic relationship looks tricky…

Samsung beats forecasts with 56% fall in operating profit (Financial Times, Song Jung-a) shows that third quarter profits fell for the fourth quarter in a row due to weak memory chip prices but not quite as badly as everyone was expecting. OK, so operating profit fell by a chunky 56% in the July-September period versus a year ago but analysts are now saying that things may be bottoming out now and pointed to company guidance of a 16.7% quarter-on-quarter hike in operating profit expectations. Samsung’s mobile business also benefited from US sanctions against Huawei, its display business improved following the launch of Apple’s new iPhone last month and its new Galaxy Note 10 with 5G capability is currently outselling its predecessor.* SO WHAT? * Given that the company generates over 50% of its operating profit from semiconductors, the prospect of seeing light at the end of the tunnel is an important development. Mind you, given that US rival Micron Technology painted a bleak outlook for the industry as recently as last month you do hope that analysts aren’t getting ahead of themselves as consensus would suggest that chip prices aren’t likely to make a full recovery until next year due to the global economic

slowdown and the US-China trade war. The other potential cloud on the horizon is the ongoing spat with Japan, which has led to a restriction in the supply of key chemicals needed by the South Korean chipmakers.

Tesla needs its battery maker. A culture clash threatens their relationship (Wall Street Journal, Tim Higgins and Takashi Mochizuki) is a really interesting article that suggests a widening gap between Elon Musk’s freewheeling ways and the Japanese company’s inherent conservative nature is being made worse by the underwhelming nature of its Gigafactory joint venture. It was supposed to boost profits and assure Panasonic’s place in the future of automotive electronics while giving Tesla a steady supply of its most expensive and important components – its batteries. Both sides are arguing about the handling of battery production as Tesla has continued to pressure Panasonic on the price of its battery cells, which is one of the reasons why Panasonic’s share price has fallen by almost 50% since the start of last year. Pressure from Tesla is unlikely to abate given that it will have to continue to improve efficiency and cut manufacturing costs to keep the sticker price of its cars competitive. Conclusion: both parties need the venture to work, but cultural differences and increasing resistance from within Panasonic itself are making this harder by the day. If you want to get a good potted history of how the relationship has developed between these two companies, I would highly recommend that you read this article.

Boeing pilots kick up a fuss, Dominos suffers, recruiters paint a stark picture and M&S gets new senior management on food…

The bad news keeps on coming in Pilots sue Boeing after losing pay from grounding of aircraft (Daily Telegraph, Oliver Gill) as pilots at Southwest Airlines are now suing the aircraft maker for leaving them $100m out of pocket due to the grounding of its 737 Max planes. The pilot’s union says that its members agreed to fly the plane “based on Boeing’s representations that it was airworthy” but alleged that “these representations were false”. * SO WHAT? * This will be the first case of its kind – and I am sure other airline pilots around the world will be watching developments very closely. Rather unsurprisingly, Boeing came out fighting saying that “We believe this lawsuit is meritless and will vigorously defend against it. We will continue to work with Southwest Airlines and its pilots on efforts to safely return the Max to service”. If the pilots win, Boeing’s losses could get a whole lot bigger as other pilots elsewhere follow suit.

Following on from yesterday’s disappointing news at Pizza Express, Domino’s Pizza tempers sales outlook as delivery battle heats up (Wall Street Journal, Heather Haddon and Micah Maidenburg) shows that the world’s biggest pizza

company by sales said that its sales growth over the next few years would be slower than anticipated due to increased competition from food delivery companies. However, pizza fans should take heart from Domino’s Pizza: wheel of fortune (Financial Times, Lex) which says that the company is right to keep control of its own delivery capability as commissions at third-party delivery companies continues to rise and that its ability to generate healthy cash flow will pull it through.

Recruiters’ profits hit by global uncertainty (The Times, Elizabeth Burden) highlights profit warnings from two of the UK’s leading recruitment agencies – Page Group and Robert Walters – as global economic uncertainty filters through to staff recruitment. PageGroup/recruitment: Brexit wrecks it (Financial Times, Lex) highlights the plight of recruitment firms as leading indicators of the economy but makes the point that their share prices can recover quite quickly. Obviously, we don’t know what the ultimate effect of Brexit may be but Lex seems to be fairly calm about the prospects for these diversified recruiters.

Then in Four new faces tuck into M&S food (The Times, Ashley Armstrong) we see that four new directors have been brought into the ailing high street retailer to turn around the performance of its food business ahead of its tie-up with Ocado. It’s good to see news that senior bods are coming in to the firm as it seems that most senior management have been heading to the exit of late…

And finally, in other news…

Today, I thought I’d highlight a band that popped up on my YouTube feed over the weekend. You may well think I’m a bit slow to the party, but Pomplamoose make some great songs and really clever mash-ups like this: https://www.youtube.com/watch?v=hmLBSCiEoas . Very clever!

1. In BREXIT NEWS, we look at BoJo’s options and the effect of Brexit concerns on retailers, property and jobs
2. In HIGH STREET NEWS, Pizza Express looks dodgy and Sports Direct denies it’ll close almost all House of Frasers
3. In CAR NEWS, Volvo gets closer to Geely on engines and electric car newbies face challenges
4. In INDIVIDUAL COMPANY NEWS, HKEX bid for the LSE fails and Group Nine continues the digital media consolidation trend
5. In OTHER NEWS, I bring you a smelly plane…

So BoJo battles on and we see what Brexit concerns are doing to the high street, the property market and employment…

Can Johnson defy the law against no-deal Brexit? (Financial Times, James Blitz and Sebastian Payne) looks at BoJo’s chances of being able to stick to his promise of Brexit “deal or no deal” on October 31st given that MPs passed a law last month that cuts off his “no-deal” option. Under the Benn Act, BoJo will have to write to the EU to ask for an extension to Article 50 if he hasn’t hammered out a withdrawal agreement but then there are noises emanating from Downing Street that suggest this law could be defied via a few technical means. As things stand at the moment it looks like BoJo has got two teams – one being led by chief of staff Eddie Lister that will abide by the law and all the recent rulings, and another led by Dominic Cummings, BoJo’s chief advisers, that wants to at least give the impression that BoJo is being dragged unwillingly towards a Brexit delay. At the moment, it looks very much like BoJo will have to comply with the law – which is probably why Johnson steps up election preparations as hopes fade for Brexit (Financial Times, George Parker, Jim Pickard, Laura Hughes and Jim Brunsden). In this article, we see that BoJo’s focus appears to be shifting away from a European charm offensive to a domestic one as he prepares to pitch himself as the one fighting to protect the will of the people

against the Remainer “elites” tying his hands. Brexit talks appear to be making no progress currently.

All this uncertainty continues to weigh on the economy as Brexit fears blamed for the worst September retail sales on record (The Times, Elizabeth Burden) cites the latest stats from the British Retail Consortium and KPMG which show that total sales in September fell at their sharpest rate since 1995, UK house price growth at slowest rate in six years (The Guardian, Julia Kollewe) shows that annual house price growth is looking sluggish despite rising wages, low interest rates and the availability of cheap mortgages and Super-rich renting London homes for £5,000-plus a week amid Brexit worries (The Guardian, Julia Kollewe) observes that the super-rich are opting to rent in London rather than buy given Brexit uncertainty and the uncertain global economic backdrop. Activity in the latter is also being boosted by the weakening pound (which is itself due to Brexit uncertainty). And if all that lot isn’t enough for you, Demand for staff rises at weakest rate in eight years (The Times, Callum Jones) cites a report from KPMG and the Recruitment and Employment Confederation (REC) which shows sluggish vacancy rates as employers hold off on their hiring plans to see what happens next. * SO WHAT? * So much depends on Brexit and when we DO eventually decide on something, I would have thought that economic activity is going to increase exponentially as pent-up plans start to be executed. An extension to Article 50, however, will prolong the uncertainty and pain and may well push some companies over the brink.

Pizza Express looks like it’s going to be the next high street casualty and Sports Direct denies it will shut almost all House of Fraser outlets…

After all of the news above, you might want to take a break from it all and go for a beer and pizza with a friend. Well you’d better hurry up if you want to go to Pizza Express as Debt-laden Pizza Express to start talks with creditors (Daily Telegraph, Hannah Uttley) shows that things are getting tricky at the one-time superstar purveyor of pizzas as it turns out that the company has hired advisers to help it deal with its massive £1.1bn debt mountain. The chain has 14,000 employees and 600 outlets worldwide and is owned by Chinese private equity firm Hony Capital, which bought it for £900m in 2014. Ambitious expansion comes back to bite chain (Daily Telegraph, Hannah Uttley) blames the company’s ambitious expansion in Asia for pumping up the debt considerably but also cites the factors hitting the whole casual dining sector – high rents, rising minimum wages and ingredient costs due to a weaker sterling, not to mention growing competition. The company has resorted to dishing out 2-for-1 vouchers in an effort to get punters through the door – and data from Kantar shows that 43% of trips to Pizza Express over the last year have involved some kind of offer versus the comparable industry average of 15%. * SO WHAT? * I have always liked Pizza Express but I think that, over the years, its offering has become a bit “samey” and the standard of the competition has just

rocketed. When you can buy your Sloppy Giusseppe and dough balls at the supermarket and see Pizza Express in seemingly most town centres, there is always a risk of over-exposure. Rival pizza restaurant Franco Manca shows that pizza isn’t the problem (although it does seem to me like there are a lot of Italian chains that have hit hard times recently – Carluccio’s, Jamie’s Italian, Prezzo etc.) but when you’ve got a lot of outlets and not much else to compel people to go there, it seems like the CVA-followed-by-business-failure route is not far away. Landlords will be bracing themselves for the latest tenant to ask for lower rents.

In Sports Direct denies House of Fraser closures report (The Times, Elizabeth Burden) we see Mike Ashley’s Sports Direct denying suggestions in The Sunday Telegraph that said it was going to close almost all House of Fraser stores after the Christmas shopping season. A spokesman for Sports Direct said that the company “is working rapidly on our investment programme with the House of Fraser and it is therefore totally incorrect to assume that there will be large numbers of store closures in the new year” and added ominously that “We are taking legal advice with regards to this unbelievable level of misreporting”. Mind you, given that Ashley himself described problems at House of Fraser as “nothing short of terminal”, you can see why journalists might reach this conclusion! * SO WHAT? * Wow! What an allegation to make! The thing is that his £90m acquisition of the ailing department store has left him with a ton of expensive prime real estate that he doesn’t really need in a sector that is dying. OK, so this newspaper report has obviously riled them – but is it really that far off the mark? Bad news for employees, though.

Volvo and Geely team up on engines while electric car start-ups face challenges…

Volvo cars to combine its traditional engine business with Geely (Financial Times, Peter Campbell) highlights a new development whereby the two automakers are to combine their internal combustion engine operations in order to free up resources to concentrate on electric tech. Volvo Cars’ Chinese owner, Geely, will merge both businesses into one as they see no major demand growth for internal combustion-powered cars in the future and want to concentrate on the growth potential in electric. * SO WHAT? * This is a notable development as it is the first time that there will be a full merger of engine businesses to focus on electric technology rather than the more usual joint venture/collaboration between companies. Volvo expects 50% of its cars will be fully electric by 2025, with the remainder being hybrids. Sorry to be a party pooper but I really don’t see this happening. At the risk of sounding repetitive, charging networks are useless at the moment and I am still doubtful about electricity generation capability if everyone drives electric cars and charges them at home. Unless we have proper networks – and can cope with the surge in electricity demand without having blackouts – fully electric ain’t going to happen. Hybrids are

a different story, however. I think that anyone in the business of installing home charging stations will make enormous amounts of money in the coming years! If someone could also come up with reasonably-priced street charging stations as well, they’d probably make even more!

Electric car start-ups face uphill battle (Financial Times, Peter Campbell) highlights problems that face electric car start-ups as Chinese car maker Nio edges closer to collapse despite having raised $200m last month from its chief exec, William Li, and one of its biggest shareholders, Tencent. Nio’s travails just go to show how difficult it is to compete against the established manufacturers as their cash burn is just ridiculous given high initial costs made even worse by having to scale up manufacturing to meet unpredictable demand. * SO WHAT? * So many companies have been tempted to make electric cars due to government incentives and the fact that they are generally cheap to develop and manufacture (they are basically a battery and chassis on wheels without all the faff of the moving parts in a combustion engine). However, designing a nice car and being able to make it isn’t enough – you have to match your manufacturing capability as closely as possible to customer demand while bigger and deeper-pocketed competition start to roll out their own offerings. Nio makes some very cool-looking cars, but if the demand and production don’t match, things will continue to get more expensive and Nio will get closer to disappearing. Other start-ups will be watching Nio’s fate very closely.

HKEX gives up on LSE and Group Nine continues the consolidation wave in digital media…

HKEX drops £32bn bid for LSE after charm offensive fails (Financial Times, Daniel Shane and Alice Woodhouse) shows that Hong Kong Exchanges and Clearing is officially dropping its bid for the London Stock Exchange after a three-week attempt to convince shareholders and regulators of the attractions of its offer. The question now is what next for HKEX as it tries to grow its business. LSE lives to fight another day.

Group Nine to acquire PopSugar, continuing wave of Digital Media tie-ups (Wall Street Journal, Benjamin Mullin and Lukas I.Alpert) highlights Group Nine Media’s all-stock acquisition of women-focused publisher PopSugar as the current wave of “new media” firm consolidation continues. Group Nine is backed by Discovery Inc. and owns brands including The Dodo and NowThis and the enlarged company will be worth around $1bn with Group Nine accounting for about $600m of the valuation. * SO WHAT? * This represents the third digital media deal in the last two weeks following Vox Media’s acquisition of New York Media and Vice Media buying Refinery 29 last week. It seems that the consolidation is being driven by companies wanting to combine their audiences to boost advertising revenues. No doubt this trend will continue!

And finally, in other news…

Today, I thought I’d show you how a fruit stopped an aircraft in Pilots don oxygen masks and make emergency landing when durian stinks out plane (The Independent, Cathy Adams https://tinyurl.com/yxj6mwxm). Lovely!

1. In MACRO & MARKETS NEWS, French pension reforms get a rough ride and the IPO market takes stock after the WeWork debacle
2. In BANKS NEWS, HSBC plans to cut 10,000 jobs and digital banks fight to compete
3. In MISCELLANEOUS NEWS, Unilever vows to cut new plastic usage, the Thomas Cook aftershock continues and vaping’s black market complicates oversight
4. In OTHER NEWS, I bring you hangover hacks and Brussels sprouts crisps…

So Macron’s pension reforms prove to be unpopular and the IPO market takes a breath after the WeWork wobble…

Emmanuel Macron’s pensions reform meets chorus of disapproval (Financial Times, Victor Mallet) shows that French president Macron is meeting with resistance to his attempts at merging 42 pension schemes into one points-based national pension scheme that makes it easier to switch professions. This is an incredibly complex undertaking and some say that it will be tough to win people over to what Macron feels will be his legacy. * SO WHAT? * Sceptics say that even Macron won’t be able to push his major reforms through as resistance builds, but TBH no-one was expecting an easy ride. He originally promised to complete this reform much earlier in his presidency but he is clearly trying the “slowly, slowly catchy monkey” approach given the lengthy national consultation he has embarked on in order to calm public opinion. I think this was always going to be one of the most difficult reforms to make, but if he can get through this unscathed and with his support intact, it really will be a significant achievement. In the meantime, he faces a boatload of strikes.

In Fear overtakes greed in IPO market after WeWork debacle (Wall Street Journal, Maureen Farrell) we see that confidence in the until-recently red-hot IPO market has taken a bit of a dent as investors increasingly give the cold shoulder to flotations of start-ups with massive losses and inflated valuations. Despite all the hype and some initial success from the likes of Pinterest and Zoom Video Communications, IPO stock performance has been the worst it’s been since at least 1995, according to a report by Goldman Sachs, and tricky markets have meant that we are heading into what it usually a busy time of year for flotations with not that much to get excited about. Potential candidates for flotation are happy at the moment to remain on the sidelines, waiting for market conditions and sentiment to improve. * SO WHAT? * After a strong start, many had predicted 2019 to be a bumper year for market flotations but the subsequent performance of companies such as Uber and Lyft and the shelving of WeWork’s IPO has brought into focus the perils of investing in something that is massively loss-making. According to Dealogic, 2019 will have been the fourth busiest year for IPOs behind 1999, 2000 and 2014 and if current sluggish momentum continues, it could get worse. All of this will be bad news for investment banks who earn fat advisory fees on these deals – and the nascent trend for well-known names such as Spotify and Slack floating via the “direct listing” method, which is expected to continue with Airbnb next year (and which negates the need for a large chunk of these fees), may also limit advisors’ fee bonanza.

HSBC gets the axe out and digital banks fight for supremacy…

HSBC to axe 10,000 jobs in cost-cutting drive (Financial Times, David Crow) signals an intent by the bank to reduce headcount (it currently employs around 238,000) as it continues to up its efforts on cost-cutting. It sounds like Europe – and those in senior positions – are going to suffer most and will come on top of the 4,700 redundancies already announced. More detail could be forthcoming in the company’s third-quarter results later this month. * SO WHAT? * Given that the company makes 80% of its profits in Asia and the tough business environment for banks generally, this is hardly surprising. The previous CEO was criticised for avoiding deep staff cuts, but it seems that his interim successor Noel Quinn doesn’t have the same qualms.

Race to become UK digital banking leader hots up (Financial Times, Nicholas Megaw) is an interesting article that takes a look at how digital banks are doing at the moment as they continue to take the fight to traditional

banks and other challenger banks alike. Revolut competes in the same bracket as Monzo and Starling which offer app-based current accounts while Atom and Tandem focus on mortgages and credit cards. However, the digital banks, along with challengers such as Tesco and Metro Bank, have had a tough time breaking the dominance of the established players and many are starting to think that there just isn’t enough business to go around. The good news is that the digital banks named above have said that they no longer subsidise individual customers, meaning that they now make more revenue from servicing the accounts than running them, but investment and marketing costs are expected to continue rising. This means that they will need to raise more money from investors. * SO WHAT? * Let’s not forget that these digital banks are less than five years old, so they’ve done remarkably well to get this far. However, it would seem that they need cash to shore up their respective balance sheets to fund further expansion and I would argue that they are up against the clock to do so before sentiment turns against them for whatever reason (remember Revolut suffering from allegations of links to Russia?). I still think that there could be scope for consolidation in a very fragmented sector either between the challengers themselves or with the established banks looking for a tech boost and a different client base. 

Unilever pledges to cut new plastic use, Thomas Cook fallout continues and vaping’s black market causes a headache…

Unilever pledges to halve use of new plastics (The Guardian, Zoe Wood) signals intentions by consumer goods giant Unilever to cut its use of virgin plastics by making more environmentally friendly versions of its products which could involve making shampoo refill stations, cardboard deodorant sticks and toothpaste tablets a common sight at the supermarket. It said that it will switch to reusable packs, concentrated refills and using alternative materials. * SO WHAT? * This sounds great from an environmental point of view but I suspect that this could have quite a nice side effect for Unilever as refill stations etc. will take up quite a lot of shelf space in your average supermarket, leading to potentially better sales and possibly less room for competitors’ products. It’s great that such a company is pledging to do its bit for the environment, though, and maybe it will lead others to think about what they can do.

In Thomas Cook bosses were warned of £10bn claims (Daily Telegraph, Oliver Gill and Jack Torrance) we see that Thomas Cook’s bosses were warned before it collapsed that creditor claims could rise above an eye-watering £10bn with huge debts owed to hoteliers, intermediaries and other suppliers. It is, however, thought that many suppliers and bond holders will only actually be able to recover around 2-3% of what they are owed while German, Spanish and Portuguese governments have allocated around €830m so far to help Thomas Cook subsidiaries

and stop the rot from spreading. * SO WHAT? * The company will probably be able to get some money from the sale of its valuable UK airport landing slots (the number of interested buyers seems to be growing by the day), but it’s thought that slots outside Britain will be worthless. Unions are obviously saying the UK government should have done more to save Thomas Cook, but a spokesman for the Department for Transport said that “Unfortunately airlines and tour operators do fail. It is not the Government’s role to prop them up, and any financial assistance risks setting a precedent. We believe anyone looking at the details of this collapse will conclude a rescue deal would have been a poor use of taxpayers money, with no guarantee the company would have remained solvent”.

Vaping’s black market complicates efforts to combat crises (Wall Street Journal, Jennifer Maloney and Daniela Hernandez) shows that the current crackdown on vaping is fueling a black market as authorities try to suppress the alleged cause of mysterious lung illnesses and a surge in teen vaping. All sorts of vapes are available online and offline and “legit” companies are suffering from copycats trying to cash in with unapproved products. Juul, the vaping giant in America, has had thousands of listing of counterfeit Juul-compatible products taken down, including ones with child-friendly flavours such as rainbow drops and grape soda. * SO WHAT? * Given the popularity and the subsequent crackdown, it’s unsurprising that the black market is flourishing. You do wonder, however, whether this will potentially help companies like Juul’s argument that the mysterious lung conditions that vapers have been going down with aren’t their fault – and that it’s actually the fault of online counterfeiters manufacturing and distributing inferior product. Still, this isn’t great and will be another thing that the authorities will need to deal with.

And finally, in other news…

I thought I’d kick this week off with Steps to follow before, during and after a drinking session to avoid a hangover (The Mirror, Luke Matthews https://tinyurl.com/yxelllg8) – I know it’s the beginning of the week, but it could be something worth trying towards the end of it – and the rather intriguing Walkers’ Brussels sprouts crisps are back following ‘requests all year round’ (The Mirror, Luke Matthews https://tinyurl.com/yy3rajer). BTW, they are brussels sprouts flavoured crisps – so don’t worry if you thought that you would be missing out on your potato quotient. Phew!

1. In MACRO & MARKETS NEWS, BoJo’s Brexit journey continues, US gets the go-ahead to slap the EU with big taxes and markets take a tumble
2. In TECH NEWS, Facebook remains defiant about Libra, Microsoft gets back into mobile phones with Google while Google faces a UK lawsuit for collecting iPhone data
3. In INDIVIDUAL COMPANY NEWS, Paddy Power’s owner creates a giant, Tesla falls short, Deliveroo’s losses mount while the heads of Metro Bank and Tesco announce their departures
4. In OTHER NEWS, I bring you some interesting items…

So BoJo launches a “final” Brexit deal bid, the EU is about to get “tariffed” by the US and markets dive…

Boris Johnson sends in contentious plan to break Brexit deadlock (Financial Times, George Parker, Laura Hughes and Sam Fleming) signals BoJo’s latest/final bid for a Brexit deal as he closed his Conservative party conference by dispatching “fair and reasonable” proposals to Brussels. You can see the actual letter he sent in Read Brexit letter from Johnson to Juncker (Financial Times) which addresses the contentious backstop – and it seems to have satisfied the eurosceptics from our side. Apparently, if this plan is rejected by the Europeans, he will break off talks and start preparing for a no-deal Brexit. He could also be a no-show for the forthcoming EU summit and contest any future election on a platform blaming Brussels, opposition parties and Remainers for stopping the country acting according to the wishes of the electorate in the Referendum. We’ll just have to see what Jean-Claude, Michel and friends think of this – the response to this latest proposal has been cautious so far.

US to impose tariffs on EU goods after WTO’s Airbus ruling (Wall Street Journal, Emre Peker and Josh Zumbrun) piles on the pressure for the EU as the US plans to slap 10% tariffs on jetliners and 25% tariffs from October 18th on food products including Irish and Scottish whiskies, cheeses and olives following a ruling by the World Trade Organization (WTO) yesterday. The WTO found in the US’s favour regarding its objections to the EU’s subsidies to Airbus and authorised it to impose tariffs of up

to 100% on $7.5bn worth of goods. This is the biggest trade action against the EU since the US imposed steel and aluminium tariffs last year. US trade representative Robert Lighthizer said in a statement that “For years, Europe has been providing massive subsidies to Airbus that have seriously injured the US aerospace industry and our workers. Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies”. * SO WHAT? * It is important to note that BOTH sides have been found by the WTO to have received illegal government subsidies and that Airbus is just the first one to get through the system. The WTO is due to rule on Boeing subsidies early next year, so you would have thought that the US won’t get too trigger happy on taxes. In the meantime, Airbus argues that tariffs will hit both sides by suddenly raising costs for US carriers with Airbus fleets and European officials said that getting into a tariff war now, while China and Russia are subsidising their own aircraft makers, will be counterproductive. Given that both sides gave subsidies to their own, I think that many of the accusations are just noise and bluster – and part of a broader effort to get the EU and US to the negotiation table to update current trading guidelines. The other possible consequence of this action is that it might take the edge off Airbus nicking Boeing orders after the latter has seen orders crater following the whole Boeing 737 Max disaster.

Global markets fall on poor economic data (Financial Times, Richard Henderson ,Colby Smith, Joe Rennison and Alice Woodhouse) highlights weakness in markets around the world as they reacted to weaker-than-expected US job data yesterday. Employment market sluggishness stoked ongoing concerns about the global economic slowdown as well as potentially putting downward pressure on consumer spending, hence the sell-off.

Facebook remains defiant against Libra naysayers and Microsoft moves into mobile phones with Google while Google faces a lawsuit over iPhone data…

Facebook hits back at Libra criticism and vows to press ahead (Financial Times, Hannah Murphy) follows on from what I was saying yesterday about some Libra backers getting cold feet about the project. So far, the 28 members of the so-called Libra Association (which include Visa, Mastercard, Uber, Spotify and Facebook subsidiary Calibra, among others) have promised to invest at least $10m a piece in the Libra project – but no money has changed hands yet. David Marcus, co-creator of Libra, vehemently denied knowledge that any members were having second thoughts and the Libra Association refused to confirm or deny any meetings were taking place between members. * SO WHAT? * Politicians, law makers and central bankers around the world have been sticking the boot in to Libra citing concerns about privacy, competition, money laundering, tax evasion and potential effects on financial stability, so it is unsurprising that some members could be having second thoughts in the belief that Libra will be more trouble than it’s worth. It is also unsurprising that Marcus is

defending his corner so vigorously because I think if some of the wobblier association members smell fear, they will abandon. If this leads to an exodus, Libra will be dead in the water and The Establishment will have got what it wanted.

Microsoft phone tie-up with Google with dual-screen handset (Daily Telegraph, James Titcomb) heralds Microsoft’s return to the smartphone market via a dual-screen handset (called the Surface Duo) running Android software. It’s due out next year, will be Microsoft’s first handset for four years and its first one to run on Android (not some version of Windows). It sounds a bit like a poor man’s Galaxy Fold (see more about that in The $2,000 phone of the future is here – please don’t break it (Wall Street Journal, Joanna Stern)) but Google faces UK class action lawsuit over collecting iPhone data (Financial Times, Jane Croft) highlights Google’s less than squeaky-clean rep in this area as it is facing a lawsuit in the Court of Appeal for allegedly tracking the personal data of 4m iPhone users in the UK between August 2011 and February 2012. * SO WHAT? * Richard Lloyd, a former director of consumer rights group Which? and the one bringing the case, previously estimated that if he wins the trial damages could be in the region of £750 per iPhone user, at a total potential cost of £3.3bn to Google. This is particularly notable because it will be the first time such a collective action – similar to a US-style class action – has been brought in Britain against a big tech company for misuse of data. Lots of parties will be watching this closely.

Paddy Power’s owner creates a betting powerhouse, Tesla disappoints and Deliveroo sees revenues rise and losses widen while senior departures from Metro Bank and Tesco get different reactions…

World’s largest online betting firm created by Paddy Power owner (The Guardian, Rob Davies) highlights the £10bn all-paper takeover of The Stars Group (aka TSG, which owns Sky Bet) by Flutter Entertainment, the company that owns Paddy Power and Betfair. This will give Flutter shareholders 55% of the enlarged group that will hope to use its scale and presence to get a slice of the newly-opened world of sports betting in the US. * SO WHAT? * This move will help Flutter to take advantage of the relaxation of US sports betting laws and help it expand beyond the restrictive/mature British and Australian markets. Sports betting is now legal in 11 states, with more to follow. There will no doubt be more consolidation in the industry as others fight to get a slice of a potentially lucrative growth market.

Tesla misses target for car deliveries (Daily Telegraph, Olivia Rudgard) shows that Tesla did well on the one hand – it reported its best ever delivery numbers for the quarter at 97,000 units – but disappointed on the other, as it had predicted that it would shift 100,000 units. * SO WHAT? * Logistics continue to be problematic as the company has been scrambling to increase the availability of its most affordable car, the Model 3, in Europe and Asia. Tesla’s

share price has fallen by almost a third this year – and its competition is getting stronger all the time.

There are two high profile senior exec departures that are grabbing headlines in today’s newspapers. Tesco chief Dave Lewis to step down next year (Financial Times, Jonathan Eley) heralds the surprise news that Tesco’s turnaround man is resigning without a job to go to after  five years in the hot seat. * SO WHAT? * I think that he’s actually done a pretty impressive job at a very difficult time in Tesco’s history and lived up to his nickname “Drastic Dave” by making some drastic changes to a supermarket retailer that was in all sorts of problems when he turned up. He axed the HQ, sold off non-core businesses and even had a dabble in taking on Aldi and Lidl with Tesco discounter Jack’s – but maybe it’s time to let someone else have a go. In a way you would have thought that he could have resigned after Christmas, but putting my cynical hat on for a moment, it may be that if this key trading period proves to be a disaster they can blame him and if it goes well, they can call it his swansong.

It’s a bit of a different story in Metro Bank seals £350m bond sale as founder is shown the door (Daily Telegraph, Lucy Burton) as the UK challenger bank managed, at last, to get a bond deal away after the company’s controversial chairman Vernon Hill resigned. The company had to cancel the bond deal only a few days ago due to lack of investor interest – so Hill’s removal seems to have appeased doubting investors. Clearly, the company could not wait to get rid of him! * SO WHAT? * This is a positive step but problems still remain at the bank which spooked everyone earlier this year when it admitted that it had mis-classified its loan book. Having said that, Hill’s departure and subsequent bond sale will buy it time to turn things around – and with “Vernon the Barbarian” out of the way, it will probably make it easier to appoint a successor.

And finally, in other news…

I thought I’d leave you with a few potential purchasing ideas today. Halloumi wrapped in bacon is coming to Aldi this Christmas (The Mirror, Luke Matthews https://tinyurl.com/y5twspkq) is definitely something I want to get involved in (and my two young sons are particularly enamoured by the two metre long pig-in-blanket!) but I’m not so sure about ASOS baffles people with faux wireless headphones sold as ‘fashion accessories’ (The Mirror, Courtney Pochin https://tinyurl.com/y26b23b2). Hmm.

1. In MACRO NEWS, BoJo considers three Brexit scenarios and UK manufacturers stockpile
2. In RETAIL & CONSUMER GOODS NEWS, John Lewis cuts deep, M&S fiddles about, Ikea targets smart home tech, Amazon expands grocery stores, Rip Curl gets sold and luxury brands suffer from Hong Kong exposure
3. In CLEAN ENERGY NEWS, funds outperform and Bombardier signs a deal to make battery-powered trains
4. In INDIVIDUAL COMPANY NEWS, Libra backers get the wobbles and Revolut’s losses double
5. In OTHER NEWS, I bring you some coffee art…

So BoJo faces a few options and manufacturers get stockpiling…

PM Boris Johnson weighs three potential scenarios (Financial Times, George Parker) identifies three scenarios facing the PM as the Brexit deadline approaches. Scenario one is a deal, which will fulfil his “do or die” promise to get Brexit happening on Halloween. In this scenario, getting a deal done would mean that he would go into an election where he would probably be able to neutralise the threat of the Brexit Party (who want a clean break from the EU) on the one hand and the Liberal Democrats (who want to stop Brexit) on the other. This may well put the Conservatives on track to win another election as “do-ers”. The tricky thing here is that he hasn’t got much time. Scenario two is a no-deal Brexit where BoJo could potentially ignore the legislation intended to prevent such an outcome and take it to the courts, which could potentially result in a delay to Brexit and the third scenario of a second Brexit referendum, which could result in an almighty clash between politicians and the electorate, according to BoJo’s

team. They are currently putting together a formal legal proposal for a Brexit deal in the hope that this will form the basis of negotiations scheduled for later on this month. It is expected that we’ll know by the weekend whether this latest attempt has legs.

UK manufacturers start stockpiling for no-deal Brexit (again) (The Guardian, Richard Partington) highlights the rather unsurprising fact that British manufacturers have been ramping up stockpiles ahead of the latest Brexit deadline of October 31st, according to the latest findings of the IHS Markit/Cips Purchasing Managers’ Index (PMI). * SO WHAT? * Stockpiling is probably masking the trend that many clients are re-routing supply chains away from the UK but many UK-based companies are having to make their contingency plans. Greggs said yesterday that it is building up supplies of key ingredients, but it is not possible to replace everything so it is having to think up alternative recipes and offerings. Stockpiling occurred ahead of the original Brexit deadline and inventories have been declining ever since. However, James Smith, an economist at ING, made the interesting observation that “Inventory levels are still perceived to be fairly high, but also warehousing space is becoming more constrained given the close proximity to Black Friday and Christmas”.

John Lewis cuts, M&S fiddles around, Ikea eyes smart home tech, Amazon expands grocery stores, Rip Curl finds a new parent and luxury brands face Hong Kong fallout…

John Lewis to cut a third of managers in £100m cost-cutting push (Financial Times, Jonathan Eley) shows how seriously the John Lewis Partnership is taking the current high street downturn as it announced that it will cut about a third of management roles in bringing together its department stores and supermarkets as part of cost cutting measures. Both divisions will be run as one from next year onwards under an eight-person team reversing the separation that was introduced in 2001 to help each side grow faster. The changes will come into force from February 2020. News of the dramatic overhaul came just after John Lewis unveiled a first half loss amid tricky market conditions. * SO WHAT? * This sounds like a logical move, especially when you consider that there is major cross-over between the two brands – 80% of those who spend the most shop at both John Lewis AND Waitrose. The group really needs to evolve quickly in order to meet the ongoing challenges of changing consumer behaviour and I think it is notable that such changes are taking place NOW rather than waiting for the new chairman, Sharon White (who is currently head of telecoms regulator Ofcom) to wield the broom and the axe when she takes over from Sir Charlie Mayfield. Time will tell whether the changes are dramatic enough or whether more will have to be done.

M&S to launch ‘buy now, pay later’ option to reverse slide in clothing sales (The Guardian, Zoe Wood) heralds part of a wider plan to modernise the high street stalwart’s ailing clothing business, which is still the UK’s biggest clothing retailer. Sales have been falling for seven years and other retailers, such as Next, have benefited from customers using credit in the form of things like Klarna. * SO WHAT? * This sounds like using a sticking plaster to cover a gaping wound. The fact is that M&S sells boring clothes in a boring format that just doesn’t inspire. This is a perennial problem for M&S that it seems to address from time to time before slipping back into blandness. I think that the company needs to narrow down its customer avatar and focus right in on that – either that or have distinct offerings targeting different groups under one roof. This is what happened with the original launch of brands such as Per Una and Autograph – but that happened AAAAAAGES ago. M&S has already been sweeping out the upper echelons of its management – it’s time to stop p!ssing about and get the right products on the shelves. If it can put some magic into the format as well, then that would be perfect! Anything less will be just fiddling around at the edges IMHO. The good thing, from M&S’s point of view, is that the competition isn’t exactly having it easy either – so maybe this gives it breathing space to do something proper without competitors nibbling away at its customer base while it rings in the changes.

Ikea assembles software engineers in smart home push (Financial Times, Richard Milne) highlights the latest development in Ikea’s continued self-reinvention as the

chief exec of parent company, Inter Ikea, said that it is making its biggest investment in twenty years in smart home technology. It has so far launched speakers in partnership with Sonos and smart blinds that can be controlled via an app and believes that it can add to the “smart party” via its deep understanding of the home. * SO WHAT? * It sounds like an interesting idea that I think will be increasingly commoditised – and Ikea are well-placed to take advantage of this. The focus on “smart homes” is just part of the biggest overhaul the business has had in its 76 year history as it has boosted internet sales, broadened its services offering and experimented with smaller formats in city centres to reduce its reliance of its traditional big-box out-of-town model. This is all great, but sooner or later it will have to stop tinkering about and come up with a solid roadmap. Mind you, at least it is having a go now and has enough money to throw at its own evolution rather than waiting around and only doing something when its back is against the wall.

Amazon’s grocery store plan moves ahead with Los Angeles leases (Wall Street Journal, Esther Fung) signals the e-tailer’s intentions to open a chain of US grocery stores starting with outlets in Los Angeles, Chicago and Philadelphia. As things stand currently, it has 16 Amazon Go stores (these are the ones that have no checkouts), four Amazon 4-star stores (the ones which stock products with a 4-start-or-above rating) and 18 Amazon book stores. * SO WHAT? * It’s interesting to see how the etailing giant is going against the trend in beefing up its offline presence while traditional stores are going the opposite way and trying to increase their online presence. I guess the main conclusion we can draw from that is that it is important to have a BALANCE between offline and online offerings to ensure continued success whichever side of the retailing divide you come from.

Then in Iconic surf brand Rip Curl sold to New Zealand camping retailer (Financial Times, Peter Wells) we see that the iconic Aussie surfing equipment and apparel company has agreed to be taken over by New Zealand-based retailer Kathmandu for $236m (A$350m). * SO WHAT? * This is a major development because Rip Curl has been a private company since it as founded fifty years ago. Kathmandu said that the acquisition will give it a presence in North America and Europe. Rivals Billabong and Quicksilver went bankrupt before being saved in the last few years, so at least Rip Curl has avoided a similar fate!

Luxury brands hammered by upheaval in Hong Kong (Daily Telegraph, Hannah Uttley) shows that the ongoing protests in Hong Kong are having a serious impact on upmarket retailers’ sales as some analysts warn that they could be up to 60% lower as shoppers and tourists stay away – visitors from China alone fell by 40% versus the previous year. If you combine that with the ongoing trade war between the US and China you’ve got a recipe for sluggishness. RBC Capital Markets analyst Rogerio Fujimori pointed out that “The smaller you are in Hong Kong, the better. Brands will have to reassess how many stores they need, maybe close some or make them smaller. This is such an extreme situation where all the visitors have disappeared and rents are very high”. The other thing is that no one knows when this situation is going to end – and as we all know, businesses hate uncertainty. Luxury goods company Richemont, which owns Swatch Group and Cartier, gets between 11 and 12% of its sales from Hong Kong and is particularly exposed to the current unrest.

Clean energy funds outperform fossil fuel stocks and Bombardier lands a deal for battery-powered trains…

Clean energy shares streak ahead of fossil fuel stocks (Financial Times, Henry Sanderson) shows that it pays to be clean as the iShares Clean Energy exchange-traded fund has gone up by 32% so far this year versus the oil-dominated Vanguard Energy ETF, which has only risen by 1% over the same time period. Many renewable energy developers have been benefiting from continued falls in the cost of wind and solar in the last few years to the extent that they are now cheaper than coal and natural gas in some markets. For instance, the cost of solar has fallen by

a whopping 85% since 2010 and renewables have also been boosted by generally low interest rates (making the funding of alternative energy projects cheaper) and more government support for renewable energy development.

Staying on the alternative energy theme, Bombardier signs deal for battery trains (Daily Telegraph, Oliver Gill) shows that the train maker has signed a deal worth €100m with the UK government to power trains with lithium batteries as part of a wider commitment to increase the electrification of Britain’s railways by one third. The company will be using Swiss batter specialists Leclanche as its preferred supplier for the next five years. * SO WHAT? * Ministers have promised to have full electrification of our rail network by 2040 and electric batteries will drastically reduce the need for overhead wires and poles, which could result in cost reductions of about 30%. This deal will come as very good news for Bombardier, especially at its UK HQ in Derby.

Libra’s partners get the wobbles and Revolut’s losses double…

Visa, Mastercard, others reconsider involvement in Facebook’s Libra network (Wall Street Journal, AnnMaria Andriotis and Peter Rudegeair) shows that partners in Facebook’s cryptocurrency project are having the wobbles as they reconsider their support in the face of massive backlash from politicians and regulators around the world. Policy execs from its backers in the Libra Association are being summoned to a meeting tomorrow in Washington DC ahead of an October 14th meeting in Geneva where the group is supposed to appoint a board of directors. * SO WHAT? * If the wobbles turn into defections, Facebook’s

plans could be thrown into jeopardy. Regulators appear to have been leaning on the likes of Visa, Mastercard, PayPal and Stripe by looking deeper into their own compliance plans, so you can see why they could potentially get cold feet. It really looks like Libra could be dead before it is fully born – or maybe it will just have to morph into something less widespread and more akin to “Disney Dollars” that you spend in a theme park…

Following on from yesterday’s big announcement, Revolut’s losses double after it expands user base to 7m (Daily Telegraph, James Cook) brings the challenger back down to earth with a bump. The losses were due to rising customer acquisition costs, but the number of new customers helped to drive revenues up from £12m to £58.2m in the last year. * SO WHAT? * Clearly, Revolut still has a great deal of work ahead of it in order to be a success long term.

And finally, in other news…

Today, I thought I’d leave you with some examples of impressive stuff you can do with coffee in These photos of coffee art will make you want a cuppa (msn.com https://tinyurl.com/y3sksqk8). The 3D ones are my favourites!

1. In MACRO, MARKETS & OIL NEWS, European joblessness hits new lows, BoJo continues the search for a deal,  UK consumer spending buoys the economy, Shanghai Star loses is lustre and Saudi Arabia tries to sweeten the Aramco deal
2. In FIN/TECH NEWS, Revolut makes a big move, TikTok makes its parent proud and Facebook’s news costs might be less than expected
3. In INDIVIDUAL COMPANY NEWS, WeWork officially postpones its IPO and Goals gets relegated
4. In OTHER NEWS, I bring you a gathering of Nigels…

So European unemployment hits lows, BoJo continues to search for a deal, UK consumers boost the economy, Shanghai Star ain’t so stellar and Saudi Aramco aims to tempt buyers…

Eurozone defying slump as jobless rate drops to 12-year low (Daily Telegraph, Tom Rees) heralds some good news for the ‘zone as the latest figures show that unemployment is now at its lowest level since 2007. This has been due to particular strength in Italy, Greece and Spain – and even Germany wasn’t too bad either. Unemployment rates in southern Europe are still relatively high, though, with rates of 9.5% in Italy and 13.8% in Spain versus levels below 4% in the UK, US and Germany. The overall unemployment rate for the Eurozone now stands at 7.4%. * SO WHAT? * This is quite interesting considering that the Eurozone economy is having a wobble at the moment, with Germany teetering on the brink of recession and ECB president Mario Draghi’s continued calls for increased government spending and economic stimulus to jolt its economy back to life . In theory, if Eurozone governments get spending, there will be more scope for the unemployment rate to fall further as employment opportunities and wages start to rise.

Johnson to ‘know by weekend’ whether he has chance of Brexit deal (Financial Times, George Parker, Sam Fleming, Mehreen Khan and Arthur Beesley) suggests that BoJo is continuing to push for a deal with the EU and that he’ll know by the weekend whether new proposals have any chance of helping to avoid a no-deal Brexit. The drama rumbles on as both sides make threats and accuse each other of being unreasonable while BoJo continues to brandish the prospect of no-deal as a negotiation tool.

In the meantime, Consumer spending boosts economy due to higher wages (Daily Telegraph, Tim Wallace and Tom Rees) cites the latest figures from the Office for National Statistics which show a rise in consumer spending in Q2 of 2019 due to the boost that households are getting from rising wages. Even the proportion of incomes being saved has gone up from 6.4% in the

previous quarter to 6.8% now. Given that consumer spending is going up despite credit card lending growth slowing down, it shows that higher wages (and not increased levels of unsecured lending) are fueling the spending as they filter through to the real economy.

Elsewhere, Shanghai’s Star Market fades after initial success (Financial Times, Hudson Lockett) shows that the much-hyped Chinese alternative to the Nasdaq has faltered since its launch in July. 25 companies listed initially and others predicted this to ramp up significantly as the year wore on, but an initial boom has turned into a damp squib. The main selling point – that listing on this new index would be less onerous than other exchanges on the mainland – appears to have have involved rather more bureaucracy than the marketing had implied. * SO WHAT? * The Shanghai Stock Exchange is trying to make sure it only lets in “quality” companies that don’t have “fluff valuations” to give Star a fighting chance of doing better than ChiNext, an earlier attempt to attract tech stocks. At the end of the day, it only started in July, so it’s too early to say whether Star is going to be a winner or not. It may well be that this slowdown gives the new index a bit of a breather to get things right. Nasdaq won’t be quaking in its boots just yet, but if lessons learned from ChiNext are implemented effectively, it seems to me that there will be no shortage of Chinese companies wanting a piece of the action – and if quality control maintains intact, it could well attract non-Chinese tech companies as well as corporates look for a way to tap into Chinese thirst for all things tech.

Saudi Aramco dangles $75bn payout to float investors’ boat (The Times, Emily Gosden) highlights plans for the state-owned oil company to dole out a $75bn dividend to boost the attraction of its forthcoming public listing. This would exclipse other company dividends – Royal Dutch Shell was the most generous dividend payer last year with a “measly” $16bn in dividend payments – and is part of a bid to justify the $2tn valuation that Crown Prince Mohammed bin Salman (aka “MBS”) is seeking when the world’s biggest oil company finally lists. You will recall that MBS wants to list Saudi Aramco as part of his “Vision 2030” plan to wean the kingdom off reliance on oil revenues. At least some proceeds from the sale will be ploughed into intiatives to execute this plan, so you can see why MBS wants to get the highest valuation possible.

Revolut aims for expansion, TikTok ticks along nicely and Facebook might not pay out so much for news…

Having said yesterday that challenger banks are generally having a rough time, Digital bank Revolut sparks an expansion revolution (Daily Telegraph, James Cook) highlights the company’s dramatic announcement yesterday that it has signed a deal with card issuer Visa that will help it to expand to 24 new countries, which will mean it will be hiring around 3,500 new employees, bringing its total headcount to 5,000. * SO WHAT? * This is an astounding development as most digital banks expand slowly, country-by-country – so Revolut announcing an expansion into 24 at the same time is somewhat notable!  It aims to launch in Japan and America by the end of the year with other countries such as Brazil, Russia and South Africa to follow but won’t launch in all 24 countries by the end of 2020. This announcement surprised everyone and is likely to make rivals such as Monzo and Starling rethink their expansion plans. I think that this is a VERY bold move because this isn’t just any old product it is selling – the banking services it sells are highly regulated and dealing with this across 24 countries will be an absolute nightmare. The company has already come under scrutiny for alleged links to Russia so the pressure is bound to intensify hugely. It seems to me that this move will either catapult Revolut into the stratosphere, or it could just magnify any issues that it currently has. Now this is purely speculation here, but I think that if it goes well, then Revolut’s growth will trump that of all its rivals, but if it DOESN’T it could become

an extremely attractive acquisition target for a lumbering “traditional” bank wanting to get access to cutting-edge technology as well as know-how in new services (not to mention access to countries where it may not have a presence). Who knows? It could be an acquisition target before that (but probably at a highly inflated price)!

Viral video sharing app TikTok on song with £6bn revenues (Daily Telegraph, Matthew Field) highlights the continued success of TikTok as it drives profits for Chinese parent company Bytedance. TikTok now has over a billion users worldwide and has helped to pump up the valuation of its parent to about $75bn, although most of the latter’s income comes from the Chinese version of the app, Douyin. Although it’s doing rather well, Bytedance has been subject to allegations of censorship and investigations by UK and US regulators over its handling of children’s data.

Then With Facebook’s coming news tab, only some will get paid (Wall Street Journal, Lukas I. Alpert and Sahil Patel) we see the rather interesting development that Facebook will only be paying a few of the publishers whose content will appear in the upcoming Facebook news section. The news section, which will appear on the toolbar at the bottom of Facebook’s mobile app, is expected to launch at the end of this month and will include links to stories from around 200 publications. Negotiations will a number of publishers are still ongoing as Facebook wants access to everything while some publishers only want to give them limited access. Facebook is offering around $3m per year on a three-year contract for national newspapers, which then slides down to a several hundreds of thousands of dollars per year for regional publications. There will be a “Top News” section with the top 10 headlines curated by humans while news in subsections will be selected by algorithm and there will be NO advertising in the feed. It still won’t be as good as Watson’s Daily, though 😜

WeWork “officially” drops its plans to list and Goals gets relegated…

Although we all knew this was going to happen anyway, WeWork drops listing after doubts grow (The Times, Patrick Hosking) shows that the company behind WeWork, the We Company, officially cancelled plans to float yesterday, one week after it removed its chief exec. It said that it would now concentrate on its core business. * SO WHAT? * This was bound to happen and I think it’s a good thing that it has been forced to take a breath and sort out its business. No doubt it will come back for a listing in the not-TOO-distant future, though, as it is STILL going to need

money! At least when it comes back, it can say to investors that it has taken measures to address previous concerns rather than just fronting up and saying to them “trust us”, wink, wink as they did before.

Goals is relegated from stock market as Ashley waits (Daily Telegraph, Hannah Uttley) shows that the five-a-side football company backed by Sports Direct’s Mike Ashley has been kicked off the Aim stock exchange for having tricky financials. Shares in the company were suspended in March on news of an HMRC inquiry into alleged accounting errors and this delisting effectively turns it into a private company. Ashley launched a £3.8bn takeover bid for the company last week and talks are ongoing. It sounds like Ashley will be able to pick up yet another asset at fire sale prices…

And finally, in other news…

I thought I’d leave you today with something that is particularly heartening for guys called Nigel in World’s biggest gathering of Nigels and all things Nigelness attracts 433 Nigels (Metro, Richard Hartley-Parkinson https://tinyurl.com/y6l5vnfx). Good on ’em. Mover-and-shaker Nigels that probably weren’t in attendance included Nigel Owens (top rugby referee – decent excuse, he’s currently at the Rugby World Cup), Nigel Benn (the aging boxer who announced a comeback – he’s probably training in the gym) and, of course, Nigel Farage (who, to be honest, should have turned up as we all know he likes a pint, but maybe he was afraid other Nigels would turn on him). The gathering also came up, rather handily, for a collective noun for a group of Nigels – so a group of them will now be called “a niggle” of Nigels. Sadly, Nigella Lawson didn’t turn up, but there’s always next year…

1. In INDUSTRY NEWS, shale oil production plateaus and UK challenger banks fade
2. In RETAIL NEWS, Barneys attracts buyer interest, Forever 21 files for bankruptcy, Miss Selfridge posts a loss, Ted Baker looks like it will ask for money, Mamas & Papas edges closer to a sale and we look at what happens to ex-retailers
3. In INDIVIDUAL COMPANY NEWS, VW faces a massive legal claim
4. In OTHER NEWS, I bring you the world’s longest water slide…

So shale oil production slows and UK challenger banks lose momentum…

Shale boom is slowing just when the world needs oil most (Wall Street Journal, Christopher M.Matthews and Rebecca Elliott) contends that the recent attack on Saudi Arabia’s oil production has exposed the slowing momentum of the US shale boom. US oil production has only increased by 1% in the first six months of the year versus 7% growth over the same period last year, according to the Energy Department. This has been due to a mix of operational issues like drilling wells too close to each other as well as less dramatic technological advances in shale oil production. James West, an MD at investment bank Evercore, observed that “We’re getting closer to peak production and we are reaching the peak of the general physics of these wells”. * SO WHAT? * US shale oil now makes up around 10% of worldwide oil production and has helped to insulate the US – and the world – from geopolitical supply shocks such as the one we saw recently. The point here is that the rate of shale production growth looks likely to slow down as things stand, especially if the oil price continues to stay around the $60 a barrel level (which is unattractive from a profitability point of view for small and midsize shale producers). Even if the price rises from here, producers are unlikely to ramp up production significantly as they got burned in the past by doing so too quickly, only to watch the price fall. This means that they will be aiming to maximise production from existing wells.

UK’s bank challengers are fading in fight with big four (Financial Times, Nicholas Megaw) highlights the difficulties facing the UK’s challenger banks who were meant to take the fight to the lumbering incumbents with their funky offerings. Last week, Santander blamed increased regulation and Brexit concerns for its poor performance, Metro bank saw its share price crater by 30% last week due to a pulled bond sale and CYBG (owner of Clydesdale Bank, Yorkshire Bank and Virgin Money) has seen its share price almost halve since its peak in April. Although their collective arrival was supposed to shake up the sector, it doesn’t appear to have done so as the top six banks accounted for 80% of personal current accounts in 2000 – a figure that has since risen to 87% in 2017! * SO WHAT? * The problem here is that although banking licences have been doled out by the Bank of England, they have been accompanied with extremely stringent regulation which has made it difficult to grow. Although banks and trade groups like UK Finance have been lobbying for a relaxation of the rules to make things easier for the smaller operators, it is unlikely that anything will happen in the short term. On the downside, it would be fair to say that some of the banks have shot themselves in the foot – Metro’s woes were sparked by an admission that it had misclassified loans, which led to a confidence problem, and CYBG was too optimistic in its forecasts – but then optimists say that the new banks are innovating away from traditional lending and exploring new areas such as recurring fees for things like insurance and share-trading etc. A lack of branches also affords them a lower cost base making it easier for them to expand into new areas – but in the meantime, stellar growth appears to be limited in scope. There’s still time, but if things continue to look lacklustre surely there will be a need for consolidation to revive their collective fortunes.

Barneys gets buyer interest, Forever 21 files for bankruptcy, Miss Selfridge reports a big loss, Ted Baker looks like it may ask for cash, Mamas & Papas explores a sale and we see what happens to all those ex-shop workers…

Luxury retailer Barneys receives interest from potential buyers (Wall Street Journal, Soma Biswas) heralds some potentially good news for the ailing department store as it gets a deadline extension to find bidders. It filed for bankruptcy in August after a massive rent hike at its flagship Manhattan store, so finding a buyer will be key to its long-term survival.

Then, at the other end of the scale, Forever 21, teen-focused retailer, files for bankruptcy (Wall Street Journal, Soma Biswas) highlights the problems of the cheap’n cheerful fashion retailer as it filed for bankruptcy protection yesterday and announced the closure of hundreds of its stores from a current portfolio of 800 outlets. * SO WHAT? * Forever 21 swam against the tide by opening bigger shops when competitors were moving to smaller ones and their client base continued to buy more online, which ultimately led to the company’s demise. In addition to US closures, the company will shut most of its Asian and European outlets but continue operations in Mexico and Latin America. It’s just the latest casualty of the ongoing migration of its customers buying more online.

In the UK, Miss Selfridge reports £17.5m loss as store closures continue (The Guardian, Sarah Butler) shows that things still aren’t going well for the youth fashion chain as it made write-downs on loss-making stores and weaker sales. Its parent company, Arcadia, said that Miss Selfridge will mainly sell online in future and is continuing its programme of store closures (which included the closure of its flagship Oxford Street store). Ted Baker investors on the alert for a cash call (Daily Telegraph, Laura Onita) highlights an upcoming roadshow of the company’s top management due after it unveils its half-year results this Thursday, prompting one major shareholder to guess that Ted Baker could be aiming to ask for cash. This all comes amid rumours that founder Ray Kelvin is plotting a comeback (he still owns 35% of the company) and taking the company private. Kelvin is still facing allegations of sexual harassment and the share price is at a six-year low,

having fallen by over 30% so far this year. * SO WHAT? * Everything seems to have gone a bit quiet for Kelvin of late – and, given all the negative publicity from the sexual harassment allegations, it would seem like a decent enough idea to take the company private IF he really was planning a comeback because it would give Kelvin the chance to build up his reputation again without the scrutiny that goes with running a public company. It seems to me that Ted Baker just hasn’t been the same without Kelvin and that he still needs to be the one calling the shots for it to survive. Taking it private would probably be the best course of action from here – but it will cost a lot of money (although it seems to be getting cheaper by the day). Obviously, his return is just speculation at this stage.

Continuing with the gloom, Taking baby steps to company sale (The Times, Ashley Armstrong) shows that the private equity firm-0wned babyware store Mamas & Papas has hired advisers to find a buyer for the business as the high street continues to implode. This comes only five years after the company entered into a CVA after which the retailer shut half of its shops. * SO WHAT? * What is it about babyware shops these days? Mothercare is continuing to have problems and formerly big brand Kiddicare (eventually bought by Dunelm in 2016) finally disappeared earlier this year. Maybe the prospect of trailing around a shop whilst pregnant or with screaming kids has made parents and parents-to-be more eager to shop from the relative tranquility of their own homes. Who knows where a buyer will come from – another private equity firm perhaps?? Whoever it is will certainly have their work cut out.

Given all of the above, you do wonder where all the ex-employees go when retailers shut down. How the crisis in UK retailing is reshaping employment (Financial Times, Jonathan Eley and Robert Wright) points out that about 57,000  jobs were lost in the UK over the last year in retail, the UK’s biggest private sector employer with over 3m workers. The sector has been hit badly by the increase in online shopping, falling consumer confidence and higher overheads (minimum wage increases and higher wages generally due to a tight labour market etc) among other things. Data from the Office for National Statistics suggests that ex-retail employees have migrated to restaurants, hotels and other service sectors but research by the Local Data Company suggests that the uptick in these areas is unlikely to be able to absorb all the workers. The labour market will continue to evolve, but for now it remains tight and it seems that workers displaced by a slimming down of the retail sector are finding jobs. Let’s hope this continues.

VW faces a very very big legal claim…

VW facing the largest collective legal claim in modern German history (Financial Times, Joe Miller) heralds a big day for VW as it will find out the final number of claimants who have signed up to a landmark collective lawsuit over

omissions test cheating today. Lawyers for VW think this case could carry on for four years, go through the Supreme Court, and then get dismissed. However, this will be the first time new “class action” legislation (known as “declaratory model action” or DMA) will be brought to bear in the country that brought it in because of the “Dieselgate” scandal. * SO WHAT? * VW will obviously try to drag the whole thing out to increase the number of claimants giving up – but today will be a line in the sand.

And finally, in other news…

I thought I’d leave you today with something that sounds like a LOT of fun: Slip slidin’ away: record-breaking Malaysian water chute unveiled (msn.com, https://tinyurl.com/y4o59yqw). The water slide goes for 1,111m and takes four minutes to descend! It sounds great, no?? If you can’t get there and want to see what it’s like, have a look at this video!

1. In INITIAL PUBLIC OFFERING NEWS, Peloton’s debut frightens off Endeavour
2. In RETAIL-RELATED NEWS, McKinsey starts up a mall, vacant shops in the UK hit new highs and the costs of Thomas Cook become clearer
3. In INDIVIDUAL COMPANY NEWS, Juul and Imperial Brands get dinged by vaping while Pearson has a profit warning
4. In OTHER NEWS, I bring you a swanky new airport…

So Peloton’s IPO disappoints and scares off Endeavour…

Peloton skids on stock market debut (Financial Times, Richard Henderson) highlights the rather disappointing debut for the Silicon Valley-based provider of fitness equipment and online spin classes as its shares fell by 11% from its flotation price of $29. The IPO raised $1.2bn for the company, however, and chief exec John Foley said he wanted to prioritise growth over profitability for the next few years and didn’t sound too concerned about the $300m lawsuit the company is facing from music publishers who say that the company hasn’t paid license fees. Here is the company’s business model: you buy a $2,200 exercise bike and/or a $4,000 treadmill with a massive screen that helps you take online workout “classes” for an additional $40 a month. If you are a pauper, don’t worry – you can get a piece of the Peloton dream by paying a $20 monthly subscription fee if you don’t have more money than sense have their equipment. This is the second worst IPO debut for a company raising over $500 this year, beaten by SmileDirectClub, which fell by a quite frankly frown-inducing 28%. * SO WHAT? * It seems that investor fervour for hugely loss-making companies that give themselves massive valuations has waning a bit recently. Endeavour pulls IPO after Peloton’s poor debut (Wall Street Journal, Maureen Farrell, Corrie Driebusch,

Miriam Gottfried and Allison Prang) shows that the owner of the Miss Universe Pageant, Ultimate Fighting Championship and Hollywood’s biggest talent agency decided to pull its own plans to float as a result of Peloton’s performance – and this, in turn, may deter others as well (or at least force them to be more realistic about their valuations). I just can’t see Peloton as a long-term investment because its model is so fragile – it is relying on a very narrow customer base that has a lot of money and can probably be fickle. If you are a serious cyclist wanting to train, you’d get a Wattbike or one of the myriad of turbo trainers and go on Zwift to get that social feeling (and no, I’m not being paid by these companies in case you were wondering!). Yes, it involves buying a bike – but at least you can cycle the blimmin thing outside as well as having the whole indoor malarkey going on! Alternatively, you could join a gym and go to the classes or hire your own personal trainer for far less money. Mind you, I would change my mind if Peloton used the money it’s just raised to broaden its business model and perhaps move into other areas. I wonder whether it will try to emulate the “cult” feeling the keeps people going to CrossFit – but then CrossFit is real and CrossFitters sweat with each other in classes that engender mutual encouragement and they have the increasingly popular CrossFit Games that give everyone something to aspire to. For the moment, at least, I think it’s a one-trick pony with a hugely inflated opinion of itself and I worry about the true scalability of its business model.

McKinsey tries its hand at retail, UK shop vacancies rise and the costs of Thomas Cook’s collapse become clearer…

McKinsey to start selling underwear and make-up (Financial Times, Alistair Gray) is a headline I never really expected to see, but the canny management consultancy has announced that it will be opening a retail store and selling underwear, make-up and jewellery to real customers in a real shopping mall in suburban Minneapolis in a venture called “Modern Retail Collective”. The outlet, which is due to open today in Mall of America, the biggest US shopping centre, will be used to test new retailing technology like smart mirrors and software that improves the customer experience. Customers will also be able to pay in cryptocurrency while retailers taking space in the mall will rotate. * SO WHAT? * I think that this is an interesting concept and something that will no doubt be welcomed by retailers who want to try new things out in what seems to be a “retail laboratory”. I do wonder, however, whether such a mall will attract an atypical consumer who likes to try out new things more than your average punter and therefore skew results. Whether it’s successful or not, I’m sure it will provide McKinsey with some insight and perhaps a rich data source that it will turn into money via research reports.

Meanwhile, Vacant shops tally hits five-year high (Daily Telegraph, Laura Onita) cites the latest findings from the Local Data Company which show that the number of vacant shops on the UK high street has hit its highest level since the end of 2014 as retailers battle against changing consumer trends, rents and business rates. * SO WHAT? * This is just evidence of what most of us have probably suspected anyway given the seemingly endless flow of negative news on the sector. Clearly landlords and local councils can help retailers by lowering rents and rates, but at the end of the day it’s the retailers themselves who will have to adapt. There are “offline” retailers who are actually doing quite well out there (e.g. Joules, JD Sports, Primark etc.), so it CAN be done. It’s just not that easy!

Cost of Thomas Cook collapse becomes clearer (Financial Times, Alice Hancock and Daniel Thomas) looks at the ongoing fallout from Thomas Cook’s collapse as banks, suppliers, partners and landlords of its high street shops continue to count the cost. Banks including Morgan Stanley, Barclays, UniCredit, Credit Suisse and Royal Bank of Scotland are among those facing writedowns of up to £1.8bn as a result and official estimates currently put the cost to the government and the industry’s Atol insurance scheme at over £500m. We are still in the early aftermath of this debacle, so there is obviously a chance that the costs are going to go up (it’s rare that costs goes down in these cases as the ripple effect can easily be underestimated!).

Juul and Imperial Brands suffer vaping problems and Pearson warns on profits…

Following on from all of the recent anti-vaping developments, Backlash against vaping in US will hit profits, Imperial warns (The Guardian, Sean Farrell) shows that it’s all having a very real knock-on effect as FTSE100 company Imperial Brands warned its profits would fall below previous expectations for the full year due to the growing backlash. Yesterday’s trading update showed the company lowering its full year forecasts for net revenue growth and earnings per share to take into account the increasingly hostile environment. Its share price fell 13% on the news. * SO WHAT? * The huge swing in sentiment against vaping resulted in all sorts of strife – and not just at Imperial. The whole hoo-hah has, for instance, led to Juul’s chief exec resigning – to be replaced by Altria’s chief growth officer KC Crosthwaite (Altria has a 35% stake in Juul). Having a grizzled tobacco veteran in the hot seat at a very tricky time could be a good thing for Juul as he will be

very used to dealing with massive hostility. China stopped Juul’s product sales, India’s banned e-cigarettes, Trump is moving towards a ban on almost all flavoured vapes and the whole thing is getting jumped on by the FDA, the FTC and federal prosecutors. In Altria’s case, KC will need all the experience he has to navigate this one – and if he does, maybe the PMI/Altria merger will be back on. But until then, it’s tin hats on and wait for the **** to hit the fan.

Investors throw the book at Pearson (The Times, Simon Duke) highlights Pearson’s downbeat expectations for the future, blaming a sharp fall in the sale of US university textbooks, as it continues to overhaul its business and boost its digital learning offering. The share price fell by 14% on this news as investor fear increased that the company’s turnaround plans weren’t perhaps as effective as they had been led to believe. Given that Pearson is the biggest publisher of textbooks in the US and its college courseware business brings in 25% of its turnover, you can see the reason for concern. * SO WHAT? * I think that the company is in a transition phase as students use physical textbook less and online resources more. In order to survive, Pearson has to remain relevant in an increasingly digitised world and ensure that its offering stays relevant.

And finally, in other news…

I thought I’d leave you today with something really impressive: Beijing opens glitzy airport ahead of China’s 70th anniversary (msn.com https://tinyurl.com/y3v24joz). This place looks incredible!

1. In TECH NEWS, South Korean tech firms benefit from the spat with Japan, Nintendo releases Mario Kart app, eBay’s boss resigns and Amazon does wearables
2. In TRANSPORT-RELATED NEWS, UK car production hits new lows, Aston Martin’s debt gets more expensive and Wrightbus collapses
3. In RETAILER NEWS, Sainsbury’s announces slimming plans, Tesco closes its first “Jack” store and Boohoo spends wisely with influencers
4. In INDIVIDUAL COMPANY NEWS, Match.com faces the FTC for dodgy dealings and the PMI/Altria merger goes up in smoke
5. In OTHER NEWS, I bring you mayonnaise-flavoured ice cream and the all-important sweetcorn debate…

So South Korean firms benefit from supply chain reorganisation, Nintendo launches a new app, eBay loses its CEO and Amazon announces new hardware…

South Korea groups see supply chain boost in trade war with Japan (Financial Times, Song Jung-a) shows that some companies are starting to benefit from the ongoing Japan-South Korea trade spat at the moment. Local start-up BTL Advanced Material is benefiting from South Korean companies forced to re-jig their supply chains to de-emphasise Japan. Thus far, it has not been able to compete on price with Japanese rivals such as Dai Nippon Printing and Showa Denko, but South Korean industry has decided to make a conscious effort to boost its use of domestic suppliers while the government has also come up with concrete measures (like tax breaks and a reduction in bureaucracy) to encourage larger companies help their smaller local suppliers. * SO WHAT? * I think that it is always healthy to diversify your supply chain in order to insulate against any external shocks. This is obviously easier said than done in some areas – notably high-tech areas that need specific expertise as well as quality and delivery assurance – and no doubt the South Korean government is surfing on the wave of nationalist sentiment at the moment. But the thing is, when this all dies down and you are a South Korean manufacturer, do you a) buy local and pay up handsomely for being patriotic or b) buy the way cheaper, better quality and tried-and-tested product from Japan? I suspect that although many companies will want to do a), sooner or later they are going to have to do b) in order to remain competitive – especially in the tough trading environment we are finding ourselves in at the moment. On the flip side, this may be a good opportunity for Japanese manufacturers to diversify their own client base to reduce reliance on South Korean customers, although clearly customers such as Samsung and LG will not be easily replaceable!

Nintendo bets big on mobile with launch of Mario Kart app (Financial Times, Kana Inagaki and Leo Lewis) heralds a major move for the company with its biggest ever mobile game release, Mario Kart Tour, which could change the way it makes money outside of consoles. Nintendo has introduced the option of a $4.99 subscription service that will enable gamers to access benefits such as faster karts and they can also make in-app purchases. * SO WHAT? * This is the company’s third attempt at monetising a mobile game. Super Mario Run, launched in 2016, was free to download but came with a one-time $10 payment for premium content which dampened its success. Dr Mario World was its second attempt, where it swapped the payment model for an advertising one, but the game just didn’t catch on. This third attempt sounds pretty expensive

to me considering that subscribers can get access to 100 games on Apple’s new gaming service Arcade for the price of this ONE game from Nintendo. Without playing, I do not know what the difference is in terms of gameplay and graphics so all things being equal this offering sounds rather expensive. As Flappy Birds, Angry Birds and Candy Crush showed, you don’t need amazing graphics to have a wildly successful game – and if Apple Arcade games are “good enough” for when you are trying to kill time waiting for the bus/train etc. then Nintendo’s Mario Kart Tour will continue its losing run on the mobile platform. Nintendo has been more than fashionably late to the mobile game-playing party and appears to have had trouble getting its head around the use of devices other than its own consoles.

EBay CEO Devin Wenig resigns (Wall Street Journal, Sebastian Herrera and Allison Prang) highlights trouble at the top of the company as its chief exec cited disagreement with the new board for his departure. The board is currently overseeing a strategic review after increasing pressure from activist investors such as Elliott Management Corp and Starboard Value to break up the company. CFO Scott Schenkel will serve as interim CEO until it gets a successor. The share price fell about 1% on the news, but has actually gone up by 40% so far this year. Fun facts: eBay bought PayPal for $1.5bn in 2002 and then spun it off in 2015. PayPal is now worth over $120bn while eBay is worth over $32bn. * SO WHAT? * It seems to me that eBay is suffering from increasing competition and a general maturing of the online marketplace business as both revenue growth and the value of goods sold continue to weaken. Wenig’s departure may pave the way for a sale of StubHub and/or its classifieds business. TBH, his departure has followed a number of senior level exits in the last year or so, including CTO Steve Fisher and RJ Pittman, so maybe the company is due some fresh blood and a new direction.

Amazon extends Alexa’s reach into wearables (Wall Street Journal, Sebastian Herrera) highlights the broadening of Amazon’s product line-up with over a dozen new devices including a high-end speaker, a multi-function oven, a motion sensor and wireless earbuds – all with Alexa built-in. It also unveiled Echo Frames, glasses that will incorporate microphones and speakers to communicate with Alexa. * SO WHAT? * This all sounds good, although a more ubiquitous Alexa sounds slightly creepy IMO. However, it’s important for Amazon to address the fact that its leadership in the home virtual assistants space is continuing to erode, so more devices with more Alexa probably makes sense. TBH, my favourite bit of news from this release is that Samuel L. Jackson is among a number of celebs signed up to be a voice for Alexa. How great is that?? Samuel L in my kitchen! Can you imagine “The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men…” booming out while you wash the dishes?!?

UK production hits new lows, Aston Martin has more woes and Wrightbus fails…

UK car production at seven-year low after Brexit chaos (The Times, Robert Lea) cites the latest figures from the Society of Motor Manufacturers and Traders which show that car production in UK factories fell by 17% year-on-year, to its lowest level for seven years. This is just more evidence of gloom in the sector – and Aston Martin borrows $150m at sky-high interest rate (Daily Telegraph, Alan Tovey) confirms that even more as the high interest rate (a hefty 12%!) it is being forced to pay on its secured bonds reflects heightening concerns about its viability. * SO WHAT? * Talk about hype. The shares listed in autumn last year at £19 a pop and are now trading at 550.8p – and the S&P ratings agency cut the company’s rating to “junk” yesterday because it felt the company has “reached its debt ceiling in terms of amount of term debt and the cash interest burden it can sustainably service”. I’m a fan of the

cars as much as anyone, but it sounds to me that if the forthcoming DBX SUV isn’t a success, the company may not survive. Given the current global slowdown, poor car sales in every market and a perceived move away from “gas guzzlers”, Aston will have its work cut out. It will be hoping that its moneyed customer base will prove to be fully insulated against the buffeting of external economic forces.

More than 1,000 jobs lost after talks to save bus-maker collapse (The Guardian, Simon Goodley and Jasper Jolly) shows that one of Northern Ireland’s biggest employers – and (in)famous maker of the double-decker “Boris bus” – has collapsed into administration. The company is based in the county Antrim town of Ballymena and is now the latest employer, following the departure of Michelin, Gallaher and Blackbourne Electrical over the last few years. As always with these things, it’s not just the jobs at the failed company that disappear – there are thought to be another 1,700 hanging in the balance down the supply chain. * SO WHAT? * It seems that the company has suffered with a weaker order book following a “boom” of large orders for vehicles meeting stricter emissions standards in recent years. The company’s administrator is looking for buyers.

Sainsbury’s announces cuts, Tesco closes a “Jack’s” and Boohoo cries with joy…

Sainsbury’s to close up to 125 outlets as boss ‘tweaks’ plan (Daily Telegraph, Laura Onita) shows that Sainsbury’s is now embarking on a cost-cutting spree following its failed bid to buy Asda. Chief exec Mike Coupe announced the closure of up to 125 (as yet unspecified) outlets over the next five years including large shops, convenience stores and stand-alone Argos outlets. It said that it will also stop any new mortgage sales and capital injections into its banking arm after already putting £35m into it this year. * SO WHAT? * Tough times after its failed bid which would have provided Mike Coupe with potentially easy wins if it had gone ahead. It hasn’t, so the next best thing he can do is to slim the business down. I wonder how long he is going to last in the hot seat without any exciting new strategy to fight back against the rise and rise of the German discounters.

Talking of discounters, Tesco shuts pioneer shop in sign that Jack’s not all right (Daily Telegraph, Laura Onita)

shows that Tesco’s lukewarm foray into taking on the likes of Aldi and Lidl at their own game isn’t goint particularly well. Its first “Jack’s” discount store in Rawtenstall, Lancashire, which only opened earlier this year is going to close down! Tesco currently has 10 “Jack’s” discount format stores and aims to open three more by the end of the year. Still, closing one down so soon after opening it doesn’t say much for management shrewdness or success for the brand! I continue to believe that this is a brand that is destined to fail (it’s cannibalising Tesco and is a new format that it has no track record in).

On a more positive note, Boohoo’s £90m marketing spend pays off (The Times, Elizabeth Burden and Ashley Armstrong) highlights a strong performance for online fashion retailer Boohoo, which has vindicated its £90m spend on marketing over the last year – an amount equivalent to 9% of annual sales. Its revenues were up by a whopping 43% in H1 with pre-tax profits up by an even chunkier 83%. Concerns that the (fire sale price) acquisitions of Karen Millen and Coast last month as well as Miss Pap and Nasty Gal would cannibalise Boohoo sales generally have not been borne out. It’s a retail star! Well, for now anyway 😜. We all know how fickle fashion can be!

Match.com faces scrutiny, the PMI/Altria merger is off and Thomas Cook fallout continues…

Match lured singletons with fake hope of finding ‘the one’, US regulator claims (Financial Times, Hannah Murphy) sounds pretty serious as the US Federal Trade Commission (FTC) is suing online dating company Match, saying that it ensnared “hundreds of thousands” of people to pay for their services by using false expressions of interest. Match has over 25% of the online dating market and Match.com as well as Tinder, OKCupid and PlentyOfFish. It said that “We believe that Match.com conned people into paying for subscriptions via messages the company knew were from scammers. Online dating services obviously shouldn’t be using romance scammers as a way to fatten their bottom line”. The FTC also alleges that the promise of a free six-month subscription if users don’t “meet someone special” is spurious and that it also made it too difficult for users to cancel subscriptions. * SO

WHAT? * The share price only fell by 3% on the news, but this sounds pretty serious to me. We’ll just have to see how this unfolds, but for now I’d expect a cap on share price upside. Obviously, the company strenuously denies the allegations. I suspect the judgment will be followed closely by other businesses who operate on a subscription model.

Then Philip Morris and Altria snuff out merger amid vape alert (The Times, Alex Ralph) shows that all the e-cigarette negativity around the world has been too much for the proposed £200m merger between the two tobacco companies to survive, just one month after mooting it. Given the huge amount of negative publicity surrounding vaping at the moment (not to mention the resignation of Juul’s chief exec Kevin Burns) this is not that surprising. PMI/Altria: the vape escape (Financial Times, Lex) says it is just as well given the diverging fortunes of the two groups – especially now in vaping. Philip Morris has less debt, superior margins and a strong e-cigarette offering of its own in IQOS, which should benefit from the vaping crackdown. Altria, on the other hand, is looking like a rabbit caught in the headlights wearing its 35% stake in Juul like a massive lead weight.

And finally, in other news…

Today, I thought I’d leave you with something weird in Morinaga Milk Industry unveils Japan’s first mayonnaise-flavored ice cream! (SoraNews24, Shannon McNaught https://tinyurl.com/y2hcc8qo) and something to ponder and discuss in Is corn a fruit, a vegetable, or a grain? (Popular Science, Sara Chodosh https://tinyurl.com/y2tne5za). Hmmm.

1. In MACRO NEWS, BoJo faces parliamentary ire, Trump faces another impeachment attempt and India implements a big tax cut
2. In HIGH STREET NEWS, Tui cracks on, M&S lose yet another senior exec and Metro Bank looks vulnerable
3. In CAR NEWS, VW execs face more dieselgate fallout and Nio asks for even more money
4. In INDIVIDUAL COMPANY NEWS, WeWork’s chief steps down, Facebook buys CTRL for $1bn, Nike has strong figures and Juul prepares for a restructure
5. In OTHER NEWS, I bring you the joy of Japanese toilets…

So BoJo gets a massive slap, Trump faces another impeachment attempt and India tries to boost its economy with a big tax cut…

There’s going to be a lot of hysterical comment about this, so better buckle up. In Boris Johnson forced to fly home to face anger of parliament (Financial Times, George Parker, Jane Croft and Sebastian Payne) we see that BoJo has had to cut short his New York trip to fly home and will face calls for his resignation as he was overruled by our Supreme Court for his attempt to stop MPs from debating Brexit by shutting down parliament. The court ruled unanimously that his advice to the Queen to suspend parliament for five weeks was unlawful, so MPs have been sharpening their knives ahead of returning to parliament this morning. BoJo now has the rather impressive record of introducing six votes and being defeated six times in his three months as PM. * SO WHAT? * Although this is an epic development from a constitutional point of view, it looks unlikely to have much impact on Brexit in the short term as legislation to prevent no-deal has already been put in place and a vote of no-confidence on the PM does not look like it’s on the cards for now as Labour said that it is not going to call such a vote. We will now see what MPs do with this unexpected time before the Brexit deadline. The drama continues…

BoJo’s BFF also seems to be having a bit of bother in Pelosi announces impeachment inquiry of President Trump (Wall Street Journal, Natalie Andrews and Andrew Duehren) as speaker Nancy Pelosi called for an official inquiry that could lead to impeachment over reports that President Trump stopped giving aid to the Ukraine in order to pressure them to investigate Democratic presidential candidate Joe Biden. Using his office to put pressure on a foreign entity to investigate a political rival for personal gain is an impeachable offence. * SO WHAT? * So far, Trump has withstood attacks for alleged ties to Russia, involvement with porn stars and lying generally but none of it has stuck so far. Funnily enough, Trump tweeted “PRESIDENTIAL HARASSMENT!” and called the allegations

a witch hunt. Maybe this is something more substantial that will actually stick, but given Trump’s ability to side-step (and sack!) his opponents and brazen things out it is not a given!

India’s tax cut euphoria wanes as economists count cost (Financial Times, Amy Kazmin) looks at the immediate effects of a chunky $20bn cut in corporate tax unveiled last week as part of an effort by the Indian government to add fizz to a faltering economy. It cut its top effective tax rate from almost 35% to just over 25% and taxes on new manufacturing investment to 17% on Friday. The unexpected cut was cause for celebration by some business leaders – Harsh Goenka, chairman of industrial conglomerate RPG Enterprises said that “Just when the economy and street were losing hope, the finance minister, in a veritable Goddess Lakshmi avatar, has offered succour to millions of countrymen who were praying for a revival in the economy and a return to prosperity”. I bet our chancellor would be quite chuffed if he got likened to the Hindu goddess of wealth! Anyway, this latest move is unlikely to turnaround five consecutive quarters of falling GDP growth immediately as Indians have been gradually tightening the purse strings and using their savings to spend. Although this is a measure that will eventually feed down to the people, other more immediate ways of improving household purchasing power would have been to cut goods-and-services taxes and/or personal income taxes. Jahangir Aziz, head of emerging markets research at JP Morgan, made a very interesting point when he said “There is a broad consensus that the real problem facing India is not that it is too expensive to do business but the fact that there is no demand…if you want to boost consumption, you reduce the price of things people are buying”. * SO WHAT? * This cut in corporate taxes may benefit the country in the medium-to-long-term given that it could help to attract foreign investment, but given that this cut equates to about 0.7% of GDP per year, this growth will come at a cost. Still, for the moment, this cut will help Indian companies pay down debt and increase dividends. Also, if this doesn’t work quickly enough to turn things around the government can always throw in cuts to goods-and-services and/or personal income taxes to up the feelgood factor later on. This won’t be great for the current account deficit, but maybe this is the price India has to pay to reignite economic growth.

Tui picks up the pieces, M&S loses another senior bod and Metro bank’s nightmare continues…

In the aftermath of Thomas Cook’s spectacular failure, Tui boss says it will fly home customers booked on Thomas Cook flights (The Guardian, Julia Kollewe) shows that one of Thomas Cook’s main rivals is now playing its part in the repatriation of holidaymakers as its chief exec Friedrich Joussen said “Tui is preparing measures to support. Where Tui customers are booked on Thomas Cook Airlines flights and these are no longer operated, replacement flights will be offered”. Tui’s share price jumped by over 7% in trading on Monday on the Thomas Cook news – and a further 1.55% yesterday – as investors concluded that a short term rise in costs for the repatriation effort will result in long term gain for the company as it gets the custom that Thomas Cook would have had. Mind you, Tui’s profit is from expenditure, not at Thomas Cook’s expense (Financial Times, Matthew Vincent) says that this is not just because Tui happens to be the “last one standing” – it’s down to Tui’s more diversified business model. I said yesterday that hedge funds would be among those to benefit from Thomas Cook’s demise, but Hedge funds will make little profit (The Times, Dominic Walsh) contends that won’t really be the case across the board as losses from bonds will be roughly balanced out by what they made on Credit Default Swaps (CDSs).

Then in Further shuffling of pack at M&S as logistics boss leaves (Daily Telegraph, Laura Onita) we see that the revolving door to M&S HQ continues to spin faster than laundry on a rapid wash cycle as Gordan Mowat, head of supply chain and logistics for the retailer’s clothing and home division, has been booted after two years in the role. This comes just days after the CFO’s departure and a few months after clothing and home boss Jill McDonald’s. * SO WHAT? * The top management clear out continues under chief exec Steve Rowe’s tenure in ongoing efforts to turn the company’s fortunes around. It fell out of the FTSE100 earlier this month and is now getting dragged into a legal battle between Ocado and rival Today Development Partners. Tough times at M&S and things do not look like they’re going to get much better in the short term at least.

Metro Bank shares hit record low prompting sale speculation (Financial Times, Nicholas Megaw) shows that the embattled challenger bank’s share price fell by 35% yesterday to hit record lows after it failed to execute a bond deal that would have raised £200m. Its advisers said, however, that the company would be able to raise new debt after it announces its Q3 results next month (but then they would say that!). Metro Bank is seeking to beat a Bank of England deadline to raise new debt by January 1st. * SO WHAT? * Given its recent record, many are now speculating that it could be forced to sell itself. All of this strife kicked off in January when it announced that it had miscategorised its loans, meaning that its calculations for how much capital it needed to cover these loans was incorrect. Hedge funds like Odey Asset Management, Marshall Wace and ENA Investment capital are, in the meantime, benefiting from Metro’s pain via their short positions.

VW’s dieselgate scandal rears its head again and Nio asks for more money…

Volkswagen bosses face charges over market manipulation (Daily Telegraph, Alan Tovey) shows that “dieselgate” has come to bite the company in the bottom as top execs Herbert Diess, Hans Peter Poetsch and Martin Winterkorn are now being accused of market manipulation in that they didn’t inform shareholders of their deception. The company has thus far paid out around €30bn in fines and settlements since the scandal broke in 2015 over its fitting of “defeat devices” to ace emissions tests. This thing just never seems to die! * SO WHAT? * If a court in Braunschweig agrees to go ahead with the case, it’ll be the first time that the leadership of Germany’s biggest

corporation will be put on trial. The decision to proceed or not with the charges is expected to take a few weeks.

There’s trouble in China in Nio forced to raise $200m from chief and shareholder Tencent (Financial Times, Peter Campbell) as the Chinese electric carmaker (which makes very eye-catching sports cars) has been forced to go cap in hand to ask for $200m from its chief exec and shareholder Tencent in the wake of a catastrophic quarter which saw big vehicle recalls for dodgy batteries and weakening sales. Chief exec William Li added that he’d have to cut about 20% of its staff and sell off non core businesses by the end of the year in order to head off a complete collapse. The company blamed the slow China car market in addition to falling demand for its vehicles and services. * SO WHAT? * This is a pretty spectacular collapse as things go, but the car maker can limp along for now on fumes. Although it floated in September last year to great fanfare as China’s answer to Tesla, its demise is further evidence of just how difficult profitable car manufacturing can be. 

WeWork’s chief steps down, Facebook buys CTRL, Nike posts solid numbers and Juul’s nightmare continues…

In a quick scoot around other important developments today, WeWork’s Adam Neumann steps down as CEO (Wall Street Journal, Eliot Brown, Dana Cimilluca, David Benoit and Maureen Farrell) heralds a dramatic (yet not altogether unexpected) move by WeWork’s founder as he resigned as chief executive – although he will remain as non-exec chairman. His voting rights will also be cut. In the meantime, his new co-CEOs are expected to axe employees in an attempt to slow the company’s losses. * SO WHAT? * Neumann proved to be the major stumbling block for investors in the recent push to float this massively loss-making company and the pressure has now proved too much to resist. A dramatic development but no doubt this is all part of moves to get the flotation back on

track for the end of the year. Maybe this, coupled with a load of cost-cutting, will be enough to tempt investors back.

Then in Facebook to spend $1bn on brain-control start-up CTRL Labs (Financial Times, Hannah Murphy and Patrick McGee) we see that the social media giant has agreed to buy a company that makes tech to let people’s brains control electronic devices. CTRL differs from others in this field as it only uses non-invasive technologies to connect the two. It’ll become part of the company’s Reality Labs team, which is the division responsible for developing AR glasses. Fun fact: $1bn is what Facebook paid for Instagram back in 2012.

Elsewhere, Strong sales in China lift Nike results (Wall Street Journal, Kimberly Chin and Khadeeja Safdar) highlights an impressive 22% uplift in China revenues in the latest quarter while Juul prepares staff shake-up amid US crackdown (Wall Street Journal, Jennifer Maloney) shows that things continue to get worse at the e-cigarette maker amidst a myriad of investigations.

And finally, in other news…

Many of you will know by now that I am half-Japanese and have lived, worked and studied in Tokyo for a number of years so when I saw this I thought I had to highlight it: Loo and behold! Japan’s high-tech toilets bemuse fans (Reuters, Lucien Libert https://tinyurl.com/yy4awjx3). Yes, yes, we all know about sushi, manga and sumo wrestling – but Japan also has impressive toilets 😜. New users never fail to be surprised/excited/horrified at the vast array of options and angles of water spray available in what many feel is like sitting in Captain Kirk’s chair in the USS Enterprise!

1. In INDIVIDUAL COMPANY NEWS, I give you more on Thomas Cook – the why, the winners and losers and why liquidation and not administration, Juul’s (and vaping’s) worsening nightmare and Google’s game service
2. In CAR NEWS, Hyundai & Aptiv embark on a $4bn joint venture while VW voices its eagerness to form battery alliances
3. In MACRO NEWS, the Eurozone economy continues to slow as there’s more evidence Germany will go into recession
4. In OTHER NEWS, I bring you deep-fried Jaffa Cakes 🤢 and the kindness of strangers…

So Thomas Cook fallout continues, Juul’s nightmare gets worse and Google launches a gaming service…

Given the nature of its business and the brand name, it’s not surprising that Thomas Cook continues to be all over the newspapers today. Just in case you spent yesterday in a cave, rocking backwards and forwards whilst sticking your fingers in your ears and saying “Lalalalalala”, Why the world’s oldest tour operator failed (Daily Telegraph, Oliver Gill and Michael O’Dwyer) does a great job of summarising the story so far. Basically, the main problems started when it merged with MyTravel in 2007 that lumbered it with massive debts at a time when customers were increasingly shifting online. The company almost went under in 2011 but managed to negotiated its financing and thus a stay of execution. However, a few years later, the heatwave in summer 2018 decimated the market for last-minute holidays which left the company wearing a boatload of rooms it had previously booked in anticipation and fears of terrorist attacks hit demand for previously-popular destinations such as Turkey and Tunisia. Things continued to get worse in 2019 as customers delayed holiday bookings because they wanted to wait and see what happened with Brexit (plus sterling continued to weaken) and then when it tried to sell its airline to raise some cash, it failed. Eventually, its biggest shareholder – China conglomerate Fosun with an 18% stake – looked like it was going to inject a ton of cash but then panic increased among suppliers that they weren’t going to get paid, so demanded more cash in advance while hedge funds bought up bonds and shorted the stock, making the whole situation go from bad to worse. In addition to customers and employees who lost out big time in this whole debacle, Thomas Cook boss in crosshairs over company liquidation (Daily Telegraph, Michael O’Dwyer and James Burton) shows that chief exec Peter Fankhauser is facing increasing pressure for letting the company die (whilst getting paid handsomely as he oversaw its demise), Watchdog under fire on Thomas Cook shares (The Times, Alex Ralph, Ben Martin and Dominic Walsh) shows that now the Financial Conduct Authority (FCA) is being accused of not intervening quickly enough and Condor airline in €200m bailout plea to German government (Daily Telegraph, Justin Huggler) shows that Thomas Cook’s highly profitable German airline Condor is now struggling to survive. Meanwhile, Hedge Funds will gain from demise (Daily Telegraph, Tom Rees) shows that some will profit from the demise as speculators benefited from short-selling Thomas Cook shares for months and using credit default swaps (CDS) – which are derivatives which pay out of a company defaults on its debt. All in all, Thomas Cook: the dear departed (Financial Times, Lex) blames the demise on a string of chief execs that made the wrong decisions and didn’t take the online threat seriously enough quickly enough. For those of you who like more detail, Why Thomas Cook has gone into liquidation not administration (Financial Times, Matthew Vincent) says that the company did not go into administration because an administrator has to stump up cash in this process to keep a business going while it finds buyers. Given the scale and complexity of Thomas Cook’s debt, liquidation was the only option in

this case as previous opportunities to pay down debt and restructure had been missed. The whole thing is a huge mess. * SO WHAT? * I think that we will see a continuous flow of negative news on Thomas Cook’s failure as the repercussions play out. Its rivals Tui and Dart saw their share prices rise yesterday in anticipation of them getting more business but it may be short-lived given that they continue to face the perennial banana skins of online competition, terrorism and climate change. There is now talk of potential regulation to claw back back of top executives who have been judged retrospectively to have played a part in a company’s demise, but I suspect anything along those lines would take ages – if ever – to be implemented.

Then in Federal prosecutors conducting criminal probe of Juul (Wall Street Journal, Jennifer Maloney) we see that things are continuing to get worse for the king of vaping as the US attorney’s office of the Northern District of California is conducting a criminal investigation into Juul Labs, although the details are sketchy at this stage. * SO WHAT? * This latest investigation is in addition to others being conducted by the FTC, the FDA and other state attorneys general who are looking into alleged questionable marketing practices among other things. However, that could well be small beer against the potential nightmare they could face if a link between vaping and various lung conditions can be found. ‘The bells start going off’ How doctors uncovered the vaping crisis (Wall Street Journal, Brianna Abbott) makes for alarming reading and if what is alleged is true, could open up a massive can of worms in terms of litigation and class action lawsuits around the world (not to mention the needless deaths and suffering in the process). Some countries are already implementing vaping bans, taking decisive action before the conclusion of any other investigations. A nightmare for tobacco companies who thought they’d found a new product with growth potential. Even worse for those who die as a result of using them or suffer because of the chemical exposure to their lungs…

On a slightly lighter note, Following Apple’s lead, Google launches subscription videogame service (Wall Street Journal, Sarah E. Needleman) shows that Google is launching Play Pass for $4.99 a month after Apple launched a similar service last week for mobile gaming, called Apple Arcade, for the same price. Play Pass started on Android services in the US yesterday and will be rolled out internationally in the coming months. It has over 350 games and apps and won’t feature ads or prompt gamers to buy anything. Apple Arcade “only” has over 100 games, but unlike for Play Pass, they are new and exclusive for the service. * SO WHAT? * This is just a natural development for mobile gaming IMO and is a precursor for the introduction of Google Stadia, which is a bigger scale game streaming service that will give access to console-quality games. This service is slated to launch in November and will cost $10 a month. I believe that streaming is the future of gaming and that the next generation of consoles will be the last due to hard copy games becoming increasingly obsolete and vast improvements in processing speeds. However, the success of the service will be heavily dependent on 5G rollout which will be needed to provide the necessary speeds for a non-frustrating experience. Services like this will give players like Apple and Google access to very nice steady revenue streams.

Hyundai and Aptiv strike an autonomous deal and VW seeks battery partners…

Hyundai Motor and Aptiv seal $4bn autonomous car joint venture (Financial Times, Song Jung-a) heralds a chunky joint venture between the South Korean car giant and the Dublin-based auto technology group Aptiv to develop autonomous cars by 2022. This will be Hyundai’s biggest investment yet in future mobility tech as it tries to make up for being late to the party versus its peers. Aptiv, which used to be known as Delphi Automotive, will contribute its autonomous driving technology to the venture while Hyundai (along with affiliates Kia Motor and Hyundai Mobis) will provide vehicle engineering services, R&D and access to its intellectual property. It aims to start testing completely autonomous systems in 2020 with a view to churn out driverless platforms by 2022. * SO WHAT? * As many regular readers of Watson’s Daily will know, I am highly sceptical about the practicality of driverless vehicles although I like the idea in theory (it would be brilliant for the freedom and mobility of the elderly and disabled, for instance). Surely we should start with something “easy” like driverless trains (no traffic to worry about) before wading

into the far more complicated situation on our roads with all the ethical, legal and practical considerations that need to be taken into account. I think this is all noise, but it’s probably a good move for Hyundai who now stand NOT to lose out IF a driverless boom takes off. 2022? My *rse.

Volkswagen keen to forge battery technology relationships (Financial Times, Joe Miller) heralds an additional commitment to the €1bn already earmarked by the company for battery tech as it looks to open up to third parties in a bid to keep its target of launching up to 70 new electric vehicles over the next decade. At the moment, the company’s current providers “can only fulfil 50-60% of [VW’s] total need by 2023”, hence the need to open things up. Stefan Sommer, VW’s supervisory board member for procurement added that “We need huge capacity for battery cells…six or seven times the size of [the Salzgitter] factory”. * SO WHAT? * This all sounds great but EVs still account for a teeny weeny proportion of new car sales, although obviously they are shouting about the massive percentage increases in new cars sold. Potential partners may fear committing too much money to something where the projection of future demand looks over-inflated (after all, why would a company as big as VW not be willing/able to do this themselves??), but I guess it’s a good idea in theory. The major obstacle to it all remains the virtually non-existent charging structure in many developed countries and will remain so for years to come IMO.

The Eurozone economy continues to look tricky as Germany edges closer to recession…

Eurozone economy slows amid trade decline and Brexit fears (The Guardian, Phillip Inman) cites the latest Purchasing Managers Index for manufacturing in Germany

which showed a sharp decline on the back of weaker demand as Brexit concerns and ongoing tariff problems continue to bite. Simon Wells, chief European economist at HSBC, observed that “Today’s PMIs make grim reading, particularly for Germany. Since the peak of the German manufacturing PMI in December 2017 there have been a few occasions where signs of stabilisation have been snuffed out”. * SO WHAT? * Given that Germany is the major engine of the Eurozone economy, the latest gloomy figures would seem to support the ECB’s recent moves to implement stimulus measures.

And finally, in other news…

I thought I’d leave you today with something a bit grim in Chip Shop is making battered Jaffa Cakes – and people are very sceptical (The Mirror, Courtney Pochin https://tinyurl.com/y4wsclw4) – bleurrgggghhh 🤢- and something altogether more palatable in Sports fan asks for beer money and ends up raising $1m for children’s hospital (Sky News, Sanya Burgess https://tinyurl.com/y595l2m5). But deep-fried Jaffa Cakes, people?? That’s just WRONG!!!

1. In RETAIL NEWS, Thomas Cook collapses and Ikea eyes a big China expansion
2. In FOOD-RELATED NEWS, sandwich supremo Greencore diversifies and Meatless Farm gets a C4 investment
3. In INDIVIDUAL COMPANY NEWS, SoftBank looks to oust WeWork’s CEO and CBD company Vertical Wellness strives to get the message out
4. In OTHER NEWS, I bring you something that will make your eyes go funny…

So Thomas Cook collapses and Ikea aims at China…

Thomas Cook collapses after knife-edge rescue talks fail (Financial Times, Alice Hancock and Daniel Thomas) heralds the demise of the 178-year old travel operator as talks held between the lenders, shareholders and the government over the weekend failed to result in a rescue package. This will leave 21,000 jobs at risk and 150,000 UK holiday makers stuck abroad who will now have to rely on the Civil Aviation Authority to organise the biggest emergency repatriation in peacetime. Restructuring specialist AlixPartners is expected to work with the CAA to sort out the mass-repatriation which could take around two weeks. Chinese conglomerate Fosun had offered to contribute £450m to the rescue package, but it all fell apart in the end. Just to give you an idea of scale, when Monarch collapsed in October 2017 (it was the UK’s fifth biggest airline at the time) the CAA chartered around 30 planes to repatriate 85,000 of Monarch’s customers, costing £60m. Anyone who’s yet to travel with Thomas Cook from the UK has been advised by the CAA NOT to go to the airport as all of the company’s bookings have been cancelled, but those who have booked package holidays will be able to claim compensation via the Atol protection scheme (which should happen within 60 days). Those who’ve booked flights with Thomas Cook airlines, however, probably won’t be covered by Atol and will need to make claims via travel insurance or their credit card companies. There’s also a potentially nasty thing that arrangers of stag/hen-dos may have to deal with – that banks may decide that only the purchaser’s flight is covered, with the rest of the booking being judged as a cash transaction between the

purchaser and the rest of the group. * SO WHAT? * Things have been looking decidedly shaky at Thomas Cook for a while and it’s no secret that the whole industry has been suffering from a combination of late bookings (because of people waiting to see what happens with Brexit), weakening sterling, higher fuel prices and intensifying competition from people putting their holidays together online, among other things. Rivals fear fallout from Thomas Cook failure (Daily Telegraph, Oliver Gill) shows that hundreds of smaller travel agents will suffer from Thomas Cook’s collapse because if they have combined Thomas Cook flights with third-party hotels, they will be responsible for either replacing the flight or refunding the cost of the entire trip – which could be disastrous. However, The airline bosses who will welcome Cook’s fall (Daily Telegraph, Oliver Gill) shows that airlines such as Virgin Atlantic and Flybe will be among those fighting for Thomas Cook’s take-off and landing slots at Gatwick (where it has 200) and Manchester (where it has 350). EasyJet, Lufthansa, AirFrance KLM and Norwegian Air could also potentially benefit from Thomas Cook’s demise by either getting some extra slots or raising prices. Tough times.

Ikea assembles $1.4bn China expansion drive (Financial Times, Tom Hancock) highlights the Swedish retailer’s biggest annual investment in China where it is allocating $1.4bn over the next year following a sudden slowdown in sales growth there. It is hoping to benefit from Chinese consumer spending growth via new stores and a revamp of existing ones. * SO WHAT? * China is in Ikea’s top five markets in the world, but sales growth has slowed in the country as its large store formats have proved to be less appealing to customers and competition from the likes of Japan’s Muji has attracted more affluent customers. Ikea continues to invest heavily in testing different formats and improving logistics and digital offerings.

Sandwich maker Greencore aims to diversify and Meatless Farm gets a Channel 4 boost…

Greencore looks to diversify into sushi and salads (Financial Times, Leila Abboud) shows that the UK’s biggest sandwich maker is intending to expand its existing offering into sushi, salads and hot meals in order to spur growth after selling its US business last year for £817m. Chief exec Patrick Coveney, who’s been at the head of the company since 2007, is also talking about returning cash to shareholders via dividends and share buy backs and is also considering the acquisition of “several” companies worth up to £50m in the next three to five years in order to broaden its existing offering. Fun fact: Greencore makes a staggering three out of every five sandwiches sold in the UK every year 😱. * SO WHAT? * It sounds like the company is ticking all the boxes for investors with a chunky disposal, promises of returning cash to shareholders and expansion from its core offering that is RELATED to its core offering. For instance, it recently bought Freshtime – a company that specialises in making salads and chilled

snacks – which will broaden Greencore’s product line-up accordingly whilst also boosting its relationship with the Co-Op. Greencore’s share price has increased by 27% this year versus the FTSE250 rising by only 15%.

Channel 4 takes a bite of Meatless (The Times, Alistair Osborne) heralds a big investment by Channel 4’s Commercial Growth Fund, believed to be in seven figures, into UK-based Beyond Meat rival The Meatless Farm Company in exchange for advertising airtime across its main channel and streaming service. Meatless Farm makes a range of vegetarian-friendly mince, burgers and sausages that are currently sold in Sainsbury’s, Morrisons and Amazon-owned Whole Foods across the US. Danish founder Morten Toft Bech said that “Our mission is to make it easy for people to reduce their red meat consumption by switching to plant-based meat alternatives. Making the swap, even if it’s just once a week, can make a huge difference to our planet – it’s the equivalent of taking 16 million cars off the road”. * SO WHAT? * I think that this is quite an interesting move for both sides as Channel 4 gets a stake in a business that is in a super-hot area at the moment – meat substitutes – while Meatless Market gets some nice advertising. It just remains to be seen whether it can take on the likes of Beyond Meat or Impossible Foods.

Softbank looks at ousting WeWork’s founder and Vertical Wellness continues to increase CBD awareness…

In SoftBank moves to oust Neumann as WeWork chief executive (Financial Times, Eric Platt and Andrew Edgecliffe-Johnson) we see that there are rumours that major shareholder SoftBank is looking to call a board meeting this week to demote founder Adam Neumann following the collapsed IPO attempt, his erratic behaviour and news of his drug use. It’s not clear yet whether the majority of board members share SoftBank’s sentiment, so I guess a vote would give us all a clearer picture. Did you know that, in the original IPO filing documents, it said that Neumann’s shares would have 20x the voting power of ordinary shares, his wife would have a say in picking his successor in the even of his death, and WeWork’s board would have NO women?! OK, so some of these were scaled back as the company tried to appease potential investors, but in the end it all proved too much and the IPO didn’t take place. News of his marijuana use on the company jet and tequila-fuelled company parties probably didn’t help either. * SO WHAT? * Neumann sounds like a complete d***, but then again chief execs don’t have to be likeable! I think that he just reflects the arrogance of many founders in recent years who are more than happy to take investors’ money but give them zero in return. I suspect that WeWork’s failure to sweet-talk investors will be a salutary lesson for all those other arrogant, massively loss-making, one-trick ponies waiting in the wings to stuff their pockets with

investor cash with zero blow-back. Ironically enough, given my previous profession, I think that shareholders who bang on about being the owners of the company and their importance is a load of rubbish. Yes, they own the shares, but very rarely do they ACTUALLY give a **** about the company and its employees. However, you have to draw the line somewhere and having your cake and eating it by selling shares whilst at the same time giving shareholders heavily-diluted (or zero) voting rights is taking massive liberties IMHO. The sooner this practice is stamped out the better.

Hemp CFO’s quest: educate banks, auditors on the benefits of CBD (Wall Street Journal, Nina Trentmann) looks at the challenges facing CBD-maker Vertical Wellness ahead of its IPO. The company works with farmers to grow hemp in Kentucky, Tennessee and California and processes the flowers, leaves and stems of the hemp plant to turn them into CBD oil, which is used in all sorts of products including creams, lotions and shampoos. As you may recall, cannabidiol (aka CBD), was legalised in the US last year but given that this has only been a recent development, the company is still finding it hard to appoint auditors and bankers given the product’s shady past. * SO WHAT? * Many cannabis companies have gone over the border to Canada over the years to develop their wares given looser legal restrictions, but all of them – listed and unlisted – are racing to build scale in their operations in anticipation of mass-legalisation across the world. Although a public listing will invite much closer scrutiny by investors, it is one way to bring in a lot of money quickly – and the money is needed to build scale. I suspect that there will continue to be more consolidation in what is still a fragmented industry.

And finally, in other news…

I thought I’d leave you today with something really annoying: Can you spot the showerhead among the household items? (Daily Mail, Latoya Gayle https://tinyurl.com/yxgfou79). This will make your eyes go funny!

1. In MACRO NEWS, the European Commission raises hopes of a Brexit deal and UK interest rates remain unchanged
2. In RETAIL NEWS, UK retail sales fall in August, Debenhams brushes Ashley aside and Next’s sales slow
3. In INDIVIDUAL COMPANY NEWS, E-cigarettes get banned in Asia, Amazon commits to electric delivery vans, Airbnb aims for a 2020 flotation and Stripe’s worth continues to climb
4. In OTHER NEWS, I bring you a hilarious misunderstanding…

So it appears that the EC might be throwing us a bone and the Bank of England leaves interest rates untouched…

In European Commission raises hopes of a Brexit deal (Financial Times, Sam Fleming, Jim Brunsden and George Parker) we see that Jean-Claude Juncker, president of the European Commission, appeared to soften his stance by saying he might scrap the Irish “backstop” if BoJo comes up with a workable alternative. On the surface, it would appear that this is a turnaround as J-C said only last month that “We have made clear that we are not prepared to hold new negotiations on the withdrawal agreement”. I would caution against reading too much into this latest development and I think that Irish PM Leo Varadkar put it best when he said “I think the rhetoric has tempered, the mood music is good, there is a lot of energy and positivity.

But when it comes to the substance of the issues that need to be resolved the gaps are still very wide and we’ve no time to lose”. The drama rolls on…

Bank of England holds interest rates but cuts GDP forecasts (Daily Telegraph, Russell Lynch and Tom Rees) is not exactly the most inspiring headline you’ll ever see, but it was interesting to see that ALL members of the Bank of England’s Monetary Policy Committee (MPC) voted to leave interest rates unchanged at the current 0.75% level. * SO WHAT? * Given that we currently have a backdrop of the ECB announcing big stimulus measures to get the eurozone out of a rut, the US cutting its interest rates for the second time in a row after ten years of either staying the same or going in the other direction and, of course, Brexit it is unsurprising that the Bank of England will want to keep its powder dry by keeping things as they are. If we cut now, we will have less ammo to use in the Brexit aftermath and TBH, there appears to be no desperate need to do so given that the current rate of inflation of 1.7% is below the target rate of 2%.

UK retail sales have a disappointing August, Debenhams ploughs on with its restructuring and Next’s sales growth slows…

Sudden fall in online sales deepens gloom enveloping retailers (The Times, Elizabeth Burden) cites the latest figures from the Office for National Statistics (ONS) which show that retail sales fell unexpectedly last month, with particular weakness in online sales which showed their sharpest drop in four years. Rhian Murphy, head of retail sales at the ONS, observed that “Retail sales grew moderately in the three months to August with online sales still providing the biggest driver, despite falling back in the latest month”. * SO WHAT? * The fall in online sales is quite surprising, but it may just be a blip. However, those of a nervous disposition will say that it is a sign of the fickle nature of consumer confidence. Either way, we’re heading into the busiest quarter of the year in the run-up to Christmas, so retailers will be hoping this is just a one-off rather than a trend.

Debenhams pushes on with shop closures after legal challenge fails (The Guardian, Sarah Butler) shows that

the troubled department store has successfully shrugged off a Sports Direct-funded legal challenge to its recently-agreed CVA, which means that it can continue with its store closure programme. At least 22 of Debenhams’ 166 stores are set to close by January 2020 and rents on many others are to be reduced as part of the CVA. * SO WHAT? * This looks like Mike Ashley’s bid to put a spanner in the works has failed for now. Still, if he bides his time, Debenhams may well collapse further down the line and he can wade in at fire sale prices (although he might not have as much money then given how Sports Direct and his other businesses are performing). I know that sounds a bit harsh, but I think trimming stores here and there and doing a bit of a cosmetic upgrade is like rearranging the deckchairs on the Titanic. Department stores are going DOWN. Unless the management team comes up with something special (and they haven’t so far), I believe that Debenhams will die the death of a thousand cuts.

Next blames warm weather for slow sales as shares plummet (The Guardian, Zoe Wood and Julia Kollewe) highlights investor disappointment with the apparel and homeware retailer as it blamed disappointing sales of its new autumn clothing ranges on recent warm weather. Next’s shares were the biggest faller on the FTSE100 yesterday (they fell by 5%) as its chief exec Lord Wolfson was pretty downbeat on current trading.

E-cigarettes get more bad news, Amazon commits to electric delivery vans, Airbnb aims for flotation and Stripe’s value continues to rise…

Asian countries move to ban e-cigarettes as global backlash grows (Financial Times, Stephanie Findlay) heralds even more bad news for e-cigarettes as India’s cabinet announced, in a meeting on Wednesday, a ban and jail time for up to three years for those who make, import or sell vaping products in response to a massive rise in its popularity among young people. This drastic move came in the same week that China, which is the world’s biggest producer and consumer of tobacco, stopped sales of Juul products and shortly after a recommendation earlier this month from the US Centers for Disease Control and Prevention that consumers should avoid the products due to an increase in unexplained lung illnesses among users. China seems to be moving towards tightening e-cigarette legislation while Cambodia and Thailand banned the use and import of e-cigarettes in 2014. * SO WHAT? * When you consider the potential market size of China (over 300m 

smokers) and India (over 266m) and the slowing down of sales of “traditional” smokes, you can understand why big tobacco companies are trying to throw their weight behind the tobacco alternatives. Still, as the negative news stories pile up, the industry will have a big PR battle on its hands to protect this nascent business. Mind you, although this is bad, the fact is that this will (somewhat ironically) probably benefit traditional cigarette sales – so the tobacco companies win either way because this is what makes them the most money anyway! It just might mean that they might have to rein in the rhetoric on a “tobacco-free future”…

Elsewhere, Amazon to add 100,000 electric vehicles as part of climate pledge (Wall Street Journal, Patrick Thomas) highlights progress for the e-tailing giant on reducing its carbon emissions as it committed to buying electric vehicles from Detroit-based start-up Rivian Automotive with a view to using them for deliveries in 2021. Then Tech unicorn Airbnb shares its plan to go public in 2020 (The Times, James Dean) heralds the plan of yet another unicorn to float on the stock market (but at least this one makes money!) while Fintech firm Stripe joins Silicon Valley elite with $35billion valuation (Wall Street Journal, Peter Rudegeair) shows the latest sky-high valuation for a US start-up after its latest fund-raising round.

And finally, in other news…

I thought I’d leave you today with something that almost made me fall off my chair this morning: Man fuming as wife’s sandwich has ‘b!tch’ written on it – then discovers meaning (The Mirror, Courtney Pochin https://tinyurl.com/y2bw5ywz). This works so well because you just won’t see what’s coming 😜

1. In MACRO NEWS, the Fed cuts US interest rates, Japanese exports continue to drop, UK inflation falls and house price rises slow
2. In TECH NEWS, Facebook announces Portal TV while smart TVs send out your data
3. In INDIVIDUAL COMPANY NEWS, FedEx delivers bad results, Pendragon suffers and River Island opens stores despite losses
4. In OTHER NEWS, I bring you a couple of accommodation options…

So the Fed cuts rates, Japanese exports weaken further, UK inflation drops and house price growth slows down…

Fed cuts rates but splits between officials widen (The Times, James Dean) highlights the Federal Reserve’s decision to cut rates by 0.25% (also referred to as “25 basis points”) for the second consecutive meeting. This now brings the federal funds rate down to a range of 1.75-2% and Fed chairman Jerome Powell said that “We took this step to help keep the US economy strong in the face of notable developments”. Everyone and their dog expected a rate cut, but Trump had made no secret of his desire for the Fed to cut deeper in the run-up to the Fed meeting so his reaction was unsurprising: “Jay Powell and the Federal Reserve fail again. No guts, no sense, no vision!”. * SO WHAT? * Trump wanted a much bigger cut that would have put the rocket boosters under the stock markets, but it was not to be. What became apparent in this meeting, however, was that the team of rate-setters became more divided on direction with two saying the base rate should have remained unchanged and one called for a bigger cut. As things stand at the moment, Fed officials are expecting the rates to continue at this level until the end of the year.

Japan exports fall for ninth month in a row (Financial Times, Daniel Shane) shows that Japan’s exports continue to weaken in the face of the continued global slowdown. Data from the Ministry of Finance showed that exports from Japan fell by 8.2% year-on-year during August in their worst performance since January. Exports to China, Japan’s biggest trade partner, fell by 12.1% while shipments to the US fell by 4.4%. Exports to South Korea – where trading relations have been getting very frosty of late – fell by 9.4%. Particularly weak categories included automobiles, machinery and other manufactured goods.

* SO WHAT? * Yes, the weakness was due in part to a stronger Yen making its goods less price-competitive, but this has a LOT to do with the current US-China trade spat and the resultant tariffs. Imports also fell in August and there’s a cloud looming large on the horizon that could adversely affect spending – Japan’s consumption tax (its equivalent of VAT) is due to rise later this year from 8% to 10%.

Meanwhile, Inflation falls to 1.7% as costs tumble (The Times, Philip Aldrick) cites the latest figures from the Office for National Statistics which reflect the slowest growth in inflation since December 2016 as it fell from 2.1% in July to 1.7% last month, coming in below market expectations of 1.9%. * SO WHAT? * Hopefully, this will help household finances in conjunction with rising wages, which are growing at a rate that is above inflation currently. Household spending has been a major driver of economic growth in the last few years as business investment has shrunk, mainly due to Brexit uncertainty. Having said that, you do wonder whether the impact of the recent drone attacks on Saudi Arabian oil producing facilities will put sustained upward pressure on fuel prices, which could lead to slightly higher inflation.

House prices in Britain rising at slowest rate for seven years (The Guardian, Richard Partington) cites more data from the Office of Statistics which show that house prices in Britain are rising at their weakest annual rate for seven years due to Brexit uncertainty. House prices fell in four of nine English regions, with the north-east seeing the biggest decline. Depressing fact alert – the north-east region is the region in the country where house prices are still below the levels they were before the 2008 financial crisis 😱. Richard Donnell at property website Zoopla observed that “The reality is that buyers are simply being more cautious and this has reduced the impetus for house-price growth. Weaker levels of house-price growth are set to be a feature of the market for the rest of this year and the first half of 2020 at least”.

Facebook introduces Portal TV and it seems that smart TVs are being naughty with your data…

In Facebook announced video streaming device Portal TV (Financial Times, Hannah Murphy) we see further evidence of the social media company’s efforts to push into consumer hardware this time via a voice-controlled “smart video chat” device that connects to TVs called Portal TV. Facebook launched a smaller device called Portal last year which was just used for video chatting but this latest product – which will cost $149 – will also include video and music streaming services such as Amazon Prime, Spotify, Showtime and CBS All Access. It will also include Amazon’s Alexa smart speaker, which will respond to “Hey Portal”. * SO WHAT? * Sounds great but it is entering a crowded market including Amazon’s Fire Stick, Google’s Chromecast and Roku. Also, ANOTHER virtual assistant?!?! If you were living on your own in an apartment and owned a Samsung phone, an iPad, an Echo and now Portal TV, you’d never be alone! You’d always have your friends Bixby, Siri, Alexa and “Portal” to keep you company!!! In fact, who

would need real friends if your virtual assistant could keep you entertained with the music you like, sort out your pizza deliveries and fun facts about the world??

Mind you, Smart TVs sending private data to Netflix and Facebook (Financial Times, Madhumita Murgia) sounds rather creepy as it turns out that smart TVs are sending sensitive user data to companies including Netflix, Google and Facebook even when they are idle, according to analysis published by researchers at Northeastern University and Imperial College London. Devices including those made by Samsung and LG were found to be sending data on location and IP addresses to Netflix and other third-party advertisers even when users did not have a Netflix account. Other smart devices such as speakers and cameras were also sending user data to companies such as Spotify and Microsoft! * SO WHAT? * When you consider the growing number of smart devices popping up in your average home, it is somewhat discomforting to think that they are spying on you. Given all the hoo-ha going on at the moment re data privacy, surely the regulators have got to clamp down on this sort of thing hard. As Max Van Kleek, a computer scientist at the University of Oxford, put it “People are spending more and more time on these devices, and they are placed in such critical places in people’s homes, so we need to hold them to account”.

FedEx has a disappointing delivery, Pendragon suffers and River Island says it’ll open more stores…

FedEx shares plummet following dismal results (Wall Street Journal, Paul Ziobro) highlights the biggest one-day percentage fall in the company’s share price since December 2008 as it cut its earnings guidance for the fiscal year. The shares fell by 13% in trading yesterday as forecasts were cut due to lower revenues in its TNT Express division which takes packages and cargo by planes around the world. * SO WHAT? * This is clearly not great news, but it seems to me that FedEx is doing a real overhaul of its business by cutting costs, investing in the struggling Express business and doing things like reviewing its customer relationships (like with Amazon, for example). Investors will want to see a turnaround in the foreseeable future but with a weaker economic backdrop and falling global shipments, I can’t see things changing any time soon. You do wonder whether the company is “kitchen sinking” all the bad stuff now while expectations are low…

Car giant Pendragon drives into red and trims 300 jobs (Daily Telegraph, Alan Tovey) reflects a company that is going through a rough patch at the moment as the

chairman of the Britain’s biggest car dealer resigned yesterday following the June departure of its former chief exec, who himself was only in the hot seat (ejector seat, more like!) for a few months. Pendragon owns the Evans Halshaw and Stratsone brands and posted a hefty loss yesterday for H1, reversing a decent profit in the same period last year. The loss was put down to having too many secondhand cars which forced the company to cut prices or sell at auction. Pendragon also had a downbeat outlook, warning that it is “not anticipating any improvement in [customer confidence] for the rest of our financial year”. Shares in the company have halved over the last 12 months and they fell by a further 10% on yesterday’s news. * SO WHAT? * Cars are big ticket items and when consumers are worried about the economy they sit on their hands. Clearly, Brexit uncertainties are at play here and Pendragon is paying the price.

River Island on course to open stores despite profit slump (Daily Telegraph, Laura Onita) is a somewhat counter-intuitive sounding headline as the the departing chief exec said that that the company will continue store openings despite unveiling falling profits and revenues yesterday. * SO WHAT? * The company, like its competition, is battling against high rates, expensive rents and a customer base that is increasingly going online. It said it would continue to commit to physical stores, but only when they are economically viable.

And finally, in other news…

I thought I’d leave you today with two accommodation options at the opposite ends of the cost scale: Highclere Castle – the real-life Downton Abbey – is available to rent on Airbnb (Mental Floss, Garin Pirnia https://tinyurl.com/y34smsjt) for fans who will have to fork out $159 for one room for one night (so a VERY limited offer!) and, if you are feeling a bit more financially flush World’s tallest residential building has 112th floor penthouse (Sky News, Alix Culbertson https://tinyurl.com/yyjvob5a), which could set you back a piffling $63m for a five-bed penthouse or a mere $6.9m for a two-bedroom flat. I’ll have both 😂

1. In MACRO, OIL AND TRADE NEWS, Spain heads for another election, Italy’s ex-PM makes a breakaway party, the Netherlands rolls out economic stimulus, the oil price falls and Vietnam continues to benefit from China deserters
2. In HIGH STREET NEWS, French Connection’s buyer search continues and Thomas Cook files for bankruptcy in the US
3. In INDIVIDUAL COMPANY NEWS, Amazon offers high-def music streaming, Juul’s sales stop in China and Sirius Minerals is up against it
4. In OTHER NEWS, I bring you a very hot chip…

So Spain schedules yet another election, Italy’s political scene splinters further and the Netherlands unveils economic stimulus while the Saudis talk a good game and Vietnam benefits from China’s woes…

Continental Europe is not a dull place at the moment! Spain heads for election after Sanchez fails to win rivals’ backing (Financial Times, Daniel Dombey) heralds what will be the country’s fourth general election in four years when Spaniards head for the polls on November 10th after current PM Pedro Sanchez failed to cobble together a workable coalition. Then in Italy’s former PM Matteo Renzi forms breakaway party (Financial Times, Miles Johnson) we see that Renzi is forming his own new centrist movement, splintering Italian politics more than it already is and Netherlands rolls out economic stimulus plan as downturn looms (Financial Times, Mehreen Khan) shows the Dutch government unveiling tax cuts and an investment boost in an effort to avert economic slowdown. * SO WHAT? * Europe is in a right old state at the moment – Germany is suffering hugely from the trade dispute which is making its all-important exports expensive and less competitive, Italy is just all over the place financially and politically – and then there’s Brexit. France and Spain are actually doing quite well but then the whole political instability thing in the latter will be a bit of a drag. The ECB has said it will implement stimulus measures, but has asked for governments that can to spend as well in order to do their bit for the common good – hence the Dutch government’s actions. I know this is being somewhat simplistic, but I really think that if Trump/Xi came to a trade agreement and Europe threw the UK a bone in Brexit negotiations, markets and trade would go ballistic. However, it seems that trade negotiations are just dragging out longer and longer (maybe China is willing to dig in until  

at least next year’s US presidential election?) and Brexit talks just don’t seem to be making much progress as neither side wants to be seen to be backing down. IF there is ANY movement on the latter, I would expect it to be right at the last minute after a lot of posturing and manoeuvering in the background.

After a tumultuous few days, Oil prices fall as Saudi Arabia plays down drone attacks (Daily Telegraph, Russell Lynch) says that oil markets fell on hopes that Saudi Arabia’s oil production could recover more quickly from the weekend’s drone attacks than had originally been thought. New energy minister Prince Abdulaziz bin Salman stated in a press conference yesterday that damage had been “contained” and that some supplies were already coming back online. This contradicted initial assessments that it would take months to get back on track. I bet that your local petrol station will still leave the prices up for a bit anyway, though 😜

Vietnam gains ground in shift from China (Financial Times, John Reed) looks at how Vietnam is currently benefiting from companies moving production out of China. This has already been happening to some extent – Samsung, Canon and Nokia are among those to have contributed to sizeable foreign investment over recent years – but Apple recently began trialing production of Air Pods in the country while Amazon and Home Depot have also increased sourcing recently. However, companies aren’t that keen to disclose too much about their moves to Vietnam for fear of annoying the Chinese but given the country’s record $39.5bn trade surplus with the US last year, you can see that things are clearly hotting up. * SO WHAT? * In theory, this is all brilliant for Vietnam, but the reality of it is that although there is upside to be had, it will be limited by its current scale and infrastructure – plus, it won’t see a sudden influx as supply chains are very complicated and take time to change. Although Vietnam is unlikely to replace China completely as a supplier of choice, it can certainly benefit from being part of a “China plus one” strategy that business leaders are pursuing currently.

French Connection continues its search for a buyer and Thomas Cook scrambles for survival…

In French Connection extends deadline to find buyer (The Guardian, Sarah Butler) we see that troubled fashion chain French Connection has had to extend its deadline to find a buyer until the end of January next year amid continued trading weakness and the second delay of its strategic review that was originally supposed to complete at the beginning of this year. Potential buyers include – surprise, surprise – Mike Ashley’s Sports Direct, which already owns 26% of French Connection, but any deal would have to be approved by founder Stephen Marks, who still owns 41%. The company reported a pretax loss of £3.7m in the last six months on weaker sales and that it had closed eight UK stores, including its flagship on Oxford Street. * SO WHAT? * If I was a potential buyer, I would just wait until this thing gets even cheaper and let the existing management do more clearing out. Ashley always has an eye on a bargain and the brand would probably fit quite well in his portfolio. Still, he doesn’t have an exactly stellar reputation for enhancing brands and his main business – Sports Direct – 

is getting killed at the moment by arch-rival JD Sports. If you also bear in mind that many of his longest-serving trusted lieutenants have been exiting the business over the last year or so, I worry that Ashley is in danger of spreading himself far too thinly. And if that happens, he’ll have no qualms in selling off non-core businesses. Given that he bought many of them very cheaply, he stands a good chance of making some money out of them if he can find any buyers in the current environment. It’s quite sad, really, to see a retailer that was once a leader be reduced to this.

Thomas Cook in US bankruptcy move (The Times, Dominic Walsh) continues its bid for survival  as it filed for Chapter 15 bankruptcy protection in the US, which protects foreign companies from legal action by American creditors in the event of a corporate restructuring outside of the US (it’s the equivalent of Chapter 11, but for non-US companies). This will give it some time to complete a reorganisation. * SO WHAT? * This will help Thomas Cook’s bid for survival as it could trigger an insurance payment on its debt, which will win it support for its reorganisation. The bid continues – but I must say that if I was in the market for a holiday, I would be quite keen NOT to use Thomas Cook right now given its precarious nature. I am sure that I am not alone and think that the longer this drags on the worse it’s going to get for the venerable travel company as potential punters get increasingly nervous about its future.

Amazon goes high-def, Juul’s China sales stop and Sirius faces a serious problem…

Amazon music streaming goes high-definition (Wall Street Journal, Anne Steele) highlights Amazon’s decision to introduce a high-resolution version of its music service that will stream music at a similar quality to CDs or better. In doing so, it will be the first major subscription streamer to offer this. Tidal already offers such capability – but has a relatively small audience – and Amazon hopes that $12.99 per month to Prime members (and $14.99 for non-members) will be compelling enough to attract listeners (especially given that Tidal charges $19.99 per month). * SO WHAT? * Streaming now accounts for 80% of revenue from recorded music, but sound quality has suffered in the meantime. Now that streaming has become ubiquitous, Amazon is betting that the Next Big Thing will be audio quality. It’ll be interesting to see the take-up!

Juul’s sales halted in China, days after launch (Wall Street Journal, Jennifer Maloney) heralds a sudden stop in China sales as its products were taken off JD.com and Tmall websites just days after they were launched. Juul’s

vaporisers went on sale early last week online but were taken off by the end of the week with no apparent explanation. * SO WHAT? * Given the hurdles that Juul is facing in its US domestic market, overseas expansion is something that the company is keen to pursue, but incidents like this are clearly going to limit its prospects. There has been no official explanation, but surely this has got a lot to do with the current US-China trade war (although it would be a strange target given that Trump doesn’t seem to be a Juul fan). You could say that Juul’s expansion plans are going up in smoke…

Sirius plan on the brink of collapse as it faces cash crunch (Daily Telegraph, Jon Yeomans) is a story that’s being splashed across many of today’s broadsheets and highlights the travails of Sirius Minerals’ plans to build a fertilizer mine in Yorkshire to open by 2021. Basically, the company needed to sell a $500m bond to get an additional $2.5bn in debt financing from JP Morgan and the government decided not to back it. * SO WHAT? * It is thought that Sirius only has enough cash to survive for six months, so it will wind down construction work near Whitby until it finds a backer. The FTSE250 company’s share price cratered by over 50% in trading on the news yesterday and 1,200 related jobs hang in the balance – not to mention the cash that thousands of retail investors put in to the venture (85,000 private investors make up 50% of its share register!).

And finally, in other news…

I thought I’d leave you today with something to stimulate the senses in The World’s Spiciest Chip Is Sold Only One to a Customer (Mental Floss, Jake Rossen https://tinyurl.com/yxzyqsxs). The fact that this snack comes in a coffin-shaped box should be a sign of things to come. The video is hilarious – but not for those who are sensitive to profanity 😂 Why do people do this to themselves?!? 🥵😱🔥🔥🔥🚒👩‍🚒

1. In MACRO & OIL NEWS, China’s industrial growth slows, BoJo annoys Luxembourgers and oil prices shoot up
2. In VEHICLE-RELATED NEWS, Ineos announces car production in Bridgend and Arrival opens a new electric van factory
3. In INDIVIDUAL COMPANY NEWS, WeWork’s IPO gets postponed and Aldi opens London stores
4. In MEATLESS NEWS, US cattle states do their best to strangle meatless products
5. In OTHER NEWS, I bring you curry milkshake and cool murals…

So China’s industrial growth slows right down, BoJo does a no-show and oil prices spike…

China’s industrial growth slumps to weakest rate in over 17 years (The Guardian, Phillip Inman) cites the latest figures on China’s economy which show that US import tariffs and weakening domestic demand are taking their toll, bringing industrial production down to levels not seen since February 2002. Retail sales figures also undershot expectations, as did capital investment and it is increasingly looking like interest rate cuts might be needed in addition to the central bank’s relaxation of lending restrictions to jolt the economy back into life. Clearly, a resolution of the current trade war would help as well! * SO WHAT? * If things continue in this way, the official year-end GDP growth target of 6-6.5% will look rather vulnerable, especially considering that Q2 growth fell to 6.2% – it’s weakest level in almost 30 years.

Boris Johnson frustrates EU with dearth of fresh Brexit detail (Financial Times, Sam Fleming, Jim Brunsden and George Parker) reflects what’s on the front pages of many broadsheets today as EU officials said that BoJo didn’t give them any details on new proposals for Brexit and then abandoned a press conference. * SO WHAT? * He was there to meet current European Commission president Jean-Claude Juncker and Luxembourg PM Xavier Bettel but, TBH, he was never going to get a good reception! J-C is strongly anti-Brexit (and he’s not about to change now), Bettel is “one of the most outspoken EU leaders in criticising Brexit” and is besties with French President

Macron, another staunch pro-European. TBH, I don’t know why BoJo even bothered going there in the first place. This all just sounds to me like noise that has been hyped up. I am expecting to see more of this kind of thing in the coming weeks as terms get debated behind closed doors…

Meanwhile, it’s all kicking off with oil as per Oil price spikes as fears mount over Saudi supply disruption (Financial Times, David Sheppard, Anjli Raval and Demetri Sevastopulo) where we see that oil prices suddenly shot up by as much as 20% on supply concerns following the weekend drone strike on the world’s biggest oil refinery (which Trump says originated in Iran) as trading volumes shot up. There is talk of the drawing down of oil inventories from both the US and Saudi Arabia to boost supplies, but that will only be a short-term solution. Attacks on Saudi oilfields have an effect far beyond just petrol prices (Daily Telegraph, Russell Lynch and Tim Wallace) takes a look at the immediate winners and losers (oil majors like BP/Royal Dutch Shell and airlines like British Airways owner IAG respectively) but also highlights that such jumps filter through to the real “economy” in the form of higher prices at the pump, which can then lead to higher inflation and less cash being available for consumers to spend on other things. * SO WHAT? * The timing of this isn’t great given that the global economy is looking pretty ropey at the moment and places that might be able to suddenly up production are unlikely to be able to just open the taps. Venezuela’s state oil producer is having a ‘mare, Libya is in civil war, Iran is “banned” under US sanctions and even US shale producers won’t be able to keep up with demand. It’s not great for the UK either as we are a net importer of oil – and we are, of course, in the middle of rather precarious-looking Brexit discussions. Still, it’s too early to say whether this panic will be short-lived or not.

Ineos has great news for Bridgend and Arrival electric vans spark interest…

Given that the automotive industry and Bridgend have had their fair share of bad news over the last few years, Jim Ratcliffe’s Ineos set to build new car in Wales (Financial Times, Peter Campbell and Michael Pooler) is a nice departure as Ratcliffe is close to signing a deal to make an SUV in the town where Ford is shutting down its factory. Ineos is believed to be putting £600m into the project (called “Projekt Grenadier”) that will be a welcome boost to a town that’s taken a real pasting over recent years. Ineos has zero experience in car-making, but it is a powerful conglomerate with interests in chemical works, refineries, North Sea oil and gasfields, shale and football clubs. No details have been made officially available as yet.

Then in Arrival time: how the white van went green (The Guardian, Jasper Jolly) we see that west-London headquartered Arrival has announced a new factory in Banbury Oxfordshire which will make electric commercial vehicles that are already being trialed by the likes of Royal

Mail, DHL, DPD and BT. Prototypes of the first full version will roll off its robotic assembly line in December. Vans are a very attractive area for electrification as mileages are often predictable, charging can be done in depots and diesel vehicles are becoming an increasing expense/liability. The company has already received potential orders for thousands of vehicles and it plans to boost production significantly over the next two years. Given that its production methods are completely different from the conventional production line methodology, Arrival (which used to be known as Charge Automotive) believes it can hit profitability at a far lower threshold – less than 10,000 vehicles per year – than established manufacturers. It has 600 staff across the US, Germany, Russia and Israel, with 250 of them being in the UK. * SO WHAT? * Arrival is not the only operator in this space as Tevva (which focuses on converting existing trucks to hybrids or full battery power) and Volta Trucks are also in the mix along with Ford, which is due to launch its plug-in hybrid electric Transit Custom at the end of the year. Incumbents have generally been slow to boost the electrification of urban vans because convention dictates that sales can only increase in a meaningful way when “green” vans become compelling on a cost basis – but given Arrival’s original production methods, that day may be coming soon. Good luck to ’em I say!

WeWork’s IPO gets postponed and Aldi expands in London…

WeWork postpones IPO after chilly response from investors (Financial Times, Eric Platt and James Fontanella-Khan) shows that sense has prevailed after WeWork decided to postpone its IPO last night after failing to muster up enough investor interest. It said that the plan now was to do it by the end of the year. * SO WHAT? * It seems that investors have decided to kick this money pit into the long grass for the moment because of

nervousness surrounding founder Adam Neumann’s outsize influence, hugely pumped-up valuations and lack of profitability. I think that the longer this drags on the more likely it is that WeWork will get found out. There are plenty of other companies out there in this space who are profitable and have a longer track record.

Aldi throws dozens more stores into its London trolley (The Times, Dominic Walsh) highlights the German discounter’s plan to double its store estate in the capital as part of broader expansion plans. The supermarket announced record sales last year in the UK and Ireland but said profits took a big hit due to price cuts and investment in new stores. Onward!

US cattle states try to stem the meatless revolution…

US cattle states seek to rein in substitute meat labelling (Financial Times, Gregory Meyer) shows that cattle and poultry farmers are fighting back against the burgeoning meatless revolution by getting Wyoming, Oklahomah and South Dakota to control labelling. Mark Gordon, Wyoming governor and cattle rancher (so no vested interest there then!) signed a bill into law earlier this year banning the word “meat” to be used if it doesn’t come from an animal.

Twelve states have passed similar laws with more to come. Oklahoma, Missouri, South Dakota, Montana, Kentucky and North Dakota have the highest beef cattle inventory while Alabama, Arkansas, Mississippi and South Carolina are  top for chickens. * SO WHAT? * Clearly, cattle and poultry farmers aren’t going to take things lying down and when you have a powerful agricultural lobby behind you you are going to use it. Labelling legislation is certainly going to slow things down for meatless, but I don’t think it’ll be enough to kill it (the same thing is going on over here). I personally think that meatless isn’t going to kill farming – it’s just going to change it. However, you can understand the objections of the people who make their livelihoods in this area.

And finally, in other news…

I thought I’d leave you with something that sounds very strange in We try a curry milkshake at Mos Burger Japan (SoraNews24, Oona McGee https://tinyurl.com/yxpvrkp5) – bleurrrrgh 🤢- and something that is deeply impressive in An artist uses spray paint to ‘carve’ through walls, and the see-through murals make for wild optical illusions (Insider, Darcy Schild https://tinyurl.com/y62j5krm). This is WILD 👍👍👍!

1. In OIL & CRYPTO NEWS, Saudi Arabia’s production takes a major hit and Facebook faces questions on Libra
2. In HIGH STREET NEWS, restaurants continue to close, Thomas Cook gets a stay of execution and HMV’s new owner tries new tricks
3. In REAL ESTATE NEWS, house prices fall in September and student housing looks ripe for a fall
4. In INDIVIDUAL COMPANY NEWS, Purdue Pharma files for bankruptcy protection and BMW decides not to renew the i3
5. In OTHER NEWS, I bring you an e-sports hotel and a Game of Thrones tapestry…

So Saudi Arabia’s production takes a big hit and Facebook’s Libra faces a regulator inquisition…

Petrol price to rise after missiles hit crucial Saudi oil refineries (Daily Telegraph, Hannah Boland) shows what happens when oil refineries at Opec’s biggest producer get hit by a drone missile attack. Ashley Kelty, an oil analyst at Cantor Fitzgerald, estimates that prices at the petrol pump will rise by at least 5p per gallon over the next few days until we know more about when the supply lines can be fixed. Early reports suggest that production won’t be back on track for weeks, not days. * SO WHAT? * The attack took out 5.7m barrels of oil per day of output, equivalent to about 5% of global supply and about 50% of Saudi Arabia’s production capacity, so this is a very big deal. The global economy could do without this at the moment given that oil helps to power economic growth, which is looking

somewhat shaky at the moment. My advice – fill your cars now if you can as garages always seem to be quick to put the price up and rather slower when it goes down again!

In Central banks to grill Facebook over Libra (Financial Times, Mehreen Khan, Sam Fleming and Caroline Binham) we see that the social media giant is to be interrogated by officials from 26 central banks on its Libra cryptocurrency project in Basel today over concerns about the potential threat it poses to financial stability. The ECB is chairing the meeting but has been quite blunt about expectations for Facebook as it said that “the bar for regulatory approval will be very high” for it to operate in the EU. * SO WHAT? * Regulators and politicians clearly hate the prospect of Libra and the potential power (and data) that Facebook could have if it went ahead. This is all to do with them potentially losing control of their own finances and resulting in fewer tools with which to react to economic circumstances. It’ll be interesting to see how these talks pan out, but I’m thinking that Facebook is facing Mission Impossible with the EU.

Restaurants continue to close, Thomas Cook gets more time and HMV’s owner tries new tricks…

More than 1,400 UK restaurants close as casual dining crunch bites (The Guardian, Rupert Neate) cites a report by accountancy firm UHY Hacker Young which confirms what we already knew – that things are pretty grim at the moment for casual dining restaurants as over 1,400 have closed down since June 2018. Byron, Strada,  Gourmet Burger Kitchen and Jamie Oliver’s restaurant chains have all been casualties as the number of restaurant insolvencies have increased by 25% in the year to June 2019 – the largest number of insolvencies since at least 2014. Peter Kubik, a partner at UHY Hacker Young observed that “Good restaurants and bad have all struggled from overcapacity, weak consumer spending and surging costs. Having a loyal following is great but if that loyal following stops going out then you have a problem. The number of restaurants whose sales are at or near capacity is pretty small – they’re the exception”. * SO WHAT? * I think that a lot of the problems among restaurants are mirrored in high street retailers and survivors are likely to be the ones who create good customer experiences and who differentiate themselves whether they are small independents or bigger chains. They both face an online onslaught (retailers from the likes of Amazon et al. and restaurants from the likes of Deliveroo etc – why go out when you can sit on your @rse and get it without moving 😜) and need to adapt to a changing – and more discerning – customer. This is just evidence of what we already know.

Then Thomas Cook wins more time to thrash out £1.1bn rescue deal (Daily Telegraph, Alan Tovey) tells us that Thomas Cook has secured more time to negotiate its survival. It needs the support of 75% of its creditors to

continue with its proposal to let Fosun, the Chinese conglomerate which is Thomas Cook’s biggest shareholder with an 18% stake, to pay it £450m for a 75% stake in the tour business and 25% of its airline. * SO WHAT? * Thomas Cook faces a number of pressures at the moment – its Air Transport Operator’s Licence (Atol) is to expire at the end of this month, hedge funds are buying Thomas Cook debt and will want to be paid out in any deal, and it also needs to get cracking on booking hotel rooms for next year. Regulators at the Civil Aviation Authority (CAA) are looking into what might happen if the company fails, which would result in what would be the biggest ever repatriation of British holidaymakers trapped abroad. You’ve heard of “Fergie Time” – this is now “Thomas Time” and the outcome is far from a foregone conclusion. What a nightmare.

On a more positive note, Sunrise fights old battles for a new dawn at HMV (Daily Telegraph, Laura Onita) looks at how HMV is doing under its “new” owner Sunrise Records, the Canadian record store. It bought HMV in February this year for £883,000 after the embattled chain continued to suffer from high costs, falling sales and the increase in downloading/streaming and is trying new things to revive its fortunes. Unusually, 114 of HMV’s 127 stores are still open (most new owners buying something out of administration tend to jettison far more than has been the case here) and there haven’t been many job culls or supplier shake-ups as yet. * SO WHAT? * When you consider that the high street has seen the disappearance of the likes of Our Price, Tower Records and Zavvi over the years, this is no mean feat – but then again, there are a lot of rental reviews due in January – so if big cuts are going to happen, that will be the time to expect them. It sounds to me like the company needs to wield the axe unfortunately because they are just selling stuff you can buy online at cheaper prices. Like I keep saying, unless this retailer can provide better customer experience, it will die a death IMHO – but this time it will be final. 

House prices take a hit in September and student housing looks like it’s in oversupply…

Rare September fall in house prices (The Times, Philip Aldrick) cites the latest data from online property portal Rightmove which shows that house prices have fallen in September for the first time since 2010. House prices tend to bounce at this time of year but Brexit worries have been blamed as being the reason that buyers are hesitating. Rightmove director Miles Shipside pointed out that “As the deadline gets closer and tensions heighten, there has been a big swing with sales agreed now over 5 per cent below those of a year ago. Buying activity is still at nearly 95 per cent of what it was a year ago, but sellers in all regions are seeing fewer sales go through”. * SO WHAT? * Rightmove’s figures are one of a number of data points that are taken into account regarding the judgment of the health of the property market – other ones come from mortgage providers Halifax and Nationwide as well as the Office for National Statistics, the latter of which releases figures with a two-month delay.

Higher education: is Britain’s student housing bubble set to burst? (Financial Times, Thomas Hale and Judith Evans) looks at whether the massive growth in recent years of student accommodation, embarked upon by rising student numbers, is about to peak out. Investors have been throwing money at this area for a while now but prices are getting to such a level that there aren’t enough students to fill the accommodation at current prices and there are questions now as to the effect this concentration of resources is having on places that are becoming ghost towns in the holidays. * SO WHAT? * According to data from the Higher Education Statistics Authority, there were 550,000 first year students enrolled on a first degree in the year ending summer 2018 versus just under 360,000 in 2,000 – so you can see why accommodation has become an issue. However, investors have been gravitating towards accommodation close to higher ranked universities in recent years, meaning that the oversupply problem has been particularly acute in some areas. Given that this accommodation has been designed with students in mind, if developers buy with a view to changing their use, they could well incur quite high costs to convert them giving them more reason to stay away. It’ll be interesting to see if this oversupply can somehow help to meet non-student needs.

Purdue Pharma files for bankruptcy and BMW decides not to update the i3…

OxyContin maker Purdue Pharma files for bankruptcy protection (Wall Street Journal, Sara Randazzo and Jared S.Hopkins) highlights the latest development for a company that has become well-known for producing pain-relieving drugs, including OxyContin. It has been facing lawsuits from almost every state in the US for contributing to opioid addiction and it filed for bankruptcy protection

last night with a partial deal that could resolve some of these lawsuits. Johnson & Johnson, McKesson Corp and Cardinal Health are also faced with similar actions that allege that they have also contributed to the current opioid crisis – and it’s not going away.

BMW signals end of road for its i3 electric car (Financial Times, Peter Campbell) heralds a sad day for i3 fans as the distinctive runaround’s future development will be sacrificed to make way for the electrification of other models in BMW’s line-up. Cars generally have a 7 year life cycle and the i3 will hit that mark next year. It will continue to be produced for a few more years, it’s just that there won’t be a new version.

And finally, in other news…

I thought I’d leave you with two things today – Japan’s first dedicated e-sports hotel to open this spring with three full floors of gaming gear (SoraNews24, Casey Baseel https://tinyurl.com/y5mtnrvs), which will no doubt be a big hit with gamers and Fire and thread: Bayeux-inspired ‘Game of Thrones’ tapestry unveiled in France (Reuters https://tinyurl.com/y3y8zyeo) which will no doubt please embroidery and GoT fans alike!

1. In MACRO & CRYPTOCURRENCY NEWS, the ECB stimulates, Germany teeters and France says “non” to Libra
2. In RETAIL NEWS, Topshop suffers, Old Navy outlines expansion plans, Morrisons gets closer to Amazon, supermarkets mull Brexit actions and John Lewis has a shocker
3. In IPO NEWS, AB InBev reignites plans for an Asian listing, SmileDirect has a bad debut and WeWork ploughs ahead
4. In INDIVIDUAL COMPANY NEWS, BAT axes 20% of its senior staff and Trainline puts in a solid performance
5. In OTHER NEWS, I bring you the ring-con and a fire massage…

So “Super” Mario wants to go out with a bang, Germany continues to wobble and Libra gets the French thumbs down…

ECB cuts rates and tells governments to act (Financial Times, Martin Arnold) shows that Mario Draghi, president of the ECB until he hands over the reins to former IMF MD Christine Lagarde, just announced the biggest package of rate cuts and stimulus for three years in order to jolt the eurozone back into growth mode. It cut its deposit rate from -0.4% to a new record low of -0.5% and will restart its quantitative easing programme worth $20bn per month. The ECB expects inflation rates will stay lower for longer and also lowered its inflation projections for this year and next – but this is based on assumptions of a smooth Brexit (!). Trump expressed his displeasure, saying that the moves were designed to weaken the Euro, which would be bad for US exports. Draghi obviously denied that exchange rates were the target here, but yeah right. * SO WHAT? * Europe is in a hole and Draghi has used his silky diplomatic skills to hand Lagarde something she can work with. I think that the success of these latest moves, although widely expected, will largely depend on how much the individual countries toe the line. Given the current sluggishness of the eurozone (and global, for that matter) economy, you would think that it would be in their interests to do so – at least in the short-to-medium term.

Fears of German recession as factory output slumps by 5.3% (Daily Telegraph, Tom Rees) highlights the predictions of the well-respected IFO Institute, which says that Germany is in recession and will have its worst growth

for six years in 2019. Tito Wollmershaeuser, head of forecasts at IFO, warned that “This downturn was triggered by a series of world political events that call into question a global economic order that has grown over decades”. This grim assessment was also borne out by the latest figures for eurozone factory output which fell more than expected in July, with German manufacturers being the worst performer. * SO WHAT? * The Eurozone needs Germany to pick up otherwise a proper recovery just won’t get off the ground.

France plans to block Facebook’s digital currency Libra (Daily Telegraph, Natasha Bernal) just shows the latest blow to Facebook’s Libra cryptocurrency project, with French finance minister Bruno Le Maire being the latest politician to slag it off. He told an event at OECD that “All these concerns about Libra are serious. I therefore want to say with plenty of clarity: in these conditions we cannot authorise the development of Libra on European soil”, explaining that “It would be a global currency, held by a single player, which has more than two billion users around the world. The monetary sovereignty of states is under threat”. He called on the financial sector to respond to Libra and come up with ways to improve and streamline existing international payments systems. * SO WHAT? * Central banks and politicians hate the idea of Libra and continue to accuse it of bypassing the regulation and scrutiny that flat currencies have. It seems to me that if they have their way, Libra will become something akin to the Disney Dollars that you get at an amusement park and nothing more. Banks have already been working on their own cryptocurrencies for internal payments systems, so surely the tech is there or thereabouts. I just wonder whether banks are trying to keep their powder dry and use central banks/politicians’ aversion to all things Libra/Facebook as leverage to buy themselves concessions for a potential launch of a more “legit” cryptocurrency. The drama continues…

Topshop’s woes continue, Old Navy plans more stores, Morrisons cuddles up with Amazon, supermarkets mull Brexit preparations and John Lewis has a shocker…

Philip Green’s TopShop and Topman report £505m loss (The Guardian, Sarah Butler) shows that Arcadia’s fashion brands continue to suffer against stiff competition with the likes of Asos, H&M and Primark. Given that Topshop is Arcadia’s biggest brand, this is particularly worrying. On the plus side, Topshop has plans to expand online, as it already went live on Asos’ website and has plan to go live on Next’s in the coming months. It is already available in the US via Nordstrom the department store and via Zalando online. * SO WHAT? * TBH, this should be no surprise given that it is only just emerging from a CVA that squeeked through in June – so if the group had staged a dramatic turnaround this quickly questions would have been asked. While it’s good to see that the company is trying to optimise its online/offline balance, you do wonder whether this is too little too late. We’ll just have to wait and see – but I’m sure that those who have their pensions tied up in the company will be watching nervously.

Old Navy plans to open 800 more stores (Wall Street Journal, Patrick Thomas) heralds early moves by Old Navy to open a boatload (#dadjokes) of stores in preparation for its split from parent company Gap. Old Navy has outperformed its parent (and sister brands like Banana Republic) for years and plans to split the two with separate public listings were announced earlier this year. The company didn’t reveal a timeline for the openings at an investor event yesterday but news of the openings stands in stark contrast to Gap’s store closures over the last few years. * SO WHAT? * It looks very much like the student has become the master and it’s now time for Old Navy to spread its wings and separate from Gap, which will retain the Gap, Banana Republic, Athleta, Intermix and Hill City brands. Investor reaction was muted, though, given that splitting up will incur pretty big costs. Still, it sounds like

the right thing to do long term.

Back in the UK, Morrisons puts faith in partnership with Amazon (The Times, Elizabeth Burden) shows that Britain’s fourth biggest supermarket chain is deepening its online partnership with Amazon by signing a multi-year contract (rather than its existing rolling contract) to expand its same-day delivery service to Glasgow, Newcastle, Liverpool, Sheffield and Portsmouth in addition to its existing presence in Leeds, Manchester, Birmingham and parts of London and the home counties. * SO WHAT? * Given the supermarket’s otherwise disappointing performance in the second quarter it’s probably just as well that it is able to cement what has been a successful venture thus far. Morrisons’ current partnership with Ocado will remain unchanged.

Staying on the subject of grocers, Supermarkets make contingencies for a Brexit airlift of fruit and veg (Daily Telegraph) takes a look at what supermarkets are doing to prepare for a disorderly Brexit – including plans to import fruit and veg by plane if our ports and roads get gridlocked. Senior execs from Co-op and Waitrose are weighing up the options, although this particular one will involve higher costs and environmental impact. Morrisons has said that it has already started stockpiling as it intends to take advantage of its supply chain being almost two-thirds based in the UK. All three supermarkets said that they would try not to put up prices. * SO WHAT? * God knows. I would have thought that frozen food will also get more popular as well – and if that’s the case, maybe freezer sales will rise? Waitrose is stockpiling wine (well but of course), olive oil and canned food while the Co-op is keeping it real with stockpiling water and toilet roll…

Meanwhile, John Lewis issues stark no-deal Brexit warning (Financial Times, Jonathan Eley) cites outgoing (as in, leaving – not “really friendly bloke”) chairman Charlie Mayfield who said that “should the UK leave the EU without a deal, we expect the effect to be significant and it will not be possible to mitigate the impact”. The retailer suffered its first ever half year loss, blaming big investment costs and increasingly sluggish sales of big ticket items. * SO WHAT? * This is hardly surprising given the current economic backdrop, but it is significant as John Lewis is often seen to be the barometer of the higher-spending middle classes.

AB InBev reignites its Asia plans, SmileDirect loses its sparkle and WeWork ploughs ahead with its IPO…

In Brewing giant brings back plan to float Asian division (The Times, Dominic Walsh) we see that the world’s #1 brewer has resuscitated plans to float its Asia Pacific business on the Hong Kong Stock Exchange shortly after selling its mature Australian beer business to Asahi for $11bn. It had to abandon plans to list two months ago as investors were frightened off by the price the company was asking. * SO WHAT? * You would have thought that hiving off its Australian business will make it a more attractive investment proposition, but the downside at the moment is Hong Kong’s current instability, which might put investors off. Still, if it manages a successful sale, it would aim to raise about $5bn that would go some way to reducing its massive debt mountain.

Elsewhere, SmileDirectClub shares tumble 28% in public debut (Financial Times, Miles Kruppa) heralds a disappointing stock market debut for the American company that sells clear teeth aligners directly to consumers as its share price fell by a whopping 28% from its flotation price of $28. * SO WHAT? * Given that this was the latest flotation of a company that is deeply in debt and makes b*gger all money, you would think that this may serve as a warning for other considering the same thing although…

WeWork to list shares on Nasdaq, make governance changes (Wall Street Journal, Maureen Farrell and Corrie Driesbusch) shows that WeWork is going to plough ahead with plans to list despite investor concerns and its biggest shareholder, SoftBank, expressing reservations. We Co, the parent company, will be embarking on an investor roadshow next week. * SO WHAT? * I think this sounds like a nightmare, although I’m sure there will be investor frenzy. As I keep saying, there are more profitable operators out there in this space with a better and longer track record. I worry that this company is all mouth and no trousers.

BAT decides to cut senior staff and Trainline remains on track…

British American Tobacco cuts 2,300 jobs in shift towards vaping (The Guardian, Rob Davies) shows plans by the tobacco giant to cut down staff numbers by 2020 as the company tries to move towards a non-tobacco future. * SO WHAT? * Interesting timing for such an announcement given that vaping is coming under massive regulatory pressure at the moment from regulators and politicians – with Trump most recently jumping on the anti-vaping bandwagon. Still, whatever happens with vaping, tobacco 

companies will have to cut their employee numbers as cigarette sales continue to fall worldwide. Moving towards non-tobacco is just a convenient and PR-friendly excuse IMHO.

Trainline chairman pulls into siding with growth on fast track (The Times, Simon Duke) shows solid performance and raising of full year forecasts by the company on the one hand and the announcement of the resignation of its chairman, Douglas McCallum, on the other. Mind you, given that he make £6.5m in the June flotation and still has £12.3m worth of shares as well, you can understand that he might want to spend more time on the golf course 😜. He was always going to leave the company within 12 months of the flotation anyway, so I guess he is just leaving on a high!

And finally, in other news…

I thought I’d leave you with two things today – Nintendo’s crazy new Ring-con and RingFit Adventure are its new exercise/gaming hybrid (SoraNews24, Casey Baseel https://tinyurl.com/y3ww9ozf), which looks rather less alarming than it sounds 😂 – and Egyptian masseur plays with fire to ease muscle pain (Reuters, https://tinyurl.com/y37c5t3a) which is also supposedly the case! Out of the two, I’d go for the Nintendo option every time!

1. In MACRO NEWS, Trump urges the Fed to take interest rates to zero while tariffs on both sides of the US-China divide relent slightly and Scotland says no
2. In RETAIL NEWS, Zara benefits from a polka-dot dress, Forever 21 files for bankruptcy and Sports Direct’s search for an auditor continues
3. In INDIVIDUAL COMPANY NEWS, the London Stock Exchange gets a surprise bid from its Hong Kong counterpart, California passes Uber-unfriendly legislation and Trump considers banning non-nicotine flavoured e-cigarettes
4. In OTHER NEWS, I bring you a beautiful town benefiting from Bond…

So Trump continues to pressure the Fed, tariffs take a breather and Scotland says no…

Trump demands Federal Reserve cuts US interest rates to zero (Daily Telegraph, Tom Rees) shows that Trump isn’t letting up on his pressuring of the Fed ahead of next week’s scheduled meeting. In typical Trump style, he tweeted that “The Federal Reserve should get our interest rates down to zero, or less, and we should then start to refinance our debt”. It is widely believed that the Fed will cut interest rates next Wednesday in only the second time in ten years as the US economy is starting to show that it’s not immune to the current global slowdown. * SO WHAT? * The Fed is independent and Trump can sling all the mud he likes. Having said that, if he continues to slag off Jerome Powell (who he nominated, remember) and the US economy goes down the toilet, Trump will then say “I told you so” and if Jerome Powell cuts interest rates, which usually gives the economy a boost, Trump will say “It’s all because of me”. Trump can carve a win out of this either way but poor old JP will be the one wearing the responsibility for any economic weakness (because obviously Trump will take all the credit for anything good!).

Then in the ongoing trade war between the US and China, US to delay tariffs on China by two weeks (Wall Street Journal, Catherine Lucey and William Mauldin) shows a slightly more conciliatory stance ahead of planned trade talks next month from the American side and China eases tariffs on selected US imports before trade talks (The Times, Gurpreet Narwan) shows the same from the Chinese side. * SO WHAT? * This is all lovely, but I wouldn’t focus on this too much because it could all change very quickly if things go sour. The key will be what actually happens in the talks themselves, but the markets will probably breathe a sigh of relief in the meantime.

The Brexit noise continues in Scotland’s highest court rules prorogation of UK parliament is unlawful (Financial Times, Mure Dickie, Jane Croft and James Blitz) as Edinburgh’s Court of Session ruled that BoJo’s suspension of parliament was unlawful, but stopped short of ordering the recall of MPs. This ran against a previous decision by the High Court in London last week, which said that the suspension of parliament was “inherently political in nature and there are no legal standards against which to judge their legitimacy”, adding that “It is not a matter for the courts”. The UK Supreme Court will launch a hearing on this next week and the High Court in Belfast is currently looking at whether prorogation is breaching the Good Friday Agreement.

Zara benefits from its hit polka-dot dress, Forever 21 files for bankruptcy and Sports Direct races to get an auditor…

Zara’s hit £40 polka-dot dress propels firm’s worldwide sales growth (The Guardian, Sarah Butler) highlights a big factor in parent company Inditex’s worldwide sales growth success over the half year. The £39.99 dress was the viral fashion hit of the summer with its own Instagram Hot 4 the Spot as it appealed to all ages and all sizes – and even became a uniform for hen parties! Existing store sales were up by 5% in the six months to July with profits up by almost 9%. Inditex brands Pull & Bear, Massimo Dutti and Bershka all did well in addition to Zara with offline and online sales all growing. There have been recent store openings in Bahrain, Oman and Kuwait with more to following in South Africa, Colombia and the Philippines this autumn. * SO WHAT? * This looks like a very solid performance from a great apparel retailer and contrasts sharply with what’s going on with British counterparts like Topshop, New Look and M&S. Still, the share price fell by 4% in trading yesterday as investors were expecting higher profit margins. I think that is a bit of a harsh reaction considering that growth is expected to continue at the same rate and that its early autumn/winter collections have been “well received” – especially when you consider what is happening to the competition.

Sticking with apparel retailing for the moment, Forever 21 plans to file for bankruptcy as many retailers struggle (Wall Street Journal, Soma Biswas, Aisha Al-Muslim and Alexander Gladstone) highlights rumours that the American apparel retailer will be filing for bankruptcy this Sunday (which are denied by the company itself) due to the usual suspects of slow sales, online competition and changing customer habits. The company shut more stores between January and June – over 7,000 – than they did in

the entirety of 2018 and some are saying that another 700 could face the axe. Forever 21, which focuses on cheap and fast fashion, has suffered due to expanding too quickly with big stores just as its younger customers were ramping up their online spending. * SO WHAT? * Forever 21 is just one of a number of US stores struggling at the moment and a report by BDO said that in the first half of this year, 14 retailers with 20 stores or more filed for bankruptcy, including Payless, Gymboree and Charlotte Russe Holdings – with Charming Charlie, Barneys New York, A’Gaci and Avenue stores joining them more recently. I think this is a particular shocker given that wages have been rising for a while now, the job market is buoyant and the economy is still doing pretty well (although it’s showing signs of wobbles at the moment). Anyway, it just goes to show that retailers everywhere are under pressure as online shopping continues to grow in popularity.

Meanwhile, Sports Direct in race against time to find new auditor (Financial Times, Jonathan Eley) shows that the controversial “athleisure” retailer is up against it to get a bean-counter to sort its books. None of the biggies want to touch it with a barge pole after its accountancy firm Grant Thornton quit (its assets are increasingly sprawling, chief exec Mike Ashley can be a bit of a loose cannon and the company’s corporate governance has come under scrutiny) and if Sports Direct doesn’t manage to find one itself, the government will be called in to appoint one. Mike Ashley also came under fire at yesterday’s AGM as almost a third of independent shareholders voted against his reappointment as chief. Mind you, considering that he still controls about 63% of the shares, he can just flip them the bird. * SO WHAT? * Things are tricky for Ashley at the moment and he blames all the usual things like business rates, high rents and changing consumer behaviour for Sports Direct’s overall weakness – but when you see things like rival JD Sports’ strong performance, you do wonder whether it’s a Mike Ashley problem or sector-wide one. I’m thinking that it is becoming more of the former than the latter at the moment… 

LSE gets a surprise bid, California legislation causes an Uber headache and Trump considers banning flavoured e-cigarettes…

In LSE set to spurn shock £30bn takeover bid from Hong Kong (Daily Telegraph, Harriet Russell) we see that the Hong Kong Exchanges and Clearing’s (HKEX) unsolicited bid for the London Stock Exchange is likely to be swatted away, although LSE’s share price got a boost in trading yesterday (presumably because investors think that this could smoke out other potential bidders). * SO WHAT? * Given that the shares closed up by only 5.9% versus the 23% premium being offered by HKEX, it would suggest that the market doesn’t think it’ll go ahead. If it does, however, it could throw the LSE’s recent plans to buy Refinitiv for £22bn into doubt. Mind you, Brits and Americans will no doubt be pretty twitchy about a Chinese takeover (especially in the current climate) so I would not expect this to get past the regulators.

Uber vows to fight California legislation on gig economy (Wall Street Journal, Alejandro Lazo and Sebastian Herrera) highlights the passing of some landmark legislation that will force companies to reclassify some of its contract workers as employees – which will kick companies like Uber and Lyft where it hurts as both companies rely on flexible labour and low worker costs. * SO WHAT? * Given California’s size and history of producing precedents for business legislation, this is a big deal and could pull the rug from under the gig economy by reclassifying its workers. It’s unsurprising that companies like Uber will fight tooth and nail to overturn this legislation as it could have huge implications for them.

The pressure on e-cigarettes continues to increase as Trump plans to ban most vaping flavours (Wall Street Journal, Jennifer Maloney and Alex Leary) shows that Donny T is thinking about pulling most vaping products from the market due to growing concerns about the effect on health and rising use by teenagers. Serious stuff when you consider that flavours such as mint, mango and other fruity flavours account for 80% of Juul’s sales. * SO WHAT? * Vapers are already facing scrutiny and criticism and this latest slap from the president himself could pose serious problems for an area that the tobacco industry is pouring a lot of money into. 

And finally, in other news…

I thought I’d leave you today with a potential holiday destination idea in New Bond film gives ancient Italian town £10m boost (Sky News, Andy Hayes https://tinyurl.com/y2gvgo84). It does indeed look pretty stunning! You might have to hold off on using the airport rental for car chases, though…

1. In MACRO NEWS, Spain faces yet another election while UK jobs and pay increase
2. In MANUFACTURING NEWS, EDF faces a nuclear problem and VW and Land Rover unveil important new models
3. In TECH NEWS, Vestager gets a second term, Jack Ma steps down from Alibaba, Apple takes on Netflix and Uber cuts 400 tecchies
4. In UK HIGH STREET NEWS, we see record closures, JD Sports rides the athleisure wave and Honest Burger defies the odds
5. In OTHER NEWS, I bring you a Great British Bake-Off classic…

So Spain faces the polls again while UK wages and job numbers increase…

Spain faces fourth election in 4 years after talks fail (Financial Times, Daniel Dombey) shows that Spain is now heading towards yet another election after talks between its Socialist government and the extreme left-wing Podemos party broke down yesterday. Caretaker PM Pedro Sanchez had been trying to cobble something together to avoid this state of affairs, but it seems that the parties are too far apart on issues such as fiscal policy and Catalan independence. There will be an election on November 10th unless he can win a parliamentary vote on forming a new government by September 23rd. The Socialists nabbed 29% of the vote in Spain’s most recent election to Podemos’ 14% and some opinion polls indicate that the Socialists would improve their share while Podemos would lose share. * SO WHAT? * Spain has had three elections

since December 2015 as the old two-party system has changed to a coalition-based government which has subsequently led to instability. Yet despite this, the economy is actually doing quite well!

Pay growth at 11-year high as jobs total rises (Daily Telegraph, Tim Wallace) cites the latest figures from the Office for National Statistics which show that pay growth increased by 4% – for the first time in over 11 years – due to higher base pay and bonuses. The number of jobs also increased in the three months to July, meaning that the unemployment rate of 3.8% is now at its lowest level for 45 years!!! * SO WHAT? * If you couple that with another recent release from the ONS which shows an increase in economic output, things don’t actually look too bad at the moment. Having said that, some economists are concerned that there are signs of the rate of employment slowing down – so everyone will be following subsequent data very closely. In the meantime, it looks like consumers are going to have enough money to get them through these uncertain times – especially if they get another boost from PPI payments!

EDF has a nuclear-shaped problem, the global car industry continues its downward spiral and both VW and Land Rover unveil key vehicles…

EDF nuclear blow sparks share price meltdown (Financial Times, David Keohane) highlights welding problems at some of its nuclear plants which sparked a 7% share price fall yesterday as investors reacted to the news. This was its sharpest one-day drop in almost two years and it could get worse if it has to shut down its 58 nuclear power stations. The problems relate to components made by its majority-owned nuclear reactor construction unit Framatome. * SO WHAT? * EDF, which is 85% owned by the French government, is in a tricky position at the moment. President Macron, who faces re-election in 2022, is keen to show progress towards the target of cutting the percentage of nuclear-generated electricity in France from 72% currently to 50% by 2035 and has been putting pressure on the company to restructure. EDF is currently in the middle of a €45bn investment programme to extend the life of its existing plants and grow its renewables capability as part of this push whilst coping with €37.4bn of net debt (or double that if you include hybrid debt as well as pension and nuclear liabilities). There is talk that the nuclear and hydroelectric business could be separated into an entity called EDF Bleu, leaving the renewable energy, networks and services business into another entity called EDF Vert. Under this plan, EDF Bleu would be wholly state-owned

while EDF Vert could be listed and sell 20-40% of itself to raise funds. A delicate path would have to be trodden here as EU regulators won’t want to see too much intervention by the state and militant union leaders will obviously want to preserve jobs, but it may a good solution for investors who want exposure to EDF itself without the nuclear liabilities (plus the attractive growth prospects for the renewables business). So as you can see, the latest news of dodgy welding could throw more than a spanner in the works for EDF if it has to lose even more money to solve the current issues…

In the world of car manufacturing, we see some interesting announcements at the Frankfurt Motor Show yesterday in VW leads charge in race to electrify market (The Times, Robert Lea) where VW unveiled its first ever purpose-built electric vehicle, the ID.3 to great fanfare. Taking government subsidies into account, an ID.3 can be yours for less than £25,000, pitting it against the likes of the BMWi3, the Nissan Leaf and Mini Electric. Yesterday also saw the unveiling of the electric version of the Vauxhall Corsa, the Corsa-e, at a similar price point. A Defender, but not as we know it (The Times, Robert Lea) heralds the announcement yesterday of a new old favourite – the Land Rover Defender. The entry price point of £40,000 is somewhat higher than that of its previous incarnation at £23,000 but it looks more up-to-date and has more gizmos on it. * SO WHAT? * This is all very well, but the fact remains that car sales are continuing to decline and although electric cars look the part, charging infrastructure continues to be rather sparse. The situation of the latter must be improved as a matter of urgency if EVs are to stand a fighting chance of wider adoption.

Vestager gets a second term, Jack Ma retires, Apple takes on Netflix and Uber cuts technical staff…

Big tech companies must be collectively groaning as Vestager handed second term with more powers (The Times, Simon Duke) shows that the European Competition Commissioner, Margrethe Vestager, has been handed an unprecedented second term of five years with enhanced powers to develop digital policy across the EU. Vestager is the one who slapped Google with a multibillion-dollar fine for abusing its power in internet searches and made Apple pay the Irish government €14bn in back taxes. Her role will now include the oversight of emerging policies on cybersecurity, AI and privacy in addition to shaping the EU’s stance on tax avoidance by multinational tech companies.

Then Jack Ma, China’s richest man, steps down as chairman of Alibaba (The Guardian, Lily Kuo) marks a historic day for the Chinese e-commerce giant as its founder hands over the reins to his successor, Daniel Zhang, 20 years after he started the company. Since its beginnings among a group of friends in a shared appartment in Hangzhou in 1999, the company has expanded its business from selling goods online to having significant presence in financial services, mobile payments and AI. Alibaba listed on the New York Stock Exchange in 2014 in what is the largest IPO in history, where the company was valued at $460bn. He will retain a 6.22% shareholding in the company and remain on its board of directors until its AGM in 2020.

Apple undercuts rivals with streaming price (Wall Street Journal, Tripp Mickle) highlights the launch of three new iPhones yesterday (the iPhone 11, iPhone 11 Pro and 11 Pro Max), a new smartwatch with a better battery and its new TV+ video streaming service, which undercuts Netflix on price and which will debut on November 1st in 100 countries including the UK. Sales of the iPhone accounted for less than 50% of Apple’s overall revenues this summer for the first time since 2012 as the company continues its efforts to beef-up revenues from its services segment. * SO WHAT? * Given that the new line-up doesn’t have 5G capability (or fold 😂) I would expect iPhone owners from the last two-ish years to wait longer to upgrade, but the offer of free TV+ for a year for those buying a new iPhone, iPad or Mac will potentially boost device sales. Incremental improvements (apart from the TV thing, which is a new direction), but otherwise fairly meh from what I can see – and I like Apple products!

Uber cuts more than 400 technical jobs (Wall Street Journal, Heather Somerville and Mark Maurer) shows that the troubled ride-hailer is cutting about 8% of its headcount in product and engineering divisions, mainly in the US, as it strives to become profitable. * SO WHAT? * Uber has over 27,000 full-time employees worldwide but it seems that this may be slowing down. It laid off a third of its marketing department in July and announced its biggest ever quarterly loss last month, citing tough competition, costs related to its IPO and slowing growth in its rides business. Uber shares are currently trading at about 26% below the company’s May flotation price.