Category: Uncategorized

1. In MACRO & OIL NEWS, the UK service sector slows and Brazil holds a big oil auction
2. In RETAIL NEWS, Walgreens Boots Alliance eyes a massive buyout, Primark aims for US expansion, Pandora suffers from riots and Mothercare shuts down in the UK
3. In NEWS ON INDUSTRY TRENDS, seltzer looks like The Next Big Thing in beverages and EV sales rise in the UK
4. In INDIVIDUAL COMPANY NEWS, Xerox sees drama and Peloton has big losses
5. In OTHER NEWS, I bring you battered Quality Street and the right bauble-to-Christmas-tree ratio…

So the UK service sector weakens and Brazil holds a massive oil auction…

UK economy hit as service sector reports big fall in new orders (The Guardian, Phillip Inman) cites the latest service sector IHS/Markit/Cips Purchasing Managers’ Index which shows activity stagnating with Brexit uncertainty being to blame. Services companies said that export orders were particularly weak and rising import prices are squeezing profits, which is leading to staff cuts. * SO WHAT? * The services sector accounts for the majority of the UK’s annual GDP – and so if you combine that with recession in manufacturing and construction you get the UK’s weakest economic performance since the 2008 financial crash, according to IHS Markit’s chief business economist Chris Williamson.

Then in Brazil prepares for auction of deep-sea oil

deposits (Financial Times, Bryan Harris, Andres Schipani and Anjli Raval) we see that ExxonMobil, Shell and Cnooc are among the many oil majors who will be competing with each other to develop four oilfields off the south-east coast of Brazil that are thought to contain up to 15 BILLION barrels of crude oil. The Brazilian government stands to benefit to the tune of $25bn in licensing fees and billions more in production compensation. This will come in very handy for president Jair Bolsonaro, who is trying to revive the economy and encourage competition. This will be the largest oil bidding round ever and will begin today. * SO WHAT? * If these sites come through on the predictions, Brazil could become the world’s fourth biggest oil producer by the 2030s. It’s currently the world’s ninth biggest producer. This bright spot comes at a difficult time for the whole oil industry in Latin America with Mexico’s state-owned group Pemex announcing yet another quarterly loss last week and Venezuela’s continued fall in oil production (despite the country sitting on the world’s largest oil reserves). This latest development is also notable in that it signals an increased willingness on Brazil’s part to open up its energy industry to outsiders.

Wallgreens Boots Alliance has big buyout ambitions, Primark eyes US expansion, Pandora suffers from the riots and Mothercare shuts down in the UK…

In Walgreens weighs up largest buyout (Daily Telegraph, LaToya Harding) we see that the American drug store chain is considering what would be the biggest ever leveraged buyout. The company, which currently has a market value of $55bn and carries  $16.8bn of debt, has reportedly been in touch with some of the world’s biggest private equity firms on the matter. There is talk of asset disposals to boost funding as well. * SO WHAT? * I wouldn’t normally mention this sort of thing in Watson’s Daily because the parties are still in talks – but the sheer scale of this means that it is worth mentioning now to get it on your radar. I personally think that high street drug stores is a very difficult business and one that is ripe for change. It has a degree of downside protection via its prescriptions business which gets it a certain level of footfall, but then customers are often left with an uninspiring (and often cluttered) environment. If it manages to go private – for the right price – it may be easier to make more radical changes without inpatient shareholders breathing down its neck.

Primark ready to realise American dream (The Times, Ashley Armstrong) highlights Primark’s ambition to expand its chain in the US after strong sales at its store in Brooklyn, New York. Primark now accounts for half of the sales and profits of its parent company, Associated British Foods. It has 373 outlets worldwide, 189 of which are in the UK. * SO WHAT? * This was not an overnight success as Primark opened its first US store four years ago in Boston. Since then it has opened more stores and re-jigged formats to make things work and it looks like a rare British retailer success story. Let’s hope it doesn’t go the way of some of the others who had a tendency to over-expand too

quickly in a highly competitive market. Apparently, there aren’t any targets for numbers of stores opening, so they stand a chance IMO. It is interesting, though, that the company is doing SO well despite the fact that you can’t buy any of its stuff online! It just goes to show that there are exceptions to the general trend of fashion retailers finding a good balance between online and offline offerings.

Protests tarnish Pandora’s fortunes (The Times, Ashley Armstrong) shows that the ongoing political protests in Hong Kong are denting turnaround efforts at the troubled Danish jeweler as it reported lower-than-expected sales in the third quarter. It said that sales had halved in the region and the protests took the edge off its recently-announced overhaul aimed at pulling in younger shoppers after several profit warnings. Its share price fell by 15.5% at one stage yesterday as investors expressed their disappointment.

Mothercare to cease all UK trading with loss of 2,800 jobs (The Guardian, Sarah Butler) highlights the latest development in the demise of yet another high street struggler as its administrator, PwC, said that Mothercare will close all of its 79 UK stores and online business but keep its profitable overseas operations. * SO WHAT? * Mothercare stores will be closing over the next few weeks and months with the loss of 2,485 retail jobs and 384 head office and distribution staff among others. The fact that it is keeping its overseas operations will mean that the company will get to maintain its listing on the London Stock Exchange. It said that it is currently in talks with potential partners to keep its UK presence by selling its brand via other stores or websites. Given that it entered into a CVA last year, had a profit warning in July this year and failed to turnaround its performance, its downfall is hardly surprising. Things have got to be really bad on the UK high street when even Sports Direct’s Mike Ashley isn’t willing to buy them as per Ashley rules out riding to the rescue of Mothercare (Daily Telegraph, Laura Onita). As we’ve seen over the recent past, Ashley seems content to buy just any old cr*p (Evans Cycles, House of Fraser etc.) these days 😜!

There’s a new drink that’s getting everyone excited and electric car sales rise in the UK…

Alcoholic fizzy waters claw sales from beer (Financial Times, Leila Abboud) highlights a new US drinks craze for “spiked seltzers”. The new drink – made with sparkling water, cheap alcohol and fruit flavouring – is supposed to chime with 20-30-somethings’ desires to have healthier drinks using natural ingredients that have fewer carbs and calories. * SO WHAT? * Analysts at UBS believe that spiked seltzers will grow from a $550m market to $2.1bn market in the next three years and a drink called White Claw currently has a 53% market share followed by Boston Beer’s Truly that has 31%. Given its surging popularity, some of the world’s biggest beer companies are trying to come up with their own versions. Constellation Brands said it would launch a Corona-branded seltzer in four flavours

next year and MillerCoors is already selling Henry’s Hard Sparkling Water. The summer craze for this stuff has dented beer sales over the period – so this is not to be taken lightly! Although this is largely a US phenomenon at the moment, some seltzers have cropped up in the UK like Balans and Bodega Bay but many analysts think that this will spread around the world. Exciting!

One in 10 new cars sold in UK has electric or hybrid drivetrain (Daily Telegraph, Alan Tovey) cites the latest figures from the Society of Motor Manufacturers and Traders (SMMT) which show an increased appetite for electric vehicles. Stats show that 143,251 new cars were registered last month and 9.9% of them were either battery-powered or hybrids – up from 6.9% a year earlier. Sales of purely battery-powered cars were up strongly, but from a very low base. The figures also showed the continued demise of diesel, which now make up 24% of the market – it used to be over 50% before the VW dieselgate scandal hit in 2015. * SO WHAT? * Nice news but EVs are still very niche. I’d go hybrid as charging capabilities are still rubbish.

Xerox is at the centre of some interesting developments and Peloton disappoints…

It’s all going on at Xerox what with Xerox exits Fujifilm joint venture with $2.3bn sale to Japanese partner (Financial Times, Kana Inagaki) highlighting Xerox’s sale of its 25% stake in the joint venture on the one hand and Xerox considers takeover offer for HP (Wall Street Journal, Cara Lombardo) on the other. The copier-maker is thinking about making a cash and shares offer for HP, but nothing is confirmed yet. HP is currently worth about $27bn and is about three times the size of Xerox, but the latter will be getting a $2.3bn windfall from the sale of its JV stake as mentioned above. * SO WHAT? * If it goes ahead, good luck to ’em. Combining these two hardware businesses sounds like a nightmare to me – and I would expect LOADS of cuts to be made if it happened given the companies’ exposure to a very very mature business. Will they go the way of Kodak?? I don’t think so given that I think there will always be a need for printers and copy machines – but surely there will be scope for a LOT of cost-cuts given business overlap.

I really hope I am wrong but CEO John Foley in Losses put the brakes on Peloton (The Times, Robert Miller) sounds like he is so full of ***t when he says “I believe if we pulled back on growth we could be profitable tomorrow, but that is not what the board and the leadership of Peloton believes we should do”. The company sells £2,000 exercise bikes with a big touchscreen and gets users to pay a monthly fee to virtually attend its spin classes. It reported a bigger than expected loss for the quarter and wasn’t too hopeful about the full year either. The share price fell by 7.6% on the news. * SO WHAT? * OMG. This company is a complete POS (look that one up) IMHO and has to find some way of diversifying away from this bike business. I still don’t understand why people buy this – you can buy a pretty decent bike with all the gear for less than £2,000 and bike outside, £2,000 would also probably get you a few years’ worth of gym membership with all the spinning classes you could want (plus you’d get access to the gym, swimming pool etc.) or if you were serious about cycling, you could buy yourself a Wattbike (used by Olympic athletes which has TONS of data) for £1,600 or use an existing bike on a turbo trainer for a few hundred quid. Surely sooner or later people are going to realise they are just throwing money away and move onto something else?? “We are within striking distance of profitability”?? My *rse. Apologies to those of you who are Peloton fans – I just think there are far better ways of getting “bike fit”.

And finally, in other news…

We are coming to that time of year where fish & chip shops seem to feel the need to provide deep-fried festive offerings. Fish and Chip shop sells battered Quality Streets – and they’ve ranked best ones (The Mirror, Courtney Pochin https://tinyurl.com/yxfl2pca) is one example, although do you remember last year’s Chip shop serves deep-fried Christmas dinner – with battered sprouts (The Mirror, Mark Chandler https://tinyurl.com/yc5w3rdv)? Obviously, the trad Christmas dinner doesn’t have enough calories as it is 😂. And, speaking of Christmas, I thought you might find this useful: Christmas tree guide shows correct amount of decorations to get the perfect look (The Mirror, Luke Matthews https://tinyurl.com/y484bgzo). I might give this a go!

1. In TRADE & COMMODITIES NEWS, the US and China edge closer to a deal, India refuses to sign a pan-Asian trade pact and Freeport uses AI to mine copper
2. In NEWS BY SECTOR, German manufacturers ask for government help on EVs, cloud gaming gets a boost from China’s 5G rollout, UK MPs call for more gambling restrictions and auditors face a shake-up
3. In INDIVIDUAL COMPANY NEWS, BA’s owner buys Air Europa (and Ryanair doesn’t like it), Uber skids and Mothercare faces collapse
4. In OTHER NEWS, I bring you some truly awful dad jokes…

So excitement builds as hopes for a US/China trade solution nears, India refuses to sign a regional trade pact and Freeport uses AI to optimise copper mining…

US, China consider rolling back tariffs as part of initial trade deal (Wall Street Journal, William Maudlin and Alex Leary) cites people close to current negotiations between the two sides who seem to imply that a partial trade deal is getting closer. The “phase one” agreement would cover Chinese purchases of American farm goods, tighter controls on currency speculation, measures to protect intellectual property and ways for US industries to broaden their China business. Nothing’s finalised but that hasn’t stopped excitement building as per Wall Street closes on record highs (The Times, James Dean) where markets spiked on hopes that a deal will be signed this month.

Then India decides not to sign China-backed pan-Asian trade deal (Financial Times, Benjamin Parkin and John Reed) shows that India will not be signing off on the Regional Comprehensive Economic Partnership (RCEP) despite 15 other nations (including the 10 Asean nations plus China, Japan, South Korea, Australia and New Zealand) doing so. This trading agreement has been under discussion since 2012 and India has decided not to go ahead with it because it doesn’t want a deluge of Chinese imports when it’s got big trade deficits with it already.

Having said that, India has left to door open to joining the trade deal at a later stage. If it had joined, the group would have been the world’s biggest trading group. * SO WHAT? * Maybe I’m reading too much into this, but it seems to me that PM Narendra Modi is biding his time for better terms on the agreement. He’s got a lot to deal with in his own backyard and I think a delay will favour India. If the economy continues to slide, he has more chance of getting more domestic support saying that India NEEDS the pact, but if things turn around he will be in a better position to negotiate more favourable terms.

Freeport turns to artificial intelligence to raise copper output by 90,000 tonnes (Financial Times, Neil Hume) takes a look at Freeport-McMoran, one of the world’s biggest producers of copper, which is aiming for a 5% production uplift via the use of Artificial Intelligence at its mines. The US-listed company is testing out its AI model at a site in Arizona with a view to rolling it out across the whole of the Americas. This model, which was developed with McKinsey, uses data sensors around the mine and optimises the performance of its crushers and processing mills. * SO WHAT? * Copper is vital in the move away from fossil fuels towards renewable energy because it’s used in wind turbines, rechargeable batteries and charging points so any ways that mining can be optimised will be well-received. Success here will mean that miners can extract more from existing mines whilst simultaneously reducing carbon emissions and slowing the need to open new ones. I think this is an exciting development for AI and would imagine that other similar initiatives will pop up in both the mining and other industries to optimise existing assets (and probably find new ones).

German auto manufacturers seek help with EVs, China’s 5G rollout hastens development of cloud gaming, MPs put more pressure on gambling firms and ructions in audit continue…

German car executives call for electric-vehicle backing (Financial Times, Joe Miller) shows that the German government is being called up to boost demand for electric vehicles. This coincided with yesterday’s production launch of VW’s first mass-market all-electric vehicle, the ID.3, but Chancellor Angela Merkel stopped short of bringing forward her previously stated target of investing €3.5bn on installing 1m charging points across the country within ten years and broaden subsidies. The ID.3 will go on sale in Europe next year for around €30,000. Stephan Weil, the minister-president of Lower Saxony and member of VW’s supervisory board, pointed out that the success of electric vehicles will depend on having enough charging points and appealed for a change in tenancy and residential property laws that will make their installation easier. * SO WHAT? * Given how important the car industry is to Germany it seems only right that it should apply more pressure to the government to help its transition to new technologies. TBF, this applies in every country – not just Germany – and we have seen time and again that higher subsidies lead to more sales while cutting subsidies kills sales – just ask Tesla! I would expect other countries will be doing the same thing – but with Germany putting its full weight behind this push I’d argue that the  movement is more likely to spread. The only caveat on this is how to implement measures that will help the industry without being judged to be anti-competitive.

China 5G rollout to boost cloud gaming (Financial Times, Tom Hancock) looks at how the rollout of 5G services across China will put a rocket under the development of cloud-based gaming in the world’s biggest video games market. Cloud technology will mean that players can get high-powered gameplay on low-powered devices such as mobiles as all the whizzy tech stuff will be done on powerful remote servers as 5G allows for much faster transition speeds. London-based trade body GSMA estimates that China will have 600m 5G mobile subscribers by 2025. * SO WHAT? * Alibaba and Tencent

are likely to be particularly competitive in this space and will be able to increase revenue streams via in-game adverts etc and selling data to game designers. Interestingly, as things stand, US cloud gaming services will rely on subscriptions whereas Chinese gamers will be playing for free which will also potentially boost usage very quickly. Tencent launched its WeGame cloud gaming service in August and NetEase partnered with Huawei for its own one earlier this year. Alibaba teamed up last year with Intel to work on its offering. None of these services are perfect just yet, but the potential gains are there for the taking and the companies involved have got very deep pockets. I think that 5G will spell the end of “traditional” console gaming and that perhaps a Nintendo Switch-like functionality between a mobile phone and, say, a big TV at home will be the way forward.

It’s all going from bad to worse for UK gambling companies as Shares in UK gambling firms plunge as plans for online curbs emerge (The Guardian, Rob Davies) shows that these firms, who are still reeling from the shock of government-imposed betting limits on their previously highly profitable Fixed Odds Betting Terminals (FOBTs), are facing even more pressure from MPs who are recommending a strict clampdown on online casino games. * SO WHAT? * This is a cross-party initiative and, if adopted, would drastically reduce the amount of money they earn from slot-machine players who make up over a third of the industry’s income, according to the Gambling Commission. 888 saw its share price fall by 14% on the news with GVC (which owns Ladbrokes) taking a 10.5% hit while other players such as William Hill, Flutter Entertainment (which owns Paddy Power Betfair) and online slot-machine maker GameSys all weakened. These firms certainly are on a losing streak at the moment…

Then in UK audit shake-up spurs flood of inquiries for non-Big Four firms (Financial Times, Tabby Kinder) we see that the UK government is looking at proposals from the competition watchdog that will force all large listed businesses to appoint one of the Big Four (Deloitte, EY, KPMG and PwC) plus another firm to conduct joint audits. This will mean that smaller accounting firms will get a big boost in audit enquiries (they’ve already been seeing an uptick) but Big Four accountants: catch of the day (Financial Times, Lex) argues that this won’t necessarily improve the quality of the audits as smaller accountants are not immune to mistakes and companies won’t necessarily be keen on this initiative as it will mean that they will have to pay out more in fees.

BA’s owner buys Air Europa, Uber suffers losses and Mothercare goes into administration…

In a quick scoot around other news, British Airways group to buy Air Europa for €1bn (Financial Times, Philip Georgiadis) heralds a chunky acquisition for International Airlines Group (IAG) that will help it to expand in the South American transatlantic market and make Madrid Europe’s next hub airport but O’Leary demands IAG sells assets as part of €1bn takeover (Daily Telegraph, Simon Foy and Oliver Gill) shows that Ryanair’s boss isn’t taking this lying down. Separately, he’s also having a headache with Ryanair hit by further delay to Boeing 737 Max deliveries (The Guardian, Julia Kollewe and Gwyn Topham) that could affect the company’s plans for summer 2020.

Elsewhere, Uber booked another quarterly loss as revenue climbed (Wall Street Journal, Heather Somerville) shows that the ride-hailer still faces challenges, although it was

more upbeat about its prospects in 2021. Remember, a lock-up on the shares expires tomorrow, so things could get interesting as early investors decide to lock in profits.

Then Mothercare in fight to protect staff pensions after collapse (Daily Telegraph, Laura Onita) highlights yet another big UK high street name edging towards the retail trapdoor of death. Shops remain open for now, but 2,500 jobs are at risk as the company’s fate is decided by adminstrators. * SO WHAT? * I don’t find this surprising given that Mothercare has been in trouble for quite some time now. FWIW, I think it was bound to fail because it targets a very narrow demographic that I would argue is particularly prone to shopping online. Anyone who has had young kids will know that dragging them around shops is not always an enjoyable experience – and when you have an age demographic that is used to buying things more cheaply online (without screaming kids in tow!), it’s hardly surprising that the physical shops have become a greater burden. Maybe someone will buy the brand itself and a few shops, but this will be another headache for retail landlords as “another one bites the dust”.

And finally, in other news…

It’s one of those rare times again where I can’t find anything to put in this section! So here are some really bad dad jokes to keep you going today:

A slice of apple pie is $3.00 in Barbados and $3.50 in the Bahamas. These are the pie rates of the Caribbean.

What did the pirate say on his 80th birthday? AYE MATEY

What do you call a dog that can do magic? A Labracadabrador

Let’s all hope that I can find some decent stories to put in this section tomorrow otherwise this’ll be a looong week! 😜

1. In MARKETS & OIL NEWS, China’s stock market heads for top spot in 2019 and Saudi Aramco launches its IPO
2. In PROFESSIONAL SERVICES NEWS, administrators see fat fees but KPMG and Grant Thornton have issues
3. In INDIVIDUAL COMPANY NEWS, Uber faces a potentially tricky week and we look at the power of CATL and the Google takeover of Fitbit
4. In OTHER NEWS, I bring you a 10year-old McDonald’s meal and perpetual Christmas on the radio…

So China’s stock markets have a much better 2019 and Saudi Aramco launches its IPO…

China’s stock market on track as world’s best performing in 2019 (Financial Times, Hudson Lockett) highlights the strong performance of the country’s CSI300 index – up by a third this year – despite the global economic slowdown and the ongoing trade war with the US. The Shanghai and Shenzhen exchanges have all powered upwards on the back of domestic investor confidence as well as steady international inflows. * SO WHAT? * This contrasts sharply with a disappointing 2018 when the CSI300 benchmark fell by 25%. Consumption has weathered the trade war storm quite well and the continued inclusion of Chinese stocks in the closely-followed MSCI Emerging Markets benchmark has helped to maintain capital inflows from abroad. If it’s doing this well when the general backdrop isn’t looking particularly great, you would have thought things would get another boost if Xi and Trump manage to break the trade deadlock!

I mentioned the decision for the state-owned Saudi Aramco’s to float last week but Saudi oil giant Aramco gets go-ahead for $1.5tn stock listing (The Guardian, Jillian Ambrose and Patrick Collinson) gives more detail in terms of valuation and implications. The price and number of shares are expected to be revealed on 9th November, with trading not beginning until around 12th December, but the valuation is expected to be more around the $1.5tn mark rather than its long-touted target of $2tn. This will still make the company, which supplies 13% of oil globally, the biggest publicly traded company in the world. It has offered a massive sweetener to potential investors by saying that the Saudi government will abstain from its share of dividends in the event of an oil price collapse which essentially means that $75bn of dividends will be guaranteed every year! Wow! * SO WHAT? * The company does very well from oil and when you consider that it only costs it $2.80 to get a barrel’s worth out of the ground versus the current market price of around $62, you can see just how profitable it is! That said, Crown Prince Mohammed bin Salman is keen to use the money now to wean his country off oil money and diversify into other areas.

Administrators rake it in from the high street’s downfall but KPMG and Grant Thornton have their own problems…

Administrators eye £35m bill from crisis on the high street (Daily Telegraph, Michael O’Dwyer and Laura Onita) highlights analysis by The Daily Telegraph which shows that audit firms charged £34.6m for overseeing bust companies in 2018, £22.5m of which went to the Big Four: KPMG, EY, PwC and Deloitte. Administrators are called in to find solutions for troubled companies and try to get cash to pay creditors if the business collapses. They take over from existing directors and tend to either sell the company on as a whole or in parts. * SO WHAT? * OK so this figure is a guide as it can be pumped up by including things like legal fees and travel expenses, but it can also be lower because the fees that administrators ACTUALLY receive can be less than reported as some of it will not have been paid yet etc. Out of 18 companies falling into administration last year, PwC worked on six (including those of Evans Cycles, Coast and Conviviality) but EY handled the most expensive one, House of Fraser, for which it earned £6.2m. This year promises to be another one for big fees given the ongoing implosion of the high street and collapse of Links of London, LK Bennett, Karen Millen etc.

Bearing those fat fees in mind, KPMG to cull a tenth of its UK partners as part of overhaul (Financial Times, Tabby Kinder) sounds rather dramatic. The Big Four accountancy firm announced that it will cut 10% of its UK partners (that’s 65 partners in line for the chop) by Christmas following a review as part of a wider “refresh”. * SO WHAT? * Call me cynical, but this has a whiff of the PR stunt about it given that the firm had to be seen to do something following its audit of collapsed outsourcer Carillion, dodgy partner behaviour and £20m worth of regulatory fines in the last year alone. Around 45 partners leave the firm every year anyway either via real retirement or forced retirement,

so 65 is not completely out of the blue – especially when one source close to the company said that that the original hit list consisted of around 90 partners. KPMG launched “Project Zebra” this summer in an effort to cut £100m in costs, which has thus far resulted in the imminent closure of its Mayfair members’ club, the recall of employees’ mobile phones and the cutting of around a third of its 630 personal assistants. It’s also on the verge of selling its pensions advisory business to a private equity firm and has sold and leased back its Canary Wharf HQ, which netted it £400m. It wants to use the savings to go towards a £200m investment in its auditing business over two-and-a-half years. It doesn’t look to me like it’s doing too badly – but it seems like the negative newsflow on the company is probably being used as a good excuse to get rid of people that otherwise might have been tricky to sack. Maybe I’m being overly harsh, though!

The gloom continues in Times are particularly tough for auditors at Grant Thornton (Financial Times, Kate Burgess) as Grant Thornton, auditor to smaller and medium-sized businesses, has changed its year-end from June to December as part of the company’s plans to restructure the business. * SO WHAT? * This doesn’t sound all that earth-shattering on the surface, but it doesn’t happen all that often with big profile companies because observers get all nervy, thinking that there is something to hide. The company is a partnership and therefore doesn’t have the same reporting obligations that it would do as a publicly quoted one, but it did issue a “transparency report” for the 12 months to June 2019. However, it is having a tricky time currently as profit per partner fell to around half that of rivals at BDO while investigations by the Financial Reporting Council over its audits of Sports Direct, Patisserie Valerie and Interserve aren’t going to help its reputation much either. The company is losing ground in audits and said earlier last year that it could not compete against the Big Four and withdrew from tendering for FTSE350 audits. It has also lost ground against BDO as the biggest auditor of Aim-listed companies. An overhaul sounds like it is on the cards…

Uber heads for a nervy week, CATL keeps its hold on electric car batteries, the Fitbit/Google combo won’t be without its issues and Fortnum’s announces a Hong Kong opening…

Given the sell-off last week of Beyond Meat following the investor lock-up, Uber slump feared if backers get out (Daily Telegraph, Olivia Rudgard) you do wonder what’s going to happen with Uber’s share price this week as a lock-up period is due to expire this Wednesday, which means early backers will be able to trade their shares for the first time since the company listed in May. One investor, who put his $25,000 consultancy fee back into Uber in 2011, could sell his shares for tens of millions of dollars and a lot of short-sellers are expecting big falls in the share price as other early backers are likely to sell to lock in profits. The company’s third quarter results are due out today.

The key to electric cars is batteries. One Chinese firm dominates the industry (Wall Street Journal, Trefor Moss) is an interesting discussion about Contemporary Amperex Technology Ltd – aka “CATL” – in China. China is the world’s biggest car market and is by some way the world’s biggest electric vehicle (EV) market and the government boosted its fortunes significantly by pretty much forcing foreign car manufacturers to use locally made batteries. As a result, CATL has become the world’s biggest maker of electric vehicle batteries. * SO WHAT? * CATL’s dominance

not only in the field of batteries, but also in the related supply chain, is creating a problem for the West to find their own equivalents. It is also now looking to develop outside China by investing $2bn in its first overseas plant in Germany (which is scheduled to open in 2021) with BMW as its first customer. It’s likely that a US plant will follow, given the country’s lack of capacity – pretty bold moves for a company that only started eight years ago! The conclusion is that other competitors and potential competitors  have a huge chasm to bridge in order to catch up with CATL’s scale and production capacity. 

Fitbit’s merger with Google feels more like a surrender (Daily Telegraph, James Titcomb) follows on from the acquisition of Fitbit by Alphabet right at the end of last week for $3.2bn and highlights some real concerns given Google’s sketchy reputation with data privacy and overall fickleness. Given that it went back on its promise to keep Nest (which provides intelligent thermostats) independent of Google by forcing users to link their accounts to Google and that it switched off support for Revolv (a company that makes hubs to control lights and alarms) only a few years after it bought it (thus rendering its £210 hubs useless), it’s hardly surprising that alarm bells are ringing. As a result, the Competition and Markets Authority has been called to block any merger and the Information Commissioner’s Office, the UK’s data watchdog, has said that it would look more closely at the deal. * SO WHAT? * I think that this acquisition makes strategic sense for both sides as Google gets a ready-made product that works and Fitbit gets the capacity for connectivity that Google can offer, but this article is just pointing out that the little guys are having to leave the arena to let the big dogs (Apple and Google) slug it out. This is true and certainly raises even more concerns about data privacy and overall customer protection.

And finally, in other news…

I thought I’d leave you today with the historic meal in The chosen bun: Decade-old burger’s decay livestreamed in Iceland (afp.com https://tinyurl.com/y6jp7m33). Yuck. And then here’s something for all you Christmas-fanatics out there: Radio station playing nothing but Christmas songs launches two months before big day (The Mirror, Luke Matthews https://tinyurl.com/yxej2fle). WHAT???

1. In MACRO & OIL NEWS, Trump faces more impeachment stuff, Hong Kong goes into recession, sterling trading heats up and Shell suffers from weak oil prices
2. In RETAIL NEWS, Authentic Brands gets the green light for Barneys, JC Penney eyes a comeback and Fosun closes in on the Thomas Cook brand
3. In TECH NEWS, Samsung’s profits crater, the smartphone market grows and Pinterest gets in bother
4. In INDIVIDUAL COMPANY NEWS, Altria makes a big Juul write-down and Lloyds gets whacked on PPI
5. In OTHER NEWS, I bring you some impressive pumpkin carving…

So Trump faces more heat, Hong Kong falls into recession, sterling activity increases and Shell loses out to lower oil prices…

Democrats open new phase in Donald Trump impeachment inquiry (Financial Times, Demetri Sevastopulo and Lauren Fedor) heralds problems for Trump as this whole impeachment thing just isn’t going away. He is now going to have to face open hearings about his alleged efforts to make his Ukrainian counterpart investigate Trump’s political opponents in order to get military aid. I don’t know how long this is going to drag on for, but I guess that Trump will want to get this sorted quickly so the electorate will have time to forget it in the run-up to next year’s election.

Given all the civil unrest since June, Embattled Hong Kong slips into recession (The Times, Gurpreet Narwan) has an air of inevitability about it. However, this is a notable development given it’s the first time it’s been in this situation for ten years. GDP contracted by 3.2% in September and marked the second consecutive quarter of contraction which makes it a “technical recession”. * SO WHAT? * The government is expected to introduce more stimulus measures in addition to the £2bn-worth of tax cuts and business subsidies introduced in August but no-one’s going to want to invest or do business there in any kind of size while the civil unrest is ongoing. China will have to tread a fine line between being too heavy-handed in bringing Hong Kong to heel and potentially scaring off overseas investors.

Election to trigger an explosive rise in sterling (Daily Telegraph, Ambrose Evans-Pritchard) contends that a number of global banks are getting excited about the prospect of getting a Withdrawal Agreement and a government with a working majority if BoJo wins the upcoming general election – and that there will be a

resulting frenzy of trading that will drive up the value of sterling. HSBC’s currency strategist observed that “A lot of investment has been mothballed because of uncertainty, but we could see those mothballs wither away quickly once there is clarity. It could be radical”. Growth could gather pace very quickly, with the labour market tightening even more – which could then put pressure on the Bank of England to raise interest rates to prevent the economy overheating. Societe Generale, Danske Bank, Swedbank, Morgan Stanley and UniCredit all have £/$ year-end targets of $1.40 or thereabouts and UBS Wealth Management has advised its clients to start buying UK assets “unhedged” for the first time in years. * SO WHAT? * Much of this assumes BoJo winning with a majority that would have the ability to push through legislation – and the bigger a potential BoJo majority, the stronger sterling will be. However, many City observers will also have fears in their mind of a Jeremy Corbyn victory which sounds like it will involve massive taxes for the wealthy and the potentially very expensive nationalisation of rail, the Post Office and utilities companies – as well as the uncertainty of a possible second referendum. No one seems to be mentioning the LibDems very much at the moment, but I’m sure that will change as time goes on. I am planning on trying to read the manifestos when they come out and will try to summarise and compare them so you can see the differences as I am one fun guy 😃

Investors wipe £15bn off Shell’s value as oil prices drop (Daily Telegraph, Ed Clowes) just shows how oil price weakness has been hitting some of the oil majors as Shell’s profits fell by 15%, which was exacerbated by an uninspiring global economic backdrop. Investor disappointment regarding its downbeat assessment of paying down debt and returning cash to investors via the world’s biggest share buy back translated into a 4.5% fall in its share price – making it the biggest loser in the FTSE100. Having said that, its results were better than market expectations overall as its oil and gas trading division made much more money than analysts had been predicting. Shell needs oil prices to be at least around $65 a barrel in order to break even – but this has proved to be out of reach for the majority of this year.

Barneys/Authentic Brands gets the go-ahead, JC Penney aims to turn things around and Fosun closes in on the Thomas Cook brand…

Judge approves sale of Barneys to Authentic Brands (Wall Street Journal, Soma Biswas) highlights what will be a new chapter in the life of Barneys New York as a bankruptcy judge approved Authentic Brands’ acquisition of the ailing department store for just over $271m. It is likely that this will mean the closure of most of Barneys New York stores – leading to job losses for many of its 2,000 employees – and the licencing of the Barneys name. Closures will include the flagship store on Madison Avenue among others and the Barneys name will be licenced to Saks Fifth Avenue which will open Barneys stores within its own stores (!). The deal should close today but the door has been left open for another buyer to step in – but that looks unlikely at this stage. * SO WHAT? * The potential outcomes have been well-flagged all along – but I do wonder why you’d want to see the Barneys brand in another department store. At least there will be some kind of conclusion (assuming the deal goes ahead) and everyone can try to get things back on track for the imminent Christmas season – a tall order, admittedly, given we are now in November! Yet another example of the slow death of department stores…

Talking about dying department stores, J.C.Penney plots a comeback: less clutter, more yoga classes (Wall Street Journal, Suzanne Kapner) looks at what the struggling retailer is doing to turn things around. It seems to be experimenting with alternative formats that include a fitness studio, a videogame area and style classes (!)

as well as cutting less-profitable product categories. New-ish CEO Jill Soltau is also rejigging the layout of stores by grouping products via “lifestyle”, e.g. work, active, casual and dress. Her “experimental” store in Hurst, Texas, has wide aisles, bright lighting, interactive experiences, tons of lounges, “smart” fitting rooms and concierge services – which all sounds great. * SO WHAT? * Although it is admirable that Soltau is trying to change the format to appeal to new and existing customers, she’s against the clock as revenues continue to fall (fun fact: J.C.Penney has lost money every year since 2012), the company has about $4billion in debt and it is also facing the prospect of being delisted from the NYSE. Given that she’s also trying to do this while consumer tastes continue to change – and with limited resources – I don’t fancy her chances, although I’d love to be proved wrong. Whatever she decides, she’ll have to do it quickly otherwise time will run out.

Then in Fosun poised to snap up Thomas Cook brand (Financial Times, Daniel Thomas) we see that Chinese conglomerate Fosun is on the verge of buying the Thomas Cook brand and intellectual property assets which could mean that you could see it as an online travel agent within months of it falling into administration! There have been other companies who have been bidding – including rival Tui – but it would appear that Fosun is ahead of the pack at the moment. No details are available currently as to the price. * SO WHAT? * Given the brand recognition that Thomas Cook has built up over the years, it is eminently possible that Fosun could use the brand to front a digital travel agent which could also be used to sell package holidays to Chinese and link up with its other tourism businesses, like Club Med for example. Thomas Cook may be dead, but it is not yet buried! In a funny kind of way, you do wonder whether this worked out well for Fosun in that I suspect these assets will be cheaper than trying to rescue the whole company.

Samsung suffers, the smartphone market grows and Pinterest announces bigger losses…

South Korea’s Samsung reports 52% fall in profit amid weak demand (Financial Times, Song Jung-a) portrays a rather downbeat consumer electronics giant as it said that it expected its earnings to stay weak for the fourth quarter due to weak seasonal demand and increased marketing costs. Its downbeat assessment of future prospects extended into next year given the global economic slowdown. On the plus side, the chip business shows signs of recovery as 5G-related spending is expected to increase along with renewed spending on data centres. * SO WHAT? * This was the fourth consecutive quarter of falling earnings for the world’s #1 producer of memory chips and

smartphones. Having said that, the prospect for a recovery in chips should be positive and Smartphone market grows for first time in two years (Daily Telegraph, James Cook), which cites data from Strategy Analytics showing increased handset shipments, gives cause for some optimism – especially if Samsung can take advantage of Huawei’s US problems.

Pinterest’s losses widen as expenses ballooned (Wall Street Journal, Kimberly Chin) heralds the company’s deepening losses in the third quarter as its outgoings more than doubled, sending the share price down by a chunky 19% in after-hours trading. On the plus side, active monthly users increased by 28% from last year and came from expansion into new international markets. It did, however, lose 8% of its monthly active users in the US over the same time period. * SO WHAT? * Sales and marketing are proving to be expensive for the company but it hopes that investment now will reap rewards from SMEs further down the line by giving them a broadening product array.

Altria announces a big Juul write-down and Lloyds suffers from the PPI deluge…

Perhaps unsurprisingly, Marlboro owner sees $4.5bn of Juul’s value go up in smoke (The Times, Alex Ralph) shows that Altria has made a $4.5bn write-down in the value of its 35% stake in vaping specialist Juul. Although it didn’t cite any one thing as a reason behind the “non cash impairment charge”, the fact that it’s under investigation from the FTC, the FDA and being banned all over the place (sales restricted in China, India has announced a complete ban, etc.) suggests that this is an eminently understandable move. Juul-related troubles also led to the collapsed of the proposed merger between Altri and Philip Morris International. * SO WHAT? * Talk about trying to catch a falling knife! I really do wonder whether the value of that 35% stake bought for $12.8bn is actually going to go

to zero. Given how down everyone is on vaping, I would not be surprised if it died completely. The ONLY thing I think that could help sentiment right now is if the mysterious lung conditions that are allegedly caused by vaping are ACTUALLY caused by all the non-official knock-off products that are sold on the internet. However, I imagine that will be extraordinarily hard to prove and everyone wants to put the boot into anything or anyone involved in vaping right now.  

Lloyds profit slumps after provision for last-minute PPI claims (The Guardian, Julia Kollewe) is a story doing the rounds on today’s broadsheets as the high street bank has had to allocate another £1.8bn to cover the massive increase in PPI complaints received in the run-up to the August 29th claims deadline. * SO WHAT? * This will negate virtually all of its quarterly profit BUT it would seem that the end is in sight for this cloud that has been hanging over all of the banks over the last few years. OK, so there’s a risk that the amount of money allocated to the claims will have to go up again, but the end is definitely in sight. I expect things will go sideways for now, though, until we get Brexit/economic clarity from the general election.

And finally, in other news…

Given that it’s the day after Halloween, I thought I’d leave you with the impressive Romania hosts carving of over 30,000 pumpkins (Associated Press, Vadim Ghirda and Andreea Alexandru https://tinyurl.com/y3ymxrma). That’s a whole lot of pumpkins!

1. In MACRO NEWS, the Fed cuts rates for a third time, French GDP rises and the City hopes for a “Boris Bounce”
2. In TECH NEWS, Apple and Facebook smash it, Twitter goes a-political
3. In RETAIL/CONSUMER NEWS, Australia’s biggest supermarket faces the music for underpaying, UK MPs push for changes in business rates, Next disappoints and UK consumer confidence continues to shrink
4. In INDIVIDUAL COMPANY NEWS, Peugeot and PSA look like merging while both Lyft and Starbucks do well
5. In OTHER NEWS, I bring you holiday maximisation, McDonald’s on a diet and bad airline food…

So the Fed cuts rates, France motors and the City hopes for a Boris Bounce…

In Fed cuts rate for third time this year, signals pause (Wall Street Journal, Nick Timiraos) we see that the Federal Reserve (aka “the Fed”) cut interest rates for the third time since July, but indicated that this would be the last cut for a while unless the economy had a shocker. The federal funds rate was cut by 0.25% to a range of 1.5%-1.75%. * SO WHAT? * I think it’d be fair to say that this rate cut was largely in the price already, but US stocks rose slightly in response. It’s interesting to note that the Fed RAISED interest rates FOUR TIMES last year to try to calm an overheating economy but has CUT it three times this year in order to avert a potential downward spiral following the ongoing US-China trade war. Bluntly speaking, Trump wants the Fed to cut the rate way more than this because big rate cuts tend to boost financial markets considerably, which would make him look like a hero going into election year next year. So you can see why Fed chairman Jay Powell’s more gradual adjustments aren’t going down well in the White House…

Following on from what I was saying about France yesterday, French economic growth beats expectations (Financial Times, Martin Arnold) cites the latest figures which show that French GDP grew by 0.3% in the three

months to September. This beat market expectations, providing further evidence that the French economy is weathering the current global economic slowdown better than Germany’s, which will fall into recession if expectations of a second consecutive quarter of contraction come to fruition. France appears to be benefiting from strength in services and domestic consumption whereas Germany seems to be suffering from its exposure to exports, which are being hit by tariffs incurred during the US-China trade war. Interestingly, exports only account for 31% of French GDP versus a 48% average for the eurozone. German GDP figures are scheduled to be announced on November 14th, and the expectations aren’t good.

We are all going to be in for a barrage of noise in the run-up to the December 12th election, so City hopeful Johnson victory could spark ‘Boris Bounce’ (The Guardian, Phillip Inman) is just one of many comments! This one says that early signs in financial markets point to the expectation of a BoJo victory and his subsequent carrying through of the existing deal with tweaks. Analysts at Berenberg bank think a “Boris Bounce” (a boost to the economy and financial markets) could occur, especially if he throws tax cuts into the mix of higher public spending. * SO WHAT? * The Conservative and Labour parties are expected to publish their respective manifestos in the next two weeks or so. That should mean we’ll get a clearer picture of the parties’ respective intentions, but until then expect a ton of noise and bluster.

Apple and Facebook put in solid performances and Twitter moves away from political ads…

Apple revenue rises even as iPhone sales decline (Wall Street Journal, Tripp Mickle) highlights a solid performance in the company’s other gadgets and services division as iPhone sales growth continues to tail off. Profits were down, marking the first time since CEO Tim Cook took over in 2011 that they have declined for every quarter in a fiscal year. The company continues to talk a good game as CFO Luca Maestri said it is optimistic about a strong Christmas sales season given customer interest in its new iPhones and wearables. * SO WHAT? * However you look at it, iPhones still account for over 50% of Apple’s revenues but at least other areas of the business seem to be going in the right direction, doing just enough to take the edge off sluggish handset sales. Its new streaming service Apple TV+ is due to launch this Friday with a $4.99 per month subsciption. FWIW, I think Apple will just move sideways until it launches a 5G phone next year as all of its  products seem to be incrementally better than the previous ones. If it could come out with a 5G foldable phone that doesn’t break (unlike rival offerings!), maybe this would get people excited again! In the meantime, the company will

just keep chipping away at services and wearables. I must say, though, that I think it is madness for Apple to go into TV. Talk about a money pit. As far as I can see at the moment, they’ve got next to b*gger all content and it’s going to get worse (and more expensive) as their bigger rivals fight over existing shows to boost their own offering. Apple does seem to have money to burn, so I guess it can just throw money at streaming – but I think there are much better ways of using its cash pile.

Facebook earnings soar as Zuckerberg warns of ‘tough year’ ahead politically (Wall Street Journal, Jeff Horwitz) shows that Facebook has managed to weather the storm of bad PR and political pressure as it announced strong third quarter results yesterday, sending the share price up by 5% in after-hours trading. User numbers rose by 9% versus last year and average revenue per user was up by 19% over the same period. * SO WHAT? * OK, so it continues to struggle with Washington with antitrust and misinformation allegations and has just been abandoned by key partners in its Libra cryptocurrency project – but the business continues to rumble on unabated. Given Twitter to ban political ads (Wall Street Journal, Georgia Wells and Emily Glazer) while Facebook says it will continue in this space regardless, I expect that the company will be rubbing its hands at the prospect of higher ad revenues leading into next year’s election! Zuck should definitely be sending Jack Dorsey a big Christmas present this year for taking this stance!

Australia’s #1 supermarket faces a massive backpay bill, MPs call for a review of business rates, Next disappoints and consumer confidence continues to shrink…

Australia’s top supermarket chain underpaid workers by A$300m (Financial Times, Jamie Smyth) highlights a massive injustice as Woolworths admitted that a review undertaken by PwC found that 5,700 of its workers had been underpaid over a period stretching back to 2010! Affected employees will be getting full entitlements, with back pay and interest as well as pension contributions asap, according to the company. This is the latest underpayment scandal to hit Australia recently as Domino’s Pizza and 7-Eleven have also had similar issues. The Fair Work Ombudsman will be investigating further and trade unions across the country have launched a campaign against what they term “wage theft” calling for tough new laws to punish wrongdoers. * SO WHAT? * This is absolutely shocking, don’t you think?? Anyway, all those affected workers will suddenly get a pretty decent cash windfall which may help to boost consumer spending in some way (presumably this may help DIY retailers and holiday firms, among others, depending on the size of the windfall) – but there could be much wider implications if more companies admit to doing the same thing.

Back in the UK, Business rate regime must be replaced, MPs demand (The Times, Gurpreet Narwan) highlights ongoing hand-wringing about the effect of business rates on high street retailers as a group of MPs in the Treasury Select Committee said that they placed an unfair burden on them. They called on the government to consider alternative taxes instead like a land value tax, an online sales tax or a profits tax. * SO WHAT? * Retailers have been banging on about this for ages and will continue to do so as the high street fragments by the day. Online retailers continue to benefit from lower (or no) taxes, meaning that they can afford to charge less for their goods, which means that customers continue to use them – which makes the situation worse for physical shops. Something major clearly needs to happen, but given that business rates rake in about £30bn a year, you can understand why the government has been dragging its feet somewhat. High streets are emptying as a consequence, though, so pressure is building for change.

Next feeling the heat from a warm summer (The Times, Ashley Armstrong) shows that warmer weather at the end of summer hit high street sales growth, but online sales increased by 9.7%. Investors seemed to be underwhelmed by the company’s decision to stick with its annual profit guidance and the share price fell by just under 3% on the update. Meanwhile, Consumer confidence takes another step back (The Times, Gurpreet Narwan) cites the latest GFK consumer confidence index which shows shows that UK consumers are feeling increasingly pessimistic about their personal finances. No surprises there!

A Peugeot/Fiat combo gets closer, Lyft raises guidance and Starbucks benefits from iced coffee…

Fiat Chrysler and Peugeot agree to pursue giant auto merger (Financial Times, David Keohane and Peter Campbell) signals an agreement to merge, creating the world’s fourth biggest carmaker. The boards of both companies have agreed to “work towards” a so-called merger of equals and details will be discussed over the coming weeks. PSA chief Carlos Tavares will become CEO of the enlarged business and Fiat Chrysler’s John Elkann will become chairman while the company will be headquartered in the Netherlands, a “neutral” location. The French government, which owns 12.2% of PSA, is also officially on board with the agreement – important, considering that it was the French government’s faffing which scuppered the proposed (then abandoned) merger with Renault earlier this year. * SO WHAT? * This sounds reasonable from a strategic point of view, but it’ll be interesting to see the detail. The fact that the French government are OK with it will give this deal a big boost. I expect more mergers and “joint ventures” in the automaker sector as players huddle together to survive more onerous regulation and shrinking sales.

Elsewhere, Lyft raises guidance, reports increased revenue (Wall Street Journal, Heather Somerville) heralds positive developments for the US ride-hailer as it raised its forecasts for this year as it announced a 63% hike in revenues and more earnings per rider. It will be the second quarter in a row where it has improved its full-year guidance. * SO WHAT? * I think that Lyft is quietly doing well as it, unlike competitor Uber, isn’t trying to be all things to all people everywhere all of the time. It has stuck to the US and Canada and looks like it is heading steadily toward profitability if its third set of results since flotation are anything to go by. The next stage on that road is to reduce discounts and subsidies – but the main cloud hanging over it is the Assembly Bill 5 (aka “AB5”) legislation in California which will classify its drivers as employees who will be entitled to more legal protections, increasing the company’s overheads.

Then Starbucks gets a lift from iced coffee (Wall Street Journal, Heather Haddon) shows that the world’s largest coffee chain attributed its solid quarterly results to stronger US sales of iced coffee and other cold beverages, which now make up around half of all drink sales. Interesting takeaways from these results: cold coffee is becoming increasingly popular among younger customers who view it as a healthier alternative to fizzy drinks and younger customers are also helping sales by buying cold drinks throughout the day rather than just in the morning. The company still faces big competition in China form local rival Luckin Coffee.

And finally, in other news…

I thought I’d leave you with a few bits today: You can double the amount of days you have off work in 2020 if you plan it now (The Mirror, Luke Mattews https://tinyurl.com/y2f6ffww). Shhhh. Just keep it between us 😜. And although I’m not really a fan of McDonald’s, if you feel the need and want to minimise the impact on your waistline What to eat at McDonald’s and Nando’s if you don’t want to ruin diet – and it’s not salad (The Mirror, Zoe Forsey https://tinyurl.com/y3qe8ldx) may be worth a look! However, I would stay away from the following: Plane passengers share snaps of the worst in-flight meals they’ve been served (The Mirror, Luke Matthews https://tinyurl.com/yyh5cpaf). 🤢

1. In MACRO & OIL NEWS, BoJo gets his election, Macron’s labour reforms bear fruit, Saudi Aramco announce a cut-down IPO and BP suffers from weather and weaker oil prices
2. In CAR NEWS, strikes cost GM $3bn while Fiat and Peugeot’s owner consider a merger
3. In RETAIL NEWS, Amazon cuts fees on speedy deliveries and M&S announces “buy-now-pay-later”
4. In INDIVIDUAL COMPANY NEWS, Beyond Meat’s early backers sell while Lloyd’s faces opioid fallout of epic proportions
5. In OTHER NEWS, I bring you a ghoul/ghost puzzle…

So BoJo gets his election, Macron’s labour reforms kick in, Saudi Aramco announces its IPO and BP suffers…

General election set for December 12 as MPs vote to break Brexit paralysis (Financial Times, George Parker, Sebastian Payne and Laura Hughes) highlights the latest development on the Brexit/BoJo rollercoaster as he got his wish to hold a General Election on December 12th  after Labour eventually decided to go with it rather than drag things out any longer. He also reappointed 10 of the 21 MPs he sacked last month for going against him over Brexit, potentially removing the threat of these rebels standing as independents and splitting the Conservative vote. BoJo’s Brexit deal will be suspended in the meantime. Interestingly, opposition parties failed to move forward the date of the poll to December 9th and to extend the vote to 16 and 17 year olds. The House of Lords is expected to rubber stamp legislation to hold the December 12th election. * SO WHAT? * It’s a gamble, but clearly one that BoJo thinks he has a decent chance of winning. However, predecessors Theresa May and David Cameron completely misjudged the mood of the electorate and lost key votes that led us to this current state of affairs – Cameron regarding the referendum and May in thinking she could increase her majority. Although the Conservatives are ahead in the opinion polls at the moment, things can change and there’s still time for others to play catch-up. I guess that BoJo’s game plan is to win a majority, which will make pushing through Brexit way easier (depending on whether he gets it and how big it is) without having to rely on the DUP. Fun facts: this will be the first December election in almost a hundred years, the second general election since 2016’s referendum and the third in less than five years.

Hopping over the Channel for a minute, Macron’s labour market changes begin to bear fruit (Financial Times, Hannah Copeland and Valentina Romei) shows that the French president’s labour reforms are showing early signs that they might actually be working. He has capped the cost to employers of unfair dismissal, carried out a tax overhaul and made low-wage work more attractive by reworking benefits. He has also made it more expensive for some employers to hire people on short-term contracts and beefed-up training and skills initiatives. Another crucial area he is working on currently involves the replacement of 42 pension schemes with one system whilst pushing up the retirement age above 62. Although France’s economy is actually doing quite well against a tricky global economic backdrop its unemployment numbers remain stubbornly high – in fact, the fourth highest in the EU after Italy, Spain and Greece. However, the latest figures show that French unemployment fell to 8.5% in the second quarter of 2019 – its lowest level for ten years – and the number of temp contracts has been falling steadily since 2018. Macron is trying to reduce unemployment to below 7% by 2022 and

these figures would seem to vindicate his actions thus far. * SO WHAT? * This all sounds like things are moving in the right direction in terms of reducing headline unemployment levels but two problems need to be addressed for this to work on a long-term basis: making work more attractive than living on benefits (French benefits can be pretty generous) and how to bridge the gap between workers’ skills and the jobs available. Macron has more chance to push reform through than his predecessors given his broad-based support and the relative current strength of France’s economy – but if things turn down at all, employers and unions will be on his back. Bearing in mind the ongoing US-China trade tensions and a shaky German economy, continued strength in the French economy is not a given.

Delayed Aramco float imminent after scaled-down listing (Daily Telegraph, Simon Foy) highlights the listing that everyone has been waiting for – the initial public offering of Saudi-state-owned Saudi Arabian Oil Company, aka Saudi Aramco, aka Aramco. HOWEVER, it will only list between 1% and 2% of the company on its domestic Tadawul stock market, as opposed to the 5% it was originally thinking of floating on the domestic and international markets (the latter of which got markets around the world fawning over the regime to get the business). The timetable would suggest that the launch will be on November 3rd, with trading to commence on December 11th but Aramco’s spokesman said that “The company continues to engage with the shareholders on initial public offering readiness activities. The company is ready and timing will depend on market conditions and be at a time of the shareholders’ choosing”. * SO WHAT? * This is an important development given that this sounds like it might actually happen. Flotation has been booted into the long grass thus far because of weaker oil prices, increasing scepticism over IPOs generally and the target of a $2tn valuation (yes – you read that right – TWO TRILLION DOLLARS. That’s like TWO Apples/Googles/Amazons at their peak) looking more and more distant by the day. As for the international flotation, everyone has been jockeying for position but Tokyo seems to be the current front runner due to the current political uncertainty in the UK and Hong Kong.

Then in BP profits tumble after weaker oil prices and hurricane impact (The Guardian, Jillian Ambrose) we see that the oil major’s profits have taken a big dent due to weaker oil prices, various one-off weather-related costs and the falling value of its investments affected at least in part by downbeat forecasts for the global economy. * SO WHAT? * Current chief exec Bob Dudley will be stepping down at the beginning of next year to be replaced by BP’s current exploration and production boss Bernard Looney, who is expected to come up with a road map for a low-carbon future. Good luck with that – an oil company coming up with a low-carbon future?? That’s like tobacco companies coming up with a no-cigarette future, oh wait – that’s going to happen too, apparently. Did I just see a pig fly past my window?? 😜🐷

GM counts the cost of strikes while Fiat and Peugeot cosy up…

GM factory strike to hit bottom line by nearly $3bn (Wall Street Journal, Mike Colias) quantified the cost of a 40-day strike (the longest nationwide strike for 50 years, no less!) at its US factories as it announced cuts to its full year profit forecasts. General Motors said that it cost it all of its free cash flow for the entire year and almost $3bn in lost earnings. Despite this, the company managed to announce market expectation-busting third quarter results and investors seemed to be looking forward to strong earnings in 2020 as the share price actually jumped by 4.3% in trading yesterday. * SO WHAT? * Its refreshed line-up of pick-up trucks is expected to do well but sluggish markets in China and South America are of particular concern. The industry itself continues to see weaker sales as the US-China trade war continues to hit tariffs and consumers get increasingly reluctant to spend on big ticket items like cars etc.

Fiat Chrysler, Peugeot owner PSA in talks to combine (Wall Street Journal, Ben Dummett, Nick Kostov and Christina Rogers) highlights the prospect of Fiat Chrysler and PSA Group merging to form a $46bn company that would be the world’s 4th biggest auto manufacturer, as Fiat Chrysler said in a short statement that “There are ongoing discussions aimed at creating one of the world’s leading mobility groups”. It sounds like the two are mooting the possibility of an all-share “merger of equals”, but negotiations are still at a very early stage. The talks come only months after Fiat Chrysler walked away from another combo with Renault due to resistance from the French government (a big shareholder) and its alliance partner Nissan. * SO WHAT? * Investors were piqued by the possibility (Fiat Chrysler’s New York quoted shares were up by 7.5% overnight), but as we’ve seen already these things don’t always run smoothly as merger talks have tended to fail due to politics getting in the way and/or internal power struggles. There is pressure to consolidate in the industry due to rising costs (due to tightening emissions regulations necessitating higher input costs and the introduction of electric models) and falling sales so we’ll just have to see how this latest attempt pans out.

Amazon cuts delivery fees and M&S offers “buy-now-pay-later”…

Amazon is cranking the pressure up on grocery retailers in Amazon cuts fees on fast grocery deliveries (Daily Telegraph, Hannah Boland) as the company has announced it is scrapping fees for existing US Prime customers for its grocery deliveries. Until now, users had to pay $14.99 a month to get Amazon Fresh deliveries. This move sparks speculation that it’ll happen in the UK. * SO WHAT? * This is clearly a move to put pressure on other grocery retailers and was bound to happen given Amazon’s desire to expand in this area, not to mention its moves to squeeze out more from its logistics networks. Will supermarkets respond? Or CAN they respond given that

delivery as a proportion of overall costs for supermarkets is probably higher than it is for Amazon? 

M&S launches ‘buy now, pay later’ service to attract younger customers (The Guardian, Zoe Wood) signals a punchy move by the troubled high street stalwart as it tries to attract younger customers in the run-up to Christmas. It is working together with Clearpay to offer customers the ability to pay for orders of over £30 in four interest-free installments over six weeks with a maximum spend of £800. * SO WHAT? * This is clearly a response to the rise of rival Klarna (which already has over 4,000 retail partners in the UK including Asos, Boohoo and JD Sports), which is already successful as a service that is highly valued by younger customers on tighter budgets. Shoppers that use these payment plans tend to spend more, more often and are therefore an attractive demographic – but whether they will want to spend it at M&S is another question!

Beyond Meat suffers and Lloyd’s of London could be facing a big opioid headache…

Private backers set for Beyond Meat payday (Financial Times, Miles Kruppa) highlights the fact that early investors in Beyond Meat decided to take some money off the table as they sought to crystallise massive share price gains when their lock-up expired yesterday. Early stage investors like Kleiner Perkins and Obvious Ventures were among those who were able to use the opportunity to sell – and the shares cratered by a whopping 22% as a result, despite the company announcing its first ever quarterly profit. * SO WHAT? * As I said in yesterday’s Watson’s Daily, you can’t blame investors for selling down given the company’s stupendous outperformance since it floated. I still like the fact that Beyond Meat makes real stuff that is continuing to benefit from increasing its distribution channels – unlike companies whose prospects of turning a profit stretch way out into the distance (e.g. Uber etc.). Naysayers will say that competition in this area is increasing, that rivals are more attractive and that meatless

is just a fad – but supporters will probably say that this is a short-term blip and that as long as it keeps signing new distribution deals with supermarkets and restaurants, its stellar growth rate will continue. I would add that if the company can push down its production costs, its growth could be sustained for even longer – but that will presumably come with economies of scale as its orders increase. Exciting times!

Lloyd’s faces legal battles over $50bn opioid crisis (Daily Telegraph, Harriet Russell) highlights something that could spell potential catastrophe for private investors in Lloyd’s, known as “names”, who underwrite tons of policies in return for potential profits made from premiums. Basically, a tsunami of insurance claims relating to pharmaceuticals companies covered by Lloyd’s insurers is expected and could potentially drown a number of them in the process. Some experts believe that the potential volume of claims could have a similar effect on the market that asbestos claims had in the 90s, where Lloyd’s almost collapsed. The US opioid epidemic is alleged to have caused the deaths of 400,000 Americans over the last twenty years, so the potential for claims is enormous. If you combine this along with herbicide claims (Bayer/Monsanto) and talcum powder (Johnson & Johnson) you have a big problem on your hands if you are an insurer.

And finally, in other news…

I thought I’d leave you with something today to while away a few moments in Can you spot the ghost among the ghouls? (Mailonline, Chloe Morgan https://tinyurl.com/yy7l3bjn). How frustrating is this?!?

1. In MACRO NEWS, BoJo goes for an election while Argentina goes left again after its election
2. In TECH NEWS, Google sees a dip in profits, Spotify adds users and TikTok’s parent mulls a Hong Kong listing
3. In INDIVIDUAL COMPANY NEWS, Virgin Galactic launches, Aston Martin gets a kicking and Beyond Meat turns a profit
4. In OTHER NEWS, I bring you a reluctant cat on a treadmill…

So BoJo goes on the offensive again and Argentina gets a new old regime…

Johnson raises stake in fresh election gambit (Financial Times, George Parker and Sebastian Payne) shows that BoJo is now calling for a December 12th “Brexit election”, just after the EU agreed to a deadline extension until January 31st. He failed last night to get an early election under the Fixed Term Parliaments Act and will aim to get a majority on a vote on an early election today. The LibDems and SNP want a polling day of December 9th partly because it would allow more students to vote in their university towns – and it sounds like a compromise could be on the cards. * SO WHAT? * When it all boils down to it, IF an early general election occurs, the electorate is likely to see it like this: LibDems = Remain, Conservatives = Leave and Labour = ?. Obviously, there are divisions in the Conservative Party in particular, but Labour won’t be helped by being perceived to be wavering. At least this way, it would seem that you are getting a second referendum and general election rolled into one. Obviously, it is not as cut-and-dried as that but I suspect this is how campaigning is going to go. BoJo is gambling on voters voting for him just to get something – anything! – done and the LibDems are pitching themselves as the party for Remain (although

what their other policies are outside that will need fleshing out). As things stand, I would argue that Labour has been wrong-footed and has certainly comes across in the press as not being decisive enough on Brexit. It’ll be interesting to see what each party does in an election campaign!

Argentina’s Peronists return to power as Macri concedes defeat (Financial Times, Benedict Mander and Michael Stott) highlights the return to power of the left-wing Peronists, this time under former cabinet chief Alberto Fernandez with a smaller share of the vote than they had hoped for. This signals an end to a brief flirtation with the centre-right wing current incumbent Mauricio Macri as Peronists have been in power for all but six of the last 30 years. * SO WHAT? * This latest victory shows that Latin America is going left again after Evo Morales won a fourth term in Bolivia in a controversial election last week. Mass protests in Chile are calling for higher wages and pensions and led to the resignation of all of the centre-right cabinet. Argentina is in massive debt, has been crippled by corruption (previous president Cristina Fernandez de Kirchner, Alberto Fernandez’s running mate, is still facing 11 corruption charges!), the economy is shrinking, inflation is running at over 50% a year, unemployment is over 10% and over one third of the population lives in poverty. For all Macri’s pro-business and pro-market policies since he took office, he didn’t do enough and the electorate has decided to give the old guard another go.

Google suffers, Spotify gets more users and ByteDance aims for a Hong Kong IPO…

Google hit by slowdown in users clicking on adverts (Daily Telegraph, Margi Murphy and Alan Tovey) signals a dramatic slowdown in paid clicks on adverts (they only showed 1% growth in the third quarter versus the previous quarter) as costs rose. This comes after decades of double-digit growth. Google’s parent, Alphabet, took a hit on profits due to undisclosed equity investments (thought to be the poorly-performing Uber mainly), but met revenue expectations despite operating losses from its “other bets” which include health companies Verily and Calico as well as the driverless car division, Waymo. The results came shortly after reports that Alphabet had made an offer for Fitbit, whose shares shot up by 25% on the news. * SO WHAT? * The ad slowdown is disappointing so the company must hope that this is a blip and not a trend. The Fitbit thing is interesting, though – if it DID buy the ailing fitness-focused tech company, it would help it to compete with Apple and its Watch. Given that Fitbit’s share price is now around the $4 mark versus the $50 it hit at its peak, it would seem that Google might have a “bargain” on its hands. Strategically, this sounds good to me given the increasing popularity of wearables, but it will be all about the price and subsequent execution if the acquisition goes ahead. I’ve always said that Fitbit is a one-trick pony – but if Google was its new owner it could no doubt teach an old pony new tricks!

Spotify hails record users as finance chief steps down (Daily Telegraph, Hannah Boland) shows that the music streamer gained another five million subscribers in the latest quarter to take it to 113m paying listeners. Spotify’s

66 year old CFO stood down on a high as the company announced an operating profit of €54m – only the second time that the company had been in profit since its flotation. * SO WHAT? * Spotify has continued to add users despite increased competition from Amazon and Apple – and Apple has actually overtaken Spotify in terms of US users. Chief exec Daniel Ek did say, though, that it is adding around twice as many subscribers as Apple every month and has double the engagement level from users. Anecdotally, I used to subscribe to Apple Music for quite a while, but then I switched because I realised that Spotify just has way more content (and no, I am not being paid by Spotify to say that). Although Apple Music was “easy” (because I’ve got an iPhone), I just thought Spotify had more to offer.

Meanwhile TikTok owner ByteDance eyes initial public offering in Hong Kong (Financial Times, Henny Sender) shows that the $75bn start-up owner of smash hit app TikTok is aiming to list in Hong Kong as early as the first quarter of next year. An IPO would give early investors a way to crystallise gains they’ve made and give it currency to develop existing and new products. * SO WHAT? * The seven-year old company is no stranger to controversy as it was banned in India earlier this year amid accusations that it incited racial hatred and spread pornography and it is currently under investigation in the US over the “national security risks posed by its growing use” (I also saw something recently about ISIS using TikTok as a recruitment/propaganda tool). Still, the potential preference for a Hong Kong listing over one in New York is a much needed victory for the former, which has been hit by ongoing protests in the last few months. I would imagine that SoftBank (which was an early investor) could also do with a windfall by selling at least some of its stake in ByteDance given that its investment in WeWork continues to haemorrhage cash at the moment…

Virgin Galactic launches, Aston Martin backfires and Beyond Meat makes a profit…

Following the usual hoo-ha of the launch of anything involving Sir Richard Branson, Virgin Galactic hits $2.3bn valuation in public launch (Financial Times, Richard Henderson) heralds a muted first day on the markets for the world’s first space tourism company as initial gains fell flat by the end of trading. The company hasn’t yet launched any paying customers into space and is currently running at a net loss of $138m. Virgin Galactic: up and atom (Financial Times, Lex) highlights the fact that the company’s projections rely on some very punchy assumptions. Although the company says that 600 astronauts have already signed up going into 2022, all of their $80m deposits are fully refundable. Virgin Galactic wins space tourism race to float on stock market (The Guardian, Nils Pratley) is more blunt in its assertion that the company’s success depends on its ability to persuade multimillionaires to pay $250,000 to go from New Mexico to 50 miles above the earth and back on a 90 minute ride. The company argues that it only needs to capture 0.1% of the “high net worth” market over the next few years to hit targets. * SO WHAT? * As I said yesterday, I think this is a massive money pit. Assumptions will mean nothing if ANYTHING goes wrong because potential passengers will abandon in their droves. That said, I DO think that any innovations made here that could actually have practical “real world” implications – like advances in hypersonic flight that could cut journey times from London to New York to an hour – would be way more interesting. In the meantime, Virgin Galactic has got a lot to live up to and will need to deliver. To infinity – and beyond!

Aston Martin float adviser gives its shares the red light (Daily Telegraph, Alan Tovey) shows exactly why you should never trust the adviser to a deal to give an accurate valuation of the company it is floating! Bank of America Merrill Lynch (BAML), which got a share of £30m in advisory fees from Aston Martin’s stock market flotation last year, cut its rating on Aston Martin from Neutral to Sell and its price target from £5.50 to £4 citing weak near-term

demand and increased financial risks that could include Aston Martin asking investors for even more money! BAML is the first of the four banks which advised on the deal (HSNC, Credit Suisse and UniCredit were the others) to pull the plug and it said that Aston bosses are likely to cut their own forecasts for the coming year. * SO WHAT? * It just goes to show how biased (and wrong) “experts” can be. I think that Aston’s future depends even more now on the success of its upcoming 4×4, the DBX.

In Beyond Meat books first profit as competition mounts (Wall Street Journal, Jacob Bunge) we see that the plant-based meat-alternative company has hit an important milestone as it reported sales more than tripling in the last quarter. It is going to be focusing even more on marketing its product as being healthier for consumers and better for the environment than meat and it continues to sign up more restaurant chains. Dunkin’ Brands Group said it will be selling Beyond breakfast sandwiches nationwide, McDonald’s has been trialing a Beyond patty in Canada and Denny’s Corp said it would be introducing Beyond Burgers in Los Angeles. * SO WHAT? * It’s not all been rainbows and unicorns as some trials just haven’t gone particularly well. Canada’s Tim Hortons said it wouldn’t continue selling Beyond Burgers (although it WOULD continue with its sausage product for breakfasts) because its provision had limited impact and some have said that Beyond’s prices are still quite high. Shares in the company shot up from $25 in the IPO in May to a peak of $239.71 in late July, but have halved since due to concerns of more competition and investors shorting the stock. There may be further downward pressure on Tuesday as an insider selling restriction will lift, freeing up about 77% of the remaining shares so investors who felt they’d missed the train may yet have more chances to take a bite of the cherry. Chief exec Ethan Brown said he won’t be selling his stock and he has asked employees to hold off selling. But hey, if you had stock surely you’d take at least a LITTLE bit off the table, no?? Whatever happens, meat alternatives is a red hot area – sales grew by 9.2% over the last year versus meat sales which grew by 1.9% over the same time period, according to figures from Nielsen. Yes, competition is increasing, but then the message is still spreading that meat alternatives are actually quite tasty – and there’s a huge market to go for IMHO.

And finally, in other news…

I thought I’d leave you today with a cat that many of us can identify with sometimes in Obese cat Cinderblock really cannot be bothered with vet’s treadmill (Metro, Richard Hartley-Parkinson https://tinyurl.com/yywtce4p). Yup, been there…

1. In CONSUMER NEWS, UK consumer confidence hits new lows and booming pork prices in China have consequences
2. In LUXURY RETAIL NEWS, Tiffany mulls a bid from LVMH and Galeries Lafayette targets China growth
3. In TRANSPORT-RELATED NEWS, Tesla faces hot competition and Virgin Galactic reaches for the (IPO) stars
4. In OTHER NEWS, I bring you a product you never knew you needed and a painful sandwich…

So UK consumer confidence falls and rising pork prices hit Chinese consumers…

Consumer confidence hits a six-year low (The Times, Gurpreet Narwan) cites findings from a YouGov and Centre for Economics and Business Research (CEBR) survey which shows that concerns about the economy have pushed consumer confidence down for the third month in a row to its lowest level for six years. The same poll suggested that the outlook for businesses hadn’t suffered too badly although job security wavered despite record low current levels of unemployment. * SO WHAT? * Hardly surprising given the current uncertainty, but wage growth is still outstripping inflation and people haven’t stopped spending just yet. This time of year is always important retail-wise, but I get the feeling that many retailers really are running on fumes at the moment and will be praying for a good Christmas in order to survive.

Soaring Chinese meat prices from swine fever threaten retail crisis (Financial Times, Sun Yu) highlights the ongoing effects of the Chinese pig cull following the outbreak of African swine. Wholesale meat prices are through the roof – pork prices were almost 159% higher than in October last year, almost double the retail price rise of almost 73% – and so restaurants, butchers and food retailers are really feeling the pinch. This massive price rise has also led to price increases in related foodstuffs as consumers substitute in other animal protein sources as figures from the Ministry of Agriculture show chicken wholesale prices up by over 33% in October versus the previous year and by almost 17% for beef. * SO WHAT? * The interesting thing here is that while wholesale prices have gone up markedly, retail prices are lagging – with prices for chicken and beef rising by “only” 18% and 12% respectively – meaning that restaurants and retailers are absorbing the higher costs to a greater extent. Larger sellers can probably grit their teeth for the time being, but smaller local restaurants will probably feel the squeeze much more acutely. Time for pork substitutes, no?? Remember what I said almost 6 months ago about Right Treat? If this company can’t make a splash now, surely it never will?!?

Tiffany fields a bid and France’s Galeries Lafayette plans a China push…

In Tiffany receives LVMH takeover bid of about $120 a share (Wall Street Journal, Ben Dummett and Suzanne Kapner) we see that the luxury jeweler is mulling over an unsolicited takeover approach that was made by French luxury group LVMH earlier this month in an all-cash offer at a roughly 30% premium to the price it was trading at before the offer was made. Tiffany is currently worth about $12bn, whereas LVMH (which owns brands including Louis Vuitton, Moet & Chandon, Hennessy, Christian Dior, Bulgari etc.etc.) has a market capitalisation of about $214bn. Buying Tiffany’s would increase LVMH’s share in jewelry, one of the luxury sector’s fastest growing segments. However, Tiffany expected to reject LVMH’s $14.5bn bid (Financial Times, Harriet Agnew and James Fontanella-Khan) shows that the retailer may well push for a higher price, arguing that the current offer undervalues it. The shares have traded higher since the offer was made, narrowing the 30% premium to 22%. * SO WHAT? * It seems to me that this sounds like a pretty good match on a strategic level as it will complement LVMH’s 2011 acquisition of Bulgari and give customers a more “affordable” price point (hey – it’s all relative!). Tiffany has had a bit of a rollercoaster few years what with sluggish sales growth, top management strife and expenses involved in expansion in China and an ongoing overhaul of its flagship New York store. Clearly, Tiffany will be talking a good game to up the price LVMH pays but I think it could

do with the bigger balance sheet for its own good as well as to help it develop new product lines – and even the transition shouldn’t be too much of a shocker considering that the current CEO Alessandro Bogliolo used to work at LVMH. We’ll just have to see what happens. Given the volatility of tourist spending and economic downturn in China, I think that LVMH’s offer should be given some serious consideration.

France’s Galeries Lafayette plans to open 10 stores in China (Financial Times, Tom Hancock) highlights the French department store chain’s plans for expansion as it aims to open ten shops in China by 2025. By doing this, it is betting that Chinese consumers will be spending more than the ones in their own backyard and looking beyond the current US-China trade war. The retailer believes that its China stores will generate around 15% of the group’s overall sales and it seems that Chinese customers are no stranger to its Gallic charms as they apparently account for a whopping third of sales at Parisian outlets! * SO WHAT? * Galeries Lafayette (GL) has generally performed better than department stores in the US and UK by concentrating on providing a superior customer experience. Its Beijing store, which opened in 2013, achieved profitability two-and-a-half years ago and sales are rising rapidly following a refurbishment. Its Chinese stores currently operate via a joint venture with Hong Kong-based apparel maker I.T, which is slightly loss-making (currently down $3.5m). GL puts it down to high initial costs, which is understandable given the size of the stores. Overall, the plan sounds pretty reasonable, especially if the success of its Beijing outlet is anything to go by. However, it will have to keep innovating and improving its customer experience to make sure it stays relevant in the face of online retailing – a threat that every physical retailer faces.

Tesla faces bigger competition and Virgin Galactic charts a course for flotation…

Tesla facing tough test as giants join the charge (Daily Telegraph, Olivia Rudgard) is a really interesting piece on the evolution of the electric car as a mainstream phenomenon. It acknowledges the fact that Tesla has transformed the image of the previously unloved electric cars of yore, but also warns that the “traditional” car makers are now catching up. In addition to this, there are start-ups like Rivian (pick-up trucks and SUVs) and Lucid (luxury cars) who will be putting their own offerings into the market next year – but then there are others like China’s Nio, that are haemorrhaging cash like there’s no tomorrow. * SO WHAT? * There is the theory that many of the incumbents haven’t really been trying that hard until now and, with the likes of VW, Ford and Daimler laying out serious plans for new electric models you can see that they are not just building cars to comply with new regulations – they are trying to make cars that people actually want. I still stand by my opinion, however – that until charging networks are improved significantly, mainstream take-up will be a looooooooong way off. Also, whether our power generation networks can really cope with a major spike in electricity demand remains to be seen. If I were buying now, I would still go for petrol or hybrid.

Virgin Galactic shares start countdown to IPO (Financial Times, Richard Henderson and Miles Kruppa) highlights today as being the day that Sir Richard Branson’s Virgin Galactic lists on the New York stock exchange. Branson is betting on rich people’s willingness to pay for the ultimate “out-of-this-world” holiday one-upmanship of going to space. Apparently, Justin Bieber and Leonardo DiCaprio are among the 600 customers who have put down up to $250,000 on a ticket, but Virgin Galactic has yet to launch a commercial flight. The company is aiming for positive earnings in 2021, which assumes the launch of 115 flights. Companies like Boeing and Lockheed Martin are involved in space flight but Virgin Galactic will be the first to concentrate on space tourism. * SO WHAT? * I am HUGELY sceptical about this venture because success will depend on a steady supply of hugely flush space tourists for some years to come plus the fact that it is just one of those companies that faces delay after delay (and this is assuming that there are no incredibly expensive technical issues). It seems that Branson’s Virgin Galactic is nosing ahead of other similar vanity projects by Elon Musk’s SpaceX and Jeff Bezos’ Blue Origin, but talk about a waste of money. I think that it won’t be like taking a lighter to cash – it will be more like having truckloads of cash and pouring it continuously into an industrial furnace. Branson is good for the craic but this venture is just ridiculous IMO. I’ll be really interesting to see if this IPO “flies” and achieves a “stellar valuation”, badumtish 😁

And finally, in other news…

You know those exercise balls you see at pretty much all gyms these days? Well if you find them too intimidating (🤔) then here’s something for you: Turn your exercise ball into your furry best friend with cute pet character covers from Japan! (SoraNews24, Oona McGee https://tinyurl.com/y6qad7rs). Who knew there was a market for this kind of thing?? If, on the other hand, you think this is a bit namby-pamby, then you just have to admire this: India: Daredevils set new record for most layers in bed of nails ‘sandwich’ (SkyNews, https://tinyurl.com/y5x2kpje). I warn you – this last story is not for the squeamish! Youch in the extreme!

1. In MACRO NEWS, BoJo pushes for an election and Germany’s economy slows
2. In TECH-RELATED NEWS, Intel sounds optimistic, Nokia has a profit warning and Twitter disappoints
3. In RETAIL-RELATED NEWS, Amazon’s profits get dented, Next signs a deal with O2 and Supercuts goes into administration
4. In OTHER NEWS, nothing says ‘I love you’ more than toenail clippings…

So BoJo changes tack and Germany looks tricky…

Boris Johnson in new push for UK general election (Financial Times, Laura Hughes and Jim Pickard) shows that BoJo has admitted defeat in his efforts to get Brexit done on October 31st and is now calling for a general election on December 12th, saying that a “broken parliament” was to blame for the current situation. The PM needs to get at least 434 of the 650 MPs to go ahead with an election, but Corbyn continues to drag his feet over making a decision to support this or not, saying that he wants the prospect of no-deal taken off the table first. The LibDems are unlikely to support an election unless they know whether the EU has granted an extension (which we may get more on today). The drama goes on…and on…and on…

Warning signs for eurozone as Germany’s growth stalls (The Guardian, Phillip Inman) highlights concerns from

Mario Draghi, the outgoing (as in leaving, not extrovert 😜) president of the European Central Bank (ECB) about slowing global growth and Germany teetering on the brink of recession. He painted a gloomy picture when he said that “The incoming data since the last governing council meeting in early September confirm our previous assessment of protracted weakness in the euro area growth dynamics, the persistence of prominent downside risk and muted inflation pressures”. German companies have been feeling the heat in particular due to their exposure to exports and manufacturing and recent figures show that the country’s employment numbers fell for the first time in six years. * SO WHAT? * Germany is the bloc’s main engine – and so when it splutters, everyone else suffers (some would argue that Germany’s performance papers over the cracks elsewhere in the eurozone, so when Germany does badly, everyone else’s shortcomings become more obvious). Draghi is leaving the eurozone in a right state what with sluggish GDP, worsening jobs growth and not much to look forward to. Incoming new president Christine Lagarde has a lot to do if she’s going to turn this around!

Intel is optimistic, Nokia has a shocker and Twitter underwhelms…

Intel raises outlook, sending shares higher (Wall Street Journal, Sarah E. Needleman) highlights Intel’s solid third quarter earnings and optimism for the future as it raised its full-year outlook. Intel is the largest chip maker in the US by revenues and is seeing an uptick in demand for its chips that are used in the data centres that power cloud-computing.  The other thing is that its memory business (I’d forgotten about that 😂) is showing signs of turning around but PC-related revenues were hit as they couldn’t keep up with strong demand for PCs. * SO WHAT? * Great news for Intel, but I would also have thought that this will be good for the whole industry. It’s interesting to see the strong demand for PCs, but I’m not sure how long that will last if we get into a protracted global economic slowdown as sales of big ticket items tend to suffer.

Nokia shares plunge on 5G outlook in US and China (Financial Times, Richard Milne) shows that shares in the Finnish telecoms equipment maker fell by 24% yesterday after it announced a cancellation of its dividend and a reduction in its earnings forecasts for this year and next due to tough competition and costs of rolling out 5G networks. Interestingly, the US is trying to divert spending away from Huawei (which it doesn’t trust) and towards Ericsson and Nokia (which it does) for 5G but complicated trade rules are making things difficult. A proposed merger

in the US between Sprint and T-Mobile could take out a big customer in the American market and the Chinese government’s eagerness to support Huawei in its own market is making things even more tricky. * SO WHAT? * It sounds to me like Nokia is having problems that are entirely out of its hands – so making these cuts sounds like the sensible thing to do as it’s probably best to hunker down until the dust settles. The third quarter results weren’t all bad given the circumstances – net sales were up by 4% versus a year earlier and it made an operating profit of €264m versus a €54m loss a year ago. The chief exec believes that Nokia will have a “strong” fourth quarter.

In Twitter shares plunge as ad-business troubles weigh on growth (Wall Street Journal, Sarah E. Needleman) we see that revelations of glitches in its ad-targeting software (which made it less targeted than usual) and underwhelming ad revenues in July and August shocked the market, which sent the share price down by over 20% in trading yesterday. This is the biggest one-day percentage drop since the company floated on the stock market in 13. * SO WHAT? * The good news is that the problems with the software were fixed but the company’s credibility got dinged in the meantime. Given that advertising represents 85% of overall revenue, it is hardly surprising that any bad news in this area is going to have exponential consequences. Still, the market doesn’t like surprises and expressed that in yesterday’s sell-off. Even though you would have thought that Twitter should be taking advantage of arch-rival Facebook’s current problems in terms of attracting advertising, it doesn’t seem to be doing so.

Amazon profits take a bashing, Next signs a deal with O2 and Supercuts goes under…

Amazon’s profit hurt by push to speed up shipping (Wall Street Journal, Dana Mattioli) shows a rare hiccup in Amazon’s relentless money making as Q3 profit fell by 26% versus a year ago thanks to its investment in reducing delivery times. This is its first profit decline since 2017. * SO WHAT? * Amazon’s Q3 tends to be the quarter when spending increases in the run-up to the holiday season – and it’s expected to be even higher this year as Amazon aims to offer one-day free shipping to Prime members. Revenues were up by about 24% this quarter, but they were eclipsed by the 46% jump in shipping costs. Still, CFO Brian Olsavsky points out that faster deliveries lead Prime members to shop more, so it looks like more expenditure now will underpin higher future sales – although this obviously costs in the short term. What is slightly more worrying to my mind is the slowdown in growth for Amazon Web Services (AWS) but some would argue that a rise in shopping traffic elsewhere will boost demand for Amazon’s cloud services. It may also be that the business is just maturing.

Next stores to host O2 phone shop pop-ups (The Guardian, Laura Onita) heralds another deal for Next as it has just opened two O2 concessions in its 500 stores, with more to come, which will allow shoppers to buy a new mobile phone or renew their existing O2 contracts while clothes shopping! * SO WHAT? * This looks like another canny move from chief exec Lord Wolfson as retailers look to maximise what they can earn from the retail space they have. Next has already announced similar deals with Costa, Caffe Nero, Paperchase, Virgin Holidays, Tui and others who pay them a fee to park in their stores and flog their wares. Next also recently signed a deal that enabled customers to pick up their Amazon orders in store. All this is great to maximise revenues from their existing space, but it should also help with sales as higher footfall should translate into shoppers buying more of their stuff. Other retailers should take note!

Supercuts hair salon owner, Regis UK, enters administration (The Guardian, Zoe Wood) highlights the latest high street failure as Regis UK’s efforts to survive via CVA last year didn’t work and now 1,200 jobs are put at risk at 220 salons across the country. The shops are expected to trade as normal for the moment while Deloitte, the administrator, looks at options for the business. The nightmare on high street continues…

And finally, in other news…

You know when you give a gift, it often means so much more when you’ve put some of yourself in it? Well this guy took it to extremes in Man saves his nail clippings for a year and turns them into engagement ring (The Mirror, Courtney Pochin https://tinyurl.com/y57ojwcz). How romantic 🤢 Diamonds are just so yesterday, daaaahlings

1. In TECH NEWS, Libra comes under scrutiny while Microsoft’s earnings rise on cloud services
2. In HIGH STREET NEWS, retail job losses continue rising, Tesco announces pre-Christmas pop-ups, Domino’s gets an activist shareholder, Sports Direct gets a new auditor and Metro Bank’s founder departs
3. In INDIVIDUAL COMPANY NEWS, WeWork undergoes big changes, Boeing’s profits more than halve and Tesla announces a surprise profit
4. In OTHER NEWS, I bring you some amazing photos and an uncanny resemblance…

So Zuck defends Libra and Microsoft benefits from the cloud…

In Zuckerberg warns blocking Libra will be boon to China tech (Financial Times, Kiran Stacey and Hannah Murphy) we see that Facebook’s chief Mark Zuckerberg faced searching questions yesterday in front of Congress about his proposed cryptocurrency, Libra, as well as things like false advertising and election interference, among other things. He acknowledged the misgivings of politicians and regulators but countered by saying that “China is moving quickly with the launch of a similar idea in the coming months. Libra is going to be backed mostly by dollars and I believe that it will extend America’s financial leadership around the world, as well as our democratic values and oversight”. Zuckerberg did not bend much on Libra, although he implied that he would be open to waiting to implement his plans to give Congress time to legislate on how to regulate cryptocurrencies and to making the dollar the principle currency rather than relying on a basket of them. * SO WHAT? * Although he reiterated that Facebook was not the sole leader, it is the only big financial backer so if it pulled out, the likelihood is that the whole thing would

fall apart. It seems to me that Libra’s future in its intended form is very shaky at the moment given the number of companies that recently abandoned the project (and the fact that it was mostly the payment companies like PayPal, Mastercard, Visa, e-Bay, Stripe that did so) and I really don’t expect politicians and regulators to take their foot off Facebook’s throat given that they potentially stand a lot to lose (some of which I mention here) if Libra works as it was originally intended. I think there is a very real possibility that Libra won’t see the light of day, or else it will have to take a substantially different form if it does. Maybe it will have to start small and build up gradually rather than launch with all the bells and whistles from day one.

Microsoft posts strong earnings growth (Wall Street Journal, Aaron Tilley) highlights a solid performance by the tech giant as it reported strong earnings for the first quarter due to continued success in its cloud computing business (which includes Azure and Office 365 among other services) and sales in its three main product areas performing above expectations. * SO WHAT? * Microsoft’s cloud division has been a major driver for the company as it became the third company to hit the $1tn valuation mark but there are increasing doubts that current momentum will be difficult to sustain due to concerns that companies may cut their IT spending in the wake of the current global economic slowdown.

Job losses increase, Tesco announces pop-ups, Domino’s gets an activist investor, Sports Direct appoint an auditor and Metro Bank’s founder exits…

Retailers cut 85,000 jobs in past year (The Guardian, Sarah Butler) cites the latest report from the British Retail Consortium (BRC) which shows that the UK’s biggest private employment sector – and one that has higher than average numbers of women – has been hit hard by ongoing store closures of chains like Bonmarche (administration last week with 3,000 jobs at risk), Karen Millen and Coast (hundreds of jobs lost), Mothercare, New Look, M&S, House of Fraser and Debenhams. Retailers blame rises in the minumum wage and apprenticeship levy, business rates, product costs (weaker pound due to Brexit making imports more expensive) and high rents for the need to cut costs. BRC chief exec Helen Dickinson appealed for more government help but also observed that “While MPs rail against job losses in manufacturing, their response to larger losses in retail has remained muted”. * SO WHAT? * This is clearly a bad state of affairs but consumer tastes continue to change, meaning that retailers are having to come up with new ways to survive and appeal to a more discerning customer. Retail is clearly a very important sector and what it is having to go through at the moment is very painful. That said, there are winners out there (e.g. Hennes & Mauritz, Zara’s parent company Inditex and our very own Joules etc.) – but they tend to be the ones with a decent offering and a good balance between online and offline capabilities. The identity of our high streets is changing at the moment and councils will have to come up with new ways of making them work otherwise there will be no town centres any more.

On a slightly lighter note, Tesco ‘Finest food and wine bars’ pop up for Christmas shoppers (Daily Telegraph, Laura Onita) says that we should be expecting high-end pop-up stores in big cities in the run-up to Christmas. The supermarket giant will sell some of its “Finest” range along with wine at several small sites for four-to-six weeks in November and December. * SO WHAT? * This sounds like a fun and relatively cheap way of promoting Tesco’s “Finest” range in the run up to Christmas. It may also swing the balance towards Tesco as a way of wheedling its way into shoppers’ consciousness while all the supermarkets fight over increasingly price-sensitive customers over this critical period. It is a gimmick, but a pretty good one IMO!

As you know, there has been a lot of bad newsflow for anyone involved in pizzas recently what with Pizza Express’ finances looking pretty tricky and the lack of leadership at Domino’s so in US activist grabs slice of Domino’s (Daily Telegraph, Oliver Gill) we see that things could be about to get interesting as LA-based activist investor Browning West has just become Domino’s fifth biggest shareholder with 5.33% in the company. * SO WHAT? * Domino’s is currently in disarray, having just pulled out of Switzerland, Iceland, Norway and Sweden in a bid to stem losses and faces increasing ire from its existing franchisees who want a bigger slice of the pie. It is also in a bit of a leadership vacuum at the moment as it is still on the look-out for a new CEO and chairman. Maybe this is a good time for an activist investor like Browning West to step in and shake things up. Although it normally tends to stay in the background of its investments, this could be an occasion where it needs to step up to the plate.

Elsewhere on the high street, Sports Direct finally names new auditor (The Times, Elizabeth Burden, Greig Cameron) signals an end to what has been an embarrassing six-week search for someone suitable to sort out its books after Grant Thornton resigned and no-one else appeared to want to take it on as a client! The “lucky” auditor now in the (very) hot seat is RSM and this appointment avoids the even more embarrassing scenario of the government having to select someone or, even worse, a suspension from the London Stock Exchange. * SO WHAT? * At least Sports Direct avoided further embarrassment with RSM’s appointment but it just goes to show how much it has had to scrape the barrel to choose an accountancy firm that has never had a FTSE350 client and normally specialises in auditing private and Aim-listed companies. 

Then Founder checks out as Metro falls £2.2million into the red (Daily Telegraph, Lucy Burton) shows that Metro Bank’s controversial founder, Vernon Hill, decided to resign earlier than expected just before the company announced a quarterly loss after market close that undershot consensus expectations. * SO WHAT? * Although Hill’s departure is what many have wanted for quite some time, the challenger bank is in a torrid state following an accounting scandal earlier this year, a botched debt issue and the expenses involved in maintaining a branch network. Metro Bank: doggone (Financial Times, Lex) points out that its shares are now worth one twentieth of their peak of £40.40 and a mere 10% of its £20 a share IPO price. Clearly, a lot needs to be done and I am guessing that store closures and the sale of at least some of the loan book will be among the first measures to be taken to turn this thing around.

WeWork sees big change, Boeing’s performance suffers big turbulence and Tesla surprises on the upside…

WeWork prepares to cut 4,000 jobs after SoftBank deal (Daily Telegraph, Olivia Rudgard) highlights drastic measures as up to 30% of the company’s global workforce could be affected. Meanwhile founder Adam Neumann stands to collect a $1.7bn payout as big investor SoftBank moves in to clear things up at a company that is now worth $8bn versus the $47bn it was valued at at the beginning of this year. WeWork rescue: the winners and losers (Financial Times, Andrew Edgecliffe-Johnson, Eric Platt, Kana Inagaki and Judith Evans) puts Neumann in the winners’ corner with his fat payout while the SoftBank Vision Fund, workers (including those who borrowed money to pay for options) and investors are among those to lose out. * SO WHAT? * The fact that SoftBank isn’t treating WeWork as a subsidiary although it will actually own 80% of the stock means that it won’t have to consolidate WeWork’s massive losses onto its balance sheet, minimising any potential damage. However, the new leadership – SoftBank’s Masayoshi Son and Marcelo Claure (WeWork’s new exec chairman, ex-COO of SoftBank) – still

faces the uphill task of convincing outsiders that they can make it profitable (it’s never turned a profit) without tons of cash coming in (because a lot of investors have had their fingers burned). As the market saying goes, WeWork sounds like “a dog – with fleas”.

Things remain tricky at Boeing as well as Boeing profits fall by more than half as 737 Max scandal swirls (The Guardian, Edward Helmore) shows the continued difficulties the aircraft manufacturer faces due to the grounding of its planes in the wake of a number of crashes involving its troublesome jet. It will continue to suffer as long as its planes stay on the tarmac and I don’t see things changing anytime soon as investigators will want to make an example of it and not make any further mistakes.

Tesla delivers a surprising profit (Wall Street Journal, Sebastian Herrera) highlights a rare bit of good news for the electric vehicle manufacturer as it announced a profit for the third quarter, giving it a welcome bit of breathing room. Tesla said it expected to continue to be profitable but added that new products could squeeze margins. Everyone was so surprised by this that the share price shot up by 20% in after-hours trading! Model 3 sales are going well and the company JUST managed to hit the low end of its delivery target range. * SO WHAT? * This is great news, but competition is getting better by the day. At least the company is starting to hit its delivery targets!

And finally, in other news…

Today, I thought I’d leave you with the amazing See the year’s best pictures of the hidden microscopic world (National Geographic, Michael Greshko https://tinyurl.com/yxdurj6m) and the rather interesting observation that Everyone thinks the medieval man looks like PM adviser Dominic Cummings (Metro, Harrison Jones https://tinyurl.com/yys6htx4) 😱😱😱

1. In MACRO & COMMODITIES NEWS, we look at the latest on Brexit, Canada and and a major lithium discovery in California
2. In CONSUMER GOODS NEWS, P&G delights while Reckitt Benckiser disappoints
3. In DELIVERY-RELATED NEWS, Just Eat brushes with a bidding war and Uber gets with Costcutter
4. In INDIVIDUAL COMPANY NEWS, Continental suffers, Snap adds subs, Lyft has profits in sight and McDonald’s underperforms on lack of meatless options
5. In OTHER NEWS, I bring you a pomegranate hack…

So BoJo almost succeeds, Trudeau has a job on his hands and Rio Tinto makes a major discovery…

Boris Johnson wins Brexit deal vote but is thwarted on deadline (Financial Times, George Parker, Sebastian Payne, Laura Hughes and Jim Brunsden) shows that BoJo almost managed to get his way (with a bigger-than-expected majority of 30 MPs voting for his deal), but now that the MPs scuppered his efforts to execute Brexit on October 31st, the prospect of a general election is back on. European Council president Donald Tusk will potentially offer him a Brexit extension until January 31st, but BoJo is expected to push for an early election rather than face more delays. This will put pressure on Labour to either back an election or agree to an accelerated timetable to pass Brexit legislation.

Following on from yesterday’s election win, Justin Trudeau faces challenge of uniting a divided Canada (Financial Times, Jason Kirby) highlights the difficulties Canada’s newly-elected PM will face as he starts a second term leading a minority government. Although the economy is doing well, with unemployment close to forty-year lows and rising wages, the electorate failed to give him a majority as

critics pointed to his rather dismissive leadership style and self-imposed scandals. * SO WHAT? * Given he’s now leading a minority government, he will have to listen to others to get things done and, indeed, stay in power as the average length of tenure for a minority government in Canada stands somewhere between 18 months and two years! The deepening divide between the separatists in Quebec and the rest of the country is just one of the many things that could blow up in Trudeau’s face if he doesn’t manage to unite a fragmented political landscape.

‘Eureka’ for Rio Tinto as waste rock yields lithium (The Times, Emily Gosden) shows that mining giant Rio Tinto could be about to become America’s biggest producer of lithium for batteries following the discovery of the material at a mine in California. Apparently, it found the lithium in piles of waste rock that has just been lying around for almost a hundred years at its Boron site! * SO WHAT? * This is high-grade lithium that is used in electric vehicles, so if it manages to extract it, the discovery could have a major effect on not only the electric vehicle industry but also on the current US-China trade war as it will take away an important negotiation chip for the Chinese. Further tests are still ongoing, but if the initial discovery is confirmed, not only will it be a massive boon for American lithium supplies it will also be achievable without the need for any additional mining! Shares in Rio Tinto only rose by 0.7% in trading yesterday, but if this all pans out I would have thought they will skyrocket! 

P&G profits, Reckitt Benckiser not so much…

P&G posts another quarter of strong sales gains (Wall Street Journal, Sharon Terlep) highlights a strong quarter for Procter & Gamble as solid sales of household staples underpinned a strong performance. Revenues were also powered by price increases across all of its business lines, including its troubled Gillette shaving unit. * SO WHAT? * The company known for brands such as Head & Shoulders, Old Spice, Pantene and Pampers is now growing faster than rivals including Unilever and Kimberly-Clark after many years in the relative wilderness prompted it to hike prices and cut down its range. Growth only returned to pre-financial crisis levels last year and the company said that it was confident that it could weather a potential downturn in consumer spending better than it did in 2008 because it

has cut products that see sharp drop-offs when customers rein in their shopping habits, like makeup and perfume. It has instead focused on developing more expensive “essential products” like laundry soap and toothpaste.

In contrast to this, Reckitt Benckiser cuts sales and profit targets after tough quarter (Financial Times, Adam Samson and Leila Abboud) after its US health business and infant formula business in China contributed to a weak third quarter. This is the company’s second profit warning so far this year and comes only seven weeks after the previous CEO, Rakesh Kapoor, made way for the new CEO, Laxman Narasimhan. * SO WHAT? * Narasimhan is now doing a full review of the business and will be looking particularly closely at the company’s health business, which accounts for about 60% of sales. A new plan is expected to be announced in February at the annual results. Some are speculating whether the business could be split into two, but clearly we’ll have to wait and see. At least something is going to be done about it!

Just Eat fends off an approach and Uber gets with Costcutter…

In Shareholders hungry for bidding war over Just Eat (Daily Telegraph, Oliver Gill) we see that internet firm Prosus (the Dutch-listed arm of South African tech giant Naspers) put a £5bn all-cash offer in for Just Eat yesterday at a 20% premium to Monday’s closing price, putting a spanner in the works for Just Eat’s plans to merge with Takeway.com. Just Eat’s board rejected the offer, but it could still happen if it gets support from shareholders which some analysts think could occur if Prosus ups its offer from the current 710p to 800p. * SO WHAT? * A £9bn merger between Takeaway.com and Just Eat was agreed in July valuing the latter at 731p per share at the time. However, since then, Takewaway.com’s share price has plummeted meaning that the deal is now valuing Just Eat stock at around 600p a share (this is because the Takeaway.com deal is in shares only, meaning that the deal’s value fluctuates according to the share price). Shareholders will be licking their lips in anticipation of Prosus upping its offer and/or the start of a potential bidding war with other parties yet to emerge. Prosus was

spun off from Naspers, which made one of the best investment decisions ever when it made a £32m investment in Chinese web business Tencent in 2001 which is now worth around $130bn. You can find out more about it in How Prosus became one of the world’s most valuable companies (The Guardian, Sarah Butler).

Then Uber and Costcutter bid to corner the convenience delivery market (Daily Telegraph, Laura Onita) heralds a deal between the two which will enable Costcutter, the convenience store chain with over 1,700 shops, to sell groceries via Uber Eat’s app. * SO WHAT? * It is thought that the online grocery shopping market is worth about £11.6bn a year – which is still only 6% of the UK’s grocery market overall – but there has been a flurry of tie-ups in the sector with Asda launching an express grocery delivery service with Just Eat and the Co-Op working with Deliveroo. This all sounds great in theory but the problem is that selling groceries online or via apps remains unprofitable because of the extra costs associated with delivery. I would also say that in this particular deal between Uber Eats and Costcutter, the latter is a CONVENIENCE store and thus likely to be local. How lazy do you have to be NOT to wander to your local store?? If you want wider choice and (probably) better product, surely you just order from the supermarket rather than the corner shop?? 

Continental suffers from fallout, Snap impresses, Lyft sees light at the end of the tunnel and McDonald’s underwhelms…

In a quick scoot around some of the other news today, Continental to take €2.5bn hit as auto slowdown bites (Financial Times, Joe Miller) highlights the automotive supply giant’s decision to take a big impairment charge due to the steep decline in the car industry that has been made worse by weakening China growth. The current malaise in global car sales is clearly spreading.

There was good news in Snapchat bounces back with soaring user numbers (Daily Telegraph, Laurence Dodds) as the photo-sharing app provided reason for cheer as it increased its number of daily active users from 203m to 210m in the latest quarter. This was largely due to strong growth outside its core US and European markets. Chief exec Evan Spiegel, said that the company was on track to becoming profitable as early as this December.

Talking about profitability, Lyft expects to be profitable a year earlier than expected (Wall Street Journal, Heather Somerville) as a reduction in coupons and incentives used to attract new users has helped. The company aims to move towards a subscription model whereby users pay a monthly fee for car rides initially, to be followed by bike and scooter rides. * SO WHAT? * At least this is a move in the right direction, but even though the share price “lyfted” by over 6% on the news, it still stands at around $43 – way below the $72 level it hit in March and below its last private financing round of $47 a share. There’s also the spectre of California’s AB5 law hanging over gig-worker users, which classifies Lyft drivers as employees rather than contractors. I think that healthy doses of scepticism are still required!

Then American rivals take bite out of McDonald’s meaty menu (The Times, James Dean) shows that the world’s biggest fast-food restaurant chain fell short of profit forecasts for the first time in two years, disappointing investors. Stiff competition from rivals in the US and lack of a meatless burger on the menu were blamed for the underperformance in the third quarter.

And finally, in other news…

Watson’s Daily is all about the learning and so I thought I’d bring you this today: ‘Life-changing’ pomegranate cutting hack is blowing people’s minds (The Mirror, Courtney Pochin https://tinyurl.com/yybrwz9j). 👍

1. In MACRO NEWS, we see the latest on Brexit, Switzerland’s Green success and Trudeau’s win
2. In REAL ESTATE NEWS, Knight Frank has a ‘mare and WeWork’s valuation drops further
3. In CONVENIENCE FOOD NEWS, US fast-food chains battle over brekky and Just Eat hopes to deliver
4. In INDIVIDUAL COMPANY NEWS, drug companies settle opioid cases out of court and Halliburton indicates shale slowdown
5. In OTHER NEWS, I bring you a drawing that will blow your mind…

So BoJo continues to try to get a Brexit deal done, Switzerland lurches greenwards and Canada’s Trudeau seeks the victory…

Boris Johnson hopes to make Brexit breakthrough on Tuesday (Financial Times, George Parker and Laura Hughes) shows BoJo’s continued efforts to force his latest Brexit deal through Parliament today as yesterday’s attempt was rebuffed by the Commons speaker John Bercow. However, Voting forecast points to MPs approving Johnson’s deal (Financial Times, Sebastian Payne, John Burn-Murdoch, Laura Hughes and Jim Pickard) suggests that he stands a reasonable chance of getting his Withdrawal Agreement bill through the House of Commons without having to be forced into a customs union with the EU or to have to hold a second referendum. Meanwhile, it seems that the vague sniff of a deal has caused a bit of a stir in Pound keeps on rising after hedge funds change tack (Daily Telegraph, Tom Rees) as sterling broke the $1.30 level versus the dollar for the first time in over five months on hopes that BoJo will be able to push a deal through. Short positions had been building up in expectation of a hard Brexit, but the prospect of a less-hard Brexit has led to an unwinding of shorts and five

consecutive days of sterling strength.

In election news, Swiss voters deliver decisive shift towards green parties (Financial Times, Sam Jones) shows that Switzerland’s political landscape has shifted leftwards as the Swiss Green party and Green-Liberal party saw a decent boost from Sunday’s elections. The biggest loser from the election was the populist Swiss People’s party, although it remains the biggest party in the Federal Assembly albeit with a reduced level of support. * SO WHAT? * Despite this result fading somewhat in the background versus what’s going on elsewhere in Europe at the moment, it’s worth saying that it represents a major shift in Switzerland’s political system and will affect voting on some critical legislative issues in the coming months – including a vote on the country’s future relationship with the EU.

Then in Trudeau wins re-election but fails to secure majority (Wall Street Journal, Paul Vieira and Kim Mackrael) we see that Trudeau and his Liberal Party have been re-elected despite recent scandals that ate away at his championing of clean governance and diversity. He will return to power with a reduced majority (he won 40% of the vote when he came to office in 2015 versus about 33% now) that will require him to elicit the support of other parties in order to get legislation through.

Knight Frank quite frankly has a knightmare and WeWork doesn’t work…

Knight Frank profits plunge as political turmoil takes toll (Financial Times, Judith Evans) gives us further evidence of Brexit uncertainties hitting the UK property market as the company, which handles residential and commercial property around the world, announced an 11% fall in pre-tax profits. 60% of the company’s business is in the UK, but the overseas business has been affected by the US-China trade war and Hong Kong protests. Knight Frank’s listed rival, Savills, reported pre-tax profits down by 7% in the first half, citing all the same reasons for weakness. * SO WHAT? * Given the tricky macroeconomic backdrop generally, trading doesn’t actually look that bad and could arguably be quite a lot worse. I would suggest that there is a lot of pent-up demand building up in the background and that if Brexit and the US-China trade war could be resolved sooner-rather-than-later, markets will go bananas. I don’t even think that WeWork’s current troubles are symptomatic of a broader malaise – it seems to me that they are company-specific (it expanded too quickly with a ridiculously high cash burn) as other rivals in the space are actually profitable.

Talking about WeWork, WeWork’s valuation falls to $8billion under SoftBank rescue offer (Wall Street Journal, Liz Hoffman and Maureen Farrell) charts continued negative newsflow on the embattled flexible office space provider as the company’s board is expected to meet today to discuss emergency financing options. Possibilities include a potential takeover by SoftBank Group but a decision is expected to be made by the end of this week. * SO WHAT? * This just goes to show how ridiculous the whole WeWork hype has been because this is evidence that the company only has enough cash to last a few more weeks! When you think of all the BS that came in the lead-up to the recently abandoned flotation it is just amazing to think that it is now so close to running out of cash with no-one apart from its biggest shareholder to bail it out. There was recent news of big staff lay-offs but apparently even that has been delayed because it could not afford the costs!!! What an absolute shocker! In my previous life as a headhunter I came across a lot of people who aspired to work in a start-up. They felt that working in a small but growing “disruptor” with cool offices and the promise of a stake in the company that would ultimately make them millionaires would be a great career path. It CAN be – but as this shows, it is by no means a given. If you find yourself in such a company, make sure you spend time to understand how it REALLY works and how it actually makes its money and what the market it’s in is like. If it doesn’t feel right, it can be better to jump ship before it’s too late…

US fast-food chains fight over breakfast and Just Eat aims to deliver…

Fast-food chains heat up breakfast fight (Wall Street Journal, Heather Haddon) highlights a surge in the breakfast battlefield as Wendy’s, Shake Shack, McDonald’s, Burger King and Dunkin’ turn up the heat on attracting morning business. Breakfast visits and average spend have increased over the last five years while those at lunchtime and dinner/supper (depending on where you are from!) have fallen slightly as more people ditch brekky at home for dining on the run or “al desko”. * SO WHAT? * I think that this is an interesting area of potential growth that perhaps taps into a growing economy and rising wages as people get increasingly cash rich and time poor, but if things come off the boil in the economy and in jobs this is one of the first “expenses” to go IMO. It’s great to improve the

breakfast offering, but not at the expense of everything else – also I would have thought that it is more expensive because you will have to employ more staff in the morning to push sales. Great for consumers, though 😁

Just Eat hopes to deliver as customers’ tastes broaden (Daily Telegraph, Oliver Gill) looks at the company which is currently being acquired by Dutch operator Takeaway.com as its revenues increased by 25% in the latest quarter on a sales increase of 30%. However, the company also observed that its own delivery business was proving to be a drag on growth and consumer spending was slowing down. * SO WHAT? * Although Just Eat is a UK market leader, the enlarged group (including Takeaway.com) will create a business that services 40m customers across 20 countries. Given the deep-pocketed competition of the likes of Deliveroo and Uber Eats, it’s not going to be plain sailing. Peter Duffy, interim chief exec, says that the company will benefit from consumers’ changing tastes (i.e. being willing to try a broader range of cuisines) – but then so are all its competitors!!!

Opioid cases get settled out-of-court while Halliburton sees weakening demand from shalers…

Last-minute opioid deal could open door to bigger settlement (Wall Street Journal, Sara Randazzo) heralds a major development in the ongoing blame game of America’s opioid crisis as four drug companies and two Ohio counties reached a $260m settlement. * SO WHAT? * Drug companies have been accused of pushing opioid painkiller use too widely without proper warnings of the risk of addiction and distributors have been accused of

allowing too many pills to get into communities only to be abused. This out-of-court settlement could be a precedent for further deals between drug companies and other counties in order to avert thousands of lawsuits.

Halliburton to cut costs after demand for shale fractures (The Times, Emily Gosden) shows that the biggest oil services supplier to North America’s fracking industry is going to make more cost cuts ($300m is targeted) as demand from shale producer customers fall as well as profits. * SO WHAT? * The company provides services to oil and gas companies and employs around 60,000 people in over 80 countries and is seen, along with rival Schlumberger, as a barometer for activity in the oil sector. It believes that oilfield activity is likely to be weaker than the fourth quarter of last year.

And finally, in other news…

I’ve put things like this in Watson’s Daily before and I would recommend that, if you’ve got a spare 5 minutes you relax with a hot beverage and give this a watch: Japanese artist perfectly recreates Asahi Super Dry beer can in graphite pencil【Video】(SoraNews24, Katy Kelly https://tinyurl.com/y36brako). I think this is as impressive as it is mesmerising!

1. In MACRO & COMMODITIES NEWS, BoJo goes on the Brexit offensive again while China’s pig cull impacts corn
2. In CONSUMER-RELATED NEWS, job fears and Brexit uncertainty hit consumer confidence and house price rises are at their lowest rate since the financial crisis
3. In INDIVIDUAL COMPANY NEWS, Huawei admits US sanctions impact, Tesla pressures Europeans on self-driving and Casper tries to side-step rivals’ mis-steps
4. In OTHER NEWS, I bring you a micro pig cafe and some world wonders…

So BoJo tries again and corn prices fall on weaker demand…

Boris Johnson to make new Brexit push on Monday (Financial Times, George Parker) shows that BoJo is continuing to try to push through his new Brexit deal as he still believes he can deliver Brexit on October 31st despite losing yet another vote on Saturday. He is now aiming to win a “meaningful vote” today (which commons speaker John “or-daaaaah” Bercow could yet block) or to secure a majority when legislation implementing his deal is voted on tomorrow. OMG this is getting ridiculous! My advice to you, if you want to know more about this is to have a look at Brexit: what happens now? (BBC, Peter Barnes https://tinyurl.com/yb5f67rk) because this does a good job of identifying the current options. It’s all so darn complicated (and mind-numbing)!

You may well recall the current crisis regarding pigs in China being culled en masse due to the African swine fever epidemic (a disease for which there is no cure) which is so serious that it’s affecting China’s consumer price index and

putting upward pressure on European pork prices. African swine fever takes toll on China’s corn sector (Financial Times, Sun Yu) shows that other areas are seeing collateral damage as companies related to China’s corn sector are suffering due to the dramatic fall in demand for hog feed, which is a major use for the crop. * SO WHAT? * To put this into perspective, China is home to about HALF of the world’s pig population and almost a third of China’s annual corn output is used in hog feed – but the pig population has fallen by 41% since the epidemic broke in August last year (although some believe that the official stats on this are dodgy – and that the reality is that it’s more like 90%). Chinese corn traders and animal feed plants are now feeling the impact but farmers are not keen to replenish herds too soon because they fear it could all happen again. Corn traders are hoping that demand for poultry feed (which is another major use of the crop) will see stronger demand given that pork prices in major cities are now a whopping 84% higher than they were a year ago, meaning that more people will be eating chicken. However, Liu Chunlin, general manager of an animal feed factory in Jiangxi, says that pigs eat the feed equivalent of 30 chickens in their lifetime so a rise in chicken demand is unlikely to make up for the current shortfall in demand.

UK consumer confidence wobbles and house prices get properly sluggish…

Job fears and Brexit uncertainty take toll on consumer confidence (The Times, Callum Jones) cites a report by Deloitte which shows a weakening trend in consumer confidence due to job security and Brexit concerns. This follows another survey carried out by Deloitte this month which showed that most businesses were preparing to cut costs and hiring activity. * SO WHAT? * Until now, the jobs market has been pretty hot and consumers have still been spending. However, Deloitte’s chief economist, Ian Stewart, observed that “a decline in consumer confidence this quarter, combined with a fall in official unemployment figures, show that the period of remarkable resilience in jobs and earnings is coming to an end”. Uncertainty is

killing everyone at the moment! It’s difficult to know what is going to have bigger long terms effects at this stage – BoJo’s new deal, no-deal, another delay or a general election. I am assuming that he abandonment of Brexit altogether would be least damaging in the short term given that we know more about being in the eurozone than we do about being outside it. 

Lowest October rise in UK house prices since 2008 financial crisis (The Guardian, Rupert Jones) cites the latest data from property website Rightmove which says that UK house prices have risen by their lowest margin since the 2008 financial crisis due to – surprise, surprise – Brexit uncertainty. There is usually a seasonal bounce at this time of year of 1.6% on average for the last decade, but this year saw a monthly rise of just 0.6%. Uncertainty seems to be putting sellers off although buyers are remaining steady. * SO WHAT * It’s tricky currently but I get the impression that there is a whole load of activity will erupt when we get any kind of certainty around Brexit.

Huawei continues to hurt from US sanctions, Tesla pushes for more self-driving concessions and Casper aims to succeed where rivals have failed…

Huawei admits that US sanctions are hurting (Financial Times, Kiran Stacey) sounds a rather more downbeat note after the company recently reported rising revenues. Its execs have said that although they’ve been able to source replacements for a lot of the hardware sourced from the US, they haven’t been able to replace computing services sold by Google. * SO WHAT? * As things stand currently, customers with Huawei mobiles can still access Google’s Play app store, Google Maps and other products from Google Mobile Services due to a temporary exemption that allows US suppliers to continue to service existing equipment, but they are NOT available on new Huawei models. Clearly, this is likely to have a negative impact on new handset sales and although the company is working on its own alternative operating system (called Harmony) it is years away from being ready. Ultimately, I think that current US actions will come back to haunt them in years to come when a Chinese alternative operating system becomes fully functional. I would have thought that companies like Huawei were at least considering the development of something in the background anyway, but the heavy US sanctions will have put the rocket boosters under such plans. In the meantime, the company will suffer.

Tesla pressures Europeans to change course on self-driving cars (The Telegraph, Olivia Rudgard) shows that Europe is thinking about relaxing restrictions on Tesla’s Autopilot system as it put forward proposals last month.

Thus far the system has been restricted in Europe because of UN rules governing the speed of lane changes. * SO WHAT? * It’s good for Tesla that its proposals are at least under consideration but even if it does succeed, how many people are really going to use their cars like this?? I can recall at least two driver fatalities (one in China in 2016 and an ex-Navy SEAL in the same year) that seemed to me to be largely swept under the carpet, but if this happens more often as its cars increase in popularity Tesla could cause itself (and its investors) some major problems. Mind you, when it DOES eventually work 100% of the time, driverless taxis will be huge – but I don’t expect this to happen for many many years…

Bed-in-a-box start-up aims to avoid rival float nightmares (Daily Telegraph, James Titcomb) highlights plans for US online mattress seller Casper to float sometime this year as it backs itself to do better than its British cousins Simba and Eve Sleep. The company is working with Morgan Stanley and Goldman Sachs on a flotation it hopes will value it above the $1.1bn  private equity valuation. * SO WHAT? * Surely this should be a tough sell after UK-listed Eve Sleep ditched plans to merge with Simba. Given the relatively low barriers to entry to this business, you can see why the players in the mattress-in-a-box market have suffered – Eve Sleep floated in 2017 at 101p a share – and it is now trading at under 3p a share (!). Casper is talking a good game by saying it’s more than just beds (basically they sell other bedroom and bed-related stuff) and is investing in physical stores, but this just sounds like a disaster waiting to happen IMO. Good luck to them – but surely it would be better to consolidate existing players to get some real economies of scale going and THEN float on the stock market. This move smacks of desperation to me in that they want to raise money now while there is still some positive sentiment.

And finally, in other news…

Today, I thought I’d bring you the very cute Have coffee with adorable piggies at Tokyo’s brand-new micro pig cafe in trendy Harajuku (SoraNews24, Casey Baseel https://tinyurl.com/y3cdcejs) as well as the very impressive 27 natural wonders everyone should see in their lifetime (Insider, Meredith Cash https://tinyurl.com/yxhl5e2a).  Wow!

1. In MACRO NEWS, China’s economy slows, Turkey pauses Syria operations, BoJo presents his Brexit deal and UK manufacturers assume the brace position
2. In RETAIL & CONSUMER GOODS NEWS, WH Smith buys American, Domino’s pulls out of European markets, Unilever feels the heat while Nestle turns a corner and Juul withdraws some flavoured pods from sale
3. In PLANES, TRAINS & AUTOMOBILES NEWS, we see that flight shaming could hit airlines – although trains should benefit – and Renault paints a downbeat picture
4. In OTHER NEWS, I bring you some dad jokes…

So China’s economy slows, Turkey pauses in Syria, BoJo has a Brexit deal to sell and UK manufacturing braces itself…

China economic growth slows even more in the third quarter (Wall Street Journal, James T. Areddy) cites the latest figures from the National Bureau for Statistics which show that Chinese GDP grew by 6% in the third quarter – right at the bottom end of its target range and the slowest growth since the first quarter of 1992. * SO WHAT? * This confirms the trend of slowing growth in China as it grew by 6.2% in the second quarter and by 6.6% overall last year. Clearly this will get everyone worried about whether the full year target can be met, although a US-China trade agreement would certainly help the Chinese economy going into the end of the year.

Turkey agrees to halt Syria assault as US pledges to ease sanctions (Financial Times, Demetri Sevastopulo and Laura Pitel) heralds a pause in its military operations as US vice-president Mike Pence tried to broker some kind of truce using the promise of no more sanctions (for the moment). * SO WHAT? * At the moment, this looks like a victory for Turkish president Erdogan but more trouble could be in the offing because both sides appear to have a different interpretation of where the “safe zone” is. We’ll just have to see how this unfolds.

After much drama and hype, BoJo has managed to hammer out some kind of Brexit deal with the EU and now faces the uphill task of selling it to the UK parliament. Boris Johnson gambit hangs in balance (Financial Times, George Parker, Sam Fleming, Jim Brunsden, Michael Peel and Laura Hughes) shows that the odds are stacked against BoJo as the Democratic Unionist Party said it would be opposed, which means that he will have to rely more on his political opponents to support it in a vote scheduled for tomorrow. Jean-Claude Juncker, European Commission president, said there would be NO extension

to the Brexit process, but Donald Tusk, president of the European Council didn’t rule it out. Brexit deal drama cues wild highs and lows in sterling (Daily Telegraph, Louis Ashcroft) highlighted sterling trading at extremes on Brexit hopes and fears and it is now 7% above the 34-year low of $1.17 in early September. Sector guide to Johnson’s deal (Daily Telegraph, Tom Rees, Tim Wallace, Michael O’Dwyer, Lucy Burton and Adam Williams) is a useful overview of how the current deal might affect different industries and Will parliament approve Boris Johnson’s Brexit deal? (Financial Times, Sebastian Payne, John-Burn Murdoch, Jim Pickard and Laura Hughes) is quite an interesting look at whether it’ll get through. Conclusion: the FT thinks that 321 MPs will be against BoJo’s deal and 318 will support it. However, I’m not going to go into any detail here because it may well all change after tomorrow! I just thought I’d let you know where to look in case you are interested in following all the ins and outs.

Meanwhile, UK manufacturers braced for financial hit as US tariffs bite (The Guardian, Jasper Jolly) shows that British manufacturers are having to grit their teeth somewhat as 25% tariffs imposed by the US as part of its retaliation for subsidies given to aerospace manufacturer Airbus are coming into force today. A load of products are being hit by this new tax including French wine, Italian Parmesan and Spanish olives, among many other things. The US announced these tariffs on October 3rd after the World Trade Organisation concluded that EU nations gave state aid illegally to help Airbus develop its A380 superjumbo and the smaller A350. The Scottish Whisky association (SWA) says that its whisky products will be hit by over 60% of the UK’s total tariff bill. Apparently our government argued with the Americans to get an exception, but this clearly fell on deaf ears. * SO WHAT? * Given that this is a fight between two massive aircraft manufacturers, it seems somewhat overzealous to put the screws on other completely unrelated industries that will get badly hit by this. Still, this seems to be Trump’s negotiating style and so everyone’s just got to sit it out. The timing for some will be particularly painful given there’s the whole Brexit thing to contend with as well.

WHSmith heads stateside, Domino’s withdraws from Europe, Unilever and Nestle report and Juul withdraws some products…

WHSmith expansion gets wings with US deal (The Times, Ashley Armstrong) highlights the company’s $400m acquisition of Marshall Retail Group in the US which will effectively double the size of WHSmith’s international travel business. This follows on from its $198m acquisition of US business InMotion in October last year. The travel business now accounts for two thirds of profits at WHSmith and incoming CEO Carl Cowling said that this deal will “significantly enhance our scale and growth opportunities in the US, a large and fast-growing travel retail market”. * SO WHAT? * This latest acquisition seems to chime in well with WHSmith’s overseas and travel ambitions and should certainly give it more clout in the US market. I believe that although WHSmith’s high street business is pretty mature, its travel retail business (shops at train stations, airports etc.) still has a way to go as it continues to take advantage of a captive audience. Having said that, American dream often turns into a nightmare (The Times, Ashley Armstrong) makes the very valid point that America has been the graveyard of many a UK retailer – just ask Topshop, Tesco, Dixons and Tesco who all tried making a splash stateside and left with their collective tails between their legs. Let’s hope it’s learned from the mistakes of its predecessors!

It’s all been going wrong with pizza recently, hasn’t it! Well Domino’s pulls out of overseas markets to add to UK troubles (Daily Telegraph, Oliver Gill) continues that trend as the pizza company announced it would be pulling out of Switzerland, Iceland, Norway and Sweden after piling up

multi-million pound losses in the last few years. * SO WHAT? * Domino’s Pizza Group is having a ‘mare at the moment as it is still on the lookout for a new chief exec and chairman following heated rows with UK franchisees who want a bigger slice (sorry) of the parent group’s profits to compensate for higher labour costs. It sounds like this could be an attractive proposition for incoming senior management given it is a decent brand that people know but that also needs a bit of direction. I would imagine the shares could be up strongly on new appointments given that any newcomer is bound to do something drastic to make their mark on the company.

In consumer goods, Unilever feels the heat as ice cream sales melt and trade war hits China (The Times, Ashley Armstrong) shows that the company just missed market expectations in its quarterly results due to poor ice cream sales and a slowdown in China (due to the ongoing trade war), India (due to monsoons hitting rural spending) and Argentina (due to hyperinflation curtailing consumer spending). Having said that, the Magnum ice cream maker has kept its guidance for the full year unchanged. Meanwhile, Nestle to return $20bn to shareholders as turnaround gathers pace (Financial Times, Leila Abboud) saw the company get back on the right track with results that were largely in line with market expectations and a three year share buyback target. Nestle has been selling non-core businesses in order to improve sales growth and profit margins whilst trying to keep up with changing consumer tastes.

Then in Juul halts online sales of some flavoured e-cigarettes (Wall Street Journal, Jennifer Maloney) we see the latest development in the ongoing downfall of vaping as Juul announced that it is halting online sales of its sweet and fruity e-cigarette refill pods. It had already stopped sales of such flavours in physical shops, but has now extended this online as pressure continues on the whole industry from the FTC, the FDA and federal prosecutors.

Plane-shaming hits air travel, boosts trains and Renault has a gloomy outlook…

‘Flight-shaming’ could slow growth of airline industry, says Iata (The Guardian, Gwyn Topham) shows that the International Air Transport Association believes that the rising trend of “flight-shaming” will push airlines to take environmental concerns more seriously and Eurostar enjoys busiest August as passengers seek alternative to

flying (The Guardian, Gwyn Topham) would appear to substantiate this theory as Eurostar reported its busiest August on record due to increasing demand for alternatives to flying.

Renault warns on gloomy outlook as demand falters (Financial Times, David Keohane) continues the gloomy mood in the automotive sector as it announced that it was cutting its sales and profits guidance for 2019 as it continues to battle against weakening global demand and its leadership problems. The company said that sales would drop by 3-4% this year due to “an economic environment less favourable than expected and in a regulatory context requiring ever-increasing costs”. Tough times.

And finally, in other news…

Normally in this section, I bring you either amusing or “interesting” stories from different sources – but I just can’t find any today that hit the spot! So instead, I thought I’d bring you some dad jokes:

What did one pirate say to the other when he beat him at chess? Checkmatey

Did you hear about the famous Italian chef that recently died? He pasta way

1. In MACRO & BREXIT-RELATED NEWS, Eurozone and UK inflation see three-year lows while couriers are hired to cope with a no-deal Brexit
2. In CONSUMER-RELATED & RETAIL NEWS, PayPal turns to China, US retail sales drop, Authentic Brands & Saks bid for Barneys, Hays Travel employs Thomas Cook staff while airlines fight over its landing slots and Asos profits weaken
3. In INDIVIDUAL COMPANY NEWS, Netflix subscriber numbers fall short, Huawei revenues rise, TikTok goes educational in India and Canopy Growth makes UK inroads
4. In OTHER NEWS, I bring you a superb new (potential) job…

So Eurozone and UK inflation see three-year lows while no-deal Brexit contingency plans involve the hiring of couriers…

Eurozone inflation rate drops to three-year low as outlook darkens (Financial Times, Valentina Romei) cites the latest figures from Eurostat which show inflation’s lowest growth rate since November 2016. They diverged further away from the ECB’s target as exports contracted, increasing concerns about a potentially steep economic slowdown. France was the only country in the eurozone to see an inflation rate above 1% while Germany’s more than halved versus September last year and prices in Italy and Spain hardly changed (+0.2%).

Fall in petrol prices helps to keep cap on inflation (Daily Telegraph, Tim Wallace) cites the latest figures from the Office for National Statistics which show a UK inflation rate of 1.7%, which is below the Bank of England’s 2% target – meaning that there will be less pressure to rise the interest rate at a tricky time while Brexit negotiations are ongoing. The Bank of England usually starts at least thinking about raising interest rates if inflation goes above 2% – hence, “the target” – in order to take the edge off spending, but as it’s comfortably below that level, there is no imminent need at the moment. * SO WHAT? * Given that the unemployment rate is only 3.9% and that average wages were up by 3.8% in the 12 months to August, you would have thought that inflation would be higher because of

rising household spending power as employers pay more to attract/retain staff in a tight labour market. As far as spending goes, you have retailers complaining that total sales in September fell at their sharpest rate since 1995 on the one hand and then other stats saying that consumer spending is pretty healthy on the other. Spending power is to be further enhanced as working-age benefits are due to increase for the first time in four years due to the government relaxing its stance on austerity. As things currently stand, it is the UK consumer that’s propping up the economy as investment and manufacturing are in limbo under Brexit uncertainty. Let’s hope everyone keeps spending otherwise the economy will get a big shock!

Talking about Brexit uncertainty, Courier groups hired to keep medicine flowing after no-deal Brexit (Financial Times, Sarah Neville) shows that logistics groups UPS, DFDS and Biocair have won health department contracts to make sure that essential medicines and medical products can get to the UK within two days in the event of a no-deal Brexit. The companies will provide an express freight service for drugs and medical products in contracts worth £25m. This is in addition to the announcement last week that Brittany Ferries, DFDS, P&O and Stena Line would provide capacity for around 2,500 HGVs per week to be transported into the UK for 6 months starting on October 31st as part of plans for patients to get the medicines they need. Health Secretary Matt Hancock said that “This dedicated delivery service will get urgent supplies and short shelf-life medicines, like radio-isotopes for cancer treatments, rapidly into the country, including by plane where necessary”.

PayPal turns to China, US retail sales weaken, Barneys edges closer to safety, Hays Travel saves Thomas Cook jobs while airlines fight over its landing slots and Asos sales drop…

PayPal wants to help Chinese online shoppers buy from overseas (Financial Times, Ryan McMorrow and Yuan Yang) highlights an important new development for PayPal as China’s Central Bank has just given it permission to buy a majority stake in Chinese payments group Gopay, giving Chinese online shoppers a new way to buy things from outside China. This means that PayPal will be the only foreign company to have licences that cover domestic and cross-border web and mobile payment services. * SO WHAT? * Until now, China’s payments industry has been a closed shop to foreigners, meaning that Alibaba affiliate Ant Financial’s Alipay and Tencent’s WeChat have basically had the sandpit to themselves – Alipay has 53.8% market share and WeChat has 39.9%, according to iResearch. Clearly there is a massive mountain for PayPal to climb here, but it is hoping that it can differentiate itself by offering Chinese shoppers a way of buying from oversees where the majority of merchants aren’t set up to accept Alipay or WeChat Pay and take advantage of the fact that China is the only market in the world with more online shopping than the US. On the other hand I would have thought that, given Alipay and WeChat’s formidable financial firepower, the Chinese giants would just have to do a bit of an overseas charm offensive to convert merchants and PayPal’s one advantage will just disappear in a (small) puff of smoke! Good luck to PayPal, though.

Fall in US retail sounds alarm (The Times, James Dean) cites the latest US Commerce Department data released yesterday which shows that retailers saw an unexpected fall in headline retail sales (a drop of 0.3% for September versus market expectations of a 0.3% rise for the month). * SO WHAT? * This would imply that consumer spending, which accounts for two thirds of the US economy, may be weakening. If you couple that with recent figures showing two consecutive months of weakness in the US manufacturing sector, things aren’t looking great. If it go on like this, the Federal Reserve may have to cut interest rates further at its December meeting to try to give the economy some pep.

Authentic Brands teams with Saks to make bid for Barneys (Wall Street Journal, Soma Biswas) follows on from what I said on Tuesday, but now it appears that that Barneys New York has finalised a deal to sell its name and brands to Authentic Brands Group and investment firm

B.Riley Financial and close all of its stores – including its flagship store on Madison Avenue and the one in Beverly Hills. Having said that, it is possible that Authentic Brands could keep some stores open – but this will depend on talks about rents with landlords. The deal is worth around $271m and will mean that Barneys will avoid a total liquidation. Competing bidders will have until October 22nd to come forward or the deal will go through as is – and if they do, an auction process will be triggered on October 24th. * SO WHAT? * Authentic Brands, which owns Nine West and Aeropostale is known for buying fashion brands for peanuts when they go into bankruptcy and then turning them around. This whole process got kicked into action when the landlord of Barneys’ flagship store on Madison Avenue decided to double the annual rent to $27.9m. We’ll just have to see whether any other bidders come out of the woodwork. As I keep saying, I think that department stores are dying a slow death in many parts of the world as their often tired formats just aren’t compelling enough to get customers to buy there rather than online (or, indeed elsewhere). Consumers still value experience, so I think that if department stores can refresh this side of things dramatically, they may stand a chance. But it’s only a small chance and those changes are going to have to be biiiiiiiig.

Hays Travel owners offer jobs to 2,000 ex-Thomas Cook staff (The Guardian, Rob Davies) heralds some good news for those caught up in the Thomas Cook debacle as the new owner of its high street network announced it has made offers to 1,982 of the 9,000 staff affected. Meanwhile, Thomas Cook airport slots draw bids from rivals (Financial Times, Tanya Powley and Alice Hancock) shows that carriers including easyJet, IAG (which owns British Airways) and Wizz air are among those bidding for Thomas Cook’s take-off and landing slots at Gatwick in a process that is being managed by KPMG in their capacity as liquidators. The sale could generate tens of millions of pounds. Other Thomas Cook assets, including those of its Nordic businesses Ving, Spies and Tjarebord, have also attracted buyer interest. * SO WHAT? * This is all great news for employees, but the opening up of slots is also good news for the airlines that get them (although just HOW good depends on the price they end up paying!) as they will be able to give their customers a better offering.

Meanwhile, in online retailing, Asos still in fashion despite profit slump (The Times, Ashley Armstrong) highlights the stunning performance of Asos shares yesterday which shot up by 28% despite profits falling by 68%. Investors clearly believed that the profit loss was not long term (IT problems at its warehouses) and that Asos would be able to grow profit margins from here after bolstering its management team and resolving its warehouse issues. * SO WHAT? * Asos has had a difficult year over which time its share price has halved. However, things are now looking good for Black Friday next month.

Netflix falls short, Huawei revenues strengthen, TikTok tries education in India and there’s an important development for Canopy Growth in the UK…

In a quick scoot around other news, Netflix subscribers fall slightly short of expectations (Wall Street Journal, Joe Flint and Micah Maidenberg) shows that the streamer missed its subscriber target for the second quarter in a row – although it did OK domestically and very well internationally – giving cause for concern ahead of the imminent launch of competitor streaming services from Disney, Apple and Warner Media, among others.

Huawei rings up 24pc boost in revenue after string of 5G deals (Daily Telegraph, Natasha Bernal) shows that it’s still possible to survive a massively negative PR campaign and come up smelling of roses as its revenues shot up on the

back of major 5G deals with EE, Three and Vodafone. TikTok launches educational push in India (Financial Times, Stephanie Findlay) shows that the Chinese viral video specialist is working to repair its reputation with local authorities that think it just provides “vulgar” content by announcing an education programme that “aims at revolutionalising e-learning in India”. TikTok’s parent ByteDance is trying to make a global push into education with things like the launch of the English tutoring platform Gogokid and learning app Haohao Xuexi (“study well”) this year.

Then Canopy Growth wins UK’s first medical cannabis bulk import licence (Financial Times, Alice Hancock) highlights a major development for Canadian cannabis company Canopy Growth as the Home Office has just granted a licence to Canopy’s pharmaceutical division, Spectrum Therapeutics, to import medical cannabis in bulk to the UK. * SO WHAT? * At the moment, patients needing medical cannabis have to wait up to three months to get it, so this will speed the process up considerably. It may also signal a gradual softening of the stance the UK currency has on cannabis.

And finally, in other news…

I thought I’d let you know about quite an interesting job opportunity in A luxury travel company is hiring someone to stay in lavish homes around the world for $2,500 a week (Insider, Rachel Hosie https://tinyurl.com/y594ponb). Wow!

1. In MACRO NEWS, we look at the latest on Brexit, the jobs market wobble and trouble in Catalonia
2. In FINANCIALS-RELATED NEWS, JPMorgan beats Goldman, Citi has China plans and fund manager Woodford shuts down
3. In INDIVIDUAL COMPANY NEWS, Johnson & Johnson remains upbeat despite everything
4. In OTHER NEWS, I bring you world leaders on horseback…

So Brexit talks continue, UK jobs take a hit and Spain has Catalonia troubles…

In UK and EU remain locked in race to broker Brexit deal (Financial Times, Jim Brundsen, Sam Fleming, Mehreen Khan, Michael Peel and George Parker) we see that both sides continue to negotiate against the clock to secure a Brexit deal, with EU chiefs warning that it won’t be possible unless BoJo gives more concessions. Mid-cap stocks surge amid hopes of Brexit breakthrough (Daily Telegraph, Louis Ashworth) shows that investors were getting all a-flutter about the prospect of a deal and sent the FTSE250 up by 1.34% as they invested in UK-centric sectors like retailers, landlords, high street lenders and restaurants. The pound also strengthened to a five-month high versus the euro and a four-month high versus the dollar. * SO WHAT? * It’s all noise and bluster at the moment, so we’ll just have to see what (if anything) is actually decided as there are still major hurdles to negotiate. Although the FTSE100 represents our biggest companies, many of them are heavily reliant on profits earned abroad so the FTSE250 is seen to be a more accurate measure of how the UK is doing.

Meanwhile, UK’s robust jobs market dented amid big fall in employment (The Guardian, Phillip Inman) cites the latest figures from the Office for National Statistics which show that the number of people in work fell by the sharpest rate in four years in August due to Brexit uncertainties. In

addition to that, the trend in rising average weekly wages weakened and the number of job vacancies have also fallen. * SO WHAT? * I don’t think that this is exactly surprising given all the uncertainty at the moment – I actually think it’s MORE surprising that things have been quite as robust as they have been given the backdrop. Everyone is waiting for Brexit clarity – and then things can get moving once more IMHO.

As if Spain wasn’t having enough of a headache at the moment as it approaches its fourth general election in four years on November 10th, What next for Catalonia after Supreme Court judgement (Financial Times, Daniel Dombey) highlights the discord that has ensued since the Supreme Court sentenced Oriol Junqueras, the former leader of the Catalonian government, to 13 years in prison on Monday “for sedition and misuse of public funds” connected with the illegal 2017 vote on independence. Eight of his colleagues were also sent to prison for between nine and 12 years. Heated protests resulted, especially at Barcelona airport, where over 100 flights were cancelled and over 130 people were injured. * SO WHAT? * Pedro Sanchez, Spain’s caretaker PM, wants the separatists and other Catalans to talk to each other, but the separatists aren’t having any of it. Sanchez had sought to form a government with separatist MPs in the current parliament, but gave up and decided to chance his luck with yet another general election. The funny thing is that Spain’s economy has been a highlight in a very sluggish Europe of late, but all this political impotence could well put it at risk if it carries on for much longer. The drama continues…

JPMorgan beats Goldman, Citi wants more in China and Neil Woodford suffers the ultimate humiliation…

JPMorgan earnings leave Goldman in the shade (Financial Times, Laura Noonan) gives JPMorgan bragging rights over Goldman Sachs as it turns out that record investment banking fees helped it to outpace its rival, which was itself weakened by a chunky 27% fall in profits due to tech investments in things like WeWork and Uber. * SO WHAT? * Yesterday was a big day for US banks reporting their results. JPMorgan was the best performer, beating analyst expectations, and while Goldman was hit by some of its investments, investors will probably be looking forward to the unveiling of its strategic plan in January as well as benefits flowing through from its investments in its Marcus brand and Apple credit card.

Citi plans to take full ownership of Chinese securities business (Financial Times, George Hammond) heralds what could be a historic development as the American bank is pushing to take full ownership of its securities business in China. It is now unwinding its existing local joint venture with Orient Securities (in which it has a 33% stake) with a view to taking full ownership next year, taking advantage of the relaxation of regulations which, until now, have forced western financial institutions to partner up with a local. From next year, the limits on foreign ownership of securities business and fund management companies are to be abolished. * SO WHAT? * This sounds like a decent enough move strategically as China is one of Citi’s top three Asian markets for its investment banking business. I get the impression that foreign companies have been wary of putting too much into their Chinese

businesses given political risk (that they get used as pawns in trade negotiations, for instance) and potentially revealing too much about their secret sauce to “outsiders” – so getting 100% control could well be useful and could persuade them to invest more, which would probably result in faster growth.

Neil Woodford to close down investment funds (The Guardian, Kalyeena Makortoff and Julia Kollewe) heralds tough news from the embattled former star fund manager as he was fired from his flagship fund and quit as manager of the last two funds. It signals the end of an era which started in 2015 after he formed his own fund following 25 very successful years at Invesco Perpetual as a high profile portfolio manager. Rise and fall of investing game’s star player (The Times, Ben Martin) charts his fall from hero to zero and Clearance sale begins as fund liquidates stock (The Times, Tom Howard) shows the impact on his remaining fund holdings – Eve Sleep, in which he holds a 31.2% stake, fell by 23% and Synairgen, in which he holds a 20% stake, fell by 13.5%. * SO WHAT? * At the end of the day, the writing was on the wall when everything started to collapse around four months ago when Woodford was forced to prohibit fund withdrawals. His main problem was that he had too many illiquid stocks (stocks that are hard to sell easily) in his portfolios, which made liquidating them much harder when investors started to get antsy and ask for their money back. As a fund manager, no-one worries about this when things are going well, but this can quite quickly turn into a bit of death spiral as investors all start to hit the exit button at the same time and in increasing numbers. Illiquid stocks are generally riskier investments but give more upside potential – but sudden investor redemptions can make things very tricky as the fund manager can’t sell them fast enough. Active fund managers will be under more pressure now given that Woodford was supposed to represent “best in breed” and passive funds will no doubt take advantage and take even more money as investors decrease their risk appetite.

Johnson & Johnson talks a good game…

Johnson & Johnson raises outlook, beats profit estimates (Wall Street Journal, Patrick Thomas and Peter Loftus) shows that J&J is talking a good game for 2019 despite facing a ton of lawsuits regarding allegations that its baby powder causes cancer, that it contributed to the ongoing US opioid crisis and that its antipsychotic drug

Risperdal caused irreversible breast enlargement in men. Despite all this it unveiled decent quarterly results that were above market expectations on the back of gains in its consumer and pharmaceuticals divisions. * SO WHAT? * Talk about putting a brave face on things! The litigation issues are piling up and putting a big cloud over the company’s prospects but if it manages to get past this and draw a line under them, it would seem that it has enough underlying momentum to get back on track. Drug distributors in talks to settle opioid litigation for $18bn (Wall Street Journal, Sara Randazzo) implies that things may be going this way for the opioid accusations, but there are still plenty of other things to worry about for now.

And finally, in other news…

Sometimes, we need a bit of motivation to get us going. Although our own Boris Johnson does little to help pep up the nation’s spirits, this isn’t the case for all world leaders – just check out Kim Jong-un channels hardman hero Vladimir Putin as he rides on horseback in bizarre snaps (The Sun, Neal Baker https://tinyurl.com/yxbas43d). There are just some things that you can’t unsee…

1. In MACRO, COMMODITIES AND CRYPTO NEWS, we look at US/China, US/Turkey, Brexit, falling oil and rising pork prices and Libra problems
2. In NEWS ON RETAILERS & CONSUMER TRENDS, Barneys gets rescued, cashierless tech spreads, Sports Direct seeks an industry review and Loaf looks good while Chinese consumers cool on electric vehicles and Lego looks at renting
3. In INDIVIDUAL COMPANY NEWS, SmileDirectClub ain’t so smiley, WeWork looks to sack 13% of its workers and Sophos gets a new owner
4. In OTHER NEWS, I bring you some snack box art…

So we look at US vs China, US vs Turkey, Brexit stuff, falling oil and rising pork prices and Libra woes…

China ‘keeps champagne on ice’ over fragile truce in US trade war (Daily Telegraph, Tom Rees) signals the rather more cautious tone from state-run newspaper China Daily over a partial trade deal between the two countries than Trump’s typically understated “greatest and biggest deal ever made for our great patriot farmers in the history of our country” assessment of the agreement reached last week.  US Treasury Secretary Steve Mnuchin was also less effusive about the deal and pointed out that tariffs on $156bn of Chinese imports would still come into force on December 15th unless this “phase one” deal was signed off. * SO WHAT? * The latest stats show that trade between the two countries has fallen by over 20% so far this year so clearly there is a lot to play for. Having said that, it sounds like there are still a lot of major issues to be addressed so I would agree with China’s assessment of the situation! Trump’s bombastic tweets are just a way of putting a bit of pressure on the proceedings. It ain’t a deal until it’s all signed off by presidents on both sides!

US imposes penalties on Turkey, aiming to stop incursion into Syria (Wall Streeet Journal, Ian Talley and Vivian Salama) heralds sanctions from Washington on Turkey as the US raised steel tariffs and threatened that there would be more to come if the country continued a military offensive in northern Syria. Trump urged both sides to negotiate, but has been widely criticised for withdrawing troops from the region leaving Kurdish militias – who had helped the US led fight against Islamic State – exposed. He said that “I am fully prepared to swiftly destroy Turkey’s economy if Turkish leaders continue down this dangerous and destructive path” and many have speculated that the sanctions could start small and be ratcheted up to cutting access to US markets, which would cripple Turkey’s economy. Turkish president Erdogan is not known to be a soft touch, so expect a very bumpy (and destructive) ride.

There seem to be differing interpretations on how Brexit talks are going at the moment with Hopes fade for Brexit deal at summit as EU needs ‘more time’ (Financial Times, Jim Pickard, George Parker and Laura Hughes) on the one hand with Finnish PM Antti Rinne, who currency holds the

EU presidency, appealing for more time and Stephen Coveney, Ireland’s deputy PM, implying that talks may have to extend into next week. On the other, Johnson edges closer to a deal (Daily Telegraph, Peter Foster, Gordon Rayner and Camilla Tominey) sounds an altogether more upbeat tone as it notes that BoJo cancelled Cabinet talks scheduled for today to avoid any potential leaks while delicate discussions are in progress. More noise as the drama rumbles on…

Meanwhile, Oil takes hit amid wariness over trade deal (Wall Street Journal, David Hodari and Joe Wallace) shows that oil prices weakened as doubts about the solidity of the US/China trade deal increased. Oil prices rose on Friday after Trump said that major progress had been made in the trade talks. Other commodity prices also reacted – soybean prices shot up initially as Trump said China had agreed to buy a load of US agricultural products, but then came back down again. African swine fever drives up European pork prices (Financial Times, Valerie Hopkins and Emiko Terazono) highlights price rises for pork, but this wasn’t due to trade talk chatter – it was due to massive demand from China who had to decimate its own pig herd due to the outbreak of African swine fever. Prices are now at six-year highs, having jumped up by 35% since the start of the year. Better ship in those bacon butties/sausage sandwiches before they hit caviar-like prices 😜 as there is usually a time lag before wholesale prices for pork filter down to consumers! Fun fact: Spainiards consume the most pork in the EU followed closely by the Poles and then Germans.

Then Facebook admits digital currency doubts as regulatory hurdles loom (Financial Times, Kiran Stacey and Hannah Murphy) highlights continued challenges for Facebook’s proposed cryptocurrency, Libra, as the company said that although it has the technology, it will struggle to get regulatory approval in time to launch by the end of next year. Dante Disparte, Libra’s deputy chairman, said that it would not launch anywhere until it gets regulatory approval in Europe and the US. Fresh blow for Libra and Booking.com is the latest to pull out (Daily Telegraph, Matthew Field and Laurence Dodds) shows that Facebook’s troubles were exacerbated by the latest company to pull out, travel giant Booking Holdings (which owns Booking.com). This comes shortly after PayPal, Mastercard, Visa, e-Bay, Stripe and Mercado Pago all abandoned over the last week and just before the Libra Association confirmed its founding members. The only payment firm left is Dutch firm PayU.

Barneys gets rescued, cashierless tech goes to more retailers, Sports Direct complains about Adidas and Nike and Loaf does well sofa while Chinese cool on electric car sales and Lego considers rentals…

Barneys’ new suitor seeks tie-up with Saks (Wall Street Journal, Suzanne Kapner and Juliet Chung) highlights a potential bidder for Barneys New York in the form of Authentic Brands, which owns brands including Nine West and Aeropostale, which plans to licence it to Saks. Saks is currently in talks to open Barneys departments in some of its stores and take over its website while Authentic Brands is in talks with landlords about keeping stores open as part of what is believed to be a $270m bid. * SO WHAT? * Barneys New York has to meet a deadline today to find a buyer but any bid could still be trumped by a bankruptcy auction scheduled for later this month. Since it filed for bankruptcy protection in August, Barneys New York has been trying to stave off liquidation as department stores continue to struggle.

I thought that Silicon Valley takes on Amazon’s cashierless ‘Go’ stores (Wall Street Journal, Sebastian Herrera) was a really interesting article because it shows that there are some start-ups, like Zippin and Standard Cognition, who are making tech similar to that used in Amazon Go’s cashierless stores (where you do your shopping and walk out without having to go to a cashier because the stores cameras and sensors pick up what you buy and charge you wirelessly) and selling it to grocery chains, sports stadiums and convenience stores. * SO WHAT? * Many analysts expect that Amazon will licence out its tech once it has perfected it, but in the meantime these start-ups are arguing that customers should use them because they aren’t retailer competitors. I think that this sounds like a nice idea in theory, but I also think that Amazon will win out here because they can easily absorb the development costs and scale-up very quickly while smaller start-ups could be crippled if things go wrong and they end up being liable for losses and tech blips. It is notable that Amazon has taken what I think is a very careful approach to using this technology and rolling it out. Good luck to the start-ups, but I think they will be fighting an uphill battle to get it right and scalable before Amazon does.

Back in the UK, Sports Direct calls for industry review (Daily Telegraph, LaToya Harding) highlights Mike Ashley’s latest whinge as he complains about the dominance of Nike and Adidas, calling for a Europe-wide investigation into the sportswear industry. He argues that such “must-have” brands dominate the market which gives them oversize power in supply and product prices. There were reports over the weekend that Nike told some independent suppliers that their access to its products will end in two years as they put more effort into promoting their online presence and it sounds like Adidas will be doing something similar. * SO WHAT? * I must say that I think that if Adidas or Nike were doing some sort of dodgy price-fixing, then Ashley could potentially have a point. However, I think that Nike and Adidas are perfectly entitled to supply who they want to supply and if they don’t think that Ashley’s pile-it-

high-sell-it-cheap methods ring true with the image it wants to project, then they should be free to do what they want to. It sounds to me like sour grapes that he’s not getting access to merch that arch-rival JD Sports is getting and unless he does a revamp of his stores, it ain’t going to happen IMO.

Loaf sitting pretty as sofa sales keep on rising (Daily Telegraph, Laura Onita) shows that sofa start-up Loaf is proving to be a rare high street success story as the sofa retailer which targets younger shoppers reported rising turnover for the year to end of March but kept profits flat as it invested in growth and more showrooms. This contrasts with rivals DFS and ScS who both reported a slowdown in recent sales, although Dunelm is still doing quite well. * SO WHAT? * It’s impressive for companies like this to be able to report profits in a market like this. Furniture retailers do very well when there is a buoyant property market and confidence in the economy as consumers are willing to buy big ticket items and move abode – which often necessitates the purchase of new furniture. The fact that they are seeing strong sales at the moment is great – so imagine what they would be if Brexit got sorted and the housing market started to fire up again! We’ll just have to see how the Brexit talks progress.

Then on the consumer side of things, China new energy vehicle sales drop 34% (Financial Times, Christian Shepherd) highlights a rather worrying trend given that China is the world’s biggest market for cars and is mad keen on New Energy Vehicles (NEV). The Chinese government has made development of the electric vehicle industry a priority and has provided a lot of support for it in the form of subsidies and policy for both buyers and manufacturers. * SO WHAT? * The problem is that, back in March, the government stopped support for all but the top-performing marques (such as bus company Yutong and top electric car maker BYD), effectively putting the smaller ones at risk as consumers continue to be very price sensitive. This has been made worse by consumers being less willing to hand over their cash against the backdrop of an economic slowdown but TBH, a drop-off in sales of electric vehicles pretty much always happens when subsidies are taken away. The training wheels have come off and it’s time to see who can keep pedaling!

Lego looks at putting together potential rental service (Financial Times, Peggy Hollinger and Richard Milne) shows that Lego is thinking about offering a rental service as a way to make its products more environmentally friendly. He talked about this as being one of many different ideas being floated by the company at the moment during a Financial Times conference held last week on the future of manufacturing. Lego itself is facing sustainability issues given then massive amount of plastic it uses and although it has promised to phase out fossil-fuel based plastics by 2030 it still has yet to find a material that has “clutch power” – the ability to put bricks together and take them apart easily. * SO WHAT? * I think that the concept of hiring “things” is a very interesting one and Lego isn’t the only Nordic company to consider it. Ikea, the world’s largest furniture retailer, has been experimenting with furniture rental and Volvo Cars has already started a car subscription service where customers can change cars every 12 months and all costs excluding fuel are included. This is a really interesting subject and will be something that more and more companies wrestle with as more efforts are made to be environmentally friendly. 

SmileDirectClub frowns, WeWork workers suffer and Sophos gets a new owner…

SmileDirectClub shares hit low after California Bill (Wall Street Journal, Stephen Nakrosis) highlights a 13% fall in the share price of an already battered SmileDirectClub on news that new legislation in California will make it harder for Californians to buy from the teeth-straighening start-up. Basically, the bill will require a dentist providing orthodontics to review a patient’s recent X-rays. * SO WHAT? * Given that the start-up’s business is built on supplying clear teeth straighteners direct to consumers without the need to see a dentist, this presents a rather serious hurdle. SmileDirectClub floated on the market last month at $23, fell by 28% on its first day of trading and is

now priced at $9.44. This latest development is a big problem and it had better hope that other jurisdictions don’t follow suit, otherwise this company is toast.

WeWork set to sack 2,000 staff as anger towards co-founder grows (The Guardian, Dominic Rushe) shows more problems with the embattled “unicorn” office space supremo as rumours surface about a cull of 13% of its 15,000 staff worldwide. WeWork have not commented. What a fall from grace.

In Bumper payday for Sophos founders as $3.8bn takeover agreed (The Times, Simon Duke) we see that American private equity fund Thoma Bravo has decided to buy the cybersecurity software specialist, netting its two founders almost £500m. Thoma Bravo said that it will be conducting an in-depth review of the company after the acquisition completes sometime in the first quarter of next year.

And finally, in other news…

I thought I’d leave you today with some impressive skills in Japanese snack package craft artist holds first Tokyo exhibition in Ikebukuro, offers autographs (SoraNews24, Katy Kelly https://tinyurl.com/y2t6y9k2). Just. Wow.

1. In RETAIL/HIGH STREET NEWS, we see UK shopper numbers fall, how UK retailers can learn from their American cousins and why Pizza Express might survive
2. In NEWS ON TRENDS, Marijuana stocks get a kicking while companies are looking increasingly vulnerable to shocks
3. In INDIVIDUAL COMPANY NEWS, Netflix gets sold down and Revolut wants to raise $1.5bn for expansion
4. In OTHER NEWS, I bring you some excellent animal photos…

So we see that UK shopper numbers are weakening, how UK retailers could learn from American counterparts and why Pizza Express might be OK after all…

Number of shoppers on UK high street falls by 10% in seven years (The Guardian, Kalyeena Makortoff) cites the latest figures from the British Retail Consortium (BRC) and Springboard which reflect ongoing challenges on the UK high street. Retail footfall fell by 1.7% last month versus September last year as high street retailers have continued to suffer from online competition. BRC chief exec Helen Dickinson continues to paint a gloomy outlook and said that “if the government wants to support consumers and retailers they should make sure they take no deal off the table, while addressing the public policy costs such as business rates, that prevent shops from investing in their retail offering”. Christmas is always important for retailers, but a good one may mean the difference between going bust and survival for some.

One way that retailers might be able to boost sales is to copy their American cousins as per Retailers can learn trick or two from US (The Times, Patrick Hosking) which says that struggling retailers should try to promote festivals other than Christmas, like Halloween, to boost sales. Nina Skero, chief exec of the Centre for Economics and Business Research observed that retailers have tended to promote Christmas earlier and earlier (Selfridges opened their Christmas department in July, John Lewis in mid-September and even the cashier down at my local M&S told me management were encouraging staff to sell mince pies from last month!), but data from the Office for National Statistics implies that this just spreads Christmas over a longer time frame. Halloween is a serious earner in the ‘States as Americans spend $9bn on related merchandise while we spend a more “paltry” £419m. * SO WHAT? * This certainly sounds logical to me and there would seem to be a decent amount of upside to be had from promoting other festivals – although I think that if

retailers were really canny, they should perhaps try to invent new ones! For instance, Alibaba appropriated the relatively unknown Singles Day celebration in China in 2009 and then promoted it as an opportunity for consumers to splurge on gifts to themselves, offering big discounts through its consumer shopping site, Tmall. It is now one of the biggest, if not THE biggest offline and online shopping day in the world! And what about White Day in Japan – which is held exactly one month after Valentine’s Day where men are supposed to give women gifts to reciprocate the gifts they received on February 14th. This was first celebrated in 1978 in Japan and thought up by the National Confectionery Industry Association! Doing something like this would take some doing these days, but I’m sure it’d be possible if enough industry heads were involved and it was marketed properly…

For those of you who were saddened by the tricky situation currently being experienced by Pizza Express, No sell-by date on Pizza Express (The Times, Dominic Walsh) should give you reason for cheer because it says that it won’t go under and that it won’t have to deploy a CVA like some of its fellow high street strugglers (despite rumours published in The Sunday Telegraph yesterday that its bondholders were thinking of doing so) because, according to data analysis firm Debtwire, only 25 of the UK and Ireland’s 480 outlets are actually loss-making. * SO WHAT? * If that is indeed the case, maybe things will work out for the company. However, David Page, a former super-franchisee and CEO at Pizza Expess and current exec at successful competitor Franco Manca, poured scorn on that assessment and said that the percentage of loss-making outlets in an average restaurant chain portfolio is about 10-15%, adding that “If you were starting a casual dining pizza chain today, you wouldn’t open more than 250 stores because there aren’t the sites to support them”. We’ll just have to monitor further developments, but I am sorry to say that although I want to believe, I just don’t think it will be able to survive in its current form without something very dramatic happening. I said last week that I thought its offering is just not that inspiring and that the competition has just moved on. I’m all for comfort food, but Pizza Express will really have to engage in some out-of-the-pizza-box thinking to get things back on track IMO.

Marijuana stocks get smoked and dividend cover (sounds boring but IS important) makes shares look vulnerable…

Marijuana madness turns into cannabis crash (Wall Street Journal, Jacquie McNish and Vipal Monga) highlights weakness in the share prices of marijuana producers last week following a number of disappointing reports of quarterly performance and investor wobbles over sky high valuations. Hexo Corp, which has a joint venture (no pun intended), with Molson Coors Brewing, saw its share price crater by 38% last week as it cut its full year revenue outlook dramatically due to lower sales and pot prices – it’s CFO had resigned the week before. Then LA-based MedMen Enterprises announced that it was abandoning its proposed merger with Chicago-based Pharma-Cann due to difficult market conditions, pointing to the near-halving of cannabis stocks in the Horizons Marijuana Life Sciences Index as evidence of the current situation. Even the big players like Canopy Growth have seen their share prices fall by over 30% so far this year despite having the backing of Constellation Brands, who bought a 38% stake in the company not so long ago. Clearly, Constellation must have been concerned as they installed their CFO as Canopy’s board chairman last Thursday. * SO WHAT? * It sounds to me like the legalisation of cannabis in some states and countries led to a huge amount of froth which then turned into industry consolidation and over-hyped valuations. The

reality seems to be that the roll-out of legalisation and approval of products with varying amounts of CBD (the “good” element of cannabis) and THC (the “naughty”/dangerous element of cannabis) is proving to be much slower than everyone was hoping, which is resulting in a supply glut. I think that this may well result in more consolidation as company valuations come back down to earth and present more reasonable buying opportunities.

Stay with me for Shrinking cover poses threat to dividend payouts (The Times, Louisa Clarence-Smith) because chat about dividend cover isn’t usually all that exciting. Well, to be honest, this isn’t really all that exciting – but it is important!  Stats from the Henderson International Income Trust (HINT), an investment trust, show that dividend cover for British firms (this is the number of times a company’s dividend payout is covered by after-tax profits) is getting to its lowest level for a decade as dividend payouts have been rising while profits have been falling. * SO WHAT? * Yes, this all sounds rather boring, but the thing is that if dividend cover is narrowing fast, it means that companies and their investors are going to be particularly vulnerable to a downturn. This is because companies will either have to cut or cancel their dividends and investors who invested in companies for their dividend payout will get no love and may possibly be forced to sell their holdings as a result, making the situation worse for the companies as well. Generally speaking, divindend cover tends to rise when the economy is doing well and then level out as companies make higher payouts versus their profits before an economic contraction forces a sudden correction – and then the whole things starts over again.

Netflix is a fave of short-sellers and Revolut wants money for expansion…

Short sellers stream into Netflix as big rivals launch (Daily Telegraph, James Titcomb) highlights the increasing number of short sellers (investors who borrow shares in a company and sell them because they believe they can buy them back at a cheaper price when the stock falls) of the streaming giant as the launch of rival services from Disney and Apple approaches. They are set to launch within a month and will undercut Netflix subscription charges – and this has led to shares in the streamer to fall by about 25% in the last three months. Netflix is trying to launch  new high profile programming to keep users loyal but we’ll see soon enough what the impact will be of the newcomers.

Revolut looks to raise $1.5bn to expand worldwide (Financial Times, Stephen Morris) shows that UK fintech company Revolut’s wants to raise as much as $1.5bn in a global expansion bid. This follows a recent partnership with payments company Visa to open in 24 new countries including the US, Canada, Japan and Singapore and last year’s application for a eurozone licence. * SO WHAT? * This is very exciting, but I think that the company is still vulnerable to slippage as it suffered recently from continued allegations of its chief exec Nikolay Storonsky’s links with Russia and other bad press about how it treats its employees. Still, these things are probably just bumps on the road of a start-up that has only existed for five years! At least they are now shipping in some heavyweight senior management in the form of ex-Goldman Sachs exec Michael Sherwood (already appointed) and Martin Gilbert (due to be announced as its new chairman) to give them a dusting of legitimacy.

And finally, in other news…

I thought I’d leave you today with Hilarious animals captured in best photos from Comedy Wildlife Photography Awards (The Mirror, Emma Pryer https://tinyurl.com/y27hlgv7) because it seems like a good way to start the week!

1. In MACRO NEWS, Trump/China talks get markets tingling, BoJo and Varadkar make positive Brexit noises and the UK is on course to avoid recession
2. In RETAIL NEWS, Walmart’s US CEO resigns, Hays/Thomas Cook faces a challenging future, Dunelm’s sales rise, Dunkerton says he’s saved Superdry’s Christmas, HMV makes positive moves and N Brown turns things around
3. In INDIVIDUAL COMPANY NEWS, Samsung Display invests $11bn, Philips has a profit warning and Dyson gives up on its own cars
4. In OTHER NEWS, I bring you questionable running attire and some Jesus shoes…

So excitement builds as Trump gets involved in China trade talks, Brexit talks take a positive turn and the UK looks like it’ll avoid recession…

Trump to meet with China for talks aimed at ending trade war (The Guardian, Dominic Rushe) shows that Trump’s 13th round of talks in a 15-month trade battle has got markets all a-flutter as he tweeted “Big day of negotiations with China. They want to make a deal, but do I?”. Trump has thus far put tariffs on over $360bn worth of Chinese imports and is on track to add another $160bn-worth to that on December 15th. * SO WHAT? * There have been many false dawns before and anything that sounds positive – like a Chinese official telling Bloomberg that the country was open to a “partial trade deal” – seems to be balanced out with things that will irk the Chinese, like the US decision to crack down on 28 Chinese tech firms because of the way the country treats Uighur Muslims and Muslim ethnic minorities. The devil is always in the detail, but the fact that Trump is on hand with the negotiations (rather than leaving it to his flunkies) would suggest that concrete progress COULD be made this time. The US-China trade war has been a real drag on global trade generally, so anything to ease the current logjam would be taken very positively by the markets IMO.

Boris Johnson and Leo Varadkar see ‘pathway’ to a Brexit deal (Financial Times, George Parker, Arthur Beesley and Jim Brunsden) would seem to signal a big shift in

sentiment given all the recent negativity as the Irish PM said that a withdrawal treaty could be agreed by the end of the month. Michel Barnier, the EU’s chief Brexit negotiator, will decide today whether these talks could lead to an actual breakthrough. * SO WHAT? * Sterling strengthened 1.5% against the dollar on hopes that we’re nearing some kind of deal, but again, there’s going to be a whole lot of to-ing and fro-ing going on as negotiations continue to develop. Separately, Brexit tariffs jeopardise entire Nissan Europe business model (Financial Times, Peter Campbell) shows veiled threats by Nissan that a no-deal Brexit could put its Sunderland plant in danger – but again, my impression is that this is all noise. Car sales are down globally, Nissan is in a right state at the moment with its leadership etc., and I think Brexit is just an easy excuse to blame everything on.

Meanwhile, UK on track to avoid recession despite Brexit chaos (The Guardian, Richard Partington) cites the latest figures from the Office for National Statistics which show that GDP has actually gone up by 0.3% in the three months to August, which was higher than market expectations. Given the nightmarish political and economic backdrop, this is actually quite impressive and would imply that Britain could well avoid a technical recession – which is defined as two consecutive quarters of contraction – for now. Given that GDP had contracted in the previous quarter somewhat unexpectedly, many economists will be breathing a sigh of relief. The services sector GDP (which accounts for around 80% of the UK’s GDP) grew over the period, but manufacturing continues to look sluggish.

Walmart loses its US CEO, Hays Travel has its work cut out, Dunelm announces decent sales, Superdry gets ready for Christmas, HMV marches forward and N Brown puts in a solid performance…

Walmart’s US stores chief to quit retailer (Wall Street Journal, Sarah Nassauer) highlights the departure of the retailer’s US chief, Greg Foran, who is leaving to become CEO of Air New Zealand. He’ll stay until January 31st and be replaced by John Furner, who has been running the Sam’s Club warehouse chain for the last couple of years. * SO WHAT? * I think this is significant given that Foran became head of Walmart’s biggest division in 2014 and led a major turnaround in the US by cutting down on new store openings and investing in improvements. Walmart has seen four years of rising sales and it gets two thirds of its annual revenues from its US stores. It sounds like Furner has got big shoes to fill at a very crucial time for the company as it continues to battle with intense competition from its offline and online peers.

Following on from yesterday’s news, there is some interesting comment on whether Hays Travel has bitten off more than it can chew in Is it too many Cooks for Hays (Daily Telegraph, Michael O’Dwyer) as stats from the Local Data Company show that 49 of the 555 Thomas Cook stores Hays Travel bought yesterday are within 100m of an existing Hays Travel (33 of these are within 50m) and 76 are within 1km. Interestingly, Hays Travel’s MD, John Hays, said that he was “aware” of the overlap and that one of the reasons why he got the go-ahead to buy the store estate was because he took the whole lot on rather than cherry-pick the ones he wanted. Interestingly, Scottish travel agent Barrhead Travel (which is owned by US company Travel Leaders Group and has 6,000 outlets worldwide) said yesterday that it would open up to 100 stores in the UK and hire former Thomas Cook employees. If you want more information and background on the deal and the background, you should definitely read Will Hays and Thomas Cook be the perfect package deal? (Daily Telegraph, Michael O’Dwyer). * SO WHAT? * I am really pleased for the Thomas Cook employees on this as this gives many of them hope. However, I am much more circumspect as to whether this venture can be a true long-term success for the company itself without cutting LOADS of stores and, ultimately, jobs given a) the massive store overlap and b) the continued viability of travel agents in their current form. Hays supporters will say that it’s worked out well so far and that we should have faith in its management which, incidentally, wants to preserve as many jobs as it can. Sceptics will say that buying a ton of high street shops was one of the main reasons why Thomas Cook slid down its slippery slope in the first place as the company was left wearing physical outlets when customers were moving online. Good luck to Hays, I say – but I just hope that it hasn’t bitten off more than it can chew in an evolving market place.

Dunelm shares slide despite rise in sales (The Times, Elizabeth Burden) shows the continued success of Britain’s biggest homeware and soft furnishings retailer (because all

the others have gone bust!!!) as it unveiled a 7.5% year-on-year rise in sales for the latest quarter. However, it tempered investor enthusiasm by saying that the homeware market was wavering and that the weakening pound will impact its margins as material costs will effectively get more expensive. * SO WHAT? * Yes, OK, so the shares fell by a chunky 10% after its downbeat comments, but TBH I think they have been doing pretty well considering that the market has been falling around their ears for the past few years. Mind you, the company could do with activity in the housing market picking up because this boosts sales when people move abode.

Then in Dunkerton says has ‘saved Christmas’ at Superdry (Financial Times, Jonathan Eley) we see that returned Superdry founder Julian Dunkerton is talking a good game as he stated yesterday that he’d done enough to take the company through Christmas since being reappointed head honcho earlier this year. He has been cutting costs and making sure that the company had enough new products to get them through the crucial final quarter. * SO WHAT? * Let’s hope his talk can be matched with actions as the company has had three profit warnings this year – so it could definitely do with some Christmas cheer! The share price has fallen by 25% since he returned as chief exec following a dramatic boardroom bust-up as investors remain sceptical about a turnaround – so he’s got a lot of convincing to do. Given he’s still got 18% of the shares in the company, he’s clearly incentivised to do a good job 😜

HMV bets on vinyl revival with new flagship store (Daily Telegraph, Laura Onita) brings us up to speed with what’s going on in the record shop chain that Canadian chain Sunrise Records bought for £883,000 in February. It is now opening a store called the Vault, a 25,000 sq ft site in Birmingham’s city centre, which it says will be one of Europe’s biggest entertainment shops. Fun fact: the site used to be occupied by Ikea. * SO WHAT? * It’s great to see someone with the balls to go against the flow – and Sunrise CEO Doug Putman is doing just that by pushing vinyl and keeping physical stores open. So far he’s kept 114 of HMV’s 127 stores open for the moment, but will be reviewing the estate after the Christmas trading season. Given Putnam grew Sunrise from five stores in 2014 to 84 stores today, he does at least have a track record of success in this area so although I think that the world is against him, I really hope he succeeds. Christmas will be crucial (although it is for ALL retailers).

Then there’s good news in N Brown in the black as online sales grow (The Times, Elizabeth Burden) as the company that owns the Jacomo, Simply Be, Figleaves, JD Williams and High & Mighty brands not only returned to profit, but did it in the same half of the year where it closed all of its shops to focus purely on online sales. Profits were up by a whopping 169% for the first six months although sales fell slightly. * SO WHAT? * I think this is really impressive and shows that even when your back is up against the wall, it is possible to overcome with laser-focus. I would suggest that the company has a real niche in plus-size and clothing for mature customers and simplifying the channels will really help to cut costs on an ongoing basis. Going purely online is quite dramatic to my mind as I’m a fan of getting balance between offline and online, but actually in this case, it looks like the decision to change has worked.

Samsung invests, Philips has a profit warning and Dyson walks away from cars…

Samsung Display to inject $11bn into next-generation screens (Financial Times, Song Jung-a) heralds a chunky investment for the world’s biggest display maker in next-generation tech as it aims to stay ahead of local competition LG Display and Chinese rivals. It aims to build a production line in South Korea to make large OLED TV panels (over 65″) in 2021 and will accelerate the transition of its LCD production lines to OLED production. * SO WHAT? * This is clearly a significant amount of money, but I guess it has to be done given the competition breathing down its neck in this space.

Philips blames trade war as it warns on profit (Financial Times, Sarah Provan) highlights problems at the Dutch electronics/healthcare tech conglomerate as the US-China trade war continues to bite. The company’s share price fell by 10% on news of the profit warning and the outlook doesn’t look too great either. Chief exec Frans van Houten bemoaned that “All businesses are affected by the tariffs. The amount depends on your manufacturing footprint. Where you source and where you sell. We export from China to the US and export from the US to China so we are hit on both sides”. Tough times.

Dyson cancels electric car project (Financial Times, Peter Campbell and Michael Pooler) heralds a very swift end to Dyson’s ambitions regarding its efforts to break into the automotive industry. It said yesterday that it will wind down its electric vehicle (EV) project as it failed to find buyers for its designs and that its plans to build a car from the ground up in Singapore just weren’t possible any more. It will try to absorb the 523 employees involved in the project elsewhere in the company in its first big commercial failure since it tried to make washing machines. * SO WHAT? * Given that Dyson employs 14,000 worldwide with 4,500 in the UK, 523 employees doesn’t sound too disastrous (unless you are one of the employees losing their job), but I actually think that this departure is a GOOD thing for the company as newbies moving into electric vehicle manufacturing are having a terrible time as they realise the whole thing is just a massive money pit. Although this is an embarrassing development given the fanfare to which the project was announced a couple of years ago, I think it is way better to cut now than throw more money down the pit never to be seen again. If it still wants a piece of the EV action, I think the company would be far better served to divert its efforts into battery technology and sell to other car manufacturers (or at least work with them so some of the R&D costs can be underwritten).

And finally, in other news…

I thought I’d leave you with a couple of unusual things as we head into the weekend. Hikers left ‘uncomfortable’ after encountering man jogging in pink thong (The Mirror, Courtney Pochin https://tinyurl.com/y23r7ea6) recounts an unusual sight, but the fact that the protagonist said ‘Sorry girls, sorry girls, sorry girls’ as he jogged past would suggest that this was either a) a bet or b) something that he did for himself rather than wanting to elicit reactions from others! Then there was news of the sale of some unusually-customised footwear in $3,000 Jesus Shoes filled with holy water sell out in minutes (The Independent, Sabrina Barr https://tinyurl.com/yxkjhhsx). What??? Have a great weekend y’all (but keep covered up if you go jogging 😜)!

1. In TECH NEWS, the OECD targets tech giants on tax, Apple annoys China and Twitter misuses data
2. In RETAIL/CONSUMER GOODS NEWS, LVMH shines, Tilbury sparks takeover rumours, Hays Travel buys Thomas Cook stores, BT announces high street revamp and Links goes bust
3. In INDIVIDUAL COMPANY NEWS, Johnson & Johnson gets another legal battering and Alibaba stops e-cigarette sales to US buyers
4. In OTHER NEWS, I bring you a pet care incident and hypnotism for Marmite haters…

So the OECD targets tech giants, Apple frustrates China with an app and it turns out that Twitter is being naughty with data …

OECD takes aim at tech giants with plan to shake up global tax (Financial Times, Chris Giles) shows that the OECD unveiled a raft of proposals yesterday to shake up global taxation to stop the likes of Facebook, Apple, Amazon, Netflix and Google (aka “FAANGs”) from shuffling their profits around the world to minimise the taxes they pay. The Paris-based organisation wants to get an agreement in principal by the end of January before getting into the nitty-gritty of the actual rules themselves. * SO WHAT? * Winners will include countries such as the US, China, UK, Germany, France and Italy as well as developing economies while the FAANGs, tax havens and low tax destinations such as Ireland could lose out big time (if the proposals were actually put into place). This would negate the need for individual countries to pass their own guidance. Call me cynical, but IF these proposals get approval in principle there are plenty of entities, governments and countries who will do their utmost to drag things out for as long as possible – not least places like Ireland who have built their economy up by attracting businesses who want to minimise their tax bill. I think that this sounds eminently logical and WAAAAAAY overdue, but at least someone has stuck their neck out with some concrete(ish) proposals. Accountants will no doubt be rubbing their hands in anticipation of advisory fees that will come their way in a brand new international tax regime!

Apple pulls Hong Kong cop-tracking map app after China uproar (Wall Street Journal, Tripp Mickle) highlights a serious misstep in Apple/China relations as Apple approved an app called HKmap.live – which Hong Kong protesters used to track police activity – to go on its Appstore and then pulled it just days later following serious criticism from Chinese state media. The company said in a statement that it pulled the app because Hong Kong’s Cyber Security and Technology Crime Bureau verified that HKmap.live was being “used to target and ambush police, threaten public safety, and criminals have used it to victimise residents in areas where they know there is no law enforcement”. * SO WHAT? * Apple just can’t do anything right when it comes to China. Things like this will just give Chinese authorities more reason to go hard on the company that is desperate to expand there but keeps on coming up against resistance. As I have said before, I think that it should pull back China expansion plans and concentrate on India where it may stand more of a chance (but only if it can somehow lower the cost of its offering there to more realistic levels).

Twitter admits misusing personal data (Daily Telegraph, Natasha Bernal) shows that Twitter admitted yesterday that it had allowed advertisers to use personal data of up to 14.1m people in the UK to sell targeted advertising without them knowing. The company generated around £595m of ad revenue in the UK in the second quarter alone but it also seems that all of Twitter’s 140m users around the world could also have been affected by this. * SO WHAT? * On the face of it, this seems to me like a big admission. Will this be a class-action-in-waiting, I wonder?? If it is, Twitter may surely have to take a massive hit. 

LVMH does well despite Hong Kong protests, takeover rumours surround Tilbury, Hays Travel gives Thomas Cook staff a lifeline, BT announces store plans and Links goes bust…

LVMH sales jump 11% despite Hong Kong protests (Financial Times, Harriet Agnew) highlights an impressive performance by the world’s biggest luxury group which managed to post double-digit revenue growth for the third quarter against a backdrop of trade wars and regional protests. The owner of brands such as Louis Vuitton, Moet & Chandon and Bulgari announced sales growth of 11% year-on-year, which was ahead of market expectations of 8.8% growth. The company said that Europe and the US made “good progress” and Asia still managed to put in a decent performance despite what’s going on in Hong Kong. * SO WHAT? * This is important good news for a company whose biggest market is Asia ex-Japan with the region accounting for around a third of group sales versus about 25% for the US and roughly 20% for Europe (excluding France). Asia ex-Japan growth was about 18% in the first six months of this year. This has set the bar for competitors including Kering, Richemont and Hermes who are yet to report results – so investors will be interested to see how they fare in comparison.

In other news on luxury goods but on a much smaller scale, Speculation of a takeover bid as revenues soar at Tilbury (Daily Telegraph, Laura Onita) shows how the success of make-up brand Tilbury is sparking takeover rumours. The company announced a 44.5% rise in revenues on the back of its popularity with celebrity fans including Nigella Lawson and Amal Clooney with Estee Lauder already having considered (and then abandoned) a $1bn takeover. The company – which is also backed by the likes of Mario Testino, model Stella Tennant and venture capital firm Sequoia – was set up by Charlotte Tilbury only seven years ago at Selfridges in London and its creams and makeup can now be found in John Lewis, Harvey Nichols and Space NK.

Surprise in Square Mile as Hays Travel buys Thomas Cook stores (Daily Telegraph, Michael O’Dwyer) will come as a massive relief for some of those who’d lost their jobs following Thomas Cook’s collapse. Family-owned firm Hays Travel, which is the UK’s biggest independent travel agent, has swooped in for an undisclosed sum to take over

Thomas Cook’s 555 UK stores, rescuing up to 2,500 jobs in the process. This will take its existing store estate of 190 to 745 and its founder, John Hays, believes that his company’s balance between offline and online presence will give it the edge it needs to survive. The Thomas Cook stores will be rebranded and staff who had been made redundant have been encouraged to apply for jobs there. The shops have been taken on at current rents but obviously they are going to be renegotiated. * SO WHAT? * This is a great lifeline for the staff at the moment, but surely there will be branch closures to come. Although Ryanair’s chief exec Michael O’Leary famously contended that no-one under 40 goes to a travel agent these days, We shouldn’t be too sceptical about rescue of Thomas Cook shops (The Guardian, Nils Pratley) suggests that Hays’ success thus far should not be underestimated and that the package holiday still has legs as a concept. That said, it makes the very valid point that longer term success could well depend on how much they can squeeze down rents when they enter into negotiations with landlords.

BT hopes new stores will go down a storm (The Times, Alex Ralph) highlights BT’s decision to return to the high street for the first time since 2002 as part of a push to provide services that will help customers deal with internet-connected devices. It will overhaul its 600 EE mobile network stores as part of the revamp and staff it with experts “who can help with everything from getting online for the first time to the latest in smart home technology”. The company will also accelerate the “reshoring” of its customer contact centres to Britain and Ireland a year ahead of schedule. * SO WHAT? * This is all part of an overhaul instigated by Philip Jansen, who joined as chief exec in February this year. Given that BT also owns Openreach and BT Sport and provides corporations with security, cloud and networking services, he has got plenty to work with. It’s interesting to see another telecoms company revamping their UK high street stores after Vodafone announced something similar earlier this week. 

It looks like there are going to be more gaps in the UK high street as Links of London goes bust after failing to find a buyer (Daily Telegraph, Laura Onita) shows that the London-based jewellery seller called in the administrators from Deloitte yesterday as efforts to find a buyer, raise finance and cut rents ultimately all failed. The company has 28 stores and seven concessions in the UK and Ireland – a far cry from its peak of 50 shops when the husband-and-wife founders sold the business to Greek retail group Folli Follie in 2006. Unsurprisingly, Mike Ashley’s Sports Direct Group reportedly made a (presumably risible) bid for the company when Savigny Partners were looking for buyers. As the song says, another one bites the dust…

Johnson & Johnson gets into even more trouble, Alibaba stops selling e-cigarettes to US buyers and the EU stands firm on a Brexit extension…

Johnson & Johnson hit with $8bn court order over antipsychotic drug (Financial Times, Hannah Kuchler) shows that the world’s biggest pharmaceutical company has been ordered to hand over $8bn after claims that it did not warn young men that taking its antipsychotic drug Risperdal could result in irreversible breast growth. * SO WHAT? * J&J is having an absolute nightmare at the moment as it is facing accusations of mis-selling opioids, contributing to the US opioid epidemic, and liability lawsuits that claim its talcum powder caused cancer. The company plans to appeal. At the moment, the company appears to be losing its firefights.

Further to all the negative newsflow on e-cigarettes at the moment, Alibaba to stop sales of e-cigarettes to US buyers (Wall Street Journal, Jennifer Maloney) highlights the latest kick in the teeth for e-cigarettes. Increasing numbers of people developing lung diseases after having

used often counterfeit product from dodgy online sources has led to bans and increased restriction of e-cigarette and related accessory sales. It seems to me that the noose continues to tighten on what was, until recently, seen to be a wonder-product.

You are no doubt sick to the back teeth of Brexit, but it is important and there has been a major new development in No extension without new referendum or election (Daily Telegraph, James Crisp, Anna Mikhailova and Peter Foster) which says that the president of the European Parliament, David Sassoli, made the announcement during a debate in Brussels yesterday. BoJo has been itching for an election but Remain-MPs have said they will only vote for one if he delays Brexit. It was revealed last night that Jeremy Corbyn will grant BoJo a general election on November 26th if he fails to deliver Brexit this month. * SO WHAT? * Clearly a lot can happen this month, but as things stand I would have thought that the LibDems will win votes from Labour and Conservative Remainers, Labour will probably lose out because of its seemingly constant wavering over the issue and the Conservatives will effectively be the party representing Leavers. It looks like fortune may be favouring BoJo as he wants an election (because he think he can win), but if he DOES manage to hammer something out with the Europeans in the meantime, he will look like a hero. However, as I said earlier, so many things can change in the coming weeks.

And finally, in other news…

I thought I’d leave you with a couple of things today! The first involves a pet carer who got a bit of a shock in Woman’s horror as she thinks dog’s nose fell off – then she realises mistake (The Mirror, Courtney Pochin https://tinyurl.com/yyrsyfbz) and then there’s the slightly sinister intent in Marmite is hunting for its biggest haters – so they can hypnotise them (The Mirror, Courtney Pochin https://tinyurl.com/y3ztucmj). Creepy!